The registered office of Elia Group SA/NV (hereafter referred to as the \u201cCompany\u201d or \u201cElia\u201d) is established in Belgium and located at 20 Boulevard de l\u2019Empereur, 1000 Brussels. Elia Group SA/NV is a public limited company, which is a listed company on Euronext Brussels, under the symbol ELI, whose reference shareholder is municipal holding company Publi-T SC.
The consolidated financial statements for the financial year 2023 include those of Elia Group SA/NV and its subsidiaries (collectively referred to as \u2018the Group' or 'Elia Group') and the group's interests in joint ventures and associates.
Elia Group comprises two electricity transmission system operators (TSOs): Elia Transmission Belgium SA/NV (\"ETB\") in Belgium and 50Hertz Transmission GmbH (\"50HertZ\"), in which Elia Group holds an 80% stake through Eurogrid International SA/NV (fully owned) and Eurogrid GmbH (80%). 50Hertz Transmission GmbH is one of Germany\u2019s four transmission system operators; it operates in the north and east of the country. We refer to the Group structure in Note 7 for further details.
The Group also has a 50% stake in Nemo Link Ltd, which constructed an electrical interconnector between the UK and Belgium: the Nemo Link interconnector. Nemo Link Ltd is a joint venture between Elia Transmission Belgium SA/NV and National Grid Ventures (in the UK). It began its commercial operations on 30 January 2019, with a transfer capacity of 1000 MW.
With around 3,473 employees and a transmission system that comprises some 19,460.5\u00a0km of high-voltage connections and serves 30\u00a0million end consumers, Elia Group is one of Europe\u2019s top five TSOs. It efficiently, reliably and securely transports electricity from generators to distribution system operators and major industrial consumers, while also importing and exporting electricity from and to neighbouring countries. The Group is a driving force behind the development of the European electricity market and the integration of energy generated from renewable sources. In addition to its transmission activities in Belgium and Germany, the Group offers businesses a range of consultancy and engineering services.
Through ETB and 50Hertz, Elia Group\u2019s mission is to realise the climate ambitions of the European Green Deal. Over the next few years, large-scale investments in renewable energy production and the offshore grid are due to be undertaken and any delay in unlocking flexibility or realising grid infrastructure will result in additional capacity needs. Investing in accelerated digitalisation and investments in the timely build-out of grid infrastructure
are therefore very important. This confirms the strategic and economic value of the Group's assets, which will continue to be modernised and developed, as demonstrated by the various projects that got underway in 2023. We refer to note 6.1 where further information is provided on the investment plan. 8.5. MiscellaneousTHE IMPACT OF THE WAR IN UKRAINE
These consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS), which have been adopted by the European Union. In doing so, the Group applied all new and revised standards and interpretations published by the International Accounting Standards Board (IASB), including those which came into effect for the financial year starting on 1 January 2023, which are applicable to the Group\u2019s activities.
NEW AND AMENDED STANDARDS AND INTERPRETATIONS
The standards, amendments and interpretations listed below came into effect in 2023, with little or limited impact on the Group:
\u2022IFRS 17 Insurance Contracts (including the June 2020 and December 2021 amendments to IFRS 17)
\u2022Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies;
\u2022Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates;
\u2022Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction;
\u2022Amendments to IAS 12 Income taxes: International Tax Reform \u2013 Pillar Two Model Rules (effective immediately but not yet endorsed in the EU \u2013 disclosures are required for annual periods beginning on or after 1 January 2023).
The standards, amendments and interpretations listed below did not take effect in 2023. The changes to the standards, amendments and interpretations listed below are not expected to have a material impact on these annual accounts and are therefore not outlined in any great detail:
\u2022Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants (applicable for annual periods beginning on or after 1 January 2024, but not yet endorsed in the EU);
\u2022Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (applicable for annual periods beginning on or after 1 January 2024, but not yet endorsed in the EU);
\u2022Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements (applicable for annual periods beginning on or after 1 January 2024, but not yet endorsed in the EU).
In general, these consolidated financial statements were prepared on a historical cost basis. However, reporting related to the following categories deviate from this general rule:
\u2022Equity accounted investees: the equity method was applied to determine the value of a shareholding over which the group has a significant influence;
\u2022Other shareholdings: entities in which the group has a shareholding but over which it does not have a significant influence were valued at fair value through other comprehensive income (OCI);
\u2022Current and non-current receivables were valued at the lowest of the carrying amount and the recoverable amount;
\u2022Employee benefits were valued at the present value of the defined benefit obligations, minus the fair value of the plan assets (see also Note 6.14);
\u2022Derivative financial instruments were measured at fair value through OCI or profit and loss (P&L), depending on whether the derivative can be designated as a hedging instrument (see also Note 8.1);
The directors reassessed the going concern assumption of the Company and, at the time of approving the financial statements, held a reasonable expectation that the Group had adequate resources to continue in operational existence for the foreseeable future. The directors will therefore continue to adopt the going concern basis of accounting in the preparation of the financial statements.
The preparation of these consolidated financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that could affect the reported amounts of assets and liabilities and revenue and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances: the results of these estimates and assumptions form the basis for making judgements regarding the carrying amounts of assets and liabilities. Actual results could therefore differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised either: in the period during which the estimate is revised if the revision only affects this period; or in the period during which the estimate is revised and throughout future periods if the revision affects both current and future periods.
The following points include information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements:
\u2022The total allowed remuneration for the Group\u2019s role as TSO in the Belgian and German segments is mainly determined by calculation methods set by the Belgian federal regulator (the Commission for Electricity and Gas Regulation or CREG) and the German federal regulator (the Federal Network Agency or BNetzA) respectively. The recognition of deferral regulatory accounts is also based on the different regulatory schemes. For certain calculations, a level of professional judgement needs to be applied. More disclosures are provided in Notes\u00a06.20, 9.1.4 and 9.2.3.
\u2022Entities in which the Group holds less than 20% of the voting rights but has significant influence are accounted for under the equity method. Following the guidance in IAS 28, the Group assesses whether it has significant influence over its associates and therefore needs to account for them under the equity method (rather than applying IFRS 9) and reassesses this in each reporting period (see also Note\u00a06.5).
\u2022Deferred tax assets are recognised for the carry-forward of unused tax losses and unused tax credits in so far as it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised. In making a judgement on this, management takes into account elements such as long-term business strategy and tax planning opportunities (see Note\u00a06.7).
\u2022Credit risk related to customers: management closely reviews the outstanding trade receivables, including by considering ageing, payment history and credit risk coverage (see Note\u00a08.1).
\u2022Employee benefits including reimbursement rights \u2013 see Note 6.14:
\u2010The Group has defined benefit plans and defined contribution plans which are disclosed in Note\u00a06.14. The calculation of the liabilities or assets related to these plans is based on actuarial and statistical assumptions. For example, this is the case for the present value of future pension liabilities. The present value is, among other factors, impacted by changes in discount rates, and financial assumptions such as future increases in salary. In addition, demographic assumptions, such as average assumed retirement age, also affect the present value of future pension liabilities.
\u2010In determining the appropriate discount rate, management considers the interest rates of corporate bonds in currencies consistent with currencies of the post-employment benefit obligation, i.e. euro, with at least an AA rating or above, as set by at least one leading rating agency and extrapolated along the yield curve to correspond with the expected term of the defined benefit obligation. Higher and lower yielding bonds are excluded in developing the appropriate yield curve.
\u2010Each plan's projected cash flow is matched to the spot rates of the yield curve to calculate an associated present value. A\u00a0single equivalent discount rate is then determined that produces that same present value. The resulting discount rate therefore reflects both the current interest rate environment and the plan's distinct liability characteristics.
\u2022Provisions for environmental remediation costs: at each year-end, an estimate is made regarding future expenses with respect to soil remediation, based on the expert advice. The extent of remediation costs is dependent on a limited number of uncertainties, including newly identified cases of soil contamination (see Note\u00a06.15).
\u2022Other provisions are based on the value of the claims filed or on the estimated amount of the risk exposure. The expected timing of the related cash outflow depends on the progress and duration of the associated process/procedures (see Note\u00a06.15).
\u2022In determining the appropriate discount rate to discount the future dismantling obligation, management considers the interest rates of corporate bonds in euro with at least an AA rating or above as set by at least one leading rating agency and extrapolated along the yield curve to correspond with the expected term of the dismantling obligation. A sensitivity analysis is performed to measure the impact of a differing discount rate.
\u2022Goodwill impairment testing: the Group performs impairment tests on goodwill and on cash-generating units (CGUs) at the reporting date, and whenever there are indications that the carrying amount might be higher than the recoverable amount. This analysis is based on assumptions such as estimated investment plans, remuneration defined in the regulatory frameworks, market evolution, market share, margin evolution and discount rates (see Note\u00a06.3).
\u2022Fair value measurement of financial instruments: when the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques. The inputs for these valuation techniques are taken from observable markets where possible. Where this is not feasible, a certain level of professional judgement is required in establishing fair values. Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in OCI to the extent that the hedge is effective. If the hedge is ineffective, changes in fair value are recognised in profit or loss (see Note\u00a06.18).
\u2022The useful life of the fixed assets is defined to reflect the real depreciation of each asset. The depreciation of property, plant and equipment is mainly calculated based on the useful lives determined by the regulatory frameworks in Belgium and Germany, which are considered to be the best possible approximation of expected economic lives in the light of current events. (see Note 3.3.1 and 6.1)
\u2022The Group makes use of practical expedients when applying IFRS 16 (Leasing):
\u2010The Group applies a single discount rate per type of contracts, summarised per their duration. Those leases are assumed to have similar characteristics. The discount rate used is the Group's best estimate of the weighted average incremental borrowing rate. Each lease contract is classified in a duration bucket (<5 years, between 5 and 10 years, etc.) for which an interest rate is derived equal to the interest rate of a traded bond with the same rating as Elia Group SA/NV in the same sector with a similar duration. The interest rate is fixed over the lifetime of the lease contract.
\u2010The Group assesses the non-cancellable period of each of the contracts falling within the scope of IFRS 16. This includes the period covered by an option to extend the lease, if the lessee is reasonably certain that they will exercise that option. Certainly, where it relates to office rent contracts, the Group makes its best estimate of the non-cancellable period based on all information at its disposal (see Note 6.19).
The Group is attentive to the effects that current challenges like geopolitical risks, macro economic events and climate change may have on these financial statements and gives an overview of the potential impacts in the table below:
Type of risk /change | General description | Impact for the group | Reference to the notes |
Increasing interest rates - financing | Interest rates globally rose in 2023 due to increased market risk and central banks\u2019 actions to slow down inflation. | As the Group has substantial financing needs, it is faced with an increased cost of debt and borrowing costs and higher refinancing costs. However, these factors have no direct impact on profitability, as long as they are taken into account in the remuneration mechanism. | Note 5.3 - Net Finance costs |
Increasing interest rates - discounting | According to IFRS, Elia Group use discounting to account for the time value of money in measuring non-current assets and liabilities: When interest rates increase, the present value of those assets and liabilities will decrease. | This may mainly affect Elia Group in the following areas of financial reporting: - impairment calculations: even if the new tariff methodology in both countries has been amended to better protect the group against a rise of interest rates; - dismantling provisions: - retirement obligations | Note 6.3 - Goodwill; Note 6.14 - Employee Benefits; Note 6.15 - Provisions |
High and volatile commodity prices | High volatility in commodity prices driven in particular by the war in Ukraine. | The main impacts for the Group : - fair value of the derivatives contracted by the group for the purpose of reducing the risk of fluctuations in the expected amount of grid losses (impact in OCI) and increased margin calls; - impact on revenue and costs directly linked to energy prices, with a limited net impact on profitability due to the regulatory mechanism. This can make more complex the calculation of some incentives. - level of trade receivables (and payables), including levies (pass through), without the Group noting any increase in credit risk on its external debtors since the crisis | Note 5.6, 6.6 and 6.16 - Derivatives; Note 4.2/4.3 , 5.1 and 5.2 and 6.20 - Revenue and costs; Note 6.9 - Trade receivables |
Inflation | There is a general business risk that inflation increases direct costs while lowering consumer demand. High inflation can also trigger some significant changes in key input to assess the carrying amount of assets and liabilities | The Group is not exposed to a significant risk of onerous contract due to the regulatory nature of its main activities. Inflation was carefully considered in the calculation of : - Retirement obligations (and corresponding reimbursement rights) - Goodwill - Credit risk; and has not adversely impacted the group in 2023 | Note 6.3 - Goodwill; Note 6.9 - Trade receivables; Note 6.14 - Employee Benefits |
Geopolitical tensions | The year 2023 was marked by heightened geopolitical tensions with the war in Ukraine and Middle East. | Given the nature and location of its operations and the fact that Elia Group does not currently have activities in Russia nor in Ukraine or with Russian companies, Elia Group has not observed a direct impact of the Ukrainian conflict on its business. However, there was a strong push at the European level to become less dependent from Russian gas and fossil fuels with a willingness among the authorities in Belgium and Germany to accelerate the energy transition. This led to an increase of the Group\u2019s investment program over the mid-term. The Group sees no impact from tensions in the middle east on its business performance. | |
Climate change | Through Elia and 50Hertz, Elia Group\u2019s mission is to realise the climate ambitions of the European Green Deal. For the group as a whole, energy transition represents a challenge, but also opportunities. | Climate goals merely confirms the strategic and economic value of the current asset base without significant impact on the useful life of the existing assets. Asset base will continue to be modernised and developed, as demonstrated by the various projects that got underway in 2023. | Note 6.1 - PPE |
Additional information are also provided in Note 8.1 - Financial risk management |
These consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS), which have been adopted by the European Union. In doing so, the Group applied all new and revised standards and interpretations published by the International Accounting Standards Board (IASB), including those which came into effect for the financial year starting on 1 January 2023, which are applicable to the Group\u2019s activities.
NEW AND AMENDED STANDARDS AND INTERPRETATIONS
The standards, amendments and interpretations listed below came into effect in 2023, with little or limited impact on the Group:
\u2022IFRS 17 Insurance Contracts (including the June 2020 and December 2021 amendments to IFRS 17)
\u2022Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies;
\u2022Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates;
\u2022Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction;
\u2022Amendments to IAS 12 Income taxes: International Tax Reform \u2013 Pillar Two Model Rules (effective immediately but not yet endorsed in the EU \u2013 disclosures are required for annual periods beginning on or after 1 January 2023).
The standards, amendments and interpretations listed below did not take effect in 2023. The changes to the standards, amendments and interpretations listed below are not expected to have a material impact on these annual accounts and are therefore not outlined in any great detail:
\u2022Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants (applicable for annual periods beginning on or after 1 January 2024, but not yet endorsed in the EU);
\u2022Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (applicable for annual periods beginning on or after 1 January 2024, but not yet endorsed in the EU);
\u2022Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements (applicable for annual periods beginning on or after 1 January 2024, but not yet endorsed in the EU).
These consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS), which have been adopted by the European Union. In doing so, the Group applied all new and revised standards and interpretations published by the International Accounting Standards Board (IASB), including those which came into effect for the financial year starting on 1 January 2023, which are applicable to the Group\u2019s activities.
NEW AND AMENDED STANDARDS AND INTERPRETATIONS
The standards, amendments and interpretations listed below came into effect in 2023, with little or limited impact on the Group:
\u2022IFRS 17 Insurance Contracts (including the June 2020 and December 2021 amendments to IFRS 17)
\u2022Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies;
\u2022Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates;
\u2022Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction;
\u2022Amendments to IAS 12 Income taxes: International Tax Reform \u2013 Pillar Two Model Rules (effective immediately but not yet endorsed in the EU \u2013 disclosures are required for annual periods beginning on or after 1 January 2023).
The standards, amendments and interpretations listed below did not take effect in 2023. The changes to the standards, amendments and interpretations listed below are not expected to have a material impact on these annual accounts and are therefore not outlined in any great detail:
\u2022Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants (applicable for annual periods beginning on or after 1 January 2024, but not yet endorsed in the EU);
\u2022Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (applicable for annual periods beginning on or after 1 January 2024, but not yet endorsed in the EU);
\u2022Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements (applicable for annual periods beginning on or after 1 January 2024, but not yet endorsed in the EU).
NEW AND AMENDED STANDARDS AND INTERPRETATIONS
The standards, amendments and interpretations listed below came into effect in 2023, with little or limited impact on the Group:
\u2022IFRS 17 Insurance Contracts (including the June 2020 and December 2021 amendments to IFRS 17)
\u2022Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies;
\u2022Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates;
\u2022Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction;
\u2022Amendments to IAS 12 Income taxes: International Tax Reform \u2013 Pillar Two Model Rules (effective immediately but not yet endorsed in the EU \u2013 disclosures are required for annual periods beginning on or after 1 January 2023).
The standards, amendments and interpretations listed below did not take effect in 2023. The changes to the standards, amendments and interpretations listed below are not expected to have a material impact on these annual accounts and are therefore not outlined in any great detail:
\u2022Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants (applicable for annual periods beginning on or after 1 January 2024, but not yet endorsed in the EU);
\u2022Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (applicable for annual periods beginning on or after 1 January 2024, but not yet endorsed in the EU);
\u2022Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements (applicable for annual periods beginning on or after 1 January 2024, but not yet endorsed in the EU).
The directors reassessed the going concern assumption of the Company and, at the time of approving the financial statements, held a reasonable expectation that the Group had adequate resources to continue in operational existence for the foreseeable future. The directors will therefore continue to adopt the going concern basis of accounting in the preparation of the financial statements.
The preparation of these consolidated financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that could affect the reported amounts of assets and liabilities and revenue and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances: the results of these estimates and assumptions form the basis for making judgements regarding the carrying amounts of assets and liabilities. Actual results could therefore differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised either: in the period during which the estimate is revised if the revision only affects this period; or in the period during which the estimate is revised and throughout future periods if the revision affects both current and future periods.
The following points include information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements:
\u2022The total allowed remuneration for the Group\u2019s role as TSO in the Belgian and German segments is mainly determined by calculation methods set by the Belgian federal regulator (the Commission for Electricity and Gas Regulation or CREG) and the German federal regulator (the Federal Network Agency or BNetzA) respectively. The recognition of deferral regulatory accounts is also based on the different regulatory schemes. For certain calculations, a level of professional judgement needs to be applied. More disclosures are provided in Notes\u00a06.20, 9.1.4 and 9.2.3.
\u2022Entities in which the Group holds less than 20% of the voting rights but has significant influence are accounted for under the equity method. Following the guidance in IAS 28, the Group assesses whether it has significant influence over its associates and therefore needs to account for them under the equity method (rather than applying IFRS 9) and reassesses this in each reporting period (see also Note\u00a06.5).
\u2022Deferred tax assets are recognised for the carry-forward of unused tax losses and unused tax credits in so far as it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised. In making a judgement on this, management takes into account elements such as long-term business strategy and tax planning opportunities (see Note\u00a06.7).
\u2022Credit risk related to customers: management closely reviews the outstanding trade receivables, including by considering ageing, payment history and credit risk coverage (see Note\u00a08.1).
\u2022Employee benefits including reimbursement rights \u2013 see Note 6.14:
\u2010The Group has defined benefit plans and defined contribution plans which are disclosed in Note\u00a06.14. The calculation of the liabilities or assets related to these plans is based on actuarial and statistical assumptions. For example, this is the case for the present value of future pension liabilities. The present value is, among other factors, impacted by changes in discount rates, and financial assumptions such as future increases in salary. In addition, demographic assumptions, such as average assumed retirement age, also affect the present value of future pension liabilities.
\u2010In determining the appropriate discount rate, management considers the interest rates of corporate bonds in currencies consistent with currencies of the post-employment benefit obligation, i.e. euro, with at least an AA rating or above, as set by at least one leading rating agency and extrapolated along the yield curve to correspond with the expected term of the defined benefit obligation. Higher and lower yielding bonds are excluded in developing the appropriate yield curve.
\u2010Each plan's projected cash flow is matched to the spot rates of the yield curve to calculate an associated present value. A\u00a0single equivalent discount rate is then determined that produces that same present value. The resulting discount rate therefore reflects both the current interest rate environment and the plan's distinct liability characteristics.
\u2022Provisions for environmental remediation costs: at each year-end, an estimate is made regarding future expenses with respect to soil remediation, based on the expert advice. The extent of remediation costs is dependent on a limited number of uncertainties, including newly identified cases of soil contamination (see Note\u00a06.15).
\u2022Other provisions are based on the value of the claims filed or on the estimated amount of the risk exposure. The expected timing of the related cash outflow depends on the progress and duration of the associated process/procedures (see Note\u00a06.15).
\u2022In determining the appropriate discount rate to discount the future dismantling obligation, management considers the interest rates of corporate bonds in euro with at least an AA rating or above as set by at least one leading rating agency and extrapolated along the yield curve to correspond with the expected term of the dismantling obligation. A sensitivity analysis is performed to measure the impact of a differing discount rate.
\u2022Goodwill impairment testing: the Group performs impairment tests on goodwill and on cash-generating units (CGUs) at the reporting date, and whenever there are indications that the carrying amount might be higher than the recoverable amount. This analysis is based on assumptions such as estimated investment plans, remuneration defined in the regulatory frameworks, market evolution, market share, margin evolution and discount rates (see Note\u00a06.3).
\u2022Fair value measurement of financial instruments: when the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques. The inputs for these valuation techniques are taken from observable markets where possible. Where this is not feasible, a certain level of professional judgement is required in establishing fair values. Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in OCI to the extent that the hedge is effective. If the hedge is ineffective, changes in fair value are recognised in profit or loss (see Note\u00a06.18).
\u2022The useful life of the fixed assets is defined to reflect the real depreciation of each asset. The depreciation of property, plant and equipment is mainly calculated based on the useful lives determined by the regulatory frameworks in Belgium and Germany, which are considered to be the best possible approximation of expected economic lives in the light of current events. (see Note 3.3.1 and 6.1)
\u2022The Group makes use of practical expedients when applying IFRS 16 (Leasing):
\u2010The Group applies a single discount rate per type of contracts, summarised per their duration. Those leases are assumed to have similar characteristics. The discount rate used is the Group's best estimate of the weighted average incremental borrowing rate. Each lease contract is classified in a duration bucket (<5 years, between 5 and 10 years, etc.) for which an interest rate is derived equal to the interest rate of a traded bond with the same rating as Elia Group SA/NV in the same sector with a similar duration. The interest rate is fixed over the lifetime of the lease contract.
\u2010The Group assesses the non-cancellable period of each of the contracts falling within the scope of IFRS 16. This includes the period covered by an option to extend the lease, if the lessee is reasonably certain that they will exercise that option. Certainly, where it relates to office rent contracts, the Group makes its best estimate of the non-cancellable period based on all information at its disposal (see Note 6.19).
The Group is attentive to the effects that current challenges like geopolitical risks, macro economic events and climate change may have on these financial statements and gives an overview of the potential impacts in the table below:
Type of risk /change | General description | Impact for the group | Reference to the notes |
Increasing interest rates - financing | Interest rates globally rose in 2023 due to increased market risk and central banks\u2019 actions to slow down inflation. | As the Group has substantial financing needs, it is faced with an increased cost of debt and borrowing costs and higher refinancing costs. However, these factors have no direct impact on profitability, as long as they are taken into account in the remuneration mechanism. | Note 5.3 - Net Finance costs |
Increasing interest rates - discounting | According to IFRS, Elia Group use discounting to account for the time value of money in measuring non-current assets and liabilities: When interest rates increase, the present value of those assets and liabilities will decrease. | This may mainly affect Elia Group in the following areas of financial reporting: - impairment calculations: even if the new tariff methodology in both countries has been amended to better protect the group against a rise of interest rates; - dismantling provisions: - retirement obligations | Note 6.3 - Goodwill; Note 6.14 - Employee Benefits; Note 6.15 - Provisions |
High and volatile commodity prices | High volatility in commodity prices driven in particular by the war in Ukraine. | The main impacts for the Group : - fair value of the derivatives contracted by the group for the purpose of reducing the risk of fluctuations in the expected amount of grid losses (impact in OCI) and increased margin calls; - impact on revenue and costs directly linked to energy prices, with a limited net impact on profitability due to the regulatory mechanism. This can make more complex the calculation of some incentives. - level of trade receivables (and payables), including levies (pass through), without the Group noting any increase in credit risk on its external debtors since the crisis | Note 5.6, 6.6 and 6.16 - Derivatives; Note 4.2/4.3 , 5.1 and 5.2 and 6.20 - Revenue and costs; Note 6.9 - Trade receivables |
Inflation | There is a general business risk that inflation increases direct costs while lowering consumer demand. High inflation can also trigger some significant changes in key input to assess the carrying amount of assets and liabilities | The Group is not exposed to a significant risk of onerous contract due to the regulatory nature of its main activities. Inflation was carefully considered in the calculation of : - Retirement obligations (and corresponding reimbursement rights) - Goodwill - Credit risk; and has not adversely impacted the group in 2023 | Note 6.3 - Goodwill; Note 6.9 - Trade receivables; Note 6.14 - Employee Benefits |
Geopolitical tensions | The year 2023 was marked by heightened geopolitical tensions with the war in Ukraine and Middle East. | Given the nature and location of its operations and the fact that Elia Group does not currently have activities in Russia nor in Ukraine or with Russian companies, Elia Group has not observed a direct impact of the Ukrainian conflict on its business. However, there was a strong push at the European level to become less dependent from Russian gas and fossil fuels with a willingness among the authorities in Belgium and Germany to accelerate the energy transition. This led to an increase of the Group\u2019s investment program over the mid-term. The Group sees no impact from tensions in the middle east on its business performance. | |
Climate change | Through Elia and 50Hertz, Elia Group\u2019s mission is to realise the climate ambitions of the European Green Deal. For the group as a whole, energy transition represents a challenge, but also opportunities. | Climate goals merely confirms the strategic and economic value of the current asset base without significant impact on the useful life of the existing assets. Asset base will continue to be modernised and developed, as demonstrated by the various projects that got underway in 2023. | Note 6.1 - PPE |
Additional information are also provided in Note 8.1 - Financial risk management |
ACTUARIAL ASSUMPTIONS | ||||
(in % and years) | Belgium | Germany | ||
2023 | 2022 | 2023 | 2022 | |
Discount rate | ||||
- Pensions - defined benefit plans and cash balance - best off plans | 3.23% | 3.75% | 3.13% | 3.59% |
- Pensions - defined contribution plans | 3.16% | 3.77% | \u2014% | \u2014% |
- Other | 3.16% | 3.75% | 3.13% | 3.59% |
Expected average salary increase (excluding inflation) | 1.30% | 1.00% | 3.00% | 2.75% |
Expected inflation | 2.10% | 2.10% | 2.25% | 2.50% |
Expected increase in health benefits (including inflation) | 3.10% | 3.10% | 2.25% | 2.25% |
Expected increase in tariff advantages | 2.10% | 2.10% | 0.0 | 0.0 |
Average assumed retirement age | ||||
- Employee | 63.0 | 63.0 | 65.0 | 65.0 |
- Manager | 65.0 | 65.0 | 65.0 | 65.0 |
Life expectancy in years of a pensioner retiring at age 65 at closing date:* | ||||
Life expectancy for a 65 year old male | 19.9 | 19.9 | 20.8 | 20.7 |
Life expectancy for a 65 year old female | 23.6 | 23.6 | 24.2 | 24.1 |
*Mortality tables used: IABE in Belgium, 2018 Heubeck in Germany |
(in years\u00a0) | Belgium | Germany | ||
2023 | 2022 | 2023 | 2022 | |
Weighted average duration of the defined benefit obligation | 6.1 | 8.0 | 24.9 | 23.4 |
Weighted average duration of the defined contribution plans | 10.7 | 9.7 | n.r. | n.r. |
Weighted average duration of the post-employment benefits other than pensions | 12.5 | 13.2 | 13.5 | 12.7 |
In Germany, the liability of the defined contribution plans is completely covered by the plan assets. Therefore, no weighted average duration is necessary and thus not calculated.
The actual return on plan assets in percentage terms for 2023 was positive, ranged between 2.6% and 10.1% (compared with a range of -2.6% to -18.0% in 2022).
Below is an overview of the expected cash outflows for the DB plans:
Future expected cash outflows | < 12 months | 1-5 years | 6 - 10 years |
Pensions | (6.0) | (21.8) | (28.1) |
Other | (3.0) | (10.8) | (12.5) |
Total (in \u20ac million) | (9.0) | (32.6) | (40.6) |
There is some degree of uncertainty linked to the above expected cash outflows which can be explained by the following factors:
\u2022differences between assumptions and actual data can occur, e.g. retirement age and future salary increase;
\u2022the expected cash outflows shown above are based on a closed population and therefore do not incorporate future new hires;
\u2022future premiums are calculated based on the last known aggregate cost rate, which is reviewed on an annual basis and varies depending on the return on plan assets, the actual salary increase as opposed to the assumptions, and unexpected changes in the population.
The undersigned declare that to the best of their knowledge :
\u2022the financial statements, which have been prepared in accordance with applicable accounting policies for financial statements, give a true and fair view of the assets, the financial position and results of Elia and of its subsidiaries included in the consolidation;
SUBSIDIARIES
A subsidiary is an entity that is controlled by Elia Group. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date this control commences until the date that it ceases. The accounting policies of subsidiaries are changed when necessary, in order to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if this results in a deficit balance of the non-controlling interests. Changes to the Group's interest in a non-wholly-owned subsidiary that do not result in a loss of control are accounted for as equity transactions.
ASSOCIATES
Associates are those companies over which Elia Group exerts significant influence, but not control, in terms of their financial and operating policies. Investments in associates are accounted for in the consolidated financial statements in accordance with the equity method. They are initially recognised in the consolidated statement of financial position at cost, with all transaction costs incurred with the acquisition included, and are adjusted thereafter to reflect the Group\u2019s share of the profit or loss and other comprehensive income of the associate. This accounting under the equity method is done from the date that significant influence commences until the date that it ceases. When the Group's share of the losses exceeds its interest in an associate, its carrying amount is reduced to nil and further losses are not recognised except to the extent that the Group has incurred legal or constructive obligations or has made payments on behalf of an associate.
INTERESTS IN JOINT VENTURES
A joint venture is an arrangement under which Elia Group has joint control and has rights to the net assets of the arrangement, as opposed to joint operations, under which the Group has rights to its assets and obligations for its liabilities. Interests in joint ventures are accounted for using the equity method. They are initially recognised at cost price, with all transaction costs incurred with the acquisition included. Subsequent to initial recognition, the consolidated financial statements include the Group's share of the total recognised profits and losses of joint ventures on the basis of the equity method, from the date that joint control commences until the date that it ceases. When the Group's share of the losses exceeds its interest in joint ventures, its carrying amount is reduced to nil and further losses are not recognised except to the extent that the Group has incurred legal or constructive obligations or has made payments on behalf of a joint venture.
NON-CONTROLLING INTERESTS
Non-controlling interests are measured in line with their proportional share of the acquiree's identifiable net assets on the acquisition date.
ELIMINATION OF INTRA-GROUP TRANSACTIONS
Intra-group balances and any unrealised gains or losses or income and expenses arising from intra-group transactions are eliminated when preparing the consolidated financial statements.
FOREIGN CURRENCY TRANSACTIONS AND BALANCES
Transactions in foreign currencies are converted into the functional currency of the Company at the foreign exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies on the reporting date are converted at the foreign exchange rate on that date. Foreign exchange differences arising on conversion are recognised in profit or loss.
Non-monetary assets and liabilities denominated in foreign currencies that are valued in terms of historical cost are converted at the exchange rate on the date of the transaction.
FOREIGN OPERATIONS
A foreign operation is an entity that is a subsidiary, an associate, an interest in a joint venture or a branch of the reporting entity whose activities are based or conducted in a country or currency other than those of the reporting entity.
The financial statements of all group entities that have a functional currency which differ from the Group's presentation currency are translated into the presentation currency as follows:
\u2022assets and liabilities are translated at the exchange rate at the reporting date;
\u2022income and expenses are translated at the average exchange rate of the year.
The Group has opted for the historical cost model.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful life of each component of an item of property, plant and equipment. The useful lives are determined by the regulatory frameworks in Belgium and Germany, which are considered to be the best possible approximation of expected economic lives in the light of current events.
The Group recognises in the carrying amount of an item of property, plant and equipment the subsequent costs of replacing part of such an item when that cost is incurred, but only when it is probable that the future economic benefits embodied in the item will flow to the Group and the cost of the item can be measured reliably. All other costs, such as repair and maintenance costs, are recognised in profit or loss as and when they are incurred.
TYPE OF ASSETS | CATEGORY | RATE |
Administrative buildings | Land and buildings | 1.67 \u2013 2.00% |
Industrial buildings | Land and buildings | 2.00 \u2013 4.00% |
Overhead lines | Machinery and equip. | 2.00 \u2013 4.00% |
Underground cables | Machinery and equip. | 2.00 \u2013 5.00% |
Substations (facilities and machines) | Machinery and equip. | 2.50 \u2013 6.67% |
Remote control | Machinery and equip. | 3.00 \u2013 12.50% |
Dispatching | Machinery and equip. | 4.00 \u2013 10.00% |
Other PPE (fitting out rented buildings) | Other | contractual period |
Vehicles | Furniture and vehicles | 6.67 \u2013 20.00% |
Tools and office furniture | Furniture and vehicles | 6.67 \u2013 20.00% |
Hardware | Furniture and vehicles | 25.00 \u2013 33.00% |
Right of use assets | Leasing | contractual period |
These different types of assets are divided into four main classes: (i) Land and buildings, (ii) Machinery and equipment, (iii) Furniture and vehicles, (iv) Leasing, (v) Other tangible assets and (vi) Assets under construction.
Borrowing costs that are directly attributable to the construction of the qualifying asset are capitalised as part of the cost of that asset.\u00a0
In accordance with IAS 16, when Elia Group has a present, legal or constructive obligation to dismantle the item or restore the site, the initial cost of the item of property, plant and equipment includes an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. A corresponding provision for this obligation is recorded for the amount of the asset component (the dismantling asset) and depreciated over the asset's entire useful life (see also 3.3.13 Provisions).
COMPUTER SOFTWARE
Software licences acquired by the Group are stated at cost less accumulated amortization and impairment.
Expenditure on research activities undertaken with the purpose of developing software within the Group is recognised in profit or loss as it is incurred. Expenditure related to the development phase of software developed within the Group is capitalised if:
\u2022the costs of development can be measured reliably;
\u2022the software is technically and commercially feasible and future economic benefits are probable;
\u2022the Group plans \u2013 and has sufficient resources \u2013 to complete development;
\u2022the Group plans to use the software.
The capitalised expenditure includes the cost of material, direct labour costs and overhead costs that are directly attributable to preparing the software for its use. Other costs are recognised in profit or loss as they are incurred.
LICENCES, PATENTS AND SIMILAR RIGHTS
Expenditure on acquired licences, patents, trademarks and similar rights are capitalised and amortised on a straight-line basis over the contractual period, if any, or the estimated useful life.
AMORTISATION
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful life of intangible assets, unless the useful life is indefinite. Goodwill are tested systematically for impairment on each end of the reporting period. Software is amortised from the date it becomes available for use. The estimated useful lives are as follows:
TYPE OF ASSETS | RATE |
Licences | 20% |
Concessions | contractual period |
Computer software | 20.00 \u2013 25.00% |
LEVIES
In its role as TSOs, Elia Transmission Belgium SA/NV and 50Hertz Transmission GmbH are subject to various public service obligations imposed by their respective governments and/or by regulation mechanisms. These identify public service obligations in various areas (such as promoting the use of renewable energy, social support, fees for the use of the public domain, offshore liabilities) that should be fulfilled by TSOs. The costs incurred by TSOs as they undertake these obligations are fully covered by the tariff \u2018levies\u2019 approved by the regulators in Belgium and Germany. The amounts outstanding (deficit) are reported as a trade and other receivables.
Throughout this process, as the TSOs are agents, the Group opted for a net presentation both at profit or loss and at balance sheet level. These transactions are fully \u201cpassed through\u201d.
See also Note 9.1.4.
TRADE AND OTHER RECEIVABLES
Trade receivables and other receivables are measured at amortised cost minus the appropriate allowance for amounts regarded as unrecoverable.
IMPAIRMENT
For trade receivables and contract assets, the impairment model is based on the expected credit loss model (ECLs). Under IFRS 9 standard, the Group applies a group-wide methodology when calculating the Expected Credit Losses (ECLs).\u00a0 An individual approach is used for customers and other counterparties, for which the change in credit risk is monitored on an individual basis.
Inventories (spare parts) are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price minus the estimated costs of completion and selling expenses. The cost of inventories is based on the weighted-average-cost-price method. The cost includes the expenditure incurred in acquiring the inventories and the direct costs of bringing them to their location and making them operational.
The carrying amount of the Group's assets, excluding inventories and deferred taxes, is reviewed at the end of the reporting period for each asset to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated.
The recoverable amount of goodwill is estimated at the end of each reporting period.
An impairment loss is recognised whenever the carrying amount of such an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. Recognised impairment losses relating to cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units and then to reduce the carrying amount of the other assets in the units on a pro-rata basis.
After recognition of impairment losses, the depreciation costs for the asset will be prospectively adjusted.
CALCULATION OF THE RECOVERABLE AMOUNT
The recoverable amount of intangible assets and property, plant and equipment is determined as the higher of their fair value less costs of disposal and their value in use. In assessing value in use, the expected future cash flows are discounted to their present value using a pre-tax discount rate that reflects both the current market assessment of the time value of money and the risks specific to the asset.
The Group's assets do not generate cash flows that are independent from other assets. The recoverable amount is therefore determined for the cash-generating unit (i.e. the entire high-voltage grid) to which the asset belongs. This is also the level at which the Group administers its goodwill and gathers the economic benefits of acquired goodwill.
REVERSALS OF IMPAIRMENT
An impairment loss with respect to goodwill is not reversed. Impairment loss on other assets is reversed if there have been changes in the estimates used to determine the recoverable amount.
INITIAL RECOGNITION AND MEASUREMENT
The classification of financial assets at initial recognition depends on their contractual cash flow characteristics and the Group\u2019s business model for managing them. The Group initially measures a financial asset at its fair value (for financial assets measured at FVTOCI transaction costs are added).
SUBSEQUENT MEASUREMENT
For purposes of subsequent measurement, financial assets are classified in three categories:
\u2022Financial assets at amortised cost (debt instruments)
\u2022Financial assets measured at fair value through OCI (equity instruments)
\u2022Financial assets measured at fair value through profit and loss
Financial assets at amortised cost
Financial assets at amortised cost are managed with a view to holding them to maturity and collecting contractual cash flows. The financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the Effective Interest Rate (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Financial assets measured at fair value through OCI (equity instruments FVOCI)
Upon initial recognition, the Group irrevocably classifies its equity investments as equity instruments measured at fair value through OCI when the Group does not have significant influence and the assets are not held for trading. This classification is determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case any such gains are recorded in OCI. Equity instruments measured at fair value through OCI are not subject to impairment assessment.
The Group has elected to irrevocably classify non-listed equity investments over which the Group does not have significant influence in this category.
Financial assets measured at fair value through profit and loss (FVTPL)
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. At Elia, this mainly concerns equity instruments (SICAVs) at fair value trough income.
IMPAIRMENT OF FINANCIAL ASSETS
DERIVATIVE FINANCIAL INSTRUMENTS
The Group sometimes uses derivative financial instruments to hedge its exposure to foreign exchange, interest rate and commodity prices risks arising from operating, financing and investment activities. In accordance with its treasury policy, the Group neither holds nor issues derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as instruments held for trading purposes.
Derivative financial instruments are initially recognised at fair value. Any gain or loss resulting from changes in the fair value is immediately booked in the statement of profit or loss. Where derivative financial instruments qualify for hedge accounting, the reflection of any resulting gain or loss depends on the nature of the item being hedged.
The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the end of the reporting period, taking into account the current interest rates and the current creditworthiness of the swap counterparties and the Group. The fair value of forward exchange contracts is their quoted market price at the end of the reporting period, i.e. the present value of the quoted forward price.
DERIVATIVES USED AS HEDGING INSTRUMENTS
Cash flow hedges
Changes in the fair value of the derivative hedging instrument designated as a cash-flow hedge are recognised directly in OCI to the extent that the hedge is effective. If the hedge is ineffective, changes in fair value are recognised in profit or loss.
The Group uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions and firm commitments, as well as forward commodity contracts for its exposure to volatility in the commodity prices. The Group designates only the spot element of forward contracts as a hedged risk. The forward element is considered the cost of hedging and is recognised in OCI and accumulated in a separate component of the statement of financial position under hedging reserves.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, hedge accounting is prospectively discontinued. The cumulative gain or loss previously recognised in OCI remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in OCI is transferred, where justified, to the carrying amount of the asset. In other cases, the amount recognised in OCI is transferred to profit or loss in the same period that the hedged item affects profit or loss.
When a derivative or hedge relationship is terminated, cumulative gains or losses still remain in OCI, provided that the hedged transaction is still expected to occur. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss is removed from OCI and is immediately recognised in profit or loss.
The Group recognises derivatives to hedge the price for the future procurement of the physical requirement for grid losses that is expected in subsequent periods and is covered in each case by short-term procurement transactions on the spot market. These derivatives are measured at fair value in OCI with no effect on profit or loss as part of cash flow hedge accounting; they serve as price hedging of the physical demand for electrical energy to cover grid losses (underlying transaction). Due to the availability and liquidity of futures trading, the hedging period for intended price hedging covers a period of up to two years from the balance sheet date. In this context, the Group pursues a conservative hedging strategy oriented towards the regulatory framework and the ability to roll over the electricity procurement costs incurred, which enables timely and predictable price hedging.
The critical term match method measures effectiveness. If the valuation-relevant parameters of the hedged item and hedging instrument match, it is assumed that an effective hedging relationship exists and that changes in value from both items offset each other. The Group strives for full price hedging of the expected volume of grid loss energy (hedge ratio 1:1).
Hedging of monetary assets and liabilities
SHARE CAPITAL - TRANSACTION COSTS
Transaction costs related to the issuing of capital are deducted from the capital received.
DIVIDENDS
Dividends are recognised as a liability in the period in which they are declared (see note 6.12.1).
HYBRID SECURITIES
Hybrid securities are deeply subordinated securities. With the exception of ordinary shares, hybrid securities rank as the most junior instruments in the capital structure of the Group in an insolvency hierarchy. Hybrid securities are perpetual instruments and do not default on non-payment of coupons (unless such payment was mandatory following a resolution or payment of a dividend to ordinary shareholders).
The holders of hybrid securities have limited influence on the outcome of a bankruptcy proceeding or restructuring outside bankruptcy. Consequently, the holders cannot oblige the Group to pay distributions or redeem the securities in part or in full. Payment of distributions on and redemption of the securities is at our sole discretion. In light of their characteristics, hybrid securities are classified as an equity instrument under IFRS. The associated issue costs are recognised directly in retained earnings.
TREASURY SHARES
Financial liabilities consist of interest-bearing loans and borrowings in the Group. They are initially recognised at fair value, less related transaction costs. Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortised cost price with any difference between amount at initial recognition and redemption value being recognised in profit or loss over the period of the loans on an effective interest basis.
DEFINED-CONTRIBUTION PLANS
In Belgium, contribution based promises, called defined-contribution pension plans under Belgian pension legislation, are classified as defined-benefit plans for accounting purposes due to the legal minimum return to be guaranteed by the employer.
Before 1 January 2016, the legal minimum return was 3.75% on employee contributions, 3.25% on employer contributions and 0% for inactive plan participants.
From 1 January 2016 onwards, the legal minimum return is a variable rate between 1.75% and 3.75%. The interest rate is automatically adapted on 1 January each year based on the average return OLO 10 years over 24 months, with 1.75% as a minimum. As of 1 January 2016, the legal minimum return is 1.75% on employee and employer contributions and 0% for inactive plan participants.
As the plans are funded via a pension fund, the vertical approach is applied, meaning that 1.75% is applied on all the reserves (even before 2016).
The employer needs to finance the deficits related to the \u201cLaw on Supplementary Pensions (LSP) guarantee at any time for the employee contract and at the moment the vested reserves are transferred in case of departure, retirement or liquidation of the pension for the employer contract.
For each plan, the fair value of assets equals the sum of the accrued individual reserves (if any) and the value of the collective fund(s) (if any).
The Defined-Benefit Obligation (DBO) was determined following the Projected Unit Credit (PUC) method. The plan formula (backloaded or not) determines whether the premiums are projected.
In Germany, the defined-contribution plan comprises a fixed pension to be paid to an employee upon retirement, which is usually based on one or more factors such as the employee\u2019s age, years of service and salary.
In both countries, the calculation is performed by an accredited actuary.
DEFINED-BENEFIT PLANS
For defined-benefit plans, which exist in both Belgium and Germany, the pension expenses for each plan are assessed separately on an annual basis by accredited actuaries using the PUC method. The estimated future benefit that employees have earned in return for their service in the current and previous periods is discounted to determine its present value, and the fair value of any plan assets is deducted. The discount rate is the interest rate, at the end of the reporting period, on high quality bonds that have maturity dates approximately equivalent to the terms of the Group's obligations and that are denominated in the currency in which the benefits are expected to be paid.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in profit or loss at the earlier of the following dates:
\u2022when the plan amendment or curtailment occurs; or
\u2022when the entity recognises related restructuring costs under IAS\u00a037 or termination benefits.
Where the calculation results in a benefit to the Group, the recognised asset is limited to the present value of any future refunds from the plan or reductions in future contributions to the plan.
Remeasurements \u2013 comprising actuarial gains and losses, the effect of the asset ceiling (excluding amounts included in net interest on the net defined-benefit liability) and the return on plan assets (excluding amounts included in net interest on the net defined-benefit liability) \u2013 are recognised immediately in the statement of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
REIMBURSEMENT RIGHTS (BELGIUM)
Reimbursement rights are recognised as a separate asset when, and only when, it is virtually certain that another party will reimburse some or all of the expenditure required to settle the corresponding benefit obligation. Reimbursement rights are presented as non-current assets under other financial assets and are measured at fair value. These rights are handled the same way as the corresponding defined-benefit obligation. When the changes in the period result from changes in financial assumptions or from experience adjustments or changes in demographic assumptions, then the asset is adjusted through OCI. The components of the defined-benefit cost are recognised net of amounts relating to changes in the carrying amount of the rights to reimbursement.
OTHER LONG-TERM EMPLOYEE BENEFITS
The Group's net obligation regarding long-term service benefits other than pension plans is assessed on an annual basis by accredited actuaries. The net obligation is calculated using the PUC method and is the amount of future benefit that employees have earned in return for their service in the current and previous periods. The obligation is discounted to its present value, and the fair value of any related assets is deducted. The discount rate is the yield, at the end of the reporting period, on high quality bonds that have maturity dates approximately equivalent to the terms of the Group's obligations and that are denominated in the currency in which the benefits are expected to be paid.
SHORT-TERM EMPLOYEE BENEFITS
A provision is recognised in the balance sheet when the Group has a current legal or constructive obligation as a result of a past event and it is likely that an outflow of economic benefits \u2013 of which a reliable estimate can be made \u2013 will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessment of the time value of money and, where appropriate, of the risks specific to the liability.
The Group\u2019s main long-term provisions are provisions for dismantling obligations. The present value of the obligation at the time of commissioning represents the initial amount of the provision for dismantling with, as the counterpart, an asset for the same amount, which is included in the carrying amount of the related property, plant and equipment and is depreciated over the asset's entire useful life.
Factors having a significant influence on the amount of provisions include:
\u2022cost estimates
\u2022the timing of expenditure ; and
\u2022the discount rate applied to cash flows.
These factors are based on information and estimates deemed by the Group to be the most appropriate as of today.
Trade and other payables are stated at amortised cost.
LEVIES
In its role as a TSO, Elia Transmission Belgium SA/NV and 50Hertz Transmission GmbH are subject to various public service obligations imposed by the Government and/or by regulation mechanisms. These identify public service obligations in various fields (such as promoting the use of renewable energy, social support, fees for the use of the public domain, offshore liability) for fulfilment by TSOs. The costs incurred by TSOs in accordance with these obligations are fully covered by the tariff \u2018levies\u2019 approved by the regulator. The amounts outstanding (surplus) are reported as a trade and other payable.
In this process, as the TSOs are agents, the Group opted for a net presentation both at profit or loss and at balance sheet level. These transactions are fully \u201cpassed through\u201d.
GOVERNMENT GRANTS
Government grants are recognised when it is reasonably certain that the Group will receive such grants and that all underlying conditions will be met. Grants related to an asset are presented under other liabilities and will be recognised in the statement of profit or loss on a systematic basis over the expected useful life of the asset in question. Grants related to expense items are recognised in the statement of profit or loss in the same period as the expenses for which the grant was received. Government grants are presented as other operating income in the statement of profit or loss.
CONTRACT LIABILITIES- LAST MILE CONNECTION
Upon the inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease included in IFRS 16.
THE GROUP AS A LESSEE
The Group recognises a right-of-use asset and a lease liability on the lease commencement date. Assets and liabilities arising from a lease are initially measured on a present value basis and discounted using the Group's best estimate for the weighted average incremental borrowing rate, in case the rate implicit in the lease cannot be readily determined. The Group applies a single discount rate per group of similar contracts, summarised per their duration.
Lease payments included in the measurement of the lease liability comprise fixed payments, including in-substance fixed payments. Variable lease payments are expensed as incurred. As a practical expedient, no distinction is made between lease and non-lease components. Components that do not transfer any goods or services (initial direct costs, prepayments) are excluded from the lease price.
Right of use assets are subsequently reduced by accumulated depreciation, impairment losses and any adjustments resulting from the remeasurement of the lease liability. These assets are depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects the fact that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as that of property and equipment.
The lease liability is subsequently increased by the interest cost on the lease liability and reduced by lease payments made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or a change in the reassessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option not to be exercised.
The Group presents right-of-use assets within \u2018property, plant and equipment\u2019 and lease liabilities within \u2018loans and borrowings\u2019 (current and non-current) in the statement of financial position.
The Group operates in a regulated environment in which tariffs are meant to realise total revenue/income consisting of:
\u2022a reasonable return on invested capital;
\u2022all reasonable costs which are incurred by the Group.
Since the tariffs are based on estimates, there is always a difference between the tariffs that are actually charged and the tariffs that should have been charged (tariff setting agreed with regulator) to cover all reasonable costs of the system operator including a reasonable profit margin for its shareholders.
If the applied tariffs result in a surplus or a deficit at the end of the year, this means that the tariffs charged to end consumers should have been lower or higher respectively (and vice versa). This surplus or deficit is therefore reported in the regulatory deferral account.
The release of the regulatory deferral account will impact future tariffs: incurred regulatory liabilities will decrease future tariffs, whilst incurred regulatory assets will increase future tariffs.
In the absence of an IFRS standard which specifically applies to the treatment of these regulatory deferral accounts, Elia management referred to the requirements of IFRS 14 and the Conceptual Framework for Financial Reporting alongside the latest changes in the IASB project on Rate-regulated Activities to develop the following accounting policy:
\u2022a liability is recognised in the statement of financial position and presented as part of \u201caccruals and deferred income\u201d with respect to the Elia group\u2019s obligation to deduct an amount from the tariffs to be charged to customers in future periods because the total allowed compensation for goods or services already supplied is lower than the amount already charged to customers, or excess revenues has been generated due to higher volumes than initially estimated (regulatory liability);
\u2022an asset is recognised in the statement of financial position with respect to the Elia group\u2019s right to add an amount to the tariffs to be charged to customers in future periods because the total allowed compensation for the goods or services already supplied exceeds the amount already charged to customers or shortage in revenues has occurred due to lower volumes than initially estimated (regulatory asset); and
\u2022the net movement in the regulatory deferral accounts for the period is presented separately in the statement of profit or loss within the line item \u201cnet regulatory income (expense)\u201d.
The amount in the regulatory deferral accounts is reported on an annual basis and assessed by the regulator.
REVENUES
The Group\u2019s main revenues are realised by TSOs which operate in accordance with regulatory frameworks and which have de facto/legal monopolies in their respective control zones. The frameworks which apply in the Group\u2019s main countries of activity are detailed in Note 9 \u2018Regulatory framework and tariffs\u2019.
With regard to the regulated business, each service is based on a standard contract with the customer, mostly with a predefined regulated tariff (unit price multiplied by the volume (injection or offtake) or the reserved capacity (depending on the type of service)), so pricing is not variable. The allocation of the transaction price over the different performance obligations is therefore straightforward (one-to-one relationship). Most of these contracts are concluded for an indefinite period and have general payment terms of 15-30 days.
Considering the business of the Elia group, there are no relevant right-of-return and warranty obligations.
For all services provided by the Group, Elia is the sole and primary party responsible for executing the service and is thus the principal.
However, in its role as a TSO, Elia Transmission Belgium SA/NV and 50Hertz Transmission GmbH are subject to public service obligations imposed by the government/regulation mechanisms. These obligations mainly relate to financial support for the development of renewable energy. TSOs act as agents for these activities, and since the expense/income streams are fully covered by tariffs, they have no impact on the statement of profit and loss. See section \u2018Levies\u2019 of Note 3.3.14 for more information on the accounting treatment.
The Group\u2019s main performance obligations/contract types, their pricing and the revenue recognition method for 2023 can be summarised as follows:
Revenue by category for Elia Transmission Belgium\u00a0
Revenue stream | Nature, customer and timing of satisfaction of performance obligations | Contract \u2013 Price setting |
Grid revenues | ||
Grid connection | Technical studies conducted at the request of grid users, connected directly to the grid with a view to having a new connection built or an existing connection altered. The revenue is recognised at the point in time when the study is delivered. | Contract and tariff approved by regulator. Fixed amount per type of study. |
Last-mile connection is a component of the grid connection contract. At the request of a future grid user, Elia constructs/adjusts a dedicated/ physical connection, known as a last-mile connection, to connect the customer\u2019s facility to Elia\u2019s grid. Although control of the asset is not transferred as such to the grid user, the grid user obtains direct access to the high-voltage grid. The access right transferred by Elia is valuable to the grid user, hence why the grid user compensates Elia in cash. Since the grid user simultaneously enters into a grid connection contract, the two activities (access right and grid connection services) are not distinct and constitute a single performance obligation and interdependence between the contracts. As the total amount of revenue recognised for this single performance obligation, which includes grid connection services, is recognised over the life of the assets, the contract has no specific end date. This component of the grid connection/grid user contract is presented separately\u00a0 (not part of the grid connection/revenues from the revenue cap) because the tariff-setting method is very specific from a regulatory perspective. | Standard contract approved by regulator, but the price is set on the basis of the budget for implementing the connection. | |
The fees charged to grid users/distribution system operators (DSOs) cover the maintenance and operating costs relating to the dedicated connection facilities. The revenue is recognised over time, as this service is performed continuously throughout the contractual term. | Contract and tariff approved by regulator. Tariff is set per asset type (e.g. bay, km of cable). | |
Management and development of grid infrastructure | This component of the access contract signed with access holders/DSOs covers the development and management of the grid with a view to meeting capacity needs and satisfying demand for electricity transmission. The revenue is recognised over time, as providing sufficient capacity and a resilient grid is a service performed continuously throughout the contractual term. | Contract and tariff approved by regulator. EUR per kW/KVA for yearly/monthly peak and power available at access point. |
Management of the electricity system | This component of the access contract signed with access holders/DSOs covers the management and operation of the electricity system and the offtake of additional reactive energy relating to Elia\u2019s grid (different from the connection assets). The revenue is recognised over time, as these services are performed continuously throughout the contractual term. | Contract and tariff approved by regulator. EUR per kW/ kVArh at access point. |
Market integration | This component is part of the access contract signed with access holders/DSOs, and covers (i) services to facilitate the energy market; (ii) services to develop and enhance the integration of an effective and efficient electricity market; (iii) the management of interconnectors and coordination with neighbouring countries and the European authorities; and (iv) the publication of data, as required by transparency obligations. The revenue is recognised over time, as these services are performed continuously throughout the contractual term. | Contract and tariff approved by regulator. EUR per kW at access point. |
Compensation for imbalances | As defined in the BRP contract, the BRP (Balance Responsible Party) has a commitment to ensure a perfect balance between offtake and injection on the grid. In the event of an imbalance caused by a BRP, Elia has to activate the ancillary services, which are then invoiced to the BRP. The revenue is recognised at the point in time when an imbalance occurs. | Contract and tariff/mechanism approved by regulator. Based on market prices, EUR per kW imbalance at access point. |
International revenues | Grid use along borders is organised through half-yearly, quarterly, monthly, weekly, weekend, daily and intra-day auctions. Elia and the regulators decide which auctions are conducted along each border. Auctions are organised through an auction office, which acts as an agent. The auction office collects the revenues paid by the European energy traders, which are ultimately shared between neighbouring TSOs based on the volumes imported/exported on the border. The revenue is recognised at the point in time when an import/export activity occurs. | Framework agreement with parties and auction office. Price is set based on price difference in cross-border market prices. |
Revenue by category for 50Hertz Transmission
Revenue stream | Nature and timing of satisfaction of performance obligations | Contract \u2013 Price setting |
Grid revenues | ||
Revenues from incentive regulation | The \u2018grid use fee\u2019 is charged to grid users/DSOs connected to the grid for the offtake on the onshore grid. This contract is signed with grid users. The revenue is recognised over time, as this service is a performed continuously throughout the contractual term. | Standard contract and grid tariffs defined by regulator. |
Last-mile connection (\"client contribution\") is a component of the \u2018grid use fee\u2019 contract. At the request of a future grid user, 50Hertz constructs a dedicated/physical connection, known as a last-mile connection, to create an interface point to the grid. Although control of the asset is not transferred as such to the grid user, the grid user obtains direct access to the high-voltage grid. The access right transferred by 50Hertz is valuable to the grid user, hence why the grid user compensates Elia in cash. Since the grid user simultaneously enters into a grid connection contract, the two activities (access right and grid connection services) are not distinct and constitute a single performance obligation and interdependence between the contracts. As the total amount of revenue recognised for this single performance obligation, which includes grid connection services, is recognised over the life of the assets, the contract has no specific end date. This component of the grid connection/grid user contract is presented separately (not part of the grid connection/revenues from the revenue cap) because the tariff-setting method is very specific from a regulatory perspective. | Standard contract approved by regulator, but the price is set on the basis of the budget for implementing the connection. | |
Revenues from offshore regulation | This component comprises tariffs charged to grid users/DSOs to cover grid connection costs for offshore wind farms. The revenue is recognised over time, as this service is performed continuously throughout the contractual term | Contract and tariffs predefined in regulatory mechanism. |
Energy revenues | This revenue stream consists of different components | |
Congestion management and redispatch fees are paid by market participants for use of the capacity made available by 50Hertz on specific lines (including use of cross-border assets). This allocation mechanism is governed by transparent, market-oriented procedures. The revenue is recognised at the point in time when it is generated | Standard contracts approved by regulator and tariff mechanism defined in regulatory schemes. | |
Compensation for imbalances Market participants (BRPs) have a commitment to ensure a perfect balance between offtake and injection on the grid. In the event of an imbalance, 50Hertz invoices the market participant to compensate for the costs incurred. The revenue is recognised at the point in time when an imbalance occurs. | Standard contracts approved by regulator and tariff mechanism defined in regulatory schemes. | |
Horizontal reimbursement of lignite back-up costs In its role as a TSO, 50Hertz charges fees to other TSOs for services related to the\u00a0 reserve power required by the legal framework. The revenue is recognised over time, as this service is performed continuously throughout the contractual term. |
Other revenues
Revenue stream | Nature and timing of satisfaction of performance obligations | Contract \u2013 Price setting |
Other revenues | ||
Third-party services | Elia Grid International provides consultancy services to third parties around the world. The revenue is recognised over the completion of the contract. Third-party services are presented in other revenues. | Contract negotiated between EGI and customer. The contract price is set when the contract is concluded with the customer. |
The payment term is generally 30 days from the invoice date. | ||
Commission fee | Re.alto provides a platform through which energy actors (e.g. traders, prosumers) can exchange energy data. re.alto receives a commission on transactions undertaken via the platform. The revenue is recognised at the point in time when the transaction occurs. The commission fee is presented in other revenues. | The commission fee is a fixed percentage on each transaction. |
Others | This mainly covers other services than those described above. The revenue is recognised at the point in time when the service is complete. |
Consequently, all revenue components contain revenue from contracts with customers, i.e. parties that have contracts in place with the Group to obtain services resulting from the Group\u2019s ordinary activities in exchange for a consideration.
OTHER INCOME
Other income is recognised when the related service is performed and no further performance obligations arise.
NET REGULATORY INCOME (EXPENSE) FROM SETTLEMENT MECHANISM
Since the tariffs are based on estimates, there is always a difference between the tariffs that are actually charged and the tariffs that should have been charged (tariff setting is agreed with the regulator) to cover all the system operator\u2019s reasonable costs, including a reasonable profit margin for the shareholders.
If the applied tariffs result in a surplus or deficit at the end of the year, this means that the tariffs charged to consumers/the general public could have been lower or higher. This surplus or deficit is therefore reported in the settlement mechanism deferral account.
OTHER EXPENSES
Property taxes are directly recognised in full as soon as ownership is certain (generally on 1\u00a0January of the year in question). However, these costs, which are considered to be non-controllable costs under the regulatory framework, are recorded as revenue through the settlement mechanism for the same amount, resulting in zero impact in terms of profit or loss.
FINANCE INCOME AND EXPENSES
Finance expenses comprise interest payable on borrowings (calculated using the effective interest rate method), interest on lease liabilities, foreign-exchange losses, gains on currency hedging instruments that offset currency losses, results on interest-rate hedging instruments, losses on hedging instruments that are not part of a hedge accounting relationship, losses on financial assets classified as being for trading purposes and impairment losses on financial assets as well as any losses from hedge ineffectiveness.
Finance income includes interest receivables on bank deposits, which are recognised in profit or loss using the effective interest rate method as they accrue.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.
INCOME TAXES
Income taxes comprise current and deferred tax. Income tax expense is recognised in profit or loss, except where it relates to items recognised directly in equity. Taxes on hybrid coupons are recognised in the statement of profit and loss as these are a tax on profits whereas the hybrid coupon itself is recognised directly in equity.
Current tax is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustments to tax payable in relation to previous years.
Deferred tax is recognised, using the balance sheet method, on temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit; and differences relating to investments in subsidiaries and joint ventures where these will
probably not be reversed in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising from initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they are reversed, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and the deferred items relate to income taxes levied by the same tax authority on the same taxable entity or on different tax entities, but they are intended to settle current tax liabilities and assets on a net basis, or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised only to the extent that it is likely that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer likely that the related tax benefit will be realised.
SUBSIDIARIES
A subsidiary is an entity that is controlled by Elia Group. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date this control commences until the date that it ceases. The accounting policies of subsidiaries are changed when necessary, in order to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if this results in a deficit balance of the non-controlling interests. Changes to the Group's interest in a non-wholly-owned subsidiary that do not result in a loss of control are accounted for as equity transactions.
ASSOCIATES
Associates are those companies over which Elia Group exerts significant influence, but not control, in terms of their financial and operating policies. Investments in associates are accounted for in the consolidated financial statements in accordance with the equity method. They are initially recognised in the consolidated statement of financial position at cost, with all transaction costs incurred with the acquisition included, and are adjusted thereafter to reflect the Group\u2019s share of the profit or loss and other comprehensive income of the associate. This accounting under the equity method is done from the date that significant influence commences until the date that it ceases. When the Group's share of the losses exceeds its interest in an associate, its carrying amount is reduced to nil and further losses are not recognised except to the extent that the Group has incurred legal or constructive obligations or has made payments on behalf of an associate.
INTERESTS IN JOINT VENTURES
A joint venture is an arrangement under which Elia Group has joint control and has rights to the net assets of the arrangement, as opposed to joint operations, under which the Group has rights to its assets and obligations for its liabilities. Interests in joint ventures are accounted for using the equity method. They are initially recognised at cost price, with all transaction costs incurred with the acquisition included. Subsequent to initial recognition, the consolidated financial statements include the Group's share of the total recognised profits and losses of joint ventures on the basis of the equity method, from the date that joint control commences until the date that it ceases. When the Group's share of the losses exceeds its interest in joint ventures, its carrying amount is reduced to nil and further losses are not recognised except to the extent that the Group has incurred legal or constructive obligations or has made payments on behalf of a joint venture.
NON-CONTROLLING INTERESTS
Non-controlling interests are measured in line with their proportional share of the acquiree's identifiable net assets on the acquisition date.
ELIMINATION OF INTRA-GROUP TRANSACTIONS
Intra-group balances and any unrealised gains or losses or income and expenses arising from intra-group transactions are eliminated when preparing the consolidated financial statements.
SUBSIDIARIES
A subsidiary is an entity that is controlled by Elia Group. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date this control commences until the date that it ceases. The accounting policies of subsidiaries are changed when necessary, in order to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if this results in a deficit balance of the non-controlling interests. Changes to the Group's interest in a non-wholly-owned subsidiary that do not result in a loss of control are accounted for as equity transactions.
ASSOCIATES
Associates are those companies over which Elia Group exerts significant influence, but not control, in terms of their financial and operating policies. Investments in associates are accounted for in the consolidated financial statements in accordance with the equity method. They are initially recognised in the consolidated statement of financial position at cost, with all transaction costs incurred with the acquisition included, and are adjusted thereafter to reflect the Group\u2019s share of the profit or loss and other comprehensive income of the associate. This accounting under the equity method is done from the date that significant influence commences until the date that it ceases. When the Group's share of the losses exceeds its interest in an associate, its carrying amount is reduced to nil and further losses are not recognised except to the extent that the Group has incurred legal or constructive obligations or has made payments on behalf of an associate.
INTERESTS IN JOINT VENTURES
A joint venture is an arrangement under which Elia Group has joint control and has rights to the net assets of the arrangement, as opposed to joint operations, under which the Group has rights to its assets and obligations for its liabilities. Interests in joint ventures are accounted for using the equity method. They are initially recognised at cost price, with all transaction costs incurred with the acquisition included. Subsequent to initial recognition, the consolidated financial statements include the Group's share of the total recognised profits and losses of joint ventures on the basis of the equity method, from the date that joint control commences until the date that it ceases. When the Group's share of the losses exceeds its interest in joint ventures, its carrying amount is reduced to nil and further losses are not recognised except to the extent that the Group has incurred legal or constructive obligations or has made payments on behalf of a joint venture.
NON-CONTROLLING INTERESTS
Non-controlling interests are measured in line with their proportional share of the acquiree's identifiable net assets on the acquisition date.
ELIMINATION OF INTRA-GROUP TRANSACTIONS
Intra-group balances and any unrealised gains or losses or income and expenses arising from intra-group transactions are eliminated when preparing the consolidated financial statements.
SUBSIDIARIES
A subsidiary is an entity that is controlled by Elia Group. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date this control commences until the date that it ceases. The accounting policies of subsidiaries are changed when necessary, in order to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if this results in a deficit balance of the non-controlling interests. Changes to the Group's interest in a non-wholly-owned subsidiary that do not result in a loss of control are accounted for as equity transactions.
ASSOCIATES
Associates are those companies over which Elia Group exerts significant influence, but not control, in terms of their financial and operating policies. Investments in associates are accounted for in the consolidated financial statements in accordance with the equity method. They are initially recognised in the consolidated statement of financial position at cost, with all transaction costs incurred with the acquisition included, and are adjusted thereafter to reflect the Group\u2019s share of the profit or loss and other comprehensive income of the associate. This accounting under the equity method is done from the date that significant influence commences until the date that it ceases. When the Group's share of the losses exceeds its interest in an associate, its carrying amount is reduced to nil and further losses are not recognised except to the extent that the Group has incurred legal or constructive obligations or has made payments on behalf of an associate.
INTERESTS IN JOINT VENTURES
ASSOCIATES
Associates are those companies over which Elia Group exerts significant influence, but not control, in terms of their financial and operating policies. Investments in associates are accounted for in the consolidated financial statements in accordance with the equity method. They are initially recognised in the consolidated statement of financial position at cost, with all transaction costs incurred with the acquisition included, and are adjusted thereafter to reflect the Group\u2019s share of the profit or loss and other comprehensive income of the associate. This accounting under the equity method is done from the date that significant influence commences until the date that it ceases. When the Group's share of the losses exceeds its interest in an associate, its carrying amount is reduced to nil and further losses are not recognised except to the extent that the Group has incurred legal or constructive obligations or has made payments on behalf of an associate.
INTERESTS IN JOINT VENTURES
NON-CONTROLLING INTERESTS
FOREIGN CURRENCY TRANSACTIONS AND BALANCES
Transactions in foreign currencies are converted into the functional currency of the Company at the foreign exchange rate on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies on the reporting date are converted at the foreign exchange rate on that date. Foreign exchange differences arising on conversion are recognised in profit or loss.
Non-monetary assets and liabilities denominated in foreign currencies that are valued in terms of historical cost are converted at the exchange rate on the date of the transaction.
FOREIGN OPERATIONS
A foreign operation is an entity that is a subsidiary, an associate, an interest in a joint venture or a branch of the reporting entity whose activities are based or conducted in a country or currency other than those of the reporting entity.
The financial statements of all group entities that have a functional currency which differ from the Group's presentation currency are translated into the presentation currency as follows:
\u2022assets and liabilities are translated at the exchange rate at the reporting date;
\u2022income and expenses are translated at the average exchange rate of the year.
The Group has opted for the historical cost model.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful life of each component of an item of property, plant and equipment. The useful lives are determined by the regulatory frameworks in Belgium and Germany, which are considered to be the best possible approximation of expected economic lives in the light of current events.
The Group recognises in the carrying amount of an item of property, plant and equipment the subsequent costs of replacing part of such an item when that cost is incurred, but only when it is probable that the future economic benefits embodied in the item will flow to the Group and the cost of the item can be measured reliably. All other costs, such as repair and maintenance costs, are recognised in profit or loss as and when they are incurred.
TYPE OF ASSETS | CATEGORY | RATE |
Administrative buildings | Land and buildings | 1.67 \u2013 2.00% |
Industrial buildings | Land and buildings | 2.00 \u2013 4.00% |
Overhead lines | Machinery and equip. | 2.00 \u2013 4.00% |
Underground cables | Machinery and equip. | 2.00 \u2013 5.00% |
Substations (facilities and machines) | Machinery and equip. | 2.50 \u2013 6.67% |
Remote control | Machinery and equip. | 3.00 \u2013 12.50% |
Dispatching | Machinery and equip. | 4.00 \u2013 10.00% |
Other PPE (fitting out rented buildings) | Other | contractual period |
Vehicles | Furniture and vehicles | 6.67 \u2013 20.00% |
Tools and office furniture | Furniture and vehicles | 6.67 \u2013 20.00% |
Hardware | Furniture and vehicles | 25.00 \u2013 33.00% |
Right of use assets | Leasing | contractual period |
These different types of assets are divided into four main classes: (i) Land and buildings, (ii) Machinery and equipment, (iii) Furniture and vehicles, (iv) Leasing, (v) Other tangible assets and (vi) Assets under construction.
Borrowing costs that are directly attributable to the construction of the qualifying asset are capitalised as part of the cost of that asset.\u00a0
In accordance with IAS 16, when Elia Group has a present, legal or constructive obligation to dismantle the item or restore the site, the initial cost of the item of property, plant and equipment includes an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. A corresponding provision for this obligation is recorded for the amount of the asset component (the dismantling asset) and depreciated over the asset's entire useful life (see also 3.3.13 Provisions).
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful life of each component of an item of property, plant and equipment. The useful lives are determined by the regulatory frameworks in Belgium and Germany, which are considered to be the best possible approximation of expected economic lives in the light of current events.
The Group recognises in the carrying amount of an item of property, plant and equipment the subsequent costs of replacing part of such an item when that cost is incurred, but only when it is probable that the future economic benefits embodied in the item will flow to the Group and the cost of the item can be measured reliably. All other costs, such as repair and maintenance costs, are recognised in profit or loss as and when they are incurred.
TYPE OF ASSETS | CATEGORY | RATE |
Administrative buildings | Land and buildings | 1.67 \u2013 2.00% |
Industrial buildings | Land and buildings | 2.00 \u2013 4.00% |
Overhead lines | Machinery and equip. | 2.00 \u2013 4.00% |
Underground cables | Machinery and equip. | 2.00 \u2013 5.00% |
Substations (facilities and machines) | Machinery and equip. | 2.50 \u2013 6.67% |
Remote control | Machinery and equip. | 3.00 \u2013 12.50% |
Dispatching | Machinery and equip. | 4.00 \u2013 10.00% |
Other PPE (fitting out rented buildings) | Other | contractual period |
Vehicles | Furniture and vehicles | 6.67 \u2013 20.00% |
Tools and office furniture | Furniture and vehicles | 6.67 \u2013 20.00% |
Hardware | Furniture and vehicles | 25.00 \u2013 33.00% |
Right of use assets | Leasing | contractual period |
In accordance with IAS 16, when Elia Group has a present, legal or constructive obligation to dismantle the item or restore the site, the initial cost of the item of property, plant and equipment includes an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. A corresponding provision for this obligation is recorded for the amount of the asset component (the dismantling asset) and depreciated over the asset's entire useful life (see also 3.3.13 Provisions).
The Group\u2019s main long-term provisions are provisions for dismantling obligations. The present value of the obligation at the time of commissioning represents the initial amount of the provision for dismantling with, as the counterpart, an asset for the same amount, which is included in the carrying amount of the related property, plant and equipment and is depreciated over the asset's entire useful life.
Factors having a significant influence on the amount of provisions include:
\u2022cost estimates
\u2022the timing of expenditure ; and
\u2022the discount rate applied to cash flows.
These factors are based on information and estimates deemed by the Group to be the most appropriate as of today.
COMPUTER SOFTWARE
Software licences acquired by the Group are stated at cost less accumulated amortization and impairment.
Expenditure on research activities undertaken with the purpose of developing software within the Group is recognised in profit or loss as it is incurred. Expenditure related to the development phase of software developed within the Group is capitalised if:
\u2022the costs of development can be measured reliably;
\u2022the software is technically and commercially feasible and future economic benefits are probable;
\u2022the Group plans \u2013 and has sufficient resources \u2013 to complete development;
\u2022the Group plans to use the software.
The capitalised expenditure includes the cost of material, direct labour costs and overhead costs that are directly attributable to preparing the software for its use. Other costs are recognised in profit or loss as they are incurred.
LICENCES, PATENTS AND SIMILAR RIGHTS
Expenditure on acquired licences, patents, trademarks and similar rights are capitalised and amortised on a straight-line basis over the contractual period, if any, or the estimated useful life.
AMORTISATION
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful life of intangible assets, unless the useful life is indefinite. Goodwill are tested systematically for impairment on each end of the reporting period. Software is amortised from the date it becomes available for use. The estimated useful lives are as follows:
TYPE OF ASSETS | RATE |
Licences | 20% |
Concessions | contractual period |
Computer software | 20.00 \u2013 25.00% |
COMPUTER SOFTWARE
Software licences acquired by the Group are stated at cost less accumulated amortization and impairment.
Expenditure on research activities undertaken with the purpose of developing software within the Group is recognised in profit or loss as it is incurred. Expenditure related to the development phase of software developed within the Group is capitalised if:
\u2022the costs of development can be measured reliably;
\u2022the software is technically and commercially feasible and future economic benefits are probable;
\u2022the Group plans \u2013 and has sufficient resources \u2013 to complete development;
\u2022the Group plans to use the software.
The capitalised expenditure includes the cost of material, direct labour costs and overhead costs that are directly attributable to preparing the software for its use. Other costs are recognised in profit or loss as they are incurred.
LICENCES, PATENTS AND SIMILAR RIGHTS
Expenditure on acquired licences, patents, trademarks and similar rights are capitalised and amortised on a straight-line basis over the contractual period, if any, or the estimated useful life.
AMORTISATION
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful life of intangible assets, unless the useful life is indefinite. Goodwill are tested systematically for impairment on each end of the reporting period. Software is amortised from the date it becomes available for use. The estimated useful lives are as follows:
TYPE OF ASSETS | RATE |
Licences | 20% |
Concessions | contractual period |
Computer software | 20.00 \u2013 25.00% |
COMPUTER SOFTWARE
Software licences acquired by the Group are stated at cost less accumulated amortization and impairment.
Expenditure on research activities undertaken with the purpose of developing software within the Group is recognised in profit or loss as it is incurred. Expenditure related to the development phase of software developed within the Group is capitalised if:
\u2022the costs of development can be measured reliably;
\u2022the software is technically and commercially feasible and future economic benefits are probable;
\u2022the Group plans \u2013 and has sufficient resources \u2013 to complete development;
\u2022the Group plans to use the software.
The capitalised expenditure includes the cost of material, direct labour costs and overhead costs that are directly attributable to preparing the software for its use. Other costs are recognised in profit or loss as they are incurred.
LICENCES, PATENTS AND SIMILAR RIGHTS
Expenditure on acquired licences, patents, trademarks and similar rights are capitalised and amortised on a straight-line basis over the contractual period, if any, or the estimated useful life.
LEVIES
In its role as TSOs, Elia Transmission Belgium SA/NV and 50Hertz Transmission GmbH are subject to various public service obligations imposed by their respective governments and/or by regulation mechanisms. These identify public service obligations in various areas (such as promoting the use of renewable energy, social support, fees for the use of the public domain, offshore liabilities) that should be fulfilled by TSOs. The costs incurred by TSOs as they undertake these obligations are fully covered by the tariff \u2018levies\u2019 approved by the regulators in Belgium and Germany. The amounts outstanding (deficit) are reported as a trade and other receivables.
Throughout this process, as the TSOs are agents, the Group opted for a net presentation both at profit or loss and at balance sheet level. These transactions are fully \u201cpassed through\u201d.
See also Note 9.1.4.
TRADE AND OTHER RECEIVABLES
Trade receivables and other receivables are measured at amortised cost minus the appropriate allowance for amounts regarded as unrecoverable.
IMPAIRMENT
For trade receivables and contract assets, the impairment model is based on the expected credit loss model (ECLs). Under IFRS 9 standard, the Group applies a group-wide methodology when calculating the Expected Credit Losses (ECLs).\u00a0 An individual approach is used for customers and other counterparties, for which the change in credit risk is monitored on an individual basis.
INITIAL RECOGNITION AND MEASUREMENT
The classification of financial assets at initial recognition depends on their contractual cash flow characteristics and the Group\u2019s business model for managing them. The Group initially measures a financial asset at its fair value (for financial assets measured at FVTOCI transaction costs are added).
SUBSEQUENT MEASUREMENT
For purposes of subsequent measurement, financial assets are classified in three categories:
\u2022Financial assets at amortised cost (debt instruments)
\u2022Financial assets measured at fair value through OCI (equity instruments)
\u2022Financial assets measured at fair value through profit and loss
Financial assets at amortised cost
Financial assets at amortised cost are managed with a view to holding them to maturity and collecting contractual cash flows. The financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the Effective Interest Rate (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Financial assets measured at fair value through OCI (equity instruments FVOCI)
Upon initial recognition, the Group irrevocably classifies its equity investments as equity instruments measured at fair value through OCI when the Group does not have significant influence and the assets are not held for trading. This classification is determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case any such gains are recorded in OCI. Equity instruments measured at fair value through OCI are not subject to impairment assessment.
The Group has elected to irrevocably classify non-listed equity investments over which the Group does not have significant influence in this category.
Financial assets measured at fair value through profit and loss (FVTPL)
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. At Elia, this mainly concerns equity instruments (SICAVs) at fair value trough income.
IMPAIRMENT OF FINANCIAL ASSETS
LEVIES
In its role as TSOs, Elia Transmission Belgium SA/NV and 50Hertz Transmission GmbH are subject to various public service obligations imposed by their respective governments and/or by regulation mechanisms. These identify public service obligations in various areas (such as promoting the use of renewable energy, social support, fees for the use of the public domain, offshore liabilities) that should be fulfilled by TSOs. The costs incurred by TSOs as they undertake these obligations are fully covered by the tariff \u2018levies\u2019 approved by the regulators in Belgium and Germany. The amounts outstanding (deficit) are reported as a trade and other receivables.
Throughout this process, as the TSOs are agents, the Group opted for a net presentation both at profit or loss and at balance sheet level. These transactions are fully \u201cpassed through\u201d.
See also Note 9.1.4.
TRADE AND OTHER RECEIVABLES
Trade receivables and other receivables are measured at amortised cost minus the appropriate allowance for amounts regarded as unrecoverable.
IMPAIRMENT
For trade receivables and contract assets, the impairment model is based on the expected credit loss model (ECLs). Under IFRS 9 standard, the Group applies a group-wide methodology when calculating the Expected Credit Losses (ECLs).\u00a0 An individual approach is used for customers and other counterparties, for which the change in credit risk is monitored on an individual basis.
INITIAL RECOGNITION AND MEASUREMENT
The classification of financial assets at initial recognition depends on their contractual cash flow characteristics and the Group\u2019s business model for managing them. The Group initially measures a financial asset at its fair value (for financial assets measured at FVTOCI transaction costs are added).
SUBSEQUENT MEASUREMENT
For purposes of subsequent measurement, financial assets are classified in three categories:
\u2022Financial assets at amortised cost (debt instruments)
\u2022Financial assets measured at fair value through OCI (equity instruments)
\u2022Financial assets measured at fair value through profit and loss
Financial assets at amortised cost
Financial assets at amortised cost are managed with a view to holding them to maturity and collecting contractual cash flows. The financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the Effective Interest Rate (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Financial assets measured at fair value through OCI (equity instruments FVOCI)
Upon initial recognition, the Group irrevocably classifies its equity investments as equity instruments measured at fair value through OCI when the Group does not have significant influence and the assets are not held for trading. This classification is determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case any such gains are recorded in OCI. Equity instruments measured at fair value through OCI are not subject to impairment assessment.
The Group has elected to irrevocably classify non-listed equity investments over which the Group does not have significant influence in this category.
Financial assets measured at fair value through profit and loss (FVTPL)
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. At Elia, this mainly concerns equity instruments (SICAVs) at fair value trough income.
IMPAIRMENT OF FINANCIAL ASSETS
DERIVATIVE FINANCIAL INSTRUMENTS
The Group sometimes uses derivative financial instruments to hedge its exposure to foreign exchange, interest rate and commodity prices risks arising from operating, financing and investment activities. In accordance with its treasury policy, the Group neither holds nor issues derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as instruments held for trading purposes.
Derivative financial instruments are initially recognised at fair value. Any gain or loss resulting from changes in the fair value is immediately booked in the statement of profit or loss. Where derivative financial instruments qualify for hedge accounting, the reflection of any resulting gain or loss depends on the nature of the item being hedged.
The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the end of the reporting period, taking into account the current interest rates and the current creditworthiness of the swap counterparties and the Group. The fair value of forward exchange contracts is their quoted market price at the end of the reporting period, i.e. the present value of the quoted forward price.
DERIVATIVES USED AS HEDGING INSTRUMENTS
Cash flow hedges
Changes in the fair value of the derivative hedging instrument designated as a cash-flow hedge are recognised directly in OCI to the extent that the hedge is effective. If the hedge is ineffective, changes in fair value are recognised in profit or loss.
The Group uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions and firm commitments, as well as forward commodity contracts for its exposure to volatility in the commodity prices. The Group designates only the spot element of forward contracts as a hedged risk. The forward element is considered the cost of hedging and is recognised in OCI and accumulated in a separate component of the statement of financial position under hedging reserves.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, hedge accounting is prospectively discontinued. The cumulative gain or loss previously recognised in OCI remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in OCI is transferred, where justified, to the carrying amount of the asset. In other cases, the amount recognised in OCI is transferred to profit or loss in the same period that the hedged item affects profit or loss.
When a derivative or hedge relationship is terminated, cumulative gains or losses still remain in OCI, provided that the hedged transaction is still expected to occur. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss is removed from OCI and is immediately recognised in profit or loss.
The Group recognises derivatives to hedge the price for the future procurement of the physical requirement for grid losses that is expected in subsequent periods and is covered in each case by short-term procurement transactions on the spot market. These derivatives are measured at fair value in OCI with no effect on profit or loss as part of cash flow hedge accounting; they serve as price hedging of the physical demand for electrical energy to cover grid losses (underlying transaction). Due to the availability and liquidity of futures trading, the hedging period for intended price hedging covers a period of up to two years from the balance sheet date. In this context, the Group pursues a conservative hedging strategy oriented towards the regulatory framework and the ability to roll over the electricity procurement costs incurred, which enables timely and predictable price hedging.
The critical term match method measures effectiveness. If the valuation-relevant parameters of the hedged item and hedging instrument match, it is assumed that an effective hedging relationship exists and that changes in value from both items offset each other. The Group strives for full price hedging of the expected volume of grid loss energy (hedge ratio 1:1).
Hedging of monetary assets and liabilities
HYBRID SECURITIES
Hybrid securities are deeply subordinated securities. With the exception of ordinary shares, hybrid securities rank as the most junior instruments in the capital structure of the Group in an insolvency hierarchy. Hybrid securities are perpetual instruments and do not default on non-payment of coupons (unless such payment was mandatory following a resolution or payment of a dividend to ordinary shareholders).
The holders of hybrid securities have limited influence on the outcome of a bankruptcy proceeding or restructuring outside bankruptcy. Consequently, the holders cannot oblige the Group to pay distributions or redeem the securities in part or in full. Payment of distributions on and redemption of the securities is at our sole discretion. In light of their characteristics, hybrid securities are classified as an equity instrument under IFRS. The associated issue costs are recognised directly in retained earnings.
Financial liabilities consist of interest-bearing loans and borrowings in the Group. They are initially recognised at fair value, less related transaction costs. Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortised cost price with any difference between amount at initial recognition and redemption value being recognised in profit or loss over the period of the loans on an effective interest basis.
Trade and other payables are stated at amortised cost.
LEVIES
In its role as a TSO, Elia Transmission Belgium SA/NV and 50Hertz Transmission GmbH are subject to various public service obligations imposed by the Government and/or by regulation mechanisms. These identify public service obligations in various fields (such as promoting the use of renewable energy, social support, fees for the use of the public domain, offshore liability) for fulfilment by TSOs. The costs incurred by TSOs in accordance with these obligations are fully covered by the tariff \u2018levies\u2019 approved by the regulator. The amounts outstanding (surplus) are reported as a trade and other payable.
In this process, as the TSOs are agents, the Group opted for a net presentation both at profit or loss and at balance sheet level. These transactions are fully \u201cpassed through\u201d.
LEVIES
In its role as TSOs, Elia Transmission Belgium SA/NV and 50Hertz Transmission GmbH are subject to various public service obligations imposed by their respective governments and/or by regulation mechanisms. These identify public service obligations in various areas (such as promoting the use of renewable energy, social support, fees for the use of the public domain, offshore liabilities) that should be fulfilled by TSOs. The costs incurred by TSOs as they undertake these obligations are fully covered by the tariff \u2018levies\u2019 approved by the regulators in Belgium and Germany. The amounts outstanding (deficit) are reported as a trade and other receivables.
Throughout this process, as the TSOs are agents, the Group opted for a net presentation both at profit or loss and at balance sheet level. These transactions are fully \u201cpassed through\u201d.
See also Note 9.1.4.
TRADE AND OTHER RECEIVABLES
Trade receivables and other receivables are measured at amortised cost minus the appropriate allowance for amounts regarded as unrecoverable.
IMPAIRMENT
For trade receivables and contract assets, the impairment model is based on the expected credit loss model (ECLs). Under IFRS 9 standard, the Group applies a group-wide methodology when calculating the Expected Credit Losses (ECLs).\u00a0 An individual approach is used for customers and other counterparties, for which the change in credit risk is monitored on an individual basis.
IMPAIRMENT
For trade receivables and contract assets, the impairment model is based on the expected credit loss model (ECLs). Under IFRS 9 standard, the Group applies a group-wide methodology when calculating the Expected Credit Losses (ECLs).\u00a0 An individual approach is used for customers and other counterparties, for which the change in credit risk is monitored on an individual basis.
The carrying amount of the Group's assets, excluding inventories and deferred taxes, is reviewed at the end of the reporting period for each asset to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated.
The recoverable amount of goodwill is estimated at the end of each reporting period.
An impairment loss is recognised whenever the carrying amount of such an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. Recognised impairment losses relating to cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units and then to reduce the carrying amount of the other assets in the units on a pro-rata basis.
After recognition of impairment losses, the depreciation costs for the asset will be prospectively adjusted.
CALCULATION OF THE RECOVERABLE AMOUNT
The recoverable amount of intangible assets and property, plant and equipment is determined as the higher of their fair value less costs of disposal and their value in use. In assessing value in use, the expected future cash flows are discounted to their present value using a pre-tax discount rate that reflects both the current market assessment of the time value of money and the risks specific to the asset.
The Group's assets do not generate cash flows that are independent from other assets. The recoverable amount is therefore determined for the cash-generating unit (i.e. the entire high-voltage grid) to which the asset belongs. This is also the level at which the Group administers its goodwill and gathers the economic benefits of acquired goodwill.
REVERSALS OF IMPAIRMENT
An impairment loss with respect to goodwill is not reversed. Impairment loss on other assets is reversed if there have been changes in the estimates used to determine the recoverable amount.
INITIAL RECOGNITION AND MEASUREMENT
The classification of financial assets at initial recognition depends on their contractual cash flow characteristics and the Group\u2019s business model for managing them. The Group initially measures a financial asset at its fair value (for financial assets measured at FVTOCI transaction costs are added).
SUBSEQUENT MEASUREMENT
For purposes of subsequent measurement, financial assets are classified in three categories:
\u2022Financial assets at amortised cost (debt instruments)
\u2022Financial assets measured at fair value through OCI (equity instruments)
\u2022Financial assets measured at fair value through profit and loss
Financial assets at amortised cost
Financial assets at amortised cost are managed with a view to holding them to maturity and collecting contractual cash flows. The financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the Effective Interest Rate (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Financial assets measured at fair value through OCI (equity instruments FVOCI)
Upon initial recognition, the Group irrevocably classifies its equity investments as equity instruments measured at fair value through OCI when the Group does not have significant influence and the assets are not held for trading. This classification is determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case any such gains are recorded in OCI. Equity instruments measured at fair value through OCI are not subject to impairment assessment.
The Group has elected to irrevocably classify non-listed equity investments over which the Group does not have significant influence in this category.
Financial assets measured at fair value through profit and loss (FVTPL)
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. At Elia, this mainly concerns equity instruments (SICAVs) at fair value trough income.
IMPAIRMENT OF FINANCIAL ASSETS
Inventories (spare parts) are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price minus the estimated costs of completion and selling expenses. The cost of inventories is based on the weighted-average-cost-price method. The cost includes the expenditure incurred in acquiring the inventories and the direct costs of bringing them to their location and making them operational.
The carrying amount of the Group's assets, excluding inventories and deferred taxes, is reviewed at the end of the reporting period for each asset to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated.
The recoverable amount of goodwill is estimated at the end of each reporting period.
An impairment loss is recognised whenever the carrying amount of such an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss. Recognised impairment losses relating to cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units and then to reduce the carrying amount of the other assets in the units on a pro-rata basis.
After recognition of impairment losses, the depreciation costs for the asset will be prospectively adjusted.
CALCULATION OF THE RECOVERABLE AMOUNT
The recoverable amount of intangible assets and property, plant and equipment is determined as the higher of their fair value less costs of disposal and their value in use. In assessing value in use, the expected future cash flows are discounted to their present value using a pre-tax discount rate that reflects both the current market assessment of the time value of money and the risks specific to the asset.
The Group's assets do not generate cash flows that are independent from other assets. The recoverable amount is therefore determined for the cash-generating unit (i.e. the entire high-voltage grid) to which the asset belongs. This is also the level at which the Group administers its goodwill and gathers the economic benefits of acquired goodwill.
REVERSALS OF IMPAIRMENT
An impairment loss with respect to goodwill is not reversed. Impairment loss on other assets is reversed if there have been changes in the estimates used to determine the recoverable amount.
Financial assets measured at fair value through profit and loss (FVTPL)
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. At Elia, this mainly concerns equity instruments (SICAVs) at fair value trough income.
IMPAIRMENT OF FINANCIAL ASSETS
DERIVATIVE FINANCIAL INSTRUMENTS
The Group sometimes uses derivative financial instruments to hedge its exposure to foreign exchange, interest rate and commodity prices risks arising from operating, financing and investment activities. In accordance with its treasury policy, the Group neither holds nor issues derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as instruments held for trading purposes.
Derivative financial instruments are initially recognised at fair value. Any gain or loss resulting from changes in the fair value is immediately booked in the statement of profit or loss. Where derivative financial instruments qualify for hedge accounting, the reflection of any resulting gain or loss depends on the nature of the item being hedged.
The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the end of the reporting period, taking into account the current interest rates and the current creditworthiness of the swap counterparties and the Group. The fair value of forward exchange contracts is their quoted market price at the end of the reporting period, i.e. the present value of the quoted forward price.
DERIVATIVES USED AS HEDGING INSTRUMENTS
Cash flow hedges
Changes in the fair value of the derivative hedging instrument designated as a cash-flow hedge are recognised directly in OCI to the extent that the hedge is effective. If the hedge is ineffective, changes in fair value are recognised in profit or loss.
The Group uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions and firm commitments, as well as forward commodity contracts for its exposure to volatility in the commodity prices. The Group designates only the spot element of forward contracts as a hedged risk. The forward element is considered the cost of hedging and is recognised in OCI and accumulated in a separate component of the statement of financial position under hedging reserves.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, hedge accounting is prospectively discontinued. The cumulative gain or loss previously recognised in OCI remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in OCI is transferred, where justified, to the carrying amount of the asset. In other cases, the amount recognised in OCI is transferred to profit or loss in the same period that the hedged item affects profit or loss.
When a derivative or hedge relationship is terminated, cumulative gains or losses still remain in OCI, provided that the hedged transaction is still expected to occur. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss is removed from OCI and is immediately recognised in profit or loss.
The Group recognises derivatives to hedge the price for the future procurement of the physical requirement for grid losses that is expected in subsequent periods and is covered in each case by short-term procurement transactions on the spot market. These derivatives are measured at fair value in OCI with no effect on profit or loss as part of cash flow hedge accounting; they serve as price hedging of the physical demand for electrical energy to cover grid losses (underlying transaction). Due to the availability and liquidity of futures trading, the hedging period for intended price hedging covers a period of up to two years from the balance sheet date. In this context, the Group pursues a conservative hedging strategy oriented towards the regulatory framework and the ability to roll over the electricity procurement costs incurred, which enables timely and predictable price hedging.
The critical term match method measures effectiveness. If the valuation-relevant parameters of the hedged item and hedging instrument match, it is assumed that an effective hedging relationship exists and that changes in value from both items offset each other. The Group strives for full price hedging of the expected volume of grid loss energy (hedge ratio 1:1).
Hedging of monetary assets and liabilities
DERIVATIVE FINANCIAL INSTRUMENTS
The Group sometimes uses derivative financial instruments to hedge its exposure to foreign exchange, interest rate and commodity prices risks arising from operating, financing and investment activities. In accordance with its treasury policy, the Group neither holds nor issues derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as instruments held for trading purposes.
Derivative financial instruments are initially recognised at fair value. Any gain or loss resulting from changes in the fair value is immediately booked in the statement of profit or loss. Where derivative financial instruments qualify for hedge accounting, the reflection of any resulting gain or loss depends on the nature of the item being hedged.
The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the end of the reporting period, taking into account the current interest rates and the current creditworthiness of the swap counterparties and the Group. The fair value of forward exchange contracts is their quoted market price at the end of the reporting period, i.e. the present value of the quoted forward price.
DERIVATIVES USED AS HEDGING INSTRUMENTS
Cash flow hedges
Changes in the fair value of the derivative hedging instrument designated as a cash-flow hedge are recognised directly in OCI to the extent that the hedge is effective. If the hedge is ineffective, changes in fair value are recognised in profit or loss.
The Group uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions and firm commitments, as well as forward commodity contracts for its exposure to volatility in the commodity prices. The Group designates only the spot element of forward contracts as a hedged risk. The forward element is considered the cost of hedging and is recognised in OCI and accumulated in a separate component of the statement of financial position under hedging reserves.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, hedge accounting is prospectively discontinued. The cumulative gain or loss previously recognised in OCI remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in OCI is transferred, where justified, to the carrying amount of the asset. In other cases, the amount recognised in OCI is transferred to profit or loss in the same period that the hedged item affects profit or loss.
When a derivative or hedge relationship is terminated, cumulative gains or losses still remain in OCI, provided that the hedged transaction is still expected to occur. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss is removed from OCI and is immediately recognised in profit or loss.
The Group recognises derivatives to hedge the price for the future procurement of the physical requirement for grid losses that is expected in subsequent periods and is covered in each case by short-term procurement transactions on the spot market. These derivatives are measured at fair value in OCI with no effect on profit or loss as part of cash flow hedge accounting; they serve as price hedging of the physical demand for electrical energy to cover grid losses (underlying transaction). Due to the availability and liquidity of futures trading, the hedging period for intended price hedging covers a period of up to two years from the balance sheet date. In this context, the Group pursues a conservative hedging strategy oriented towards the regulatory framework and the ability to roll over the electricity procurement costs incurred, which enables timely and predictable price hedging.
The critical term match method measures effectiveness. If the valuation-relevant parameters of the hedged item and hedging instrument match, it is assumed that an effective hedging relationship exists and that changes in value from both items offset each other. The Group strives for full price hedging of the expected volume of grid loss energy (hedge ratio 1:1).
Hedging of monetary assets and liabilities
DERIVATIVE FINANCIAL INSTRUMENTS
The Group sometimes uses derivative financial instruments to hedge its exposure to foreign exchange, interest rate and commodity prices risks arising from operating, financing and investment activities. In accordance with its treasury policy, the Group neither holds nor issues derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as instruments held for trading purposes.
Derivative financial instruments are initially recognised at fair value. Any gain or loss resulting from changes in the fair value is immediately booked in the statement of profit or loss. Where derivative financial instruments qualify for hedge accounting, the reflection of any resulting gain or loss depends on the nature of the item being hedged.
The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the end of the reporting period, taking into account the current interest rates and the current creditworthiness of the swap counterparties and the Group. The fair value of forward exchange contracts is their quoted market price at the end of the reporting period, i.e. the present value of the quoted forward price.
SHARE CAPITAL - TRANSACTION COSTS
Transaction costs related to the issuing of capital are deducted from the capital received.
DIVIDENDS
Dividends are recognised as a liability in the period in which they are declared (see note 6.12.1).
TREASURY SHARES
Financial liabilities consist of interest-bearing loans and borrowings in the Group. They are initially recognised at fair value, less related transaction costs. Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortised cost price with any difference between amount at initial recognition and redemption value being recognised in profit or loss over the period of the loans on an effective interest basis.
Financial liabilities consist of interest-bearing loans and borrowings in the Group. They are initially recognised at fair value, less related transaction costs. Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortised cost price with any difference between amount at initial recognition and redemption value being recognised in profit or loss over the period of the loans on an effective interest basis.
Financial liabilities consist of interest-bearing loans and borrowings in the Group. They are initially recognised at fair value, less related transaction costs. Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortised cost price with any difference between amount at initial recognition and redemption value being recognised in profit or loss over the period of the loans on an effective interest basis.
Financial liabilities consist of interest-bearing loans and borrowings in the Group. They are initially recognised at fair value, less related transaction costs. Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortised cost price with any difference between amount at initial recognition and redemption value being recognised in profit or loss over the period of the loans on an effective interest basis.
DEFINED-CONTRIBUTION PLANS
In Belgium, contribution based promises, called defined-contribution pension plans under Belgian pension legislation, are classified as defined-benefit plans for accounting purposes due to the legal minimum return to be guaranteed by the employer.
Before 1 January 2016, the legal minimum return was 3.75% on employee contributions, 3.25% on employer contributions and 0% for inactive plan participants.
From 1 January 2016 onwards, the legal minimum return is a variable rate between 1.75% and 3.75%. The interest rate is automatically adapted on 1 January each year based on the average return OLO 10 years over 24 months, with 1.75% as a minimum. As of 1 January 2016, the legal minimum return is 1.75% on employee and employer contributions and 0% for inactive plan participants.
As the plans are funded via a pension fund, the vertical approach is applied, meaning that 1.75% is applied on all the reserves (even before 2016).
The employer needs to finance the deficits related to the \u201cLaw on Supplementary Pensions (LSP) guarantee at any time for the employee contract and at the moment the vested reserves are transferred in case of departure, retirement or liquidation of the pension for the employer contract.
For each plan, the fair value of assets equals the sum of the accrued individual reserves (if any) and the value of the collective fund(s) (if any).
The Defined-Benefit Obligation (DBO) was determined following the Projected Unit Credit (PUC) method. The plan formula (backloaded or not) determines whether the premiums are projected.
In Germany, the defined-contribution plan comprises a fixed pension to be paid to an employee upon retirement, which is usually based on one or more factors such as the employee\u2019s age, years of service and salary.
In both countries, the calculation is performed by an accredited actuary.
DEFINED-BENEFIT PLANS
For defined-benefit plans, which exist in both Belgium and Germany, the pension expenses for each plan are assessed separately on an annual basis by accredited actuaries using the PUC method. The estimated future benefit that employees have earned in return for their service in the current and previous periods is discounted to determine its present value, and the fair value of any plan assets is deducted. The discount rate is the interest rate, at the end of the reporting period, on high quality bonds that have maturity dates approximately equivalent to the terms of the Group's obligations and that are denominated in the currency in which the benefits are expected to be paid.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in profit or loss at the earlier of the following dates:
\u2022when the plan amendment or curtailment occurs; or
\u2022when the entity recognises related restructuring costs under IAS\u00a037 or termination benefits.
Where the calculation results in a benefit to the Group, the recognised asset is limited to the present value of any future refunds from the plan or reductions in future contributions to the plan.
Remeasurements \u2013 comprising actuarial gains and losses, the effect of the asset ceiling (excluding amounts included in net interest on the net defined-benefit liability) and the return on plan assets (excluding amounts included in net interest on the net defined-benefit liability) \u2013 are recognised immediately in the statement of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
REIMBURSEMENT RIGHTS (BELGIUM)
Reimbursement rights are recognised as a separate asset when, and only when, it is virtually certain that another party will reimburse some or all of the expenditure required to settle the corresponding benefit obligation. Reimbursement rights are presented as non-current assets under other financial assets and are measured at fair value. These rights are handled the same way as the corresponding defined-benefit obligation. When the changes in the period result from changes in financial assumptions or from experience adjustments or changes in demographic assumptions, then the asset is adjusted through OCI. The components of the defined-benefit cost are recognised net of amounts relating to changes in the carrying amount of the rights to reimbursement.
OTHER LONG-TERM EMPLOYEE BENEFITS
The Group's net obligation regarding long-term service benefits other than pension plans is assessed on an annual basis by accredited actuaries. The net obligation is calculated using the PUC method and is the amount of future benefit that employees have earned in return for their service in the current and previous periods. The obligation is discounted to its present value, and the fair value of any related assets is deducted. The discount rate is the yield, at the end of the reporting period, on high quality bonds that have maturity dates approximately equivalent to the terms of the Group's obligations and that are denominated in the currency in which the benefits are expected to be paid.
SHORT-TERM EMPLOYEE BENEFITS
A provision is recognised in the balance sheet when the Group has a current legal or constructive obligation as a result of a past event and it is likely that an outflow of economic benefits \u2013 of which a reliable estimate can be made \u2013 will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessment of the time value of money and, where appropriate, of the risks specific to the liability.
The Group\u2019s main long-term provisions are provisions for dismantling obligations. The present value of the obligation at the time of commissioning represents the initial amount of the provision for dismantling with, as the counterpart, an asset for the same amount, which is included in the carrying amount of the related property, plant and equipment and is depreciated over the asset's entire useful life.
Factors having a significant influence on the amount of provisions include:
\u2022cost estimates
\u2022the timing of expenditure ; and
\u2022the discount rate applied to cash flows.
These factors are based on information and estimates deemed by the Group to be the most appropriate as of today.
Trade and other payables are stated at amortised cost.
LEVIES
In its role as a TSO, Elia Transmission Belgium SA/NV and 50Hertz Transmission GmbH are subject to various public service obligations imposed by the Government and/or by regulation mechanisms. These identify public service obligations in various fields (such as promoting the use of renewable energy, social support, fees for the use of the public domain, offshore liability) for fulfilment by TSOs. The costs incurred by TSOs in accordance with these obligations are fully covered by the tariff \u2018levies\u2019 approved by the regulator. The amounts outstanding (surplus) are reported as a trade and other payable.
In this process, as the TSOs are agents, the Group opted for a net presentation both at profit or loss and at balance sheet level. These transactions are fully \u201cpassed through\u201d.
GOVERNMENT GRANTS
Government grants are recognised when it is reasonably certain that the Group will receive such grants and that all underlying conditions will be met. Grants related to an asset are presented under other liabilities and will be recognised in the statement of profit or loss on a systematic basis over the expected useful life of the asset in question. Grants related to expense items are recognised in the statement of profit or loss in the same period as the expenses for which the grant was received. Government grants are presented as other operating income in the statement of profit or loss.
CONTRACT LIABILITIES- LAST MILE CONNECTION
Upon the inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease included in IFRS 16.
THE GROUP AS A LESSEE
The Group recognises a right-of-use asset and a lease liability on the lease commencement date. Assets and liabilities arising from a lease are initially measured on a present value basis and discounted using the Group's best estimate for the weighted average incremental borrowing rate, in case the rate implicit in the lease cannot be readily determined. The Group applies a single discount rate per group of similar contracts, summarised per their duration.
Lease payments included in the measurement of the lease liability comprise fixed payments, including in-substance fixed payments. Variable lease payments are expensed as incurred. As a practical expedient, no distinction is made between lease and non-lease components. Components that do not transfer any goods or services (initial direct costs, prepayments) are excluded from the lease price.
Right of use assets are subsequently reduced by accumulated depreciation, impairment losses and any adjustments resulting from the remeasurement of the lease liability. These assets are depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects the fact that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as that of property and equipment.
The lease liability is subsequently increased by the interest cost on the lease liability and reduced by lease payments made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or a change in the reassessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option not to be exercised.
The Group presents right-of-use assets within \u2018property, plant and equipment\u2019 and lease liabilities within \u2018loans and borrowings\u2019 (current and non-current) in the statement of financial position.
The Group operates in a regulated environment in which tariffs are meant to realise total revenue/income consisting of:
\u2022a reasonable return on invested capital;
\u2022all reasonable costs which are incurred by the Group.
Since the tariffs are based on estimates, there is always a difference between the tariffs that are actually charged and the tariffs that should have been charged (tariff setting agreed with regulator) to cover all reasonable costs of the system operator including a reasonable profit margin for its shareholders.
If the applied tariffs result in a surplus or a deficit at the end of the year, this means that the tariffs charged to end consumers should have been lower or higher respectively (and vice versa). This surplus or deficit is therefore reported in the regulatory deferral account.
The release of the regulatory deferral account will impact future tariffs: incurred regulatory liabilities will decrease future tariffs, whilst incurred regulatory assets will increase future tariffs.
In the absence of an IFRS standard which specifically applies to the treatment of these regulatory deferral accounts, Elia management referred to the requirements of IFRS 14 and the Conceptual Framework for Financial Reporting alongside the latest changes in the IASB project on Rate-regulated Activities to develop the following accounting policy:
\u2022a liability is recognised in the statement of financial position and presented as part of \u201caccruals and deferred income\u201d with respect to the Elia group\u2019s obligation to deduct an amount from the tariffs to be charged to customers in future periods because the total allowed compensation for goods or services already supplied is lower than the amount already charged to customers, or excess revenues has been generated due to higher volumes than initially estimated (regulatory liability);
\u2022an asset is recognised in the statement of financial position with respect to the Elia group\u2019s right to add an amount to the tariffs to be charged to customers in future periods because the total allowed compensation for the goods or services already supplied exceeds the amount already charged to customers or shortage in revenues has occurred due to lower volumes than initially estimated (regulatory asset); and
\u2022the net movement in the regulatory deferral accounts for the period is presented separately in the statement of profit or loss within the line item \u201cnet regulatory income (expense)\u201d.
The amount in the regulatory deferral accounts is reported on an annual basis and assessed by the regulator.
REVENUES
The Group\u2019s main revenues are realised by TSOs which operate in accordance with regulatory frameworks and which have de facto/legal monopolies in their respective control zones. The frameworks which apply in the Group\u2019s main countries of activity are detailed in Note 9 \u2018Regulatory framework and tariffs\u2019.
With regard to the regulated business, each service is based on a standard contract with the customer, mostly with a predefined regulated tariff (unit price multiplied by the volume (injection or offtake) or the reserved capacity (depending on the type of service)), so pricing is not variable. The allocation of the transaction price over the different performance obligations is therefore straightforward (one-to-one relationship). Most of these contracts are concluded for an indefinite period and have general payment terms of 15-30 days.
Considering the business of the Elia group, there are no relevant right-of-return and warranty obligations.
For all services provided by the Group, Elia is the sole and primary party responsible for executing the service and is thus the principal.
However, in its role as a TSO, Elia Transmission Belgium SA/NV and 50Hertz Transmission GmbH are subject to public service obligations imposed by the government/regulation mechanisms. These obligations mainly relate to financial support for the development of renewable energy. TSOs act as agents for these activities, and since the expense/income streams are fully covered by tariffs, they have no impact on the statement of profit and loss. See section \u2018Levies\u2019 of Note 3.3.14 for more information on the accounting treatment.
The Group\u2019s main performance obligations/contract types, their pricing and the revenue recognition method for 2023 can be summarised as follows:
Revenue by category for Elia Transmission Belgium\u00a0
Revenue stream | Nature, customer and timing of satisfaction of performance obligations | Contract \u2013 Price setting |
Grid revenues | ||
Grid connection | Technical studies conducted at the request of grid users, connected directly to the grid with a view to having a new connection built or an existing connection altered. The revenue is recognised at the point in time when the study is delivered. | Contract and tariff approved by regulator. Fixed amount per type of study. |
Last-mile connection is a component of the grid connection contract. At the request of a future grid user, Elia constructs/adjusts a dedicated/ physical connection, known as a last-mile connection, to connect the customer\u2019s facility to Elia\u2019s grid. Although control of the asset is not transferred as such to the grid user, the grid user obtains direct access to the high-voltage grid. The access right transferred by Elia is valuable to the grid user, hence why the grid user compensates Elia in cash. Since the grid user simultaneously enters into a grid connection contract, the two activities (access right and grid connection services) are not distinct and constitute a single performance obligation and interdependence between the contracts. As the total amount of revenue recognised for this single performance obligation, which includes grid connection services, is recognised over the life of the assets, the contract has no specific end date. This component of the grid connection/grid user contract is presented separately\u00a0 (not part of the grid connection/revenues from the revenue cap) because the tariff-setting method is very specific from a regulatory perspective. | Standard contract approved by regulator, but the price is set on the basis of the budget for implementing the connection. | |
The fees charged to grid users/distribution system operators (DSOs) cover the maintenance and operating costs relating to the dedicated connection facilities. The revenue is recognised over time, as this service is performed continuously throughout the contractual term. | Contract and tariff approved by regulator. Tariff is set per asset type (e.g. bay, km of cable). | |
Management and development of grid infrastructure | This component of the access contract signed with access holders/DSOs covers the development and management of the grid with a view to meeting capacity needs and satisfying demand for electricity transmission. The revenue is recognised over time, as providing sufficient capacity and a resilient grid is a service performed continuously throughout the contractual term. | Contract and tariff approved by regulator. EUR per kW/KVA for yearly/monthly peak and power available at access point. |
Management of the electricity system | This component of the access contract signed with access holders/DSOs covers the management and operation of the electricity system and the offtake of additional reactive energy relating to Elia\u2019s grid (different from the connection assets). The revenue is recognised over time, as these services are performed continuously throughout the contractual term. | Contract and tariff approved by regulator. EUR per kW/ kVArh at access point. |
Market integration | This component is part of the access contract signed with access holders/DSOs, and covers (i) services to facilitate the energy market; (ii) services to develop and enhance the integration of an effective and efficient electricity market; (iii) the management of interconnectors and coordination with neighbouring countries and the European authorities; and (iv) the publication of data, as required by transparency obligations. The revenue is recognised over time, as these services are performed continuously throughout the contractual term. | Contract and tariff approved by regulator. EUR per kW at access point. |
Compensation for imbalances | As defined in the BRP contract, the BRP (Balance Responsible Party) has a commitment to ensure a perfect balance between offtake and injection on the grid. In the event of an imbalance caused by a BRP, Elia has to activate the ancillary services, which are then invoiced to the BRP. The revenue is recognised at the point in time when an imbalance occurs. | Contract and tariff/mechanism approved by regulator. Based on market prices, EUR per kW imbalance at access point. |
International revenues | Grid use along borders is organised through half-yearly, quarterly, monthly, weekly, weekend, daily and intra-day auctions. Elia and the regulators decide which auctions are conducted along each border. Auctions are organised through an auction office, which acts as an agent. The auction office collects the revenues paid by the European energy traders, which are ultimately shared between neighbouring TSOs based on the volumes imported/exported on the border. The revenue is recognised at the point in time when an import/export activity occurs. | Framework agreement with parties and auction office. Price is set based on price difference in cross-border market prices. |
Revenue by category for 50Hertz Transmission
Revenue stream | Nature and timing of satisfaction of performance obligations | Contract \u2013 Price setting |
Grid revenues | ||
Revenues from incentive regulation | The \u2018grid use fee\u2019 is charged to grid users/DSOs connected to the grid for the offtake on the onshore grid. This contract is signed with grid users. The revenue is recognised over time, as this service is a performed continuously throughout the contractual term. | Standard contract and grid tariffs defined by regulator. |
Last-mile connection (\"client contribution\") is a component of the \u2018grid use fee\u2019 contract. At the request of a future grid user, 50Hertz constructs a dedicated/physical connection, known as a last-mile connection, to create an interface point to the grid. Although control of the asset is not transferred as such to the grid user, the grid user obtains direct access to the high-voltage grid. The access right transferred by 50Hertz is valuable to the grid user, hence why the grid user compensates Elia in cash. Since the grid user simultaneously enters into a grid connection contract, the two activities (access right and grid connection services) are not distinct and constitute a single performance obligation and interdependence between the contracts. As the total amount of revenue recognised for this single performance obligation, which includes grid connection services, is recognised over the life of the assets, the contract has no specific end date. This component of the grid connection/grid user contract is presented separately (not part of the grid connection/revenues from the revenue cap) because the tariff-setting method is very specific from a regulatory perspective. | Standard contract approved by regulator, but the price is set on the basis of the budget for implementing the connection. | |
Revenues from offshore regulation | This component comprises tariffs charged to grid users/DSOs to cover grid connection costs for offshore wind farms. The revenue is recognised over time, as this service is performed continuously throughout the contractual term | Contract and tariffs predefined in regulatory mechanism. |
Energy revenues | This revenue stream consists of different components | |
Congestion management and redispatch fees are paid by market participants for use of the capacity made available by 50Hertz on specific lines (including use of cross-border assets). This allocation mechanism is governed by transparent, market-oriented procedures. The revenue is recognised at the point in time when it is generated | Standard contracts approved by regulator and tariff mechanism defined in regulatory schemes. | |
Compensation for imbalances Market participants (BRPs) have a commitment to ensure a perfect balance between offtake and injection on the grid. In the event of an imbalance, 50Hertz invoices the market participant to compensate for the costs incurred. The revenue is recognised at the point in time when an imbalance occurs. | Standard contracts approved by regulator and tariff mechanism defined in regulatory schemes. | |
Horizontal reimbursement of lignite back-up costs In its role as a TSO, 50Hertz charges fees to other TSOs for services related to the\u00a0 reserve power required by the legal framework. The revenue is recognised over time, as this service is performed continuously throughout the contractual term. |
Other revenues
Revenue stream | Nature and timing of satisfaction of performance obligations | Contract \u2013 Price setting |
Other revenues | ||
Third-party services | Elia Grid International provides consultancy services to third parties around the world. The revenue is recognised over the completion of the contract. Third-party services are presented in other revenues. | Contract negotiated between EGI and customer. The contract price is set when the contract is concluded with the customer. |
The payment term is generally 30 days from the invoice date. | ||
Commission fee | Re.alto provides a platform through which energy actors (e.g. traders, prosumers) can exchange energy data. re.alto receives a commission on transactions undertaken via the platform. The revenue is recognised at the point in time when the transaction occurs. The commission fee is presented in other revenues. | The commission fee is a fixed percentage on each transaction. |
Others | This mainly covers other services than those described above. The revenue is recognised at the point in time when the service is complete. |
Consequently, all revenue components contain revenue from contracts with customers, i.e. parties that have contracts in place with the Group to obtain services resulting from the Group\u2019s ordinary activities in exchange for a consideration.
OTHER INCOME
Other income is recognised when the related service is performed and no further performance obligations arise.
NET REGULATORY INCOME (EXPENSE) FROM SETTLEMENT MECHANISM
Since the tariffs are based on estimates, there is always a difference between the tariffs that are actually charged and the tariffs that should have been charged (tariff setting is agreed with the regulator) to cover all the system operator\u2019s reasonable costs, including a reasonable profit margin for the shareholders.
If the applied tariffs result in a surplus or deficit at the end of the year, this means that the tariffs charged to consumers/the general public could have been lower or higher. This surplus or deficit is therefore reported in the settlement mechanism deferral account.
OTHER EXPENSES
Property taxes are directly recognised in full as soon as ownership is certain (generally on 1\u00a0January of the year in question). However, these costs, which are considered to be non-controllable costs under the regulatory framework, are recorded as revenue through the settlement mechanism for the same amount, resulting in zero impact in terms of profit or loss.
FINANCE INCOME AND EXPENSES
Finance expenses comprise interest payable on borrowings (calculated using the effective interest rate method), interest on lease liabilities, foreign-exchange losses, gains on currency hedging instruments that offset currency losses, results on interest-rate hedging instruments, losses on hedging instruments that are not part of a hedge accounting relationship, losses on financial assets classified as being for trading purposes and impairment losses on financial assets as well as any losses from hedge ineffectiveness.
Finance income includes interest receivables on bank deposits, which are recognised in profit or loss using the effective interest rate method as they accrue.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.
INCOME TAXES
Income taxes comprise current and deferred tax. Income tax expense is recognised in profit or loss, except where it relates to items recognised directly in equity. Taxes on hybrid coupons are recognised in the statement of profit and loss as these are a tax on profits whereas the hybrid coupon itself is recognised directly in equity.
Current tax is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustments to tax payable in relation to previous years.
Deferred tax is recognised, using the balance sheet method, on temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit; and differences relating to investments in subsidiaries and joint ventures where these will
probably not be reversed in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising from initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they are reversed, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets and the deferred items relate to income taxes levied by the same tax authority on the same taxable entity or on different tax entities, but they are intended to settle current tax liabilities and assets on a net basis, or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised only to the extent that it is likely that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer likely that the related tax benefit will be realised.
FINANCE INCOME AND EXPENSES
Finance expenses comprise interest payable on borrowings (calculated using the effective interest rate method), interest on lease liabilities, foreign-exchange losses, gains on currency hedging instruments that offset currency losses, results on interest-rate hedging instruments, losses on hedging instruments that are not part of a hedge accounting relationship, losses on financial assets classified as being for trading purposes and impairment losses on financial assets as well as any losses from hedge ineffectiveness.
Finance income includes interest receivables on bank deposits, which are recognised in profit or loss using the effective interest rate method as they accrue.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.
FINANCE INCOME AND EXPENSES
Finance expenses comprise interest payable on borrowings (calculated using the effective interest rate method), interest on lease liabilities, foreign-exchange losses, gains on currency hedging instruments that offset currency losses, results on interest-rate hedging instruments, losses on hedging instruments that are not part of a hedge accounting relationship, losses on financial assets classified as being for trading purposes and impairment losses on financial assets as well as any losses from hedge ineffectiveness.
Finance income includes interest receivables on bank deposits, which are recognised in profit or loss using the effective interest rate method as they accrue.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.
FINANCE INCOME AND EXPENSES
Finance expenses comprise interest payable on borrowings (calculated using the effective interest rate method), interest on lease liabilities, foreign-exchange losses, gains on currency hedging instruments that offset currency losses, results on interest-rate hedging instruments, losses on hedging instruments that are not part of a hedge accounting relationship, losses on financial assets classified as being for trading purposes and impairment losses on financial assets as well as any losses from hedge ineffectiveness.
Finance income includes interest receivables on bank deposits, which are recognised in profit or loss using the effective interest rate method as they accrue.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.
The Group has opted for segment reporting, in conformity with the different regulatory frameworks that currently exist within the Group. This reporting approach closely reflects the Group\u2019s operational activities and is also in line with the Group\u2019s internal reporting to the Chief Operating Decision Maker (CODM), enabling the CODM to better evaluate and assess the Group\u2019s performance and activities in a transparent way.
Pursuant to IFRS 8, the Group has identified the following operating segments based on the aforementioned criteria:
\u2022Elia Transmission (Belgium), which comprises the activities based undertaken in line with the Belgian regulatory framework: the regulated activities of Elia Transmission Belgium SA/NV, Elia Asset SA/NV, Elia Engineering SA/NV, Elia Re SA, HGRT SAS and Coreso SA/NV, whose activities are directly linked to the role of the Belgian transmission system operator and are subject to the regulatory framework applicable in Belgium \u2013 see Section 9.1.3.
\u202250Hertz Transmission (Germany), which comprises the activities undertaken in line with the German regulatory framework: Eurogrid GmbH, 50Hertz Transmission GmbH, 50Hertz Offshore GmbH and 50Hertz Connectors, whose activities are directly linked to the role of the transmission system operator in Germany \u2013 see Section 9.2.3.
\u2022Non-regulated activities and Nemo Link, comprising:\u00a0
\u2022Elia Group NV/SA, mainly consisting of the holding activities in the Elia Transmission (Belgium) and 50Hertz Transmission (Germany) segment;
Eurogrid International NV/SA;
\u2010Nemo Link Ltd., which connects the UK and Belgium using high-voltage electricity cables, enabling power to be exchanged between the two countries and for which a specific regulatory framework has been set up \u2013 see Section 9.3 for more details;
\u2010the non-regulated activities of the Elia Transmission (Belgium) segment. \u2019Non-regulated activities\u2019 refers to activities which are not directly related to the role of a TSO \u2013 see Section 9.1;
\u2010EGI (Elia Grid International NV/SA, Elia Grid International GmbH, Elia Grid International Pte. Ltd Singapore (closed in 2022), Elia Grid International LLC Saudi Arabia and Elia Grid International Inc Canada (a new subsidiary incorporated in 2022), which are companies that supply specialists in consulting, services, engineering and procurement, creating value by delivering solutions based on international best practice while fully complying with regulated business environments;
\u2010Re.Alto-Energy BV/SRL and Re.Alto-Energy GmbH, a start-up founded in August 2019 which is the first European digital marketplace for energy data and services;
\u2010WindGrid (WindGrid NV/SA, WindGrid USA Holding LLC and WindGrid USA LLC ), founded in 2022, which was established to manage expected increase in investments in renewable energy production and the offshore grid expansion.
The CODM has been identified by the Group as the Boards of Directors, CEOs and Management Committees of each segment. The CODM periodically reviews the performance of the Group's segments using various indicators such as revenue, EBITDA and operating profit.
The table below shows the 2023 consolidated results for Elia Transmission (Belgium)
Results Elia Transmission\u00a0 (in \u20ac million) \u2212 period ended 31 December | 2023 | 2022 | Difference (%) |
Revenue, other income and net income (expense) from settlement mechanism | 1,383.9 | 1,561.3 | (11.4)% |
Revenues | 1,276.3 | 1,420.4 | (10.1)% |
Other income | 57.2 | 147.6 | (61.3)% |
Net income (expense) from settlement mechanism | 50.4 | (6.7) | (857.5)% |
Depreciation, amortisation, impairment and changes in provisions | (219.8) | (214.4) | 2.5% |
Results from operating activities | 287.6 | 259.6 | 10.8% |
Equity accounted investees | 2.8 | 2.4 | 18.6% |
EBIT | 290.5 | 262.0 | 10.9% |
EBITDA | 510.2 | 476.4 | 7.1% |
Finance income | 19.2 | 1.3 | 1376.9% |
Finance costs | (73.9) | (63.7) | 15.9% |
Income tax expenses | (54.9) | (42.7) | 28.7% |
Net profit | 180.9 | 156.9 | 15.3% |
Consolidated statement of financial position (in \u20ac million) | 31 December 2023 | 31 December 2022 | Difference (%) |
Total assets | 8,277.8 | 7,848.6 | 5.5% |
Capital expenditures | 747.5 | 449.0 | 66.5% |
Net financial debt | 3,479.1 | 2,916.2 | 19.3% |
The tariff methodology approved by the CREG on 7 November 2019 came into force in 2020. The methodology is applicable for a four-year period (2020 \u2013 2023). See Note 9.1 for more information about the new regulatory framework.
FINANCIAL
Elia Transmission's revenue was down by 11.4% compared with 2022, decreasing from \u20ac1,561.3 million to \u20ac1,383.9 million. Revenue was impacted by a higher regulated net profit, higher depreciations linked to the growing asset base, more than offset by lower net financial cost due to interest income from cash deposits and a strong drop in costs for ancillary services. The lower ancillary services were driven by lower balancing activation and reservation costs, resulting from the drop in gas and electricity prices as prior year was marked by the start of the war in Ukraine.
The table below provides more details about revenue component changes:
(in \u20ac million) | 2023 | 2022 | Difference (%) |
Grid revenue: | 1,234.9 | 1,415.8 | (12.8)% |
Grid connection | 46.2 | 44.8 | 3.1% |
Management and development of grid infrastructure | 461.3 | 475.3 | (3.0)% |
Management of the electrical system | 157.0 | 149.8 | 4.7% |
Compensation for imbalances | 255.1 | 365.0 | (30.1)% |
Market integration | 21.0 | 22.2 | (5.5)% |
International revenue | 294.3 | 358.6 | (17.9)% |
Last mile connection | 3.3 | 3.5 | (6.0)% |
Other revenue | 38.2 | 1.1 | 3467.0% |
Subtotal revenue | 1,276.3 | 1,420.4 | (10.1)% |
Other income | 57.2 | 147.6 | (61.3)% |
Net income (expense) from settlement mechanism | 50.4 | (6.7) | (857.5)% |
Total revenue and other income | 1,383.9 | 1,561.3 | (11.4)% |
Revenues from grid connection, the management of the electrical system and market integration remained stable compared to 2022.
The revenues from the management and development of grid infrastructure decreased from \u20ac475.3 million to \u20ac461.3 million (-\u20ac14.0 million). This is driven by reduced revenues due to lower consumption peaks (both yearly and monthly), particularly on the Distribution System Operator (DSO) side. Additionally, income related to power put at disposal saw a decrease compared to the previous year. This reduction is mainly attributed to optimization efforts and a decrease in power reserved by certain DSOs, implemented since September 2022.
Services rendered in the area of energy management and the individual balancing of balancing groups are paid under revenues from compensation for imbalances. These revenues saw a notable decline from \u20ac365.0 million to \u20ac255.1 million (-30.1%). Primarily, this decrease can be attributed to the tariff reduction for maintaining and restoring the residual balance of individual access responsible parties, amounting to \u20ac106.2 million. The drop in market conditions, specifically lower gas and electricity prices compared to last year, resulted in reduced balancing activation costs and, consequently, a lower imbalance price.
International revenue decreased to \u20ac294.3 million (-17.9%). The decrease is primarily attributed to a lower income from daily auctions for flow-based congestion, amounting to a reduction of \u20ac142.6 million. This is driven by decreased price spreads at Belgian borders compared to the previous year, particularly at the French border. Monthly auction revenues have also declined, down by \u20ac79.9 million, reflecting a less tense energy market compared to the previous year. However, these reductions are partially offset by an increase in yearly auction revenues, rising by \u20ac162.6 million. Notably, the yearly auctions for 2023 occurred in November 2022 during a peak crisis period, with nuclear unavailability in France still a concern, resulting in higher prices.
The last mile connection remained flat compared with previous year, while other revenues increased, mainly due to works delivered to third parties.
The settlement mechanism increased from -\u20ac6.7 million in 2022 to \u20ac50.4 million in 2023 and encompassed both deviations in the current year from the budget approved by the regulator (-\u20ac106.8 million) and the settlement of net surpluses from the previous tariff period (\u20ac156.7 million).The operating surplus (-\u20ac106.8 million), with respect to budgeted costs and revenue authorised by the regulator, will be returned to consumers in a future tariff period. The surplus was primarily the result of higher costs for ancillary services (+\u20ac122.1 million), higher influenceable costs (+\u20ac89.6 million), adjustment of the controllable budget (+\u20ac45.1 million) and a higher net profit (+\u20ac32.4 million). This was more than offset by an increase in tariff sales (-\u20ac137.4 million), which was mainly driven by imbalance compensations, and higher international and other sales (-\u20ac272.8 million).
EBITDA rose to \u20ac510.2 million (+7.1%) due to a higher regulated net profit, higher depreciations linked to the growing asset base, partially offset by lower net finance costs, all passed through into revenue. The EBIT increase was more pronounced (+10.9%), driven by higher dismantling provision for the Modular Offshore Grid covered by the tariffs, while already capitalised under IFRS in previous years. Also the depreciations for intangible assets expensed during the previous regulatory period and thus not covered by the tariffs decreased. The contribution of equity-accounted investments slightly increased to \u20ac2.8 million, linked to the contribution from HGRT.
Net finance cost decreased (-12.3%) compared with the previous year. This was mainly driven by the activation of borrowing costs due to the growth of the asset base (+\u20ac3.1 million), but the increasing interest rate environment also led to higher interest income on cash deposits. This was partly offset by higher interest costs linked to ETB\u2019s bond issuance. Beginning 2023, ETB tapped the debt capital market with its inaugural \u20ac500 million Green Bond for funding
its eligible green projects. ETB proactively anticipated the rising interest rate environment by concluding interest rate swaps and8 this fully to the benefit of consumers. Consequently, the average cost of debt only marginally increased to 2.0% (+10 bps) at the end of 2023, and all outstanding debt has a fixed coupon.
Net profit rose by 15.3% to 180.9 million, mainly due to the following:
\u2022A higher fair remuneration (+\u20ac7.7 million) due to asset growth and higher equity.
\u2022Increase in incentives (+\u20ac12.9 million), reflecting a strong operational performance, primarily linked to a higher efficiency gain on controllable costs despite the growth of our activities and a better performance on the incentive for interconnection capacity driven by lower congestion costs. The net contribution from incentives was slightly negatively impacted by an increase of the average tax rate.
\u2022Activation of the Green Bond issuance costs under IFRS while fully covered by the tariffs (+\u20ac2.1 million).
\u2022Higher capitalised borrowing costs due to a higher level of assets under construction and the slight uptick in average costs of debt (+\u20ac3.2 million).
\u2022A one-off tariff compensation recognized in 2022 for the financial costs linked to the capital increase (-\u20ac3.5 million).
\u2022Other (+\u20ac1.5 million): this was driven by lower share-based payment expenses linked to the capital increase in favour of members of staff (+\u20ac1.6 million), higher dismantling provisions for the Modular Offshore Grid covered by the tariffs while capitalized under IFRS (+\u20ac3.4 million) and lower depreciation of software and hardware (+\u20ac0.7 million) as some of the assets acquired during the previous regulatory period and covered by the regulatory methodology are written off. This is partially offset by slightly more damage to electrical installations compared with the previous year (-\u20ac2.1 million) and deferred tax effects (-\u20ac2.5 million).
Total assets increased by \u20ac429.2 million to \u20ac8,277.8 million due to the realisation of the investment programme.
The table below shows the 2023 consolidated results for 50Hertz Transmission (Germany) system operator activities in Germany.
Results 50Hertz Transmission (Germany) (in \u20ac million) \u2212 period ended 31 December | 2023 | 2022 | Difference (%) |
Revenue, other income and net income (expense) from settlement mechanism | 2,578.2 | 2,592.7 | (0.6)% |
Revenues | 2,553.0 | 2,222.4 | 14.9% |
Other income | 175.3 | 125.9 | 39.3% |
Net income (expense) from settlement mechanism | -150.1 | 244.4 | n.r. |
Depreciation, amortisation, impairment and changes in provisions | -332.2 | -297.3 | 11.7% |
Results from operating activities | 378.7 | 314.1 | 20.5% |
EBIT | 378.7 | 314.1 | 20.6% |
EBITDA | 710.9 | 611.5 | 16.3% |
Finance income | 37.5 | 73.9 | (49.3)% |
Finance costs | -97.3 | -46.6 | 108.8% |
Income tax expenses | -100.4 | -105.3 | (4.6)% |
Net profit | 218.5 | 236.1 | (7.5)% |
Of which attributable to the Elia Group | 174.8 | 188.9 | (7.5)% |
Consolidated statement of financial position (in \u20ac million) | 31 December 2023 | 31 December 2022 | Difference (%) |
Total assets | 10,086.6 | 11,638.1 | (13.3)% |
Capital expenditures | 1,728.1 | 1,135.9 | 52.1% |
Net financial debt | 4,693.3 | 1,255.3 | 273.9% |
50Hertz Transmission\u2019s total revenue and other income slightly decreased compared with 2022 (0.6%).
Total revenues are detailed in the table below.
(in \u20ac million) | 2023 | 2022 | Difference (%) |
Grid revenue: | 2,535.4 | 2,213.1 | 14.6% |
Revenue from incentive regulation | 1,558.0 | 862.7 | 80.6% |
Revenue from offshore regulation | 400.9 | 295.1 | 35.9% |
Energy revenue | 576.5 | 1,055.4 | (45.4)% |
Other revenue (incl. last mile connection) | 17.7 | 9.2 | 91.6% |
Subtotal revenue | 2,553.0 | 2,222.4 | 14.9% |
Other income | 175.3 | 125.9 | 39.3% |
Net income (expense) from settlement mechanism | (150.1) | 244.4 | (161.5)% |
Total revenue and other income | 2,578.2 | 2,592.6 | (0.6)% |
Revenues from incentive regulation consist of grid tariffs before the settlement mechanism; they are primarily driven by the regulatory remuneration for onshore activities (revenue cap).
Revenues from incentive regulation increased by \u20ac695.3 million. The main driver was the revenue cap increase (+\u20ac824.1 million), as it assumed energy prices at the level of 2022, and includes significantly higher cost allowance for pass-through energy costs for redispatch (+\u20ac664.4 million) and grid losses (+\u20ac71.5 million). Furthermore, it also results from the voluntary commitment to utilise electricity in electrical heat generating units instead of limiting the renewable energy production in the scope of temporary measures to reduce overloads on the transmission grid (+\u20ac67.1 million), as well as a higher cap for non-influenceable Opex (+\u20ac14.3 million), e.g. personnel, subsidies etc. The volume effects offset the higher revenue cap partially. Last year the infeed of renewable energy into the distribution grid was much higher than expected, leading to lower volumes in the transmission grid. This effect increased even further compared to last year (-\u20ac128.8 million).
Revenues from offshore surcharge include all revenues derived from the offshore grid surcharge. This includes regulatory remuneration for the connection of offshore wind farms, the reimbursement of offshore liability payments and offshore costs charged to 50Hertz by third parties, e.g. other TSOs.
The offshore surcharge revenues increased compared with the previous year (+\u20ac105.8 million) as the pass-through costs charged to 50Hertz by third parties increased (+\u20ac117.2 million). While the offshore remuneration for capital costs increased due to the execution of the investments (Ostwind 2, Ostwind 3 and Gennaker), the remuneration of the offshore Opex decreased more strongly as 50Hertz benefitted in 2022 from the final settlement of the offshore lump sum for 2018 (-\u20ac11.4 million).
Energy revenues include all revenues related to system operations and are mostly corresponding costs charged on to third parties, such as redispatch measures, costs for reserve power plants or control power costs. Revenues generated from auctioning off interconnector capacity are also included in this section.
Energy revenues strongly decreased compared to the previous year (-\u20ac478.9 million), due to the sharp drop in energy prices since last year. The main driver is the strong decrease of control power costs charged to balancing groups (-\u20ac217.7 million). The revenues from the compensation of involuntary exchanges at the grid\u2019s borders decreased as well (-\u20ac81.1 million), as did the revenues from reserve power plants (-\u20ac73.0 million). Furthermore, revenues from the auctioning of interconnector capacities dropped due to the price developments (-\u20ac58.7 million), as did the charges to other TSOs for redispatch measures decreased significantly (-\u20ac47.0 million).
Other income rose (+\u20ac49.3 million), as a result of higher own work capitalised following the increase in staffing to execute and manage the investment programme (+\u20ac40.6 million) as well as higher revenues from service level agreements (+\u20ac17.0 million).
The net regulatory income (expense) from settlement mechanism neutralises regulatory time lags. It consists of two components: firstly, the neutralisation of differences between cost allowances in the tariffs and the actual costs incurred for the current year (-\u20ac288.3 million); secondly, the balancing of said differences from prior years (+\u20ac138.1 million).
EBITDA increased to \u20ac710.9 million (+16.3%). The growing onshore and offshore asset base benefitted the investment remuneration (+\u20ac75.0 million). Base year revenues increased due to a higher remuneration (inflation adjustment) of the capital costs and the Opex compared to last year (+\u20ac9.5 million). The operational costs remained well under control (+\u20ac4.6 million), driven by lower maintenance costs and partially offset by important expenditures in digitalisation and IT in order to manage the increasing complexity of operating the system. Furthermore, the EBITDA benefitted from a higher energy bonus (+\u20ac11.1 million), especially for grid losses. 50Hertz continued to expand its talent pool in order to keep up with the increasingly larger and more complex investment programme, leading to additional staff costs (-\u20ac34.1 million). This was offset by higher own work capitalised and revenues from service level agreements (+\u20ac48.6 million). Finally, last year\u2019s EBITDA was marked by significant one-off regulatory settlements as the offshore lump sum for 2018 was settled (-\u20ac14.8 million). Also, the EBIT increased (+20.6%) despite the higher depreciations (-\u20ac34.7 million) following the execution of the investment programme. Furthermore, operating provisions remained flat.
The net financial result decreased to -\u20ac59.8 million (-\u20ac87.1 million), mainly related to the valuation of the long-term provision for congestion income from interconnectors included in the regulatory accounts (-\u20ac74.2 million). Last year was marked by a strong drop in the valuation of this liability due to the spike of forward interest rates, while the sudden drop in interest rates in December 2023 caused an increase of the provision. Furthermore, the funding costs increased due to Eurogrid\u2019s bond and green loan issuances in an environment of increasing interest rates over the first three quarters of 2023 (-\u20ac9.7 million). This is partially offset by higher capitalised borrowing costs due to the ongoing investment programme (+\u20ac7.1 million).
Net profit decreased to \u20ac218.5 million (-7.5%) as a result of:
\u2022Higher investment remuneration (+\u20ac52.5 million) following the growth of the asset base.
\u2022Decreased Opex and other costs (+\u20ac10.5 million) mainly driven by higher base year revenues and lower operating cost more than offsetting the lower regulatory settlements.
\u2022Higher energy bonus (+\u20ac4.6 million), mainly due to the bonus for grid losses.
These effects were partially compensated by:
\u2022Lower financial results (-\u20ac60.9 million), driven primarily by last year\u2019s revaluation of long-term provisions and the higher interest costs.
\u2022Higher depreciations (-\u20ac24.3 million) due to the commissioning of projects.
Total assets declined by -\u20ac1,551.5 million compared with 2022 mainly due to decreasing cash and cash equivalents linked to the decreasing energy prices and therefore a strong drop of the EEG cash balance, partially compensated by the good progress on the investment programme and therefore increasing assets under construction. The free cash flow totalled -\u20ac3,403.7 million and was heavily affected by the realisation of investment programme (\u20ac1,685.9 million) and the net cash outflow for EEG and similar mechanisms (KWK72 and SPB73) (-\u20ac2,578.6 million) driven by the decreased energy prices. 50Hertz acts as a trustee for these mechanisms.
The net financial debt, excl. EEG and similar mechanisms increased by \u20ac854.6 million compared to end of 2022, up to \u20ac5,045.9 million. The execution of the investment programme was partially financed from operating cash flow, while Eurogrid also accessed the debt market on several occasions. Including EEG and similar mechanisms, the net financial debt increased by \u20ac3,438.0 million due to the drop of the cash balance for EEG and similar mechanisms. As of December 2023, the cash position for these schemes decreased and amounted to \u20ac352.6 million.
The table below shows the 2023 consolidated results for the \u2018Non-regulated activities and Nemo Link\u2019 segment.
Results Non-regulated activities and Nemo Link (in \u20ac million) \u2212 period ended 31 December | 2023 | 2022 | Difference (%) |
Total revenues | 18.5 | 5.9 | 213.6% |
Other income | 50.5 | 38.9 | 29.9% |
Depreciation, amortisation, impairment and changes in provisions | (0.9) | (0.7) | 38.6% |
Results from operating activities | (22.0) | (13.6) | 62.3% |
Share of profit of equity accounted investees (net of income tax) | 27.3 | 37.1 | (26.4)% |
EBIT | 5.4 | 23.6 | (77.1)% |
Adjusted EBIT | 17.3 | 23.6 | (26.7)% |
EBITDA | 6.3 | 24.3 | (74.1)% |
Finance income | 4.90 | 3.80 | 28.9% |
Finance costs | (9.8) | (12.5) | (21.7)% |
Income tax expenses | (0.2) | 0.4 | (165.3)% |
Net profit | 0.2 | 15.2 | (99.0)% |
Of which attributable to the Elia Group | (0.2) | 15.2 | (101.6)% |
Adjusted items | (11.9) | 0.0 | n.r. |
Adjusted net profit | 12.1 | 15.2 | (20.4)% |
Consolidated statement of financial position (in \u20ac million) | 31/12/2023 | 31/12/2022 | Difference (%) |
Total assets | 1,844.9 | 1,946.5 | (5.2)% |
Capital expenditures | 1.1 | 0.9 | 22.9% |
Net financial debt | 469.6 | 260.1 | 80.5% |
Non-regulated revenue increased by 54.4% to \u20ac69.0 million compared to 2022. Elia Grid International (\u2018EGI\u2019) achieved a strong increase in revenues (+\u20ac8.3 million) by effectively utilizing its well-established consulting expertise in the energy industry to support countries in their pursuit of energy transition objectives. Furthermore, the intersegment transactions increased mainly between Elia Group SA, Elia Transmission Belgium and 50Hertz. The effect of these intersegment transactions is disclosed in \u2018Note 4.5. Segment reconciliation\u2019.
Equity-accounted investments contributed \u20ac27.3 million to the Group\u2019s result, which is almost entirely attributable to Nemo Link. Despite the Nemo Link\u2019s strong performance in 2023, it contributed \u20ac9.8 million less to the overall result compared to prior year. This decline can be fully attributed to the fact that Nemo Link reached the cumulative cap for the 5-year assessment, while prior year result still partially benefitted from lower performance for the years 2019-2021.
In 2023, the European and British electricity markets settled following the tumultuous state in 2022. The year saw significant power flow towards Belgium due to a more favorable gas supply situation in Great Britain, but this difference faded as EU gas storages hit record highs and reliance on Russian gas decreased. This improved supply scenario led to a significant drop in gas prices compared to 2022, reducing price spreads and flows towards Belgium. Carbon emission prices, which significantly impact power prices, also showed a downward trend in the UK relative to the EU, further reducing price differences between these markets. Consequently, the average hourly market spread came down from \u20ac41.3/MWh in 2022 to a more normal level of \u20ac13.7/MWh in 2023.
The operational availability of the interconnector remained high at 96.1% in 2023, despite more extensive maintenance due to the first 5 years of operations.
Adjusted EBIT dropped to \u20ac17.3 million (-\u20ac6.3 million). This decrease was primarily due to the lower contribution from Nemo Link (-\u20ac9.8 million), higher cost at WindGrid especially in relation to the establishment of WindGrid US (-\u20ac3.4 million) and partially offset by the lower costs at the holding (+\u20ac1.7 million). Furthermore, the adjusted EBIT was negatively impacted by higher costs for re.alto (-\u20ac0.4 million).\u00a0 Following the increase in revenues, the contribution from EGI increased (+\u20ac4.8 million), while the other non-regulated cost decreased (+\u20ac0.8 million). Considering the one-off costs linked to the acquisition of a minority stake in energyRe Giga (\u20ac11.9 million), EBIT totals \u20ac5.4 million.
Net finance cost dropped to \u20ac5.0 million, mainly consisting of interest expenses related to the senior bond (\u20ac5.2 million), expenses related to the Nemo Link private placement (\u20ac2.6 million) and other financial costs related to Elia Group SA, primarily driven by funding cost linked to equity injection in Eurogrid GmbH. These costs were partially balanced out by interest income from mainly from cash deposits (\u20ac4.3 million) benefitting from the higher interest rate environment and the Group\u2019s improved liquidity position following last year\u2019s capital increase. In the course of 2023, the Group successfully refinanced its \u20ac700 million
hybrid security, by the use of liquidity and the issuance of a new \u20ac500 million hybrid with a capped tender on the outstanding hybrid security. All the cost linked to this transaction, are directly recognised in equity under IFRS.
Adjusted net profit decreased by -20.4% to \u20ac12.1 million, mainly as a result of:
\u2022Lower contribution from Nemo Link (-\u20ac9.6 million).
\u2022Higher costs driven by the expansion of international offshore activities of WindGrid (-\u20ac3.2 million).
\u2022Lower loss for the holding (+\u20ac5.3 million) driven mainly by higher interest income on cash deposits and lower business development cost as cost linked to energyRe Giga are presented as an adjusted item.
\u2022Higher contribution from EGI (+\u20ac4.0 million).
\u2022Other items (+\u20ac0.4 million) primarily driven by lower other non-regulated cost (+\u20ac0.2 million), financial income at Eurogrid International (+\u20ac0.7 million), partially offset by higher costs for re.alto (-\u20ac0.4 million).
Total assets decreased by 5.2% amounting to \u20ac1,844.9 million (-\u20ac101.6 million) as the refinancing of the hybrid security was partially financed from existing liquidity following last year\u2019s capital increase, while the dividend paid to shareholders (-\u20ac140.4 million) was covered by the dividend proceeds from subsidiaries. Additionally, the Group increased its participation in Eurogrid GmbH, by drawing \u20ac100 million from its Revolving Credit Facilities.
This also led to a rise in net financial debt of \u20ac209.4 million to \u20ac469.6 million.
Consolidated results (in \u20ac million) \u2212 period ended 31 December | 2023 | 2023 | 2023 | 2023 | 2023 |
Elia Transmission | 50Hertz Transmission | Non-regulated activities and Nemo Link | Consolidation entries & intersegment transactions | Elia Group | |
( a ) | ( b ) | ( c ) | ( d ) | ( a ) + ( b ) + ( c ) + ( d ) | |
Revenue | 1,276.3 | 2,553.0 | 18.5 | (5.3) | 3,842.6 |
Other income | 57.2 | 175.3 | 50.5 | (72.3) | 210.7 |
Net income (expense) from settlement mechanism | 50.4 | (150.1) | 0.0 | 0.0 | (99.7) |
Depreciation, amortisation, impairment and changes in provisions | (219.8) | (332.2) | (0.9) | 0.0 | (552.9) |
Results from operating activities | 287.6 | 378.7 | (22.0) | (0.1) | 644.2 |
Share of profit of equity accounted investees, net of tax | 2.8 | 0.0 | 27.3 | 0.0 | 30.2 |
Earnings before interest and tax (EBIT) | 290.5 | 378.7 | 5.4 | (0.1) | 674.4 |
Earnings before depreciation, amortisation, interest and tax (EBITDA) | 510.2 | 710.9 | 6.3 | (0.1) | 1,227.3 |
Finance income | 19.2 | 37.5 | 4.9 | 0.0 | 61.6 |
Finance costs | (73.9) | (97.3) | (9.8) | 0.1 | (181.0) |
Income tax expenses | (54.9) | (100.4) | (0.2) | 0.0 | (155.5) |
Profit attributable to the owners of the company | 180.9 | 174.8 | (0.2) | 0.0 | 355.4 |
Consolidated statement of financial position (in \u20ac million) | 31/12/2023 | 31/12/2023 | 31/12/2023 | 31/12/2023 | 31/12/2023 |
Total assets | 8,277.8 | 10,086.6 | 1,844.9 | (819.2) | 19,390.1 |
Capital expenditures | 747.5 | 1,728.1 | 1.1 | 0.0 | 2,476.7 |
Net financial debt | 3,479.1 | 4,693.3 | 469.6 | 0.0 | 8,641.9 |
Consolidated results (in \u20ac million) \u2212 Year ended 31 December | 2022 | 2022 | 2022 | 2022 | 2022 |
Elia Transmission | 50Hertz Transmission | Non-regulated activities and Nemo Link | Consolidation entries & intersegment transactions | Elia Group | |
( a ) | ( b ) | ( c ) | ( d ) | ( a ) + ( b ) + ( c ) + ( d ) | |
Revenue | 1,420.4 | 2,222.4 | 5.9 | (32.7) | 3,616.0 |
Other income | 147.6 | 125.9 | 38.9 | (52.7) | 259.6 |
Net income (expense) from settlement mechanism | (6.7) | 244.4 | 0.0 | 0.0 | 237.7 |
Depreciation, amortisation, impairment and changes in provisions | (214.4) | (297.3) | (0.7) | 0.0 | (512.4) |
Results from operating activities | 259.6 | 314.1 | (13.6) | (0.3) | 559.8 |
Share of profit of equity accounted investees, net of tax | 2.4 | 0.0 | 37.1 | 0.0 | 39.5 |
Earnings before interest and tax (EBIT) | 262.0 | 314.1 | 23.6 | (0.3) | 599.4 |
Earnings before depreciation, amortisation, interest and tax (EBITDA) | 476.4 | 611.5 | 24.3 | (0.3) | 1,111.8 |
Finance income | 1.3 | 73.9 | 3.8 | (3.6) | 75.4 |
Finance costs | (63.7) | (46.6) | (12.5) | 3.9 | (119.0) |
Income tax expenses | (42.7) | (105.3) | 0.4 | 0.0 | (147.5) |
Profit attributable to the owners of the company | 156.9 | 188.9 | 15.2 | 0.0 | 361.0 |
Consolidated statement of financial position (in \u20ac million) | 31/12/2022 | 31/12/2022 | 31/12/2022 | 31/12/2022 | 31/12/2022 |
Total assets | 7,848.6 | 11,638.1 | 1,946.5 | (838.9) | 20,594.3 |
Capital expenditures | 449.0 | 1,135.9 | 0.9 | 0.0 | 1,585.8 |
Net financial debt | 2,916.2 | 1,255.3 | 260.1 | 0.0 | 4,431.6 |
There are no significant intersegment transactions.
(in \u20ac million) \u2212 Period ended 31 December 2023 | Elia Transmission | 50Hertz Transmission | Non-regulated activities and Nemo Link | Consolidation entries | Elia Group |
Adjusted items | |||||
Transaction costs (acqusition of EnergyRe Giga - US) | 0.0 | 0.0 | (11.9) | 0.0 | (11.9) |
Adjusted EBIT | 0.0 | 0.0 | (11.9) | 0.0 | (11.9) |
Tax impact | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Net profit \u2013 adjusted items | 0.0 | 0.0 | (11.9) | 0.0 | (11.9) |
In 2023, the Group reports the transaction costs related to the acquisition of a minority share in EnergyRe Giga US as \"adjusted items\". More information about the transaction are provided in Note 8.4 - Subsequent events.
The Group has opted for segment reporting, in conformity with the different regulatory frameworks that currently exist within the Group. This reporting approach closely reflects the Group\u2019s operational activities and is also in line with the Group\u2019s internal reporting to the Chief Operating Decision Maker (CODM), enabling the CODM to better evaluate and assess the Group\u2019s performance and activities in a transparent way.
Pursuant to IFRS 8, the Group has identified the following operating segments based on the aforementioned criteria:
\u2022Elia Transmission (Belgium), which comprises the activities based undertaken in line with the Belgian regulatory framework: the regulated activities of Elia Transmission Belgium SA/NV, Elia Asset SA/NV, Elia Engineering SA/NV, Elia Re SA, HGRT SAS and Coreso SA/NV, whose activities are directly linked to the role of the Belgian transmission system operator and are subject to the regulatory framework applicable in Belgium \u2013 see Section 9.1.3.
\u202250Hertz Transmission (Germany), which comprises the activities undertaken in line with the German regulatory framework: Eurogrid GmbH, 50Hertz Transmission GmbH, 50Hertz Offshore GmbH and 50Hertz Connectors, whose activities are directly linked to the role of the transmission system operator in Germany \u2013 see Section 9.2.3.
\u2022Non-regulated activities and Nemo Link, comprising:\u00a0
\u2022Elia Group NV/SA, mainly consisting of the holding activities in the Elia Transmission (Belgium) and 50Hertz Transmission (Germany) segment;
Eurogrid International NV/SA;
\u2010Nemo Link Ltd., which connects the UK and Belgium using high-voltage electricity cables, enabling power to be exchanged between the two countries and for which a specific regulatory framework has been set up \u2013 see Section 9.3 for more details;
\u2010the non-regulated activities of the Elia Transmission (Belgium) segment. \u2019Non-regulated activities\u2019 refers to activities which are not directly related to the role of a TSO \u2013 see Section 9.1;
\u2010EGI (Elia Grid International NV/SA, Elia Grid International GmbH, Elia Grid International Pte. Ltd Singapore (closed in 2022), Elia Grid International LLC Saudi Arabia and Elia Grid International Inc Canada (a new subsidiary incorporated in 2022), which are companies that supply specialists in consulting, services, engineering and procurement, creating value by delivering solutions based on international best practice while fully complying with regulated business environments;
\u2010Re.Alto-Energy BV/SRL and Re.Alto-Energy GmbH, a start-up founded in August 2019 which is the first European digital marketplace for energy data and services;
\u2010WindGrid (WindGrid NV/SA, WindGrid USA Holding LLC and WindGrid USA LLC ), founded in 2022, which was established to manage expected increase in investments in renewable energy production and the offshore grid expansion.
The CODM has been identified by the Group as the Boards of Directors, CEOs and Management Committees of each segment. The CODM periodically reviews the performance of the Group's segments using various indicators such as revenue, EBITDA and operating profit.
Consolidated results (in \u20ac million) \u2212 period ended 31 December | 2023 | 2023 | 2023 | 2023 | 2023 |
Elia Transmission | 50Hertz Transmission | Non-regulated activities and Nemo Link | Consolidation entries & intersegment transactions | Elia Group | |
( a ) | ( b ) | ( c ) | ( d ) | ( a ) + ( b ) + ( c ) + ( d ) | |
Revenue | 1,276.3 | 2,553.0 | 18.5 | (5.3) | 3,842.6 |
Other income | 57.2 | 175.3 | 50.5 | (72.3) | 210.7 |
Net income (expense) from settlement mechanism | 50.4 | (150.1) | 0.0 | 0.0 | (99.7) |
Depreciation, amortisation, impairment and changes in provisions | (219.8) | (332.2) | (0.9) | 0.0 | (552.9) |
Results from operating activities | 287.6 | 378.7 | (22.0) | (0.1) | 644.2 |
Share of profit of equity accounted investees, net of tax | 2.8 | 0.0 | 27.3 | 0.0 | 30.2 |
Earnings before interest and tax (EBIT) | 290.5 | 378.7 | 5.4 | (0.1) | 674.4 |
Earnings before depreciation, amortisation, interest and tax (EBITDA) | 510.2 | 710.9 | 6.3 | (0.1) | 1,227.3 |
Finance income | 19.2 | 37.5 | 4.9 | 0.0 | 61.6 |
Finance costs | (73.9) | (97.3) | (9.8) | 0.1 | (181.0) |
Income tax expenses | (54.9) | (100.4) | (0.2) | 0.0 | (155.5) |
Profit attributable to the owners of the company | 180.9 | 174.8 | (0.2) | 0.0 | 355.4 |
Consolidated statement of financial position (in \u20ac million) | 31/12/2023 | 31/12/2023 | 31/12/2023 | 31/12/2023 | 31/12/2023 |
Total assets | 8,277.8 | 10,086.6 | 1,844.9 | (819.2) | 19,390.1 |
Capital expenditures | 747.5 | 1,728.1 | 1.1 | 0.0 | 2,476.7 |
Net financial debt | 3,479.1 | 4,693.3 | 469.6 | 0.0 | 8,641.9 |
Consolidated results (in \u20ac million) \u2212 Year ended 31 December | 2022 | 2022 | 2022 | 2022 | 2022 |
Elia Transmission | 50Hertz Transmission | Non-regulated activities and Nemo Link | Consolidation entries & intersegment transactions | Elia Group | |
( a ) | ( b ) | ( c ) | ( d ) | ( a ) + ( b ) + ( c ) + ( d ) | |
Revenue | 1,420.4 | 2,222.4 | 5.9 | (32.7) | 3,616.0 |
Other income | 147.6 | 125.9 | 38.9 | (52.7) | 259.6 |
Net income (expense) from settlement mechanism | (6.7) | 244.4 | 0.0 | 0.0 | 237.7 |
Depreciation, amortisation, impairment and changes in provisions | (214.4) | (297.3) | (0.7) | 0.0 | (512.4) |
Results from operating activities | 259.6 | 314.1 | (13.6) | (0.3) | 559.8 |
Share of profit of equity accounted investees, net of tax | 2.4 | 0.0 | 37.1 | 0.0 | 39.5 |
Earnings before interest and tax (EBIT) | 262.0 | 314.1 | 23.6 | (0.3) | 599.4 |
Earnings before depreciation, amortisation, interest and tax (EBITDA) | 476.4 | 611.5 | 24.3 | (0.3) | 1,111.8 |
Finance income | 1.3 | 73.9 | 3.8 | (3.6) | 75.4 |
Finance costs | (63.7) | (46.6) | (12.5) | 3.9 | (119.0) |
Income tax expenses | (42.7) | (105.3) | 0.4 | 0.0 | (147.5) |
Profit attributable to the owners of the company | 156.9 | 188.9 | 15.2 | 0.0 | 361.0 |
Consolidated statement of financial position (in \u20ac million) | 31/12/2022 | 31/12/2022 | 31/12/2022 | 31/12/2022 | 31/12/2022 |
Total assets | 7,848.6 | 11,638.1 | 1,946.5 | (838.9) | 20,594.3 |
Capital expenditures | 449.0 | 1,135.9 | 0.9 | 0.0 | 1,585.8 |
Net financial debt | 2,916.2 | 1,255.3 | 260.1 | 0.0 | 4,431.6 |
There are no significant intersegment transactions.
(in \u20ac million) | 2023 | 2022 |
Revenue, including net income from settlement mechanism | 3,742.9 | 3,853.7 |
\u00a0 Grid revenue: | 3,670.6 | 3,837.0 |
\u00a0 Last mile connection | 4.8 | 5.1 |
\u00a0 Other revenue | 67.5 | 11.6 |
Net income (expense) from settlement mechanism | (99.7) | 237.7 |
Other income | 210.7 | 259.6 |
\u00a0 Services and technical expertise | 1.6 | (0.8) |
\u00a0 Own production | 156.6 | 107.0 |
\u00a0 Optimal use of assets | 17.4 | 16.2 |
\u00a0 Other | 32.5 | 136.6 |
\u00a0 Gain on sale PPE | 2.5 | 0.7 |
We refer to the segment reports for a detailed analysis of the Group\u2019s recognised revenues at segment level. The Elia Transmission (Belgium) segment reported revenues and other income of \u20ac1,383.9 million (Note\u00a04.2), the 50Hertz Transmission (Germany) segment reported revenues and other income of \u20ac2,578.2 million (Note 4.3) and the \u2018Non-regulated activities and Nemo Link\u2019 segment reported revenues and other income of \u20ac69.0 million (Note 4.4). The total reported revenues and other income amount to \u20ac3,953.5 million.
No further geographical information is provided as revenues are generated in the countries where the grid infrastructure is located, which largely corresponds to the segments mentioned above.
The Group\u2019s own production relates to time spent on investment projects by group employees.
(in \u20ac million) | 2023 | 2022 |
Revenue, including net income from settlement mechanism | 3,742.9 | 3,853.7 |
\u00a0 Grid revenue: | 3,670.6 | 3,837.0 |
\u00a0 Last mile connection | 4.8 | 5.1 |
\u00a0 Other revenue | 67.5 | 11.6 |
Net income (expense) from settlement mechanism | (99.7) | 237.7 |
Other income | 210.7 | 259.6 |
\u00a0 Services and technical expertise | 1.6 | (0.8) |
\u00a0 Own production | 156.6 | 107.0 |
\u00a0 Optimal use of assets | 17.4 | 16.2 |
\u00a0 Other | 32.5 | 136.6 |
\u00a0 Gain on sale PPE | 2.5 | 0.7 |
We refer to the segment reports for a detailed analysis of the Group\u2019s recognised revenues at segment level. The Elia Transmission (Belgium) segment reported revenues and other income of \u20ac1,383.9 million (Note\u00a04.2), the 50Hertz Transmission (Germany) segment reported revenues and other income of \u20ac2,578.2 million (Note 4.3) and the \u2018Non-regulated activities and Nemo Link\u2019 segment reported revenues and other income of \u20ac69.0 million (Note 4.4). The total reported revenues and other income amount to \u20ac3,953.5 million.
No further geographical information is provided as revenues are generated in the countries where the grid infrastructure is located, which largely corresponds to the segments mentioned above.
The Group\u2019s own production relates to time spent on investment projects by group employees.
COST OF MATERIALS, SERVICES AND OTHER GOODS | ||
(in \u20ac million) | 2023 | 2022 |
Raw materials, consumables and goods for resale | 17.2 | 69.7 |
Purchase of ancillary services | 1,673.7 | 2,142.4 |
Services and other goods (excl. purchase of ancillary services) | 604.6 | 412.3 |
Total | 2,295.6 | 2,624.4 |
The Group\u2019s costs for \u2018Raw materials, consumables and goods for resale\u2019 decreased to \u20ac17.2 million for the financial year 2023. In 2023, the costs are attributable to the Belgian segment for \u20ac4.4 million (\u20ac5.0 million in 2022), the German segment for \u20ac12.8 million (\u20ac64.2 million in 2022) and EGI for \u20ac0.1 million (\u20ac0.5 million in 2022). In the German segment, the decrease is mainly explained by the fact that, in the previous year, third-party services were mainly reported under raw materials. From 2023, these (EUR 66.1 m; prior year: EUR 73.2 m) are reported under Services and other goods.
Purchase of ancillary services\u2019 includes the costs for services which enable the Group to balance generation with demand, maintain constant voltage levels and manage congestion across its grids. The cost incurred in 2023 by Elia Transmission (Belgium) decreased to \u20ac375.1 million (up from \u20ac566.8 million in 2022) mainly because of lower prices to cover electricity losses and decreased activations to balance the grid against a background of the high energy prices. 50Hertz Transmission (Germany) incurred decreased costs of \u20ac1,298.6 million in 2023 compared to \u20ac1,575.6 million in 2022 also due to lower electricity prices.
Services and other goods\u2019 relates to maintenance of the grid, services provided by third parties, insurance and consultancy fees, and others. The cost of these increased by \u20ac192.3 million (+46.6%) to \u20ac604.6 million. The increase is mainly explained by the increased level of activities (in the regulatory business but also in EGI activities) in an inflationary environment.
PERSONNEL EXPENSES | ||
(in \u20ac million) | 2023 | 2022 |
Salaries and wages | 313.2 | 274.6 |
Social security contributions | 64.2 | 56.6 |
Pension costs | 25.6 | 29.6 |
Other personnel expenses | 7.8 | 5.8 |
Share-based payments expenses | 0.1 | 2.0 |
Employee benefits (excl. pensions) | 3.6 | 3.6 |
Total | 414.5 | 372.1 |
Personnel expenses increased by \u20ac42,4 million in 2023 as a consequence of the indexation and the continued growth in headcount, especially in the non-regulated segment. For Elia Transmission (Belgium) the personnel expenses amounted to \u20ac188.4 in 2023 compared to \u20ac183.5 million in 2022. 50Hertz Transmission (Germany) accounted for \u20ac201.8 million of the Group\u2019s personnel expenses for 2023 (previous year: \u20ac168.1 million) and the non-regulated activities and Nemo Link accounted for \u20ac24.2 million (previous year: \u20ac20.5 million). All three segments have experienced a growth in the number of full-time equivalents to support the acceleration of the energy transition and the development opportunities linked to the expansion of its international offshore activities.
A new capital increase in favour of the members of the personnel of Elia Group NV/SA and its Belgian subsidiaries was completed in April 2023. The capital increase resulted in the creation of 5,984\u00a0additional shares without nominal value. The Group's employees were granted a 16.66% reduction on the quoted share price, which resulted in a \u20ac0.1 million reduction overall.
See Note\u00a06.14 \u2018Employee benefits\u2019 for more information about pension costs and employee benefits\u2019.
DEPRECIATION, AMORTISATION, IMPAIRMENT AND CHANGES IN PROVISIONS | ||
(in \u20ac million) | 2023 | 2022 |
Amortisation of intangible assets | 40.2 | 30.2 |
Depreciation of property, plant and equipment | 517.3 | 483.6 |
Total depreciation and amortisation | 557.5 | 513.7 |
Impairment of inventories | 0.0 | 0.0 |
Total impairment | 0.0 | 0.0 |
Provisions for litigations | (2.6) | (1.5) |
Environmental provisions | (2.0) | 0.3 |
Other provisions | 0.0 | 0.0 |
Changes in provisions | (4.6) | (1.3) |
Depreciation, amortisation, impairment and changes in provisions | 552.9 | 512.4 |
The total \u2018depreciation, amortisation, impairment and changes in provisions\u2019 increased from \u20ac512.4 million in 2022 to \u20ac552.9 million in 2023, mainly because of an increase in depreciation of property, plant and equipment due to increasing fixed assets.
A detailed description and movement schedule is provided in other sections for 'Intangible assets' (see Note\u00a06.2), 'Property, plant and equipment' (see Note\u00a06.1) and 'Provisions' (see Note\u00a06.15).
OTHER EXPENSES | ||
(in \u20ac million) | 2023 | 2022 |
Taxes other than income tax | 22.1 | 15.4 |
Loss on disposal/sale of property, plant and equipment | 19.2 | 17.8 |
Impairment on receivables | 2.6 | 1.2 |
Other | 2.5 | 10.0 |
Total | 46.4 | 44.4 |
In 2023, the share of Elia Transmission (Belgium) in the Group\u2019s other expenses was \u20ac25.3 million (\u20ac26.6 million in 2022), 50Hertz Transmission (Germany)\u2019s total share amounted to \u20ac15.6 million (\u20ac17.0\u00a0million in 2022) and the share of the non-regulated activities and Nemo Link segment accounted for \u20ac6.7 million (\u20ac0.9 million in 2022).
Taxes other than income tax mainly consist of property taxes. The increase is mainly due to property taxes paid by the Group in Germany (and to a large extent rebilled to partners).
Losses on disposal for property, plant and equipment totalled \u20ac11.5 million for Elia Transmission (Belgium), compared with \u20ac12.8 million in the previous year. 50Hertz Transmission (Germany) recorded \u20ac7.7 million of losses on disposal for property, plant and equipment in 2023, from \u20ac5.0 million in 2022.
COST OF MATERIALS, SERVICES AND OTHER GOODS | ||
(in \u20ac million) | 2023 | 2022 |
Raw materials, consumables and goods for resale | 17.2 | 69.7 |
Purchase of ancillary services | 1,673.7 | 2,142.4 |
Services and other goods (excl. purchase of ancillary services) | 604.6 | 412.3 |
Total | 2,295.6 | 2,624.4 |
The Group\u2019s costs for \u2018Raw materials, consumables and goods for resale\u2019 decreased to \u20ac17.2 million for the financial year 2023. In 2023, the costs are attributable to the Belgian segment for \u20ac4.4 million (\u20ac5.0 million in 2022), the German segment for \u20ac12.8 million (\u20ac64.2 million in 2022) and EGI for \u20ac0.1 million (\u20ac0.5 million in 2022). In the German segment, the decrease is mainly explained by the fact that, in the previous year, third-party services were mainly reported under raw materials. From 2023, these (EUR 66.1 m; prior year: EUR 73.2 m) are reported under Services and other goods.
Purchase of ancillary services\u2019 includes the costs for services which enable the Group to balance generation with demand, maintain constant voltage levels and manage congestion across its grids. The cost incurred in 2023 by Elia Transmission (Belgium) decreased to \u20ac375.1 million (up from \u20ac566.8 million in 2022) mainly because of lower prices to cover electricity losses and decreased activations to balance the grid against a background of the high energy prices. 50Hertz Transmission (Germany) incurred decreased costs of \u20ac1,298.6 million in 2023 compared to \u20ac1,575.6 million in 2022 also due to lower electricity prices.
COST OF MATERIALS, SERVICES AND OTHER GOODS | ||
(in \u20ac million) | 2023 | 2022 |
Raw materials, consumables and goods for resale | 17.2 | 69.7 |
Purchase of ancillary services | 1,673.7 | 2,142.4 |
Services and other goods (excl. purchase of ancillary services) | 604.6 | 412.3 |
Total | 2,295.6 | 2,624.4 |
The Group\u2019s costs for \u2018Raw materials, consumables and goods for resale\u2019 decreased to \u20ac17.2 million for the financial year 2023. In 2023, the costs are attributable to the Belgian segment for \u20ac4.4 million (\u20ac5.0 million in 2022), the German segment for \u20ac12.8 million (\u20ac64.2 million in 2022) and EGI for \u20ac0.1 million (\u20ac0.5 million in 2022). In the German segment, the decrease is mainly explained by the fact that, in the previous year, third-party services were mainly reported under raw materials. From 2023, these (EUR 66.1 m; prior year: EUR 73.2 m) are reported under Services and other goods.
Purchase of ancillary services\u2019 includes the costs for services which enable the Group to balance generation with demand, maintain constant voltage levels and manage congestion across its grids. The cost incurred in 2023 by Elia Transmission (Belgium) decreased to \u20ac375.1 million (up from \u20ac566.8 million in 2022) mainly because of lower prices to cover electricity losses and decreased activations to balance the grid against a background of the high energy prices. 50Hertz Transmission (Germany) incurred decreased costs of \u20ac1,298.6 million in 2023 compared to \u20ac1,575.6 million in 2022 also due to lower electricity prices.
Services and other goods\u2019 relates to maintenance of the grid, services provided by third parties, insurance and consultancy fees, and others. The cost of these increased by \u20ac192.3 million (+46.6%) to \u20ac604.6 million. The increase is mainly explained by the increased level of activities (in the regulatory business but also in EGI activities) in an inflationary environment.
PERSONNEL EXPENSES | ||
(in \u20ac million) | 2023 | 2022 |
Salaries and wages | 313.2 | 274.6 |
Social security contributions | 64.2 | 56.6 |
Pension costs | 25.6 | 29.6 |
Other personnel expenses | 7.8 | 5.8 |
Share-based payments expenses | 0.1 | 2.0 |
Employee benefits (excl. pensions) | 3.6 | 3.6 |
Total | 414.5 | 372.1 |
Personnel expenses increased by \u20ac42,4 million in 2023 as a consequence of the indexation and the continued growth in headcount, especially in the non-regulated segment. For Elia Transmission (Belgium) the personnel expenses amounted to \u20ac188.4 in 2023 compared to \u20ac183.5 million in 2022. 50Hertz Transmission (Germany) accounted for \u20ac201.8 million of the Group\u2019s personnel expenses for 2023 (previous year: \u20ac168.1 million) and the non-regulated activities and Nemo Link accounted for \u20ac24.2 million (previous year: \u20ac20.5 million). All three segments have experienced a growth in the number of full-time equivalents to support the acceleration of the energy transition and the development opportunities linked to the expansion of its international offshore activities.
A new capital increase in favour of the members of the personnel of Elia Group NV/SA and its Belgian subsidiaries was completed in April 2023. The capital increase resulted in the creation of 5,984\u00a0additional shares without nominal value. The Group's employees were granted a 16.66% reduction on the quoted share price, which resulted in a \u20ac0.1 million reduction overall.
See Note\u00a06.14 \u2018Employee benefits\u2019 for more information about pension costs and employee benefits\u2019.
DEPRECIATION, AMORTISATION, IMPAIRMENT AND CHANGES IN PROVISIONS | ||
(in \u20ac million) | 2023 | 2022 |
Amortisation of intangible assets | 40.2 | 30.2 |
Depreciation of property, plant and equipment | 517.3 | 483.6 |
Total depreciation and amortisation | 557.5 | 513.7 |
Impairment of inventories | 0.0 | 0.0 |
Total impairment | 0.0 | 0.0 |
Provisions for litigations | (2.6) | (1.5) |
Environmental provisions | (2.0) | 0.3 |
Other provisions | 0.0 | 0.0 |
Changes in provisions | (4.6) | (1.3) |
Depreciation, amortisation, impairment and changes in provisions | 552.9 | 512.4 |
The total \u2018depreciation, amortisation, impairment and changes in provisions\u2019 increased from \u20ac512.4 million in 2022 to \u20ac552.9 million in 2023, mainly because of an increase in depreciation of property, plant and equipment due to increasing fixed assets.
A detailed description and movement schedule is provided in other sections for 'Intangible assets' (see Note\u00a06.2), 'Property, plant and equipment' (see Note\u00a06.1) and 'Provisions' (see Note\u00a06.15).
OTHER EXPENSES | ||
(in \u20ac million) | 2023 | 2022 |
Taxes other than income tax | 22.1 | 15.4 |
Loss on disposal/sale of property, plant and equipment | 19.2 | 17.8 |
Impairment on receivables | 2.6 | 1.2 |
Other | 2.5 | 10.0 |
Total | 46.4 | 44.4 |
In 2023, the share of Elia Transmission (Belgium) in the Group\u2019s other expenses was \u20ac25.3 million (\u20ac26.6 million in 2022), 50Hertz Transmission (Germany)\u2019s total share amounted to \u20ac15.6 million (\u20ac17.0\u00a0million in 2022) and the share of the non-regulated activities and Nemo Link segment accounted for \u20ac6.7 million (\u20ac0.9 million in 2022).
Taxes other than income tax mainly consist of property taxes. The increase is mainly due to property taxes paid by the Group in Germany (and to a large extent rebilled to partners).
Losses on disposal for property, plant and equipment totalled \u20ac11.5 million for Elia Transmission (Belgium), compared with \u20ac12.8 million in the previous year. 50Hertz Transmission (Germany) recorded \u20ac7.7 million of losses on disposal for property, plant and equipment in 2023, from \u20ac5.0 million in 2022.
PERSONNEL EXPENSES | ||
(in \u20ac million) | 2023 | 2022 |
Salaries and wages | 313.2 | 274.6 |
Social security contributions | 64.2 | 56.6 |
Pension costs | 25.6 | 29.6 |
Other personnel expenses | 7.8 | 5.8 |
Share-based payments expenses | 0.1 | 2.0 |
Employee benefits (excl. pensions) | 3.6 | 3.6 |
Total | 414.5 | 372.1 |
Personnel expenses increased by \u20ac42,4 million in 2023 as a consequence of the indexation and the continued growth in headcount, especially in the non-regulated segment. For Elia Transmission (Belgium) the personnel expenses amounted to \u20ac188.4 in 2023 compared to \u20ac183.5 million in 2022. 50Hertz Transmission (Germany) accounted for \u20ac201.8 million of the Group\u2019s personnel expenses for 2023 (previous year: \u20ac168.1 million) and the non-regulated activities and Nemo Link accounted for \u20ac24.2 million (previous year: \u20ac20.5 million). All three segments have experienced a growth in the number of full-time equivalents to support the acceleration of the energy transition and the development opportunities linked to the expansion of its international offshore activities.
A new capital increase in favour of the members of the personnel of Elia Group NV/SA and its Belgian subsidiaries was completed in April 2023. The capital increase resulted in the creation of 5,984\u00a0additional shares without nominal value. The Group's employees were granted a 16.66% reduction on the quoted share price, which resulted in a \u20ac0.1 million reduction overall.
See Note\u00a06.14 \u2018Employee benefits\u2019 for more information about pension costs and employee benefits\u2019.
Remeasurements of post-employment benefit obligations
The other comprehensive income on post-employment obligations had a negative impact amounting to \u20ac6.5\u00a0million. This impact is mainly explained by the decrease in the discount rate and the experience adjustments resulting from the higher salary increase, partly offset by the positive return of the plan assets. See Note 6.14 for more details.
SHARE-BASED PAYMENTS
At 31 May 2021, Eurogrid International SA/NV has granted 1,640 stock options to the employees of RealTo BV/SRL and RealTo GmbH at a strike price of \u20ac100 per stock option at exercise date 31 March 2024. Subsequently, 940 additional stock options have been granted to new employees at the same terms and conditions. In total, 2,560 stock options were granted out of a total of 4.000 options to be offered in the plan. As per 31 December 2023, 940 options are still living. The share-based payments cost amounted to \u20ac0.1 million in 2023 (\u20ac0.2 million). As the stock option plan concerns shares in RealTo BV/SRL and its parent company, the share-based payments are not presented separately in the statement of equity.
The Group has various legal and constructive defined benefit obligations linked to its Belgian and German operations.
The total net liability for employee-benefit obligations is as follows: | ||||||
(in \u20ac million) | 2023 | 2022 | ||||
Belgium | Germany | Total | Belgium | Germany | Total | |
Defined benefit plans | 2.9 | 26.0 | 28.9 | 4.3 | 20.9 | 25.1 |
Post-employment benefits other than pensions | 53.4 | 7.5 | 60.9 | 47.6 | 4.3 | 51.9 |
Subtotal | 56.3 | 33.5 | 89.9 | 51.9 | 25.2 | 77.1 |
Other (non actuarial provision) | 0.0 | 1.0 | 1.0 | |||
Total provisions for employee benefits | 56.3 | 33.5 | 89.9 | 51.9 | 26.2 | 78.1 |
Of the \u20ac89.9 million in employee benefits provisions recognised at the end of the financial year 2023, \u20ac87.1 million is presented in the long term and \u20ac3.2 million in the short term which is part of the provision discussed in note 6.15.
Belgium
DEFINED-CONTRIBUTION PLAN
Employees remunerated based on a salary scale and recruited after 1 June 2002, as well as management staff recruited after 1\u00a0May 1999 are covered by two defined-contribution pension plans (Powerbel and Enerbel):
\u2022The Enerbel plan is a plan for salaried employees hired after 1 June 2002, to which the employee and the employer contribute based on predefined formula.
\u2022The Powerbel plan is a plan for managers hired after 1 May 1999. The contributions of the employee and employer are based on a fixed percentage of the employee\u2019s salary.
The law regarding occupational pension plans, published at the end of 2015, made various changes to the guaranteed return on defined-contribution plans. For payments made after 1 January 2016, the law requires employers to guarantee an average annual return of at least 1.75% (up to 3.75% depending on who contributes) over the course of each employee\u2019s career.
For insured plans the minimum guaranteed return until 31\u00a0December 2015 still needs to be equivalent to at least 3.25% for the employer\u2019s contribution and 3.75% for the employee's contribution, with any shortfall being covered by the employer.
As a result of the above changes and as mentioned in the accounting policies, all defined-contribution pension plans under Belgian pension legislation are classified as defined-benefit plans for accounting purposes, due to the legal minimum return to be guaranteed by the employer, which represents a plan amendment. They are accounted for using the Projected Unit Credit method (PUC-method). For each plan, the fair value of assets equals the sum of the accrued individual reserves (if any) and the value of the collective fund(s) (if any), hence no application of IAS 19 \u00a7 115. In addition, with the exception of Enerbel, the defined-contributions (DC) plans are not backloaded, as such these plans are valued without projection of future contributions. The Enerbel DC plan is backloaded and this plan is valued with projection of future contributions.
Elia Transmission Belgium has transferred certain acquired reserves guaranteed by the insurers to 'Cash balance \u2013 best of' plans since 2016. The main objective of these plans is to guarantee for every subscriber a minimum guaranteed return of 3.25% on the acquired reserves until retirement age.
Both employee' and employer' contributions are paid on a monthly basis for the base plans. The employee' contribution is deducted from their salary and paid to the insurer by the employer. The amount of future cash flows depends on wage growth.
DEFINED-BENEFIT PLANS
For a closed population, collective agreements in the electricity and gas industries provide \u2018pension supplements\u2019 based on the annual salary and an employee\u2019s career within a company (partially revertible to the inheritor in case of early death of the employee).The benefits granted are linked to Elia\u2019s operating result. There is no external pension fund or group insurance for these liabilities, which means that no reserves are constituted with third parties. The obligations are classified as a defined-benefit.
The collective agreement determines that active staff hired between 1\u00a0January 1993 and 31\u00a0December 2001 and all managerial/executive staff hired prior to 1\u00a0May 1999 will be granted the same guarantees via a defined-benefit pension scheme (Elgabel and Pensiobel \u2013 closed plans). Obligations under these defined-benefit pension plans are funded by a number of pension funds for the electricity and gas industries and by insurance companies.
As mentioned above, Elia Transmission Belgium has transferred certain acquired reserves guaranteed by the insurers to 'Cash balance \u2013 best of' plans since 2016. As this guarantee is an employer obligation, these plans represent defined-benefit plans.
Both employees' and employers' contributions are paid on a monthly basis for the base plans. The employee's contribution is deducted from the salary and paid to the insurer by the employer.
OTHER PERSONNEL OBLIGATIONS\u00a0\u00a0\u00a0\u00a0
Elia Transmission (Belgium) has also granted staff certain early-retirement schemes and other post-employment benefits such as reimbursement of medical expenses and a contribution to their energy bills, as well as other long-term benefits (seniority payments). Not all of these benefits are funded and, in accordance with IAS\u00a019, these post-employment benefits are classified as defined-benefit plans.
Germany
DEFINED CONTRIBUTION PLANS
In the case of externally financed defined contribution plans, 50Hertz Transmission (Germany)\u2019s obligation is limited to paying the agreed contributions. For those defined contribution plans recognised in the form of direct guarantees, there are pledged congruent employer\u2019s liability insurance policies in place.
\u2022Pension obligations for executives (agreement with staff representatives from 2003 onwards): individual contractual pension obligations based on an agreement with representatives;
\u2022Pension obligations for executives (agreement with staff representatives from 19\u00a0August 2008 onwards): individual contractual pension obligations relating to a company pension plan with the Vattenfall Europe Group;
\u2022Collective bargaining agreement on the company pension scheme: obligations based on the collective bargaining agreement made in relation to 50Hertz Transmission\u2019s company pension scheme, concluded on 28\u00a0November 2007;
\u2022Direct insurance: direct insurance policies for all former employees who worked at Vereinigte Energiewerke\u00a0AG (VEAG) from 1993 to 31\u00a0December 2004, with the exception of managers;
\u2022Individual commitments: individual commitments which are financed exclusively by external pension funds (welfare fund and pension fund).
DEFINED-BENEFIT PLANS
Defined-benefit plans entitle employees to submit direct pension claims to 50Hertz Transmission. Provisions for these are recognised in the statement of financial position. If plan assets are created for the sole purpose of fulfilling pension obligations, the amount is offset against the present value of the obligation. The following defined-benefit plans exist in Germany:
\u2022Group works agreement regarding the company pension scheme
In accordance with the Group works agreement regarding the company pension scheme, employees are granted a company pension plan on the basis of a defined-contribution plan (effective 1 January 2007). This agreement applies to all employees within the meaning of Sec. 5 (1) of the German Work Constitution Act (BetrVG) and came into effect at the
Company on 1 January 2007. Participation in the scheme is voluntary. The scheme grants pension benefits to employees once they reach the statutory retirement age, once they take early retirement from statutory pension insurance, and in the event of occupational disability for death. Current pension benefits are increased by 1% p.a., so the scheme is classified as a defined-benefit plan.
\u2022TVV Energie
This pension plan relates to direct guarantees resulting from a collective bargaining agreement concluded on 16 October 1992. It was closed to new hires on 1 January 1993. This contribution plan applies to employees who worked at Vereinigte Energiewerke AG until 30 November 2001 and whose vested benefits were allocated to Vattenfall Europe Transmission GmbH (now 50Hertz Transmission GmbH). The scheme covers pension obligations, based on years of service and remuneration level and grants retirement and disability pensions, but no pension for surviving dependants. It is not possible to index current post-employment benefits falling due for the first time after 1 January 1993.
OTHER PERSONNEL OBLIGATIONS
50Hertz Transmission also has following obligations, which are listed under \u2018Other personnel obligations\u2019:
\u2022Obligations for long-service benefits;
\u2022Obligations from German phased retirement schemes;
\u2022Obligations for working lifetime accounts.
Not all of these benefits are funded and, in accordance with IAS 19, these post-employment benefits are classified as defined-benefit plans.
Employee benefit obligations at group level
The Group\u2019s net liability for employee benefit obligations is as follows: | ||||
(in \u20ac million) | Pensions | Other | ||
2023 | 2022 | 2023 | 2022 | |
Present value of funded defined benefit obligation | (281.7) | (249.6) | (111.0) | (93.3) |
Fair value of plan assets | 252.8 | 224.5 | 50.1 | 41.3 |
Net employee benefit liability | (28.9) | (25.1) | (60.9) | (51.9) |
The net employee benefit liability increased in total by \u20ac12.8 million, of which \u20ac8.3 million on German level and \u20ac4.5 million on Belgian level.
The net impact is mainly explained by the decrease in discount rate compared with 2022, the change from experience adjustments following higher salary increase than expected, offset to a large extent by returns on plan assets.
Movement in the present value of the defined benefit obligation | Pensions | Other | ||
(in \u20ac million) | 2023 | 2022 | 2023 | 2022 |
At the beginning of the period | (249.6) | (298.9) | (93.3) | (100.1) |
Current service cost | (14.5) | (15.9) | (11.8) | (3.1) |
Interest cost/income | (10.0) | (2.9) | (3.5) | (1.3) |
Contributions from plan participants | (1.0) | (1.0) | 0.0 | 0.0 |
Including remeasurement gains/(losses) in OCI and in Statement of profit or loss, arising from | ||||
1) Changes in demographic assumptions | 0.0 | 0.0 | 0.0 | 0.0 |
2) Changes in financial assumptions | (7.2) | 57.3 | (3.7) | 19.9 |
3) Changes from experience adjustments | (15.8) | (15.5) | (2.5) | (0.6) |
Past service cost | 0.0 | 0.0 | 0.0 | 0.0 |
Payments from the plan | 16.4 | 16.2 | 3.6 | 3.1 |
Transfers | 0.0 | 11.1 | 0.0 | (11.1) |
At the end of the period | (281.7) | (249.6) | (111.0) | (93.3) |
Movement in the fair value of the plan assets | Pensions | Other | ||
(in \u20ac million) | 2023 | 2022 | 2023 | 2022 |
At the beginning of the period | 224.5 | 236.3 | 41.3 | 56.1 |
Interest income | 8.5 | 2.4 | 0.2 | 0.0 |
Remeasurement gains/losses in OCI arising from: | ||||
Return of plan assets (excluding interest income on plan assets) | 14.9 | (35.7) | 0.3 | (0.3) |
Contributions from employer | 17.5 | 14.4 | 10.2 | 5.9 |
Contributions from plan participants | 1.0 | 1.0 | 0.0 | 0.0 |
Transfers | 0.0 | 19.4 | 0.0 | (19.4) |
Benefit payments | (13.6) | (13.3) | (2.0) | (0.9) |
At the end of the period | 252.8 | 224.5 | 50.1 | 41.3 |
Amounts recognised in comprehensive income | Pensions | Other | ||
(in \u20ac million) | 2023 | 2022 | 2023 | 2022 |
Service cost | ||||
Current service cost | (14.5) | (15.9) | (2.9) | 1.8 |
Past service cost | 0.0 | 0.0 | 0.0 | 0.0 |
Settlements | 0.6 | 0.6 | 0.0 | 0.1 |
Net interest on the net defined-benefit liability/(asset) | (1.5) | (0.6) | (3.3) | (1.2) |
Interest cost on defined-benefit obligation | (10.0) | (2.9) | (3.5) | (1.3) |
Interest income on plan assets | 8.5 | 2.4 | 0.2 | 0.0 |
Other | 0.0 | 0.0 | (0.3) | 0.0 |
Defined-benefit costs recognised in profit or loss | (15.3) | (15.9) | (8.0) | 0.6 |
Actuarial gains(/losses) on defined obligations arising from: | ||||
1) Changes in demographic assumptions | 0.0 | 0.0 | 0.0 | 0.0 |
2) Changes in financial assumptions | (7.2) | 57.3 | (3.2) | 19.9 |
3) Changes from experience adjustments | (15.8) | (15.5) | (1.5) | (0.6) |
Return on plan assets (excluding interest income on plan assets) | 14.9 | (35.7) | 0.3 | (0.3) |
Remeasurements of net defined benefit (liability)/asset recognised in other comprehensive income (OCI) | (8.1) | 6.1 | (4.4) | 19.0 |
Total | (23.4) | (9.8) | (12.3) | 19.6 |
Considering the actuarial gains or losses recognised in other comprehensive income for the reimbursement rights (+\u20ac5.9 million for 2023 - see hereafter), the net impact of the remeasurement of post-employments benefit obligations amounts to -\u20ac6.1 million.
(in \u20ac million) | 2023 | 2022 |
Breakdown of defined-benefit obligation by type of plan participants | (392.7) | (342.9) |
Active plan participants | (314.8) | (272.7) |
Terminated plan participants with def.-benefit entitlements | (24.4) | (21.5) |
Retired plan participants and beneficiaries | (53.6) | (48.7) |
Breakdown of defined-benefit obligation by type of benefits | (392.7) | (342.9) |
Retirement and death benefits | (280.6) | (248.4) |
Other post-employment benefits | (98.8) | (82.4) |
Seniority payments | (13.4) | (12.1) |
When determining the appropriate discount rate, the Group considers the interest rates of corporate bonds in currencies consistent with the currencies of the post-employment benefit obligation with at least an 'AA' rating or above, as set by an internationally acknowledged rating agency, and extrapolated as needed along the yield curve to correspond with the expected term of the defined benefit obligation.
A stress test is performed annually. This test verifies that the minimum funding requirements are covered to deal with 'shocks' with probabilities of occurrence of 0.5%.
The members (mostly) contribute to the financing of the retirement benefits by paying a personal contribution.
The annual balance of the defined benefit lump sum is financed by the employer through a recurrent allowance, which is expressed as a percentage of the total payroll of the participants. This percentage is defined by the aggregate cost method and is reviewed annually. This method of financing involves smoothing future costs over the remaining period of the plan. The costs are estimated on a projected basis (taking into account salary growth and inflation). The assumptions related to salary increase, inflation, employee turnover and age term are defined on the basis of historical data from the Company. The mortality tables used are those corresponding to the observed experience within the financing vehicle and take into consideration expected changes in mortality. The Group calculates the net interest on the net defined benefit liability (asset) using the same high-quality bond discount rate (see above) used to measure the defined benefit obligation (net interest approach). These assumptions are challenged on a regular basis.
Exceptional events (such as modifications made to the plan, changes in assumptions and overly short coverage terms) can lead to outstanding payments from the sponsor.
The defined benefit plans expose the Company to actuarial risks such as investment risk, interest-rate risk, longevity risk and salary risk.
INVESTMENT RISK
The present value of the defined benefit plan liability is calculated using a discount rate which is determined based on high-quality corporate bonds. The difference between the actual return on assets and the interest income on plan assets is included in the remeasurements component (OCI). Currently the plan has a relatively balanced range of investments, as shown below:
(in \u20ac million) | 2023 | 2022 |
Investments quoted in an active market | 73.44% | 72.44% |
Shares - Eurozone | 13.42% | 13.24% |
Shares - outside Eurozone | 17.58% | 17.34% |
Government bonds - Eurozone | 0.95% | 0.94% |
Other bonds - Eurozone | 25.09% | 24.75% |
Other bonds - outside Eurozone | 16.40% | 16.18% |
Unquoted investments | 26.56% | 27.56% |
Qualifying insurance contracts | 11.02% | 12.23% |
Property | 2.25% | 2.21% |
Cash and cash equivalents | 2.85% | 2.81% |
Other | 10.45% | 10.31% |
Total (in %) | 100.00% | 100.00% |
Due to the long-term nature of the plan liabilities, it is considered appropriate that a reasonable portion of the plan assets be invested in equity securities to leverage the return generated by the fund. In Germany, all plan assets are invested in insurance agreements.
INTEREST RISK
A decrease in the bond interest rate will increase the plan liability. However, this will be partially offset by an increase in the return on the plan\u2019s assets, of which approximately 95% is now invested in pension funds with an expected return of 3.12%.
LONGEVITY RISK
The present value of the defined benefit plan liability is calculated based on the best estimate of the life expectancy of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan's liability. The prospective mortality tables from the IA/BE are used in Belgium and the 2018 Heubeck tables are used in Germany.
SALARY RISK
The present value of the defined benefit plan liability is calculated based on the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan\u2019s liability.
ACTUARIAL ASSUMPTIONS | ||||
(in % and years) | Belgium | Germany | ||
2023 | 2022 | 2023 | 2022 | |
Discount rate | ||||
- Pensions - defined benefit plans and cash balance - best off plans | 3.23% | 3.75% | 3.13% | 3.59% |
- Pensions - defined contribution plans | 3.16% | 3.77% | \u2014% | \u2014% |
- Other | 3.16% | 3.75% | 3.13% | 3.59% |
Expected average salary increase (excluding inflation) | 1.30% | 1.00% | 3.00% | 2.75% |
Expected inflation | 2.10% | 2.10% | 2.25% | 2.50% |
Expected increase in health benefits (including inflation) | 3.10% | 3.10% | 2.25% | 2.25% |
Expected increase in tariff advantages | 2.10% | 2.10% | 0.0 | 0.0 |
Average assumed retirement age | ||||
- Employee | 63.0 | 63.0 | 65.0 | 65.0 |
- Manager | 65.0 | 65.0 | 65.0 | 65.0 |
Life expectancy in years of a pensioner retiring at age 65 at closing date:* | ||||
Life expectancy for a 65 year old male | 19.9 | 19.9 | 20.8 | 20.7 |
Life expectancy for a 65 year old female | 23.6 | 23.6 | 24.2 | 24.1 |
*Mortality tables used: IABE in Belgium, 2018 Heubeck in Germany |
(in years\u00a0) | Belgium | Germany | ||
2023 | 2022 | 2023 | 2022 | |
Weighted average duration of the defined benefit obligation | 6.1 | 8.0 | 24.9 | 23.4 |
Weighted average duration of the defined contribution plans | 10.7 | 9.7 | n.r. | n.r. |
Weighted average duration of the post-employment benefits other than pensions | 12.5 | 13.2 | 13.5 | 12.7 |
In Germany, the liability of the defined contribution plans is completely covered by the plan assets. Therefore, no weighted average duration is necessary and thus not calculated.
The actual return on plan assets in percentage terms for 2023 was positive, ranged between 2.6% and 10.1% (compared with a range of -2.6% to -18.0% in 2022).
Below is an overview of the expected cash outflows for the DB plans:
Future expected cash outflows | < 12 months | 1-5 years | 6 - 10 years |
Pensions | (6.0) | (21.8) | (28.1) |
Other | (3.0) | (10.8) | (12.5) |
Total (in \u20ac million) | (9.0) | (32.6) | (40.6) |
There is some degree of uncertainty linked to the above expected cash outflows which can be explained by the following factors:
\u2022differences between assumptions and actual data can occur, e.g. retirement age and future salary increase;
\u2022the expected cash outflows shown above are based on a closed population and therefore do not incorporate future new hires;
\u2022future premiums are calculated based on the last known aggregate cost rate, which is reviewed on an annual basis and varies depending on the return on plan assets, the actual salary increase as opposed to the assumptions, and unexpected changes in the population.
SENSITIVITY ANALYSIS | ||
Effect on defined benefit obligation | Belgium | Germany |
(in \u20ac million) | Increase (+) / Decrease (-) | Increase (+) / Decrease (-) |
Impact on the net defined-benefit obligation of an increase in: | ||
Discount rate (0.5% movement) | 7.5 | 6.2 |
Average salary increase - excl. inflation (0.5% movement) | (6.8) | 3.5 |
Inflation (0.25% movement) | (3.3) | (0.2) |
Increase of healthcare care benefits (1.0% movement) | (0.3) | n.r. |
Life expectancy of pensions (1 year) | 1.4 | (1.0) |
REIMBURSEMENT RIGHTS (BELGIUM)
As described in Note 6.6, a non-current asset (within other financial assets) is recognised as reimbursement rights linked to the defined benefit obligation for the population benefitting from the interest scheme and medical plan liabilities and tariff benefits for retired Elia employees. Each change in these liabilities equally affects the corresponding reimbursement rights under non-current other financial assets.
The change in reimbursement rights is presented below:
Movement in the present value of the reimbursement rights | Pensions | Other | ||
(in \u20ac million) | 2023 | 2022 | 2023 | 2022 |
At the beginning of the period | (14.0) | (19.0) | (19.7) | (27.2) |
Current service costs | ||||
Interest cost/income | (0.5) | (0.1) | (0.8) | (0.3) |
Actuarial gains(/losses) on defined obligations arising from: | ||||
1) Changes in demographic assumptions | 0.0 | 0.0 | 0.0 | 0.0 |
2) Changes in financial assumptions | (0.4) | 3.0 | (1.8) | 8.4 |
3) Changes from experience adjustments | (0.7) | 0.0 | (3.0) | (2.4) |
Payments from the plan | 2.3 | 2.2 | 1.9 | 1.8 |
At the end of the period | (13.3) | (14.0) | (23.5) | (19.7) |
DEPRECIATION, AMORTISATION, IMPAIRMENT AND CHANGES IN PROVISIONS | ||
(in \u20ac million) | 2023 | 2022 |
Amortisation of intangible assets | 40.2 | 30.2 |
Depreciation of property, plant and equipment | 517.3 | 483.6 |
Total depreciation and amortisation | 557.5 | 513.7 |
Impairment of inventories | 0.0 | 0.0 |
Total impairment | 0.0 | 0.0 |
Provisions for litigations | (2.6) | (1.5) |
Environmental provisions | (2.0) | 0.3 |
Other provisions | 0.0 | 0.0 |
Changes in provisions | (4.6) | (1.3) |
Depreciation, amortisation, impairment and changes in provisions | 552.9 | 512.4 |
The total \u2018depreciation, amortisation, impairment and changes in provisions\u2019 increased from \u20ac512.4 million in 2022 to \u20ac552.9 million in 2023, mainly because of an increase in depreciation of property, plant and equipment due to increasing fixed assets.
A detailed description and movement schedule is provided in other sections for 'Intangible assets' (see Note\u00a06.2), 'Property, plant and equipment' (see Note\u00a06.1) and 'Provisions' (see Note\u00a06.15).
OTHER EXPENSES | ||
(in \u20ac million) | 2023 | 2022 |
Taxes other than income tax | 22.1 | 15.4 |
Loss on disposal/sale of property, plant and equipment | 19.2 | 17.8 |
Impairment on receivables | 2.6 | 1.2 |
Other | 2.5 | 10.0 |
Total | 46.4 | 44.4 |
In 2023, the share of Elia Transmission (Belgium) in the Group\u2019s other expenses was \u20ac25.3 million (\u20ac26.6 million in 2022), 50Hertz Transmission (Germany)\u2019s total share amounted to \u20ac15.6 million (\u20ac17.0\u00a0million in 2022) and the share of the non-regulated activities and Nemo Link segment accounted for \u20ac6.7 million (\u20ac0.9 million in 2022).
Taxes other than income tax mainly consist of property taxes. The increase is mainly due to property taxes paid by the Group in Germany (and to a large extent rebilled to partners).
Losses on disposal for property, plant and equipment totalled \u20ac11.5 million for Elia Transmission (Belgium), compared with \u20ac12.8 million in the previous year. 50Hertz Transmission (Germany) recorded \u20ac7.7 million of losses on disposal for property, plant and equipment in 2023, from \u20ac5.0 million in 2022.
(in \u20ac million) | 2023 | 2022 |
Finance income | 61.6 | 75.4 |
Interest income on cash and cash equivalents and granted loans | 58.5 | 4.2 |
Other financial income | 3.2 | 71.2 |
Finance costs | (181.0) | (119.0) |
Interest expense on eurobonds and other bank borrowings | (162.4) | (112.0) |
Interest expense on derivatives | 2.8 | (0.6) |
Interest cost on leasing | (1.3) | (1.3) |
Other financial costs | (20.1) | (5.1) |
Net finance costs | (119.3) | (43.6) |
Finance income decreased from \u20ac75.4 million in 2022 to \u20ac61.6 million in 2023. The global variation results from opposite effects within this line item:
\u2022Increase in interest income following higher cash balances over the year (especially in Germany) in a higher interest rate environment, combined with a dynamic investment policy in 2023 (+\u20ac53.3 million)
\u2022Decrease in other financial income due to a negative impact of the reevaluation of provision for congestion income from interconnectors to be returned to grid customers in Germany: the positive impact of \u20ac69.2 million in 2022 turns out to be negative, with a charge of \u20ac4.2 million in 2023
The interest expenses on Eurobonds and other bank borrowings increased by \u20ac50.4 million compared to the previous year. See Note 6.13 for more details regarding the loans outstanding and the interest paid in 2023.
The interest cost on leasing is stable compared to previous year.
Other financial costs increased from \u20ac5.1 million in 2022 to \u20ac20.1 million in 2023 (+\u20ac15.0 million).
\u2022In 2022, a net income on German regulatory issues (credit amount of \u20ac69.2 million) was reported in finance income in connection with the provisions for congestion management. As explained here above, in 2023, a net charge is reported for \u20ac4.2 million.
\u2022The interests on provisions and employee benefits have increased by respectively \u20ac3.2 million and \u20ac3.0 million, the remaining variation being mainly explained by bank fees and commissions and fees on debts (+\u20ac4.3 million).
(in \u20ac million) | 2023 | 2022 |
Finance income | 61.6 | 75.4 |
Interest income on cash and cash equivalents and granted loans | 58.5 | 4.2 |
Other financial income | 3.2 | 71.2 |
Finance costs | (181.0) | (119.0) |
Interest expense on eurobonds and other bank borrowings | (162.4) | (112.0) |
Interest expense on derivatives | 2.8 | (0.6) |
Interest cost on leasing | (1.3) | (1.3) |
Other financial costs | (20.1) | (5.1) |
Net finance costs | (119.3) | (43.6) |
Finance income decreased from \u20ac75.4 million in 2022 to \u20ac61.6 million in 2023. The global variation results from opposite effects within this line item:
\u2022Increase in interest income following higher cash balances over the year (especially in Germany) in a higher interest rate environment, combined with a dynamic investment policy in 2023 (+\u20ac53.3 million)
\u2022Decrease in other financial income due to a negative impact of the reevaluation of provision for congestion income from interconnectors to be returned to grid customers in Germany: the positive impact of \u20ac69.2 million in 2022 turns out to be negative, with a charge of \u20ac4.2 million in 2023
The interest expenses on Eurobonds and other bank borrowings increased by \u20ac50.4 million compared to the previous year. See Note 6.13 for more details regarding the loans outstanding and the interest paid in 2023.
The interest cost on leasing is stable compared to previous year.
Other financial costs increased from \u20ac5.1 million in 2022 to \u20ac20.1 million in 2023 (+\u20ac15.0 million).
\u2022In 2022, a net income on German regulatory issues (credit amount of \u20ac69.2 million) was reported in finance income in connection with the provisions for congestion management. As explained here above, in 2023, a net charge is reported for \u20ac4.2 million.
\u2022The interests on provisions and employee benefits have increased by respectively \u20ac3.2 million and \u20ac3.0 million, the remaining variation being mainly explained by bank fees and commissions and fees on debts (+\u20ac4.3 million).
(in \u20ac million) | 2023 | 2022 |
Finance income | 61.6 | 75.4 |
Interest income on cash and cash equivalents and granted loans | 58.5 | 4.2 |
Other financial income | 3.2 | 71.2 |
Finance costs | (181.0) | (119.0) |
Interest expense on eurobonds and other bank borrowings | (162.4) | (112.0) |
Interest expense on derivatives | 2.8 | (0.6) |
Interest cost on leasing | (1.3) | (1.3) |
Other financial costs | (20.1) | (5.1) |
Net finance costs | (119.3) | (43.6) |
Finance income decreased from \u20ac75.4 million in 2022 to \u20ac61.6 million in 2023. The global variation results from opposite effects within this line item:
\u2022Increase in interest income following higher cash balances over the year (especially in Germany) in a higher interest rate environment, combined with a dynamic investment policy in 2023 (+\u20ac53.3 million)
\u2022Decrease in other financial income due to a negative impact of the reevaluation of provision for congestion income from interconnectors to be returned to grid customers in Germany: the positive impact of \u20ac69.2 million in 2022 turns out to be negative, with a charge of \u20ac4.2 million in 2023
The interest expenses on Eurobonds and other bank borrowings increased by \u20ac50.4 million compared to the previous year. See Note 6.13 for more details regarding the loans outstanding and the interest paid in 2023.
The interest cost on leasing is stable compared to previous year.
Other financial costs increased from \u20ac5.1 million in 2022 to \u20ac20.1 million in 2023 (+\u20ac15.0 million).
\u2022In 2022, a net income on German regulatory issues (credit amount of \u20ac69.2 million) was reported in finance income in connection with the provisions for congestion management. As explained here above, in 2023, a net charge is reported for \u20ac4.2 million.
\u2022The interests on provisions and employee benefits have increased by respectively \u20ac3.2 million and \u20ac3.0 million, the remaining variation being mainly explained by bank fees and commissions and fees on debts (+\u20ac4.3 million).
(in \u20ac million) | 2023 | 2022 |
Finance income | 61.6 | 75.4 |
Interest income on cash and cash equivalents and granted loans | 58.5 | 4.2 |
Other financial income | 3.2 | 71.2 |
Finance costs | (181.0) | (119.0) |
Interest expense on eurobonds and other bank borrowings | (162.4) | (112.0) |
Interest expense on derivatives | 2.8 | (0.6) |
Interest cost on leasing | (1.3) | (1.3) |
Other financial costs | (20.1) | (5.1) |
Net finance costs | (119.3) | (43.6) |
Finance income decreased from \u20ac75.4 million in 2022 to \u20ac61.6 million in 2023. The global variation results from opposite effects within this line item:
\u2022Increase in interest income following higher cash balances over the year (especially in Germany) in a higher interest rate environment, combined with a dynamic investment policy in 2023 (+\u20ac53.3 million)
\u2022Decrease in other financial income due to a negative impact of the reevaluation of provision for congestion income from interconnectors to be returned to grid customers in Germany: the positive impact of \u20ac69.2 million in 2022 turns out to be negative, with a charge of \u20ac4.2 million in 2023
The interest expenses on Eurobonds and other bank borrowings increased by \u20ac50.4 million compared to the previous year. See Note 6.13 for more details regarding the loans outstanding and the interest paid in 2023.
The interest cost on leasing is stable compared to previous year.
Other financial costs increased from \u20ac5.1 million in 2022 to \u20ac20.1 million in 2023 (+\u20ac15.0 million).
\u2022In 2022, a net income on German regulatory issues (credit amount of \u20ac69.2 million) was reported in finance income in connection with the provisions for congestion management. As explained here above, in 2023, a net charge is reported for \u20ac4.2 million.
\u2022The interests on provisions and employee benefits have increased by respectively \u20ac3.2 million and \u20ac3.0 million, the remaining variation being mainly explained by bank fees and commissions and fees on debts (+\u20ac4.3 million).
(in \u20ac million) | 2023 | 2022 |
Finance income | 61.6 | 75.4 |
Interest income on cash and cash equivalents and granted loans | 58.5 | 4.2 |
Other financial income | 3.2 | 71.2 |
Finance costs | (181.0) | (119.0) |
Interest expense on eurobonds and other bank borrowings | (162.4) | (112.0) |
Interest expense on derivatives | 2.8 | (0.6) |
Interest cost on leasing | (1.3) | (1.3) |
Other financial costs | (20.1) | (5.1) |
Net finance costs | (119.3) | (43.6) |
Finance income decreased from \u20ac75.4 million in 2022 to \u20ac61.6 million in 2023. The global variation results from opposite effects within this line item:
\u2022Increase in interest income following higher cash balances over the year (especially in Germany) in a higher interest rate environment, combined with a dynamic investment policy in 2023 (+\u20ac53.3 million)
\u2022Decrease in other financial income due to a negative impact of the reevaluation of provision for congestion income from interconnectors to be returned to grid customers in Germany: the positive impact of \u20ac69.2 million in 2022 turns out to be negative, with a charge of \u20ac4.2 million in 2023
The interest expenses on Eurobonds and other bank borrowings increased by \u20ac50.4 million compared to the previous year. See Note 6.13 for more details regarding the loans outstanding and the interest paid in 2023.
The interest cost on leasing is stable compared to previous year.
Other financial costs increased from \u20ac5.1 million in 2022 to \u20ac20.1 million in 2023 (+\u20ac15.0 million).
\u2022In 2022, a net income on German regulatory issues (credit amount of \u20ac69.2 million) was reported in finance income in connection with the provisions for congestion management. As explained here above, in 2023, a net charge is reported for \u20ac4.2 million.
\u2022The interests on provisions and employee benefits have increased by respectively \u20ac3.2 million and \u20ac3.0 million, the remaining variation being mainly explained by bank fees and commissions and fees on debts (+\u20ac4.3 million).
(in \u20ac million) | 2023 | 2022 |
Finance income | 61.6 | 75.4 |
Interest income on cash and cash equivalents and granted loans | 58.5 | 4.2 |
Other financial income | 3.2 | 71.2 |
Finance costs | (181.0) | (119.0) |
Interest expense on eurobonds and other bank borrowings | (162.4) | (112.0) |
Interest expense on derivatives | 2.8 | (0.6) |
Interest cost on leasing | (1.3) | (1.3) |
Other financial costs | (20.1) | (5.1) |
Net finance costs | (119.3) | (43.6) |
Finance income decreased from \u20ac75.4 million in 2022 to \u20ac61.6 million in 2023. The global variation results from opposite effects within this line item:
\u2022Increase in interest income following higher cash balances over the year (especially in Germany) in a higher interest rate environment, combined with a dynamic investment policy in 2023 (+\u20ac53.3 million)
\u2022Decrease in other financial income due to a negative impact of the reevaluation of provision for congestion income from interconnectors to be returned to grid customers in Germany: the positive impact of \u20ac69.2 million in 2022 turns out to be negative, with a charge of \u20ac4.2 million in 2023
The interest expenses on Eurobonds and other bank borrowings increased by \u20ac50.4 million compared to the previous year. See Note 6.13 for more details regarding the loans outstanding and the interest paid in 2023.
The interest cost on leasing is stable compared to previous year.
Other financial costs increased from \u20ac5.1 million in 2022 to \u20ac20.1 million in 2023 (+\u20ac15.0 million).
\u2022In 2022, a net income on German regulatory issues (credit amount of \u20ac69.2 million) was reported in finance income in connection with the provisions for congestion management. As explained here above, in 2023, a net charge is reported for \u20ac4.2 million.
\u2022The interests on provisions and employee benefits have increased by respectively \u20ac3.2 million and \u20ac3.0 million, the remaining variation being mainly explained by bank fees and commissions and fees on debts (+\u20ac4.3 million).
Total comprehensive income includes both the result of the period recognised in the statement of profit or loss and other comprehensive income recognised in equity. \u2018Other comprehensive income\u2019 includes all changes in equity other than owner-related changes, which are reported in the statement of changes in equity.
The total other comprehensive income for 2023 amounts to \u20ac272.2 million negative impact, representing a significant decrease compared with the previous year (\u20ac65.6 million negative impact). The most important drivers of this are described below.
Cash flow hedges
Since 2021, 50Hertz applies hedge accounting for the purpose of reducing the risk of fluctuations in the expected amount of grid losses. Due to the drop in energy prices over the year, the fair value of these contracts decreased from +\u20ac129.6 million in 2022 to -\u20ac224.8 million end of 2023, or a decrease of \u20ac354.5 million (pre-tax). This impact has been amplified by the negative fair value variation of the derivates contracted in Belgium in connection with the pre-hedging of probable forecast debt transactions (bonds issuance). The fair value of these derivatives decreased from \u20ac65.3 million in 2022 to \u20ac40.2 million (pre-tax) end of 2023. We refer to notes 6.18 and 8.1 for further details.
The related tax on these elements amounts to +\u20ac112.7 million.
Financial assets measured at fair value through other comprehensive income
There was no significant remeasurement in 2023. The measurement at fair value of the participation of EEX (see note 6.6) , in which 50Hertz Transmission holds a 5.4% stake resulted in a gain of \u20ac32,7 million as of 31 December 2022.
Remeasurements of post-employment benefit obligations
The other comprehensive income on post-employment obligations had a negative impact amounting to \u20ac6.5\u00a0million. This impact is mainly explained by the decrease in the discount rate and the experience adjustments resulting from the higher salary increase, partly offset by the positive return of the plan assets. See Note 6.14 for more details.
RECOGNISED IN PROFIT OR LOSS | ||
The consolidated income statement includes the following taxes: | ||
(in \u20ac million) | 2023 | 2022 |
Current year | 120.7 | 112.8 |
Adjustments for prior years | 1.2 | (0.7) |
Total current income tax expenses | 121.9 | 112.1 |
Origination from and reversal of temporary differences | 33.6 | 35.4 |
Total deferred taxes expenses | 33.6 | 35.4 |
Total income taxes and deferred taxes recognised in profit and loss | 155.5 | 147.5 |
Total income tax expenses 2023 are higher than in 2022. The increase is mainly explained by the higher profit generated in Belgium .
Deferred income taxes are discussed further in Note\u00a06.7.
RECONCILIATION OF THE EFFECTIVE TAX RATE | ||
The tax on the Group's profit (loss) before tax differs from the theoretical amount that would arise using the Belgian statutory tax rate applicable to profits (losses) of the consolidated companies: | ||
(in \u20ac million) | 2023 | 2022 |
Profit before income tax | 555.0 | 555.7 |
Domestic corporate income tax | 25.0% | 25.0% |
Income tax, using the domestic corporate tax rate | (138.8) | (138.9) |
Effect of the foreign tax rate | (16.8) | (17.5) |
Share of profit of equity accounted investees, net of tax | 8.3 | 10.0 |
Non-deductible expenses | (16.6) | (11.0) |
Adjustments for prior years | (0.1) | 0.8 |
Tax credits and other tax reductions | 5.5 | 7.3 |
Effect of unrecognized deferred tax assets on tax loss carry-forwards | (5.9) | (4.6) |
Tax on hybrid securities | 8.6 | 4.8 |
Corporate interest restriction | 0.0 | 0.0 |
Other | 0.4 | 1.6 |
Total income taxes and deferred taxes recognised in profit and loss | (155.5) | (147.5) |
* The income tax rate in Germany amounts to 29.93% in 2023 and 29.93% in 2022, for Belgium the income tax rate is 25% for 2022 and 2023 |
The effective tax rate 2023 of the Group is 28.00%, compared to 26.54% in 2022. This increase is mainly explained by the higher contribution of the Belgian segment to the profit before tax at an higher effective tax rate compared to prior year (from 17.98% to 20.85% due to lower contribution of the equity accounted investees and lower tax credits in 2023) .
The Group has applied the temporary exception issued by the IASB in May 2023 from the accounting requirements for deferred taxes in IAS 12. Accordingly, the Group neither recognises nor discloses information about deferred tax assets and liabilities related to Pillar Two income taxes.
On 14 December 2023, the government of Belgium, where the parent company is incorporated, enacted the Pillar Two income taxes legislation effective from 1 January 2024. Under the legislation, the parent company will be required to pay, in Belgium, top-up tax on profits of its subsidiaries that are taxed at an effective tax rate of less than 15 per cent. .
Based on analyses performed, the Group does however expect not to be subject to the top-up tax in relation to its operations in any of these jurisdictions.
\u2022As the newly enacted legislations are only effective as from 1 January 2024, there is no current tax impact for the year ended 31 December 2023.
\u2022If the top-up tax had applied in 2023, then, under the applicable Transitional Safe Harbour rules, no minimum top-up tax would be due for any of these jurisdictions.
\u2022Based on the Group\u2019s income tax forecasts, and based on currently available information, a similar conclusion can be reached for the foreseeable future (2024 through 2026)\u201d.
RECOGNISED DEFERRED TAX ASSETS AND LIABILITIES | ||||
(in \u20ac million) | 2023 | 2022 | ||
Assets | Liability | Assets | Liability | |
Property, plant and equipment | 23.3 | (285.9) | 25.1 | (258.6) |
Intangible assets | 0.0 | (16.2) | 0.0 | (15.8) |
Financial assets | 67.4 | (10.1) | 7.4 | (62.5) |
Non-current trade and other receivables | 9.3 | (13.1) | 1.2 | 0.0 |
Interest-bearing loans and other non-current financial liabilities | 35.8 | (10.5) | 33.9 | (5.5) |
Employee benefits | 20.6 | (9.2) | 19.2 | (10.8) |
Provisions | 40.9 | 0.0 | 36.3 | 0.0 |
Deferred revenue | 31.9 | (1.2) | 28.2 | (1.1) |
Regulatory liabilities | 0.0 | (12.3) | 79.4 | (76.3) |
Deferred tax on investment grants | 0.0 | (25.3) | 0.0 | (25.3) |
Losses carried forward | 11.2 | 12.6 | ||
Other items | 8.5 | (9.9) | 0.3 | (9.5) |
Tax asset/liability before offsetting | 249.0 | (393.8) | 243.6 | (465.4) |
Offsetting of tax | (247.0) | 247.0 | (241.8) | 241.8 |
Net tax asset/(liability) | 2.1 | (146.9) | 1.8 | (223.6) |
The changes in deferred tax assets and liabilities can be presented as follows:
CHANGES IN DEFERRED TAX ASSETS AND LIABILITIES RESULTING FROM MOVEMENTS IN TEMPORARY DIFFERENCES DURING THE FINANCIAL YEAR | |||||
(in \u20ac million) | Net tax asset/(liability) | Recognised in income statement | Recognised in comprehensive income | Other | Total |
2022 | |||||
Property, plant and equipment | (221.0) | (13.8) | 0.0 | 0.0 | (234.8) |
Intangible assets | (15.4) | (0.4) | 0.0 | 0.0 | (15.8) |
Financial assets | (105.7) | 0.0 | 50.6 | 0.0 | (55.1) |
Non-current trade and other receivables | 1.1 | 0.0 | 0.0 | 0.0 | 1.1 |
Interest-bearing loans and other non-current financial liabilities | 46.3 | (6.9) | (0.1) | 0.0 | 39.3 |
Employee benefits | 14.9 | (1.6) | (4.9) | 0.0 | 8.5 |
Provisions | 44.6 | 6.1 | 0.0 | 0.0 | 50.7 |
Deferred revenue | 14.6 | 2.6 | 0.0 | 0.0 | 17.2 |
Regulatory liabilities | 22.2 | (19.1) | 0.0 | 0.0 | 3.0 |
Deferred tax on investment grants | (1.0) | 0.0 | 0.0 | 0.0 | (1.1) |
Losses carried forward | 1.0 | 0.0 | 0.0 | 0.0 | 1.0 |
Other items | (9.3) | (2.4) | 0.0 | 0.0 | (11.7) |
Total | (207.8) | (35.4) | 45.6 | 0.0 | (196.6) |
-
(in \u20ac million) | Net tax asset/(liability) | Recognised in income statement | Recognised in comprehensive income | Other | Total |
2023 | |||||
Property, plant and equipment | (233.5) | (29.1) | 0.0 | 0.0 | (262.6) |
Intangible assets | (15.8) | (0.4) | 0.0 | 0.0 | (16.2) |
Financial assets | (55.1) | 0.0 | 112.5 | 0.0 | 57.3 |
Non-current trade and other receivables | 1.2 | (5.0) | 0.0 | 0.0 | (3.8) |
Interest-bearing loans and other non-current financial liabilities | 28.4 | 0.3 | (3.5) | 0.0 | 25.2 |
Employee benefits | 8.4 | 1.3 | 1.7 | 0.0 | 11.4 |
Provisions | 36.3 | 4.7 | 0.0 | 0.0 | 40.9 |
Deferred revenue | 27.1 | 3.6 | 0.0 | 0.0 | 30.7 |
Regulatory liabilities | 3.1 | (15.4) | 0.0 | 0.0 | (12.3) |
Deferred tax on investment grants | (25.3) | 0.0 | 0.0 | 0.0 | (25.3) |
Losses carried forward | 12.6 | (1.4) | 0.0 | 0.0 | 11.2 |
Other items | (9.2) | 7.9 | 0.0 | 0.0 | (1.4) |
Total | (221.8) | (33.6) | 110.7 | 0.0 | (144.8) |
The deferred tax liability on right-of-use assets from IFRS 16 leases is shown under \u2018Property, plant and equipment\u2019, whilst the deferred tax asset on finance lease liability is shown under \u2019Interest-bearing loans and other non-current financial liabilities\u2019.
UNRECOGNISED DEFERRED TAX ASSETS OR LIABILITIES
As at 31 December 2023, the group had unrecognised deferred tax assets for a total of \u20ac41.7 million. This amount can be summarised follows:
Gross | DT | |
12.9 | 3.2 | |
Realto | 2.8 | 0.7 |
EGI (including branches) | 1.3 | 0.3 |
Windgrid | 8.9 | 2.2 |
Dividend received deduction | 42.5 | 10.6 |
Elia Group | 38.1 | 9.5 |
Eurogrid International (BE) | 4.3 | 1.1 |
EGI | 0.2 | 0.0 |
Exceeding borrowing costs | 111.5 | 27.9 |
Elia Group | 111.5 | 27.9 |
TOTAL | 167.0 | 41.7 |
RECOGNISED IN PROFIT OR LOSS | ||
The consolidated income statement includes the following taxes: | ||
(in \u20ac million) | 2023 | 2022 |
Current year | 120.7 | 112.8 |
Adjustments for prior years | 1.2 | (0.7) |
Total current income tax expenses | 121.9 | 112.1 |
Origination from and reversal of temporary differences | 33.6 | 35.4 |
Total deferred taxes expenses | 33.6 | 35.4 |
Total income taxes and deferred taxes recognised in profit and loss | 155.5 | 147.5 |
Total income tax expenses 2023 are higher than in 2022. The increase is mainly explained by the higher profit generated in Belgium .
Deferred income taxes are discussed further in Note\u00a06.7.
RECONCILIATION OF THE EFFECTIVE TAX RATE | ||
The tax on the Group's profit (loss) before tax differs from the theoretical amount that would arise using the Belgian statutory tax rate applicable to profits (losses) of the consolidated companies: | ||
(in \u20ac million) | 2023 | 2022 |
Profit before income tax | 555.0 | 555.7 |
Domestic corporate income tax | 25.0% | 25.0% |
Income tax, using the domestic corporate tax rate | (138.8) | (138.9) |
Effect of the foreign tax rate | (16.8) | (17.5) |
Share of profit of equity accounted investees, net of tax | 8.3 | 10.0 |
Non-deductible expenses | (16.6) | (11.0) |
Adjustments for prior years | (0.1) | 0.8 |
Tax credits and other tax reductions | 5.5 | 7.3 |
Effect of unrecognized deferred tax assets on tax loss carry-forwards | (5.9) | (4.6) |
Tax on hybrid securities | 8.6 | 4.8 |
Corporate interest restriction | 0.0 | 0.0 |
Other | 0.4 | 1.6 |
Total income taxes and deferred taxes recognised in profit and loss | (155.5) | (147.5) |
* The income tax rate in Germany amounts to 29.93% in 2023 and 29.93% in 2022, for Belgium the income tax rate is 25% for 2022 and 2023 |
The effective tax rate 2023 of the Group is 28.00%, compared to 26.54% in 2022. This increase is mainly explained by the higher contribution of the Belgian segment to the profit before tax at an higher effective tax rate compared to prior year (from 17.98% to 20.85% due to lower contribution of the equity accounted investees and lower tax credits in 2023) .
The Group has applied the temporary exception issued by the IASB in May 2023 from the accounting requirements for deferred taxes in IAS 12. Accordingly, the Group neither recognises nor discloses information about deferred tax assets and liabilities related to Pillar Two income taxes.
On 14 December 2023, the government of Belgium, where the parent company is incorporated, enacted the Pillar Two income taxes legislation effective from 1 January 2024. Under the legislation, the parent company will be required to pay, in Belgium, top-up tax on profits of its subsidiaries that are taxed at an effective tax rate of less than 15 per cent. .
Based on analyses performed, the Group does however expect not to be subject to the top-up tax in relation to its operations in any of these jurisdictions.
\u2022As the newly enacted legislations are only effective as from 1 January 2024, there is no current tax impact for the year ended 31 December 2023.
\u2022If the top-up tax had applied in 2023, then, under the applicable Transitional Safe Harbour rules, no minimum top-up tax would be due for any of these jurisdictions.
\u2022Based on the Group\u2019s income tax forecasts, and based on currently available information, a similar conclusion can be reached for the foreseeable future (2024 through 2026)\u201d.
BASIC EPS
Basic earnings per share are calculated by dividing the net profit attributable to the Company\u2019s shareholders (after adjustment for the distribution on hybrid securities) (\u20ac324.5\u00a0million) by the weighted average number of ordinary shares outstanding during the year.
(in \u20ac million) | 2023 | 2022 |
Profit attributable to equity holders of ordinary shares | 324 | 342 |
Effect of dilutive potential ordinary shares | 0 | 0 |
Earnings for the purposes of diluted earnings per share | 324 | 342 |
Ordinary shares issued on 1\u00a0January | 73,515,839 | 68,728,055 |
Treasury shares as at 1 January | -13,480 | -7,248 |
Ordinary shares issued in April 2023 | 5,984 | |
Ordinary shares issued in June 2022 | 4,739,864 | |
Ordinary shares issued in December 2022 | 47,920 | |
Treasury shares - net movement for the year | -8,599 | -6,232 |
Outstanding ordinary shares as at 31 December | 73,499,744 | 73,502,359 |
Weighted average of outstanding ordinary shares (basic) | 73,499,387 | 71,142,846 |
Effect of dilutive potential ordinary shares | 0 | 0 |
Weighted average number of outstanding ordinary shares (diluted) | 73,499,387 | 71,142,846 |
Basic earnings per share (in \u20ac) | 4.41 | 4.80 |
Diluted earnings per share (in \u20ac) | 4.41 | 4.80 |
DILUTED EPS
Diluted earnings per share are determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options and convertible bonds.
Cash flow hedges
Since 2021, 50Hertz applies hedge accounting for the purpose of reducing the risk of fluctuations in the expected amount of grid losses. Due to the drop in energy prices over the year, the fair value of these contracts decreased from +\u20ac129.6 million in 2022 to -\u20ac224.8 million end of 2023, or a decrease of \u20ac354.5 million (pre-tax). This impact has been amplified by the negative fair value variation of the derivates contracted in Belgium in connection with the pre-hedging of probable forecast debt transactions (bonds issuance). The fair value of these derivatives decreased from \u20ac65.3 million in 2022 to \u20ac40.2 million (pre-tax) end of 2023. We refer to notes 6.18 and 8.1 for further details.
The related tax on these elements amounts to +\u20ac112.7 million.
Financial assets measured at fair value through other comprehensive income
There was no significant remeasurement in 2023. The measurement at fair value of the participation of EEX (see note 6.6) , in which 50Hertz Transmission holds a 5.4% stake resulted in a gain of \u20ac32,7 million as of 31 December 2022.
The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy.
Carrying amount | Fair value | ||||||||
(in \u20ac million) | Designated at fair value | Fair value through OCI | Amortised cost | Other financial liabilities at amortised cost | Total | Level 1 | Level 2 | Level 3 | Total |
Balance at 31 December 2022 | |||||||||
Other financial assets | 7.0 | 296.1 | 33.8 | 336.9 | 226.6 | 76.4 | 303.1 | ||
Equity instruments at fair value through other comprehensive income | 76.4 | 76.4 | 76.4 | 76.4 | |||||
Equity instruments at fair value through income | 7.0 | 7.0 | 7.0 | 7.0 | |||||
Derivatives | 219.7 | 219.7 | 219.7 | 219.7 | |||||
Regulatory assets | 33.8 | 33.8 | |||||||
Trade and other receivables (Current and Non-current) | 1,367.1 | 1,367.1 | |||||||
Cash and cash equivalents | 4,151.2 | 4,151.2 | |||||||
Loans and borrowings (Current and Non-Current) | (8,582.8) | (8,582.8) | (8,316.6) | 0.0 | (8,356.3) | ||||
Unsecured bond issues | (7,243.0) | (7,243.0) | (7,148.9) | (39.7) | 0.0 | (7,188.6) | |||
Unsecured financial bank loans and other loans | (1,167.7) | (1,167.7) | (1,167.7) | (1,167.7) | |||||
Lease liabilities | (90.2) | (90.2) | |||||||
Accrued interests | (81.9) | (81.9) | |||||||
Other non-current liabilities | (24.7) | (24.7) | |||||||
out of which, Derivatives | (24.7) | (24.7) | (24.7) | (24.7) | |||||
Trade and other payables | (4,804.2) | (4,804.2) | |||||||
Total | 7.0 | 271.4 | 5,552.1 | (13,387.0) | (7,556.5) | n.r. | n.r. | n.r. | n.r. |
Balance at 31 December 2023 | |||||||||
Other financial assets | 7.5 | 83.9 | 36.8 | 128.2 | 14.6 | 76.7 | 91.4 | ||
Equity instruments at fair value through other comprehensive income | 76.7 | 76.7 | 76.7 | 76.7 | |||||
Equity instruments at fair value through income | 7.5 | 7.5 | 7.5 | 7.5 | |||||
Derivatives | 7.2 | 7.2 | 7.2 | 7.2 | |||||
Regulatory assets | 36.8 | 36.8 | |||||||
Trade and other receivables (Current and Non-current) | 1,121.2 | 1,121.2 | |||||||
Cash and cash equivalents | 1,368.1 | 1,368.1 | |||||||
Assets held to hedge long-term borrowings | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Loans and borrowings (Current and Non-Current) | 0.0 | 0.0 | 0.0 | (10,010.0) | (10,010.0) | (8,021.6) | (93.9) | 0.0 | (8,115.5) |
Unsecured bond issues | (8,579.8) | (8,579.8) | (8,021.6) | (93.9) | 0.0 | (8,115.5) | |||
Unsecured financial bank loans and other loans | (1,223.8) | (1,223.8) | 0.0 | ||||||
Lease liabilities | (88.1) | (88.1) | |||||||
Accrued interests | (118.4) | (118.4) | |||||||
Other (non)-current liabilities | (597.6) | (597.6) | |||||||
Derivatives | (225.9) | (225.9) | (225.9) | ||||||
Other (grants, contract liabilities,\u2026) | (371.7) | (371.7) | |||||||
Trade and other payables | (2,149.4) | (2,149.4) | |||||||
Total | 7.5 | (513.7) | 2,526.1 | (12,159.4) | (10,139.6) | n.r. | n.r. | n.r. | n.r. |
The above tables do not include fair value information for financial assets and liabilities not measured at fair value, such as cash and cash equivalents, trade and other receivables, and trade and other payables, as their carrying amount is a reasonable approximation of fair value. We consider that the carrying amount approximates the fair value considering the financial and short-term nature.
FAIR VALUE HIERARCHY
Fair value is the amount for which an asset could be exchanged or a liability settled in an arm's-length transaction. IFRS 7 requires, for financial instruments that are measured in the statement of financial position at fair value and for financial instruments measured at amortised cost for which the fair value has been disclosed, the disclosure of fair value measurements by level in the following fair value measurement hierarchy:
\u2022Level 1: The fair value of a financial instrument that is traded in an active market is measured based on quoted (unadjusted) prices for identical assets or liabilities. A market is considered active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s-length basis.
\u2022Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These maximise the use of observable market data where these are available and rely as little as possible on entity-specific estimates. If all significant inputs required to assess the fair value of an instrument are observable, either directly (i.e. as prices) or indirectly (i.e. derived from prices), the instrument is included in level 2.
\u2022Level 3: If one or more of the significant inputs used in applying the valuation technique is not based on observable market data, the financial instrument is included in level 3. The fair value amount included under \u2018Other financial assets\u2019 has been determined by referring to either: (i) recent transaction prices, known by the Group; for similar financial assets or (ii) valuation reports issued by third parties.
The fair value of financial assets and liabilities, other than those presented in the above table, approximates to their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of other financial assets decreased by \u20ac211.7 million compared to previous year. The decrease mainly results from the fair value of the future contracts entered into by 50Hertz for the purpose of reducing the risk of fluctuations in the expected amount of grid losses (no positive fair value as at 31 December 2023 compared to \u20ac154.4 million last year). This decrease is amplified by the negative variation accounted for in Belgium in connection with the pre-hedging of probable forecast debt transactions (bonds issuance). The fair value of these derivatives amounted to \u20ac7,2 million compared to \u20ac65.3 million end of 2022.
The fair value of the Sicav and the Group\u2019s stake in EEX is stable following no significant remeasurement of the fair value of EEX. This participation in EEX is classified as \"Fair value to FVOCI\" and falls under level 3 in the fair value hierarchy. The fair value has been determined by reference to an evaluation method using discounted cash flows and therefore non-observable market data. The Group uses third party qualified valuers to perform the valuation.
The fair value of sicavs falls into level 1, i.e. valuation is based on the listed market price on an active market for identical instruments.
The fair value of the bank loans and bond issues increased by \u20ac983.0 million, due to the higher nominal value (new bonds as explained in Note 6.13) and higher pricing.
The fair values of the derivative is reported in level 1 based on market-to-market values:
in \u20ac million - Group share | 2023 | 2022 | Variation |
BE - CFH - Green Bond 2023 | 65.30 | (65.30) | |
BE - CFH - Green Bond 2024 | 7.20 | \u2014 | 7.20 |
BE - CFH - FX Forward rate 2024 | (1.10) | \u2014 | (1.10) |
GE - CFH - Grid losses | (224.80) | 129.70 | (354.50) |
Total | (218.80) | 195.00 | (413.80) |
\u2022The derivatives from the price hedge for grid loss procurement, which is measured at fair value in OCI without affecting profit or loss, falls under level 1 of the measurement hierarchy. Its value is determined on the basis of the reporting date valuation of the existing futures contracts, which are fully contracted via the EEX electricity exchange and quoted there. Credit and default risks are avoided with this form of price hedging via exchange transactions. At December 31, 2023, the Group reported derivative financial instruments in a net negative amount of -\u20ac224.8 million.The futures contracts were concluded during the fiscal year at prices between EUR 108 and EUR 174 per MWh. As a result of the volatile price development on the electricity market, derivatives with a negative market value of EUR -224.8m (prior year: \u20ac-24.7 million and positive market value of \u20ac 154.4 million) as a result of the price drop shortly before the end of 2022 were recognised in the consolidated statement of financial position under financial assets and other (non)-current liabilities .At the balance sheet date, the Group had already price-hedged a volume of 3.2 TWh for its expected physical requirements for grid loss energy in subsequent years.
\u2022The Group also uses cash flow hedging (CFH) derivative contracts to hedge future financial transactions. The fair value of these contracts amounts to \u20ac6.1 million in 2023 and relates to a forecasted debt issuance in Belgium and the USD exposure on the forthcoming US acquisition Giga (see also note 8.4).
The fair value of the bonds (including the private placement 2014 for \u20ac135.9 million)) is \u20ac8.021.6 million (prior year: \u20ac7,188.6 million). Fair value was determined by reference to published price quotations in an active market (classified as level 1 in the fair value hierarchy).
In level 2, the Group now reports the fair value of the private placement 2023 (\u20ac50.3 million) and the registered bond (\u20ac43.6 million).
*: In 2023, following the issuance of the new private placement, the Group reassessed the classification of the private placements (2020 and 2023) and reached to the conclusion that the private placement issued in 2020 had been misclassified in the past as level 3 because this bond is listed on the regulated market in Luxembourg (like the other bonds). As such the market price is directly observable, therefore the classification was changed from level 3 to level 1. The private placement newly issued in 2023 and the registered bond 2014 are not publicly listed. The fair market value (of respectively \u20ac50.3 million and \u20ac43.6 million) was derived from observable prices for comparable bonds, as such classification as level 2 is appropriate. Figures 2022 have been restated accordingly with the reclassification of the private placement 2020 in level 1 (\u20ac133.2 million reported as level 3 in published figures 2022) and the registered bond 2014 in level 2 (\u20ac39.7 million reported as level 3 in published figures 2022).
(in \u20ac million) | Land and buildings | Machinery and equipment | Furniture and vehicles | Other tangible assets | Leasing and similar rights | Assets under construction | Total |
ACQUISITION VALUE | |||||||
Balance at 1 January 2022 | 465.8 | 11,775.0 | 372.3 | 35.1 | 166.1 | 2,098.8 | 14,913.2 |
Additions | 9.3 | 334.0 | 34.7 | 0.1 | (15.6) | 1,130.1 | 1,492.6 |
Disposals | (1.8) | (82.6) | (8.4) | \u2014 | 0.5 | (0.7) | (93.0) |
Transfers | 3.6 | 718.9 | 105.6 | 11.1 | \u2014 | (838.0) | 1.1 |
Balance at 31 December 2022 | 476.8 | 12,745.3 | 504.2 | 46.4 | 151.0 | 2,390.1 | 16,313.8 |
Balance at 1 January 2023 | 476.8 | 12,745.3 | 504.2 | 46.4 | 151.0 | 2,390.1 | 16,313.8 |
Additions | 7.9 | 220.8 | 44.9 | 0.6 | 14.6 | 2,045.8 | 2,334.5 |
Disposals | (3.7) | (86.9) | (10.7) | (6.3) | (18.5) | (0.1) | (126.2) |
Transfers | 8.4 | 416.5 | 7.5 | 0.2 | (9.4) | (422.7) | 0.6 |
Balance at 31 December 2023 | 489.4 | 13,295.7 | 545.9 | 40.9 | 137.7 | 4,013.2 | 18,522.6 |
ACCUMULATED DEPRECIATION AND IMPAIRMENT | |||||||
Balance at 1 January 2022 | (40.5) | (3,726.6) | (205.7) | (32.4) | (48.6) | \u2014 | (4,053.7) |
Depreciation | (6.2) | (404.1) | (59.1) | (0.6) | (13.5) | (483.6) | |
Disposals | 1.2 | 59.4 | 8.1 | \u2014 | (0.5) | 68.2 | |
Transfers | \u2014 | 11.0 | \u2014 | (11.0) | \u2014 | \u2014 | |
Balance at 31 December 2022 | (45.5) | (4,060.3) | (256.7) | (44.0) | (62.5) | \u2014 | (4,469.1) |
Balance at 1 January 2023 | (45.5) | (4,060.3) | (256.7) | (44.0) | (62.5) | \u2014 | (4,469.1) |
Depreciation | (6.1) | (430.2) | (64.9) | (0.5) | (15.5) | (517.3) | |
Disposals | 3.0 | 76.7 | 10.2 | 6.3 | 16.8 | 113.1 | |
Transfers | \u2014 | (9.7) | \u2014 | (0.2) | 9.4 | (0.5) | |
Balance at 31 December 2023 | (48.6) | (4,423.5) | (311.4) | (38.5) | (51.8) | \u2014 | (4,873.9) |
CARRYING AMOUNT | |||||||
Balance at 1 January 2022 | 425.3 | 8,048.4 | 166.6 | 2.8 | 117.5 | 2,098.9 | 10,859.5 |
Balance at 31 December 2022 | 431.4 | 8,684.9 | 247.4 | 2.3 | 88.5 | 2,390.1 | 11,844.7 |
Balance at 1 January 2023 | 431.4 | 8,684.9 | 247.4 | 2.3 | 88.5 | 2,390.1 | 11,844.7 |
Balance at 31 December 2023 | 440.8 | 8,872.1 | 234.5 | 2.4 | 85.8 | 4,013.2 | 13,648.7 |
Large-scale (onshore and offshore) infrastructure projects in both Belgium and Germany are under construction. These projects are focusing on strengthening both the Belgian and German grids, developing the necessary offshore infrastructures to allow the integration of increasing amounts of renewable energy into the grid and the digitalisation of the infrastructure. The acceleration of the energy transition and the current inflationary environment are driving the investments of the Group.
In Belgium, Elia Transmission made investments totalling \u20ac682.8 million in property, plant and equipment. The primary focus remained on fortifying and expanding the 380 kV grid, laying the groundwork for offshore grid expansion and the seamless integration of renewable energy. An amount of circa \u20ac158.5 million was allocated to offshore developments, \u20ac321.7 million to regional grid reinforcements, and client connections, while approximately \u20ac145.2 million supported 203 replacement projects across the Belgian grid. In February 2023, Elia awarded the engineering, procurement, construction and installation contract for the Princess Elisabeth Island but he island\u2019s foundation work will only begin in early 2024 and will last for two and a half years.
In Germany, 50Hertz Transmission invested \u20ac1,650.9 million in property, plant and equipment. In total, \u20ac1,102.2 million were invested in onshore projects, while offshore investments amounted to \u20ac494.3 million. Significant onshore investments include the DC line SuedOstLink (\u20ac289.7 million), crucial for connecting growing offshore production in northern Germany to southern consumption centers. Additionally, a major focus of the year was on reinforcing the existing grid, with the 380 kV overhead line between R\u00f6hrsdorf and Remptendorf as a major project, costing \u20ac137.3 million. Other important reinforcement projects involve the southern Uckermark region (\u20ac118.0 million) and the northern Uckermark region (\u20ac25.5 million) overhead lines, and the 380 kV overhead line section between Pulgar and Vieselbach (\u20ac54.6 million). Other noteworthy onshore projects to strengthen the grid include the restructuring of the Lauchst\u00e4dt substation with STATCOM and MSCDN (\u20ac44.7 million), as well as the restructuring and reinforcement of the Wolmirstedt to G\u00fcstrow (\u20ac44.4 million) overhead line.
During 2023, \u20ac33.8 million of borrowing costs were capitalised on assets under construction. An amount of \u20ac8.7 million based on an average interest rate of 2.01% originated from the Elia Transmission Belgium segment (\u20ac6.1 million at 1.91% in 2022). An amount of \u20ac25.1 million based on an average interest rate of 1.7% was accounted for in the 50Hertz Transmission segment (\u20ac18.1 million at 1.4% in 2022).
For the Group as a whole, energy transition represents a challenge, but also opportunities. Climate goals merely confirms the strategic and economic value of the current asset base without significant impact on the useful life of the existing assets. Asset base will continue to be modernised and developed, as demonstrated by the various projects that got underway in 2023.
There were no mortgages, pledges or similar securities on PP&E relating to loans.
(in \u20ac million) | Land and buildings | Machinery and equipment | Furniture and vehicles | Other tangible assets | Leasing and similar rights | Assets under construction | Total |
ACQUISITION VALUE | |||||||
Balance at 1 January 2022 | 465.8 | 11,775.0 | 372.3 | 35.1 | 166.1 | 2,098.8 | 14,913.2 |
Additions | 9.3 | 334.0 | 34.7 | 0.1 | (15.6) | 1,130.1 | 1,492.6 |
Disposals | (1.8) | (82.6) | (8.4) | \u2014 | 0.5 | (0.7) | (93.0) |
Transfers | 3.6 | 718.9 | 105.6 | 11.1 | \u2014 | (838.0) | 1.1 |
Balance at 31 December 2022 | 476.8 | 12,745.3 | 504.2 | 46.4 | 151.0 | 2,390.1 | 16,313.8 |
Balance at 1 January 2023 | 476.8 | 12,745.3 | 504.2 | 46.4 | 151.0 | 2,390.1 | 16,313.8 |
Additions | 7.9 | 220.8 | 44.9 | 0.6 | 14.6 | 2,045.8 | 2,334.5 |
Disposals | (3.7) | (86.9) | (10.7) | (6.3) | (18.5) | (0.1) | (126.2) |
Transfers | 8.4 | 416.5 | 7.5 | 0.2 | (9.4) | (422.7) | 0.6 |
Balance at 31 December 2023 | 489.4 | 13,295.7 | 545.9 | 40.9 | 137.7 | 4,013.2 | 18,522.6 |
ACCUMULATED DEPRECIATION AND IMPAIRMENT | |||||||
Balance at 1 January 2022 | (40.5) | (3,726.6) | (205.7) | (32.4) | (48.6) | \u2014 | (4,053.7) |
Depreciation | (6.2) | (404.1) | (59.1) | (0.6) | (13.5) | (483.6) | |
Disposals | 1.2 | 59.4 | 8.1 | \u2014 | (0.5) | 68.2 | |
Transfers | \u2014 | 11.0 | \u2014 | (11.0) | \u2014 | \u2014 | |
Balance at 31 December 2022 | (45.5) | (4,060.3) | (256.7) | (44.0) | (62.5) | \u2014 | (4,469.1) |
Balance at 1 January 2023 | (45.5) | (4,060.3) | (256.7) | (44.0) | (62.5) | \u2014 | (4,469.1) |
Depreciation | (6.1) | (430.2) | (64.9) | (0.5) | (15.5) | (517.3) | |
Disposals | 3.0 | 76.7 | 10.2 | 6.3 | 16.8 | 113.1 | |
Transfers | \u2014 | (9.7) | \u2014 | (0.2) | 9.4 | (0.5) | |
Balance at 31 December 2023 | (48.6) | (4,423.5) | (311.4) | (38.5) | (51.8) | \u2014 | (4,873.9) |
CARRYING AMOUNT | |||||||
Balance at 1 January 2022 | 425.3 | 8,048.4 | 166.6 | 2.8 | 117.5 | 2,098.9 | 10,859.5 |
Balance at 31 December 2022 | 431.4 | 8,684.9 | 247.4 | 2.3 | 88.5 | 2,390.1 | 11,844.7 |
Balance at 1 January 2023 | 431.4 | 8,684.9 | 247.4 | 2.3 | 88.5 | 2,390.1 | 11,844.7 |
Balance at 31 December 2023 | 440.8 | 8,872.1 | 234.5 | 2.4 | 85.8 | 4,013.2 | 13,648.7 |
Large-scale (onshore and offshore) infrastructure projects in both Belgium and Germany are under construction. These projects are focusing on strengthening both the Belgian and German grids, developing the necessary offshore infrastructures to allow the integration of increasing amounts of renewable energy into the grid and the digitalisation of the infrastructure. The acceleration of the energy transition and the current inflationary environment are driving the investments of the Group.
In Belgium, Elia Transmission made investments totalling \u20ac682.8 million in property, plant and equipment. The primary focus remained on fortifying and expanding the 380 kV grid, laying the groundwork for offshore grid expansion and the seamless integration of renewable energy. An amount of circa \u20ac158.5 million was allocated to offshore developments, \u20ac321.7 million to regional grid reinforcements, and client connections, while approximately \u20ac145.2 million supported 203 replacement projects across the Belgian grid. In February 2023, Elia awarded the engineering, procurement, construction and installation contract for the Princess Elisabeth Island but he island\u2019s foundation work will only begin in early 2024 and will last for two and a half years.
In Germany, 50Hertz Transmission invested \u20ac1,650.9 million in property, plant and equipment. In total, \u20ac1,102.2 million were invested in onshore projects, while offshore investments amounted to \u20ac494.3 million. Significant onshore investments include the DC line SuedOstLink (\u20ac289.7 million), crucial for connecting growing offshore production in northern Germany to southern consumption centers. Additionally, a major focus of the year was on reinforcing the existing grid, with the 380 kV overhead line between R\u00f6hrsdorf and Remptendorf as a major project, costing \u20ac137.3 million. Other important reinforcement projects involve the southern Uckermark region (\u20ac118.0 million) and the northern Uckermark region (\u20ac25.5 million) overhead lines, and the 380 kV overhead line section between Pulgar and Vieselbach (\u20ac54.6 million). Other noteworthy onshore projects to strengthen the grid include the restructuring of the Lauchst\u00e4dt substation with STATCOM and MSCDN (\u20ac44.7 million), as well as the restructuring and reinforcement of the Wolmirstedt to G\u00fcstrow (\u20ac44.4 million) overhead line.
During 2023, \u20ac33.8 million of borrowing costs were capitalised on assets under construction. An amount of \u20ac8.7 million based on an average interest rate of 2.01% originated from the Elia Transmission Belgium segment (\u20ac6.1 million at 1.91% in 2022). An amount of \u20ac25.1 million based on an average interest rate of 1.7% was accounted for in the 50Hertz Transmission segment (\u20ac18.1 million at 1.4% in 2022).
For the Group as a whole, energy transition represents a challenge, but also opportunities. Climate goals merely confirms the strategic and economic value of the current asset base without significant impact on the useful life of the existing assets. Asset base will continue to be modernised and developed, as demonstrated by the various projects that got underway in 2023.
There were no mortgages, pledges or similar securities on PP&E relating to loans.
(in \u20ac million) | 2023 | 2022 |
Non-current borrowings | 9,181.3 | 7,638.6 |
Lease liabilities \u2212\u00a0non-current | 73.5 | 77.0 |
Subtotal non-current borrowings | 9,254.8 | 7,715.6 |
Current borrowings | 622.3 | 772.0 |
Lease liabilities \u2212 current | 14.6 | 13.2 |
Accrued interest | 118.4 | 81.9 |
Subtotal current loans and borrowings | 755.2 | 867.2 |
Total | 10,010.0 | 8,582.8 |
The tables below show the changes in the group's liabilities arising from financing activities, including changes arising from both cash flows and non-cash changes.
(in \u20ac million) | Current interest-bearing loans and borrowings | Non-current interest-bearing loans and borrowings | Total |
Balance at 1 January 2022 | 193.9 | 7,741.7 | 7,935.7 |
Cash flow: repayment of borrowings | (82.3) | (13.3) | (95.8) |
Cash flow: proceeds from withdrawal borrowings | 0.0 | 747.4 | 747.4 |
Accrued interest | 5.5 | 0.2 | 5.7 |
Other | 750.2 | (760.4) | (10.2) |
Balance at 31 December 2022 | 867.2 | 7,715.6 | 8,582.8 |
Balance at 1 January 2023 | 867.2 | 7,715.6 | 8,582.8 |
Cash flow: repayment of borrowings | (772.0) | (15.1) | (787.1) |
Cash flow: proceeds from withdrawal borrowings | 100.0 | 2,062.9 | 2,162.9 |
Accrued interest | 36.5 | 0.5 | 37.0 |
Other | 523.6 | (509.1) | 14.5 |
Balance at 31 December 2023 | 755.2 | 9,254.8 | 10,010.0 |
In 2022, the Group has secured liquidity for the further grid expansion necessary for the energy transition with the issuance of a second Green Bond in the amount of \u20ac750.0 million at a rate of 3.279% and a term of nine years. Repayments of borrowing from 2022 mainly relate to the closing of the commercial paper program (-\u20ac60.0 million) and the capital repayment of the amortising loans (\u20ac22.0 million).
In 2023, the Group successfully issued in Belgium a first green bond of \u20ac500 million with a fixed rate of 3.625%, dedicated to funding eligible green projects. Moreover, in March the Group syndicated a Green Loan of \u20ac600 million from seven banks with a ten-year term, which was fully drawn at year-end. In April, the Group made a re-entry into the market, issuing a 7-year bond of \u20ac650 million at an interest rate of 3.722%. In October, the Group tapped on the bond issued in April, issuing an extra \u20ac150 million under this series at the prevailing market price with a re-offer yield of 4.534%. Finally, the Group concluded a private placement of \u20ac50 million and syndicated another \u20ac120 million bank loan.
Furthermore, Elia Group has secured two bilateral Revolving Credit Facilities, amounting to a total of \u20ac120 million, of which \u20ac100 million was drawn at the end of 2023.
In 2023, the Group redeemed the \u20ac750.0 bond maturing in 2023.
There have been no breaches of the financial covenants of any interest-bearing\u00a0 loans and borrowing in the current period.
Information on the terms and conditions of outstanding interest-bearing loans and borrowings is outlined below:
As per 31 December 2023:
(in \u20ac million) - 31 December 2023 | Maturity | Redemption schedule | Amount | Interest rate |
Eurobond issues 2013/15 years | 2028 | At maturity | 561.5 | 3.25% |
Eurobond issues 2013/20 years | 2033 | At maturity | 204.5 | 3.50% |
Eurobond issues 2014/15 years | 2029 | At maturity | 355.5 | 3.00% |
Eurobond issues 2015/8.5 years | 2024 | At maturity | 503.9 | 1.38% |
Eurobond issues 2017/10 years | 2027 | At maturity | 251.4 | 1.38% |
Senior bond 2018/10 years | 2028 | At maturity | 299.9 | 1.50% |
Eurobond issues 2019/7 years | 2026 | At maturity | 505.9 | 1.38% |
Eurobond issues 2020/10 years | 2030 | At maturity | 796.8 | 0.88% |
Green Bond issue 2023/10 years | 2033 | At maturity | 514.4 | 3.63% |
Amortising bond \u2013 7.7 years | 2028 | Linear | 42.0 | 1.56% |
Amortising bond \u2013 23.7 years | 2044 | Linear | 134.8 | 1.56% |
Bond as part of Debt Issuance Programme 2015 | 2025 | At maturity | 504.7 | 1.87% |
Bond as part of Debt Issuance Programme 2015 | 2023 | At maturity | ||
Bond as part of Debt Issuance Programme 2015 | 2030 | At maturity | 140.0 | 2.62% |
Bond as part of Debt Issuance Programme 2016 | 2028 | At maturity | 756.3 | 1.50% |
Bond as part of Debt Issuance Programme 2020 | 2032 | At maturity | 755.6 | 1.11% |
Bond as part of Debt Issuance Programme 2020 - Private placement | 2040 | At maturity | 199.7 | 3.28% |
Bond as part of Debt Issuance Programme 2021 | 2031 | At maturity | 753.2 | 0.87% |
Bond as part of Debt Issuance Programme 2021 | 2033 | At maturity | 501.0 | 0.74% |
Bond as part of Debt Issuance Programme 2023 | 2030 | At maturity | 814.4 | 3.72% |
Bond as part of Debt Issuance Programme 2023 | 2038 | At maturity | 50.5 | 4.06% |
Registered bond 2014 | 2044 | At maturity | 50.1 | 3.00% |
Total bonds, including accrued interests | 8,696.0 | |||
Amortising term loan | 2033 | Linear | 155.3 | 1.80% |
Revolving Credit Facility | 2024 | At maturity | 100.6 | |
Loan with bankconsortium | 2033 | At maturity | 720.0 | 3,43% to 3,63% |
European Investment Bank | 2025 | At maturity | 100.0 | 1.08% |
Total bank loans | 1,075.9 | |||
Loan with KfW | 2026 | At maturity | 150.1 | 0.90% |
Total other loans | 150.1 | |||
Lease debts | 88.1 | |||
Total loans and borrowings (current and non-current) | 10,010.0 |
As per\u00a031 December 2022:
(in \u20ac million) - 31 December 2022 | Maturity | Redemption schedule | Amount | Interest rate |
Eurobond issues 2013/15 years | 2028 | At maturity | 561.2 | 3.25% |
Eurobond issues 2013/20 years | 2033 | At maturity | 204.5 | 3.50% |
Eurobond issues 2014/15 years | 2029 | At maturity | 355.3 | 3.00% |
Eurobond issues 2015/8.5 years | 2024 | At maturity | 503.8 | 1.38% |
Eurobond issues 2017/10 years | 2027 | At maturity | 251.0 | 1.38% |
Senior bond 2018/10 years | 2028 | At maturity | 299.7 | 1.50% |
Eurobond issues 2019/7 years | 2026 | At maturity | 505.6 | 1.38% |
Eurobond issues 2020/10 years | 2030 | At maturity | 795.6 | 0.88% |
Green Bond issue 2023/10 years | 2033 | At maturity | 0.0 | 3.63% |
Amortising bond \u2013 7.7 years | 2028 | Linear | 133.1 | 1.56% |
Amortising bond \u2013 23.7 years | 2044 | Linear | 52.2 | 1.56% |
Bond as part of Debt Issuance Programme 2015 | 2025 | At maturity | 504.3 | 1.87% |
Bond as part of Debt Issuance Programme 2015 | 2023 | At maturity | 751.7 | |
Bond as part of Debt Issuance Programme 2015 | 2030 | At maturity | 140.0 | 2.62% |
Bond as part of Debt Issuance Programme 2016 | 2028 | At maturity | 756.0 | 1.50% |
Bond as part of Debt Issuance Programme 2020 | 2032 | At maturity | 752.9 | 1.11% |
Bond as part of Debt Issuance Programme 2020 - Private placement | 2040 | At maturity | 755.4 | 3.28% |
Bond as part of Debt Issuance Programme 2021 | 2031 | At maturity | 199.7 | 0.87% |
Bond as part of Debt Issuance Programme 2021 | 2033 | At maturity | 500.9 | 0.74% |
Bond as part of Debt Issuance Programme 2023 | 2030 | At maturity | 0.0 | 3.72% |
Bond as part of Debt Issuance Programme 2023 | 2038 | At maturity | 0.0 | 3.72% |
Registered bond 2014 | 2044 | At maturity | 50.1 | 3.00% |
Total bonds | 8,073.0 | |||
Amortising term loan | 2033 | Linear | 169.5 | 1.80% |
Revolving Credit Facility | 2024 | At maturity | 0.0 | |
European Investment Bank | 2025 | At maturity | 100.0 | 1.08% |
Total bank loans | 269.5 | |||
Loan with KfW | 2026 | At maturity | 150.1 | 0.90% |
Loan with bankconsortium | 2033 | At maturity | 0.0 | 3,43% to 3,63% |
Total other loans | 150.1 | |||
Lease debts | 90.2 | |||
Total loans and borrowings (current and non-current) | 8,582.8 |
THE GROUP AS A LESSEE
The group mainly leases buildings, cars and optical fibres. It also has some rights to use (portions) of land and overhead lines. The valuation period used is based on the contractual term. Where a fixed term has not been set and an ongoing extension is subject to the contract, the relevant department has set an assumed termination date. In the event that the lease contract contains a lease extension option, the group assesses whether it is reasonably certain of exercising the option and makes its best estimate of the termination date.
Information about leases for which the group is a lessee is presented below.
Right-of-use assets
Right-of-use assets are presented separately within \u2018Property, plant and equipment\u2019 and can be broken down in the table below, with the discounted lease liability for comparison. The split between current and non-current lease liabilities also provided.
(in \u20ac million) | Use of land and overhead lines | Rent of buildings / offices | Cars | Optical fiber | Other | Total |
As of 1 January 2022 | 42.1 | 34.9 | 14.7 | 24.5 | 1.1 | 117.5 |
Additions and remeasurements | 1.3 | (0.1) | 4.7 | 0.2 | 0.4 | 6.5 |
Depreciation | (1.3) | (6.0) | (5.6) | (0.5) | (0.1) | (13.5) |
Derecognition of right-of-use assets | 0.0 | 0.0 | (0.1) | (22.0) | 0.0 | (22.1) |
As of 31 December 2022 | 42.2 | 28.9 | 13.7 | 2.3 | 1.5 | 88.5 |
(in \u20ac million) | Use of land and overhead lines | Rent of buildings / offices | Cars | Optical fiber | Other | Total |
As of 1 January 2023 | 42.2 | 28.9 | 13.7 | 2.3 | 1.5 | 88.5 |
Additions and remeasurements | 0.8 | 0.2 | 12.2 | 1.5 | (0.2) | 14.6 |
Depreciation | (1.3) | (6.0) | (7.2) | (0.7) | (0.2) | (15.5) |
Derecognition of right-of-use assets | 0.0 | (0.2) | (0.7) | (1.0) | (0.1) | (1.9) |
As of 31 December 2023 | 41.7 | 23.0 | 18.0 | 2.0 | 1.1 | 85.8 |
The right-of-use assets are briefly described below:
\u2022The use of land and overhead lines constitutes a right for the Group to use a well identified piece of land to build on someone\u2019s property. Only the contracts under which the Group has the full right to control the use of the identified asset are in scope.
\u2022The Group leases buildings and offices in which corporate functions are performed.
\u2022The Group has car leasing contracts which are used by employees for business and private activities.
\u2022The Group leases optical fibres to transmit data. Only cables that are clearly identified are in scope.
\u2022Other lease contracts: printer lease contracts and strategic reserves contracts. Strategic reserves are contracts where the Group has the right to control the use of a power plant to maintain a balance on the grid.
The Group only has lease contracts with fixed lease payments and assesses whether it is reasonable to extend a lease contract. If so, the lease contract is valued as if the extension were exercised.
Lease liabilities
Information concerning the maturity of the contractual undiscounted cash flows is provided below:
Maturity analysis - contractual undiscounted cash flows | ||
(in \u20ac million) | 2023 | 2022 |
< 1 year | 15.4 | 14.2 |
1-5 years | 35.3 | 35.1 |
> 5 years | 48.8 | 54.1 |
Total undiscounted lease liabilities at 31 December | 99.6 | 103.4 |
Lease liabilities in the statement of financial position at 31 December | 88.1 | 90.2 |
Current | 14.6 | 13.2 |
Non-current | 73.5 | 77.0 |
The discount rate used to discount the lease liabilities is the Group\u2019s best estimate of the weighted average incremental borrowing rate. The Group made use of the practical expedients, i.e. a single discount rate per group of contracts, summarised per their duration.
The Group has assessed the extension options concluded in the lease contracts and considers it reasonably likely that these extension options will be executed. The Group has therefore considered the lease contract as if the extension option is exercised in the lease liability.
The Group has no lease contracts with variable payments nor residual value guarantees. The Group did not commit to any lease that has not yet commenced. The Group has no contracts which include contingent rental payments nor include any escalation clauses or restrictions that are significant regarding the use of the asset in question.
In 2021, an optical fibre lease contract coming to maturity was prolonged and a purchase option for a value of \u20ac22.0 million was added. The purchase option came to maturity at the end of February 2022 and the Group exercised the option.
Amounts recognised in profit and loss
The following amounts were recognised in profit and loss for the financial year:
(in \u20ac million) | 2023 | 2022 |
Depreciation expense of right-of-use assets | 15.5 | 13.3 |
Interest on lease liabilities | 1.3 | 1.3 |
Expenses relating to short-term leases | 0.8 | 0.2 |
Expenses relating to low-value assets | 0.1 | 0.4 |
Total recognised in profit and loss | 17.7 | 15.1 |
A total of \u20ac17.7 million in lease expenses was recognised in the statement of profit or loss in 2023. There were no variable lease payments included in the measurement of lease liabilities.
The total cash outflow for leases amounted to \u20ac16.3 million in 2023 (\u20ac13.3 million in 2022). This amount is included in the \u201cRepayment of borrowings\u201d of the cash flow statement.
THE GROUP AS A LESSOR
The Group leases out optical fibres, land and buildings, which are presented as part of \u2018Property, plant and equipment\u2019. Leasing is only an ancillary business. Rental income is presented under \u2018Other income\u2019.
Contracts that do not relate to separately identifiable assets or under which the customer cannot directly the use of the asset or does not substantially obtain all the economic benefits associated with the use of the asset do not constitute a lease. The new lease definition led to the exclusion of some telecommunication equipment
The Group has classified these leases as operating leases as they do not substantially transfer all the risks and rewards incidental to the ownership of the assets.
The following table sets out a maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date and considering the best estimate of the contractual term:
(in \u20ac million) | 2023 | 2022 |
Within 1 year | 16.6 | 13.4 |
1 to 2 years | 15.9 | 12.7 |
2 to 3 years | 15.3 | 15.0 |
3 to 4 years | 15.3 | 12.2 |
4 to 5 years | 15.1 | 16.7 |
More than 5 years | 377.6 | 304.3 |
Total | 455.8 | 374.2 |
During 2023, \u20ac33.8 million of borrowing costs were capitalised on assets under construction. An amount of \u20ac8.7 million based on an average interest rate of 2.01% originated from the Elia Transmission Belgium segment (\u20ac6.1 million at 1.91% in 2022). An amount of \u20ac25.1 million based on an average interest rate of 1.7% was accounted for in the 50Hertz Transmission segment (\u20ac18.1 million at 1.4% in 2022).
(in \u20ac million) | Development costs of software | Licences/ concessions | Other intangible assets | Intangible assets under development | Total |
ACQUISITION VALUE | |||||
Balance at 1 January 2022 | 268.4 | 34.5 | 0.9 | 0.0 | 303.8 |
Additions | 89.5 | 3.1 | 0.6 | 0.0 | 93.2 |
Disposals | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Transfers | -1.1 | 0.0 | 0.0 | 0.0 | -1.1 |
Balance at 31 December 2022 | 356.8 | 37.6 | 1.6 | 0.0 | 395.9 |
Balance at 1 January 2023 | 356.8 | 37.6 | 1.6 | 0.0 | 395.9 |
Additions | 30.3 | 2.1 | 0.0 | 110.5 | 143.0 |
Disposals | -0.2 | 0.0 | 0.0 | 0.0 | -0.2 |
Transfers | -57.9 | 0.0 | 1.9 | 55.5 | -0.6 |
Balance at 31 December 2023 | 329.0 | 39.7 | 3.4 | 166.0 | 538.2 |
ACCUMULATED DEPRECIATION AND IMPAIRMENT | |||||
Balance at 1 January 2022 | -144.2 | -10.8 | -0.2 | 0.0 | -155.2 |
Depreciation | -26.3 | -3.5 | -0.3 | 0.0 | -30.2 |
Disposals | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Transfers | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Balance at 31 December 2022 | -170.5 | -14.4 | -0.5 | 0.0 | -185.4 |
Balance at 1 January 2023 | -170.5 | -14.4 | -0.5 | 0.0 | -185.4 |
Depreciation | -36.2 | -4.1 | 0.0 | 0.0 | -40.2 |
Disposals | 0.2 | 0.0 | 0.0 | 0.0 | 0.2 |
Transfers | 1.1 | 0.0 | -0.6 | 0.0 | 0.5 |
Balance at 31 December 2023 | -205.4 | -18.4 | -1.1 | 0.0 | -224.9 |
CARRYING AMOUNT | |||||
Balance at 1 January 2022 | 124.2 | 23.6 | 0.8 | 0.0 | 148.6 |
Balance at 31 December 2022 | 186.3 | 23.2 | 1.1 | 0.0 | 210.5 |
Balance at 1 January 2023 | 186.3 | 23.2 | 1.1 | 0.0 | 210.5 |
Balance at 31 December 2023 | 123.6 | 21.3 | 2.3 | 166.0 | 313.2 |
Software comprises both IT applications developed by the Group for operating the grid and software for the Group's normal business operations.
The Group invested a total amount of \u20ac143 million, of which \u20ac64.7 million in Elia Transmission Belgium, \u20ac77.2 million in 50Hertz Transmission and \u20ac1.1 million in the non-regulated activities and Nemo Link segment.
During 2023, \u20ac1.1\u00a0million in borrowing costs were capitalised on software in development (compared with \u20ac0.6\u00a0million in 20220) in the Elia Transmission Belgium segment, based on an average interest rate of 2.01% (1.91% in 2022). No borrowing costs on software in development were capitalised in the 50Hertz Transmission segment.
The Group does not hold individual intangible assets that are material to its financial statements, except capacity entitlements in the Kontek cable (Denmark) that amount to \u20ac13.6 million (with a remaining useful life of 10 years (until 2033) and the ERP (\u20ac32.8 million with a remaining useful life of 4 years - until 2027).
There were no changes in goodwill during the years 2022-2023. The carrying amount is the following:
(in \u20ac million) | Goodwill |
ACQUISITION VALUE | |
Balance at 1 January 2022 | 2,411.1 |
Balance at 31 December 2022 | 2,411.1 |
Balance at 1 January 2023 | 2,411.1 |
Balance at 31 December 2023 | 2,411.1 |
The goodwill relates to the following business combinations and is allocated to the cash generating unit (CGU) Elia Transmission for the acquisition of Elia Asset and Elia Engineering and to the CGU 50Hertz Transmission for the acquisition of the 20% stake in Eurogrid International:
(in \u20ac million) | 2023 |
Acquisition Elia Asset \u2013 2002 | 1,700.1 |
Acquisition Elia Engineering \u2013 2004 | 7.7 |
Acquisition Eurogrid International \u2013 2018 | 703.4 |
Total | 2,411.1 |
IMPAIRMENT TEST FOR CASH-GENERATING UNITS CONTAINING GOODWILL
According to IFRS rules, goodwill should be tested for impairment on at least an annual basis or upon the occurrence of a triggering event. Goodwill is allocated to the CGUs Elia Transmission and 50Hertz Transmission for impairment testing. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually.
The recoverable amount of CGUs is determined by reference to a value in use that is calculated based on different methods (Discounted Cash Flow and Discounted Dividend Model) using cash flow projections drawn up on the basis of the 2023 updated forecast and the 2024-2028 business plan, as approved by the Management Committee and the Board of Directors, and on extrapolated cash flows beyond that time frame.
The forecasts and projections included in the reference scenario were determined on the basis of the estimated investment plans, remuneration defined in the regulatory frameworks, market evolution, market share and margin evolution. As the Group\u2019s asset base consists of assets with long useful lives, the business plan\u2019s projection period was set to encompass the coming two regulatory periods.
The discount rates used correspond to the weighted average cost of capital, which is adjusted in order to reflect the business, market, country and currency risk relating to each goodwill CGU reviewed. The discount rates used are consistent with available external information sources.
The growth rates associated with the terminal values do not exceed the inflation rate or the long-term average growth rate for the market to which the CGU is dedicated.
More details are provided below by CGU.
ACQUISITION OF ELIA ASSET AND ELIA ENGINEERING
The acquisition of Elia Asset (in 2002) and Elia Engineering (in 2004) by the Company resulted in a positive consolidation difference of respectively \u20ac1,700.1\u00a0million and \u20ac7.7 million\u00a0 which could not be allocated to specific assets. This difference has consequently been recognised as goodwill assigned to the regulated activity in Belgium. Since 2004, annual impairment tests have been conducted and have not resulted in the recognition of any impairment losses.
The impairment test was conducted by an independent expert. This impairment test is based on the value in use and uses two main valuation methods to estimate the recoverable amount: 1) a discounted cash flows method (DCF); and 2) a dividend discount model (DDM), both of which are further detached in valuation variants depending on the terminal value calculation.
Future cash flows and future dividends are based on a business plan for the period 2023-2033. As the Group\u2019s asset base consists of assets with long useful lives, the business plan\u2019s projection period was set to encompass the coming two regulatory periods. Note that the regulatory framework within which Elia operates is characterised by an allowed revenues
basis structured around: 1) a fair remuneration of the regulated asset base; and 2) incentives to guarantee the continuity of supply and improve efficiency. Considering that the regulator will allow a fair remuneration of the regulated asset base consistent with market expectations, the estimated regulated asset base for the last forecast year can be considered an indication of the terminal value. This approach does not take into account potential cash flows generated by meeting or beating future efficiency targets.
The valuation methods are subject to different assumptions, the most important of which are outlined below.
1. Discounting of future cash flows (DCF-models):
\u2022Discount rate:
\u2010Cost of Equity of 8.7%;
\u2022Risk-free-rate: 3.1%
\u2022Beta 0.90
\u2022Equity market risk premium 5.5%
\u2022Small firm premium 1.0%
\u2022Country risk premium 0.9%
\u2010Pre-tax Cost of Debt of 4.3%;
\u2010Operational risk premium of -1.1%
\u2010Corporate tax rate of 25%;
\u2010Target gearing (D/(D+E)): 60%;
\u2010Post-tax WACC: 5.4%.
\u2022Terminal value based on two variants:
\u2010Terminal value based on a 1.15x RAB multiple in 2033.
NB: as such, the RAB itself does not take into account the contribution that the incentive remuneration makes to the value creation process.
\u2010Terminal value based on a perpetual growth rate of 3.0%. This long term growth rate is higher than long term expected inflation to capture the returns generated from the significant investments in the business plan.
2. Discounting of future dividends (DDM-models):
\u2022Discount rate:
\u2010Cost of Equity of 8.7%
\u2022Terminal value based on two variants:
\u2010Terminal value based on 1.15x RAB multiple in 2033.
NB: as such, the RAB itself does not take into account the contribution of the incentive remuneration to the value creation process.
\u2010Terminal value based on a perpetual growth rate of 3.0%. This approach assumes that the residual value consists of profit after tax less investments and considers net borrowings (in relation to the investments). However, profit and thus dividend payments in FY33 most likely does not yet reflect the (positive) impact of the investments planned in FY26-FY33.
Conclusion:
\u2022The independent analysis, which was based on a (\u20ac3,901 million) midpoint of the different valuation approaches and variants used did not result in the identification of an impairment of goodwill in the financial year 2023. Moreover, market multiples (based on current enterprise values and current/forecasted EBITDA) were applied for plausibility.
\u2022As the median and the average of the different methods presented above were relatively far apart (\u20ac3.394 million and \u20ac5.425 million respectively), mainly due to differences in assumptions for the terminal value, the expert\u2019s mid-point is based on 75% of the median and 25% of the average, bearing in mind, among other factors, that the median alone might not appropriately reflect the impact of incentive remuneration on the terminal value (see above for more details).
\u2022Compared to 2022, the context has slightly changed, giving greater visibility to the Group on how the rates of return are calculated, taking into account the changing market parameters. Indeed, the discussions on the new tariffs methodology have led to a new mechanism designed to protect ROE against a rise of interest rates. An additional remuneration is foreseen in the methodology in connection with the OLO level. The fact that the regulated return on equity is now directly linked to the evolution of the risk-free rate triggers the use of a negative operational risk premium and an unchanged WACC level compared to 2022 despite an increase in the risk-free rate. This negative premium results from the difference between the average of ROE and the cost of equity, taking into account the beta derived from the peer group (0,66 = market view) and this COE. Considering this evolution and the regulated nature of the businesses grouped with the CGU, a reasonable change in any of the valuation inputs would not result in impairment losses.
ACQUISITION OF EUROGRID INTERNATIONAL
\u2022In April 2018, the acquisition of an extra 20% stake in Eurogrid International by the Group resulted in a goodwill of \u20ac703.4\u00a0million, This consolidation difference\u00a0 has been allocated to the CGU 50Hertz Transmission, since it comprises all income and expenses generated thereof.
\u2022The impairment test was conducted by an independent expert. This impairment test is based on two main valuation methods: 1) a discounted cash flows (DCF) method; and 2) a dividend discount model (DDM). Both of these are further detached in valuation variants depending on the terminal value calculation. Future cash flows and future dividends are based on a business plan for the period 2023-2033 (two regulatory periods). As the Group\u2019s asset base consists of assets with long useful lives, the business plan\u2019s projection period was set to encompass the next two regulatory periods.
The valuation methods are subject to different assumptions, most importantly:
1. Discounting of future cash flows (DCF-models):
\u2022Discount rate:
\u2010Cost of Equity: 8.0%;
\u2022Risk-free-rate: 3.1%
\u2022Beta 0.90
\u2022Equity market risk premium 5.5%
\u2022Country risk premium 0.0%
\u2022Small firm premium 1.0%
\u2022Operational risk premium: -1.0%
\u2010Pre-tax Cost of Debt: 4.3%;
\u2010Corporate tax rate: 30%;
\u2010Target gearing (D/(D+E)): 60%;
\u2010WACC: 5.0%.
\u2022Terminal value based on two variants:
\u2010Terminal value based on a 1.15x RAB multiple in 2033;
\u2010Terminal value based on a perpetual growth rate of 2.0%.
2. Discounting of future dividends (DDM-models):
\u2022Discount rate:
\u2010Cost of Equity: 8.0%
\u2022Terminal value based on two variants:
\u2010Terminal value based on 1.15x RAB multiple in 2033;
\u2010Terminal value based on a perpetual growth rate of 2.0%.
Conclusion:
\u2022Neither the independent analysis, which was based on a (\u20ac4,448 million) midpoint of the different valuation approaches and variants used, nor the sensitivity analysis resulted in the identification of an impairment of goodwill in the financial year 2023. Moreover, market multiples (based on current enterprise values and current/forecasted EBITDA) were applied for plausibility.
\u2022The median and the average of the different methods presented above were relatively close (\u20ac3,271 million and \u20ac3,269 million respectively), as the assumptions for the terminal value were similar. Neither the independent analysis based on a median of the different valuation approaches and variants used, nor the sensitivity analysis resulted in the identification of an impairment of goodwill in the financial year 2023.
(in \u20ac million) | Development costs of software | Licences/ concessions | Other intangible assets | Intangible assets under development | Total |
ACQUISITION VALUE | |||||
Balance at 1 January 2022 | 268.4 | 34.5 | 0.9 | 0.0 | 303.8 |
Additions | 89.5 | 3.1 | 0.6 | 0.0 | 93.2 |
Disposals | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Transfers | -1.1 | 0.0 | 0.0 | 0.0 | -1.1 |
Balance at 31 December 2022 | 356.8 | 37.6 | 1.6 | 0.0 | 395.9 |
Balance at 1 January 2023 | 356.8 | 37.6 | 1.6 | 0.0 | 395.9 |
Additions | 30.3 | 2.1 | 0.0 | 110.5 | 143.0 |
Disposals | -0.2 | 0.0 | 0.0 | 0.0 | -0.2 |
Transfers | -57.9 | 0.0 | 1.9 | 55.5 | -0.6 |
Balance at 31 December 2023 | 329.0 | 39.7 | 3.4 | 166.0 | 538.2 |
ACCUMULATED DEPRECIATION AND IMPAIRMENT | |||||
Balance at 1 January 2022 | -144.2 | -10.8 | -0.2 | 0.0 | -155.2 |
Depreciation | -26.3 | -3.5 | -0.3 | 0.0 | -30.2 |
Disposals | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Transfers | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Balance at 31 December 2022 | -170.5 | -14.4 | -0.5 | 0.0 | -185.4 |
Balance at 1 January 2023 | -170.5 | -14.4 | -0.5 | 0.0 | -185.4 |
Depreciation | -36.2 | -4.1 | 0.0 | 0.0 | -40.2 |
Disposals | 0.2 | 0.0 | 0.0 | 0.0 | 0.2 |
Transfers | 1.1 | 0.0 | -0.6 | 0.0 | 0.5 |
Balance at 31 December 2023 | -205.4 | -18.4 | -1.1 | 0.0 | -224.9 |
CARRYING AMOUNT | |||||
Balance at 1 January 2022 | 124.2 | 23.6 | 0.8 | 0.0 | 148.6 |
Balance at 31 December 2022 | 186.3 | 23.2 | 1.1 | 0.0 | 210.5 |
Balance at 1 January 2023 | 186.3 | 23.2 | 1.1 | 0.0 | 210.5 |
Balance at 31 December 2023 | 123.6 | 21.3 | 2.3 | 166.0 | 313.2 |
Software comprises both IT applications developed by the Group for operating the grid and software for the Group's normal business operations.
The Group invested a total amount of \u20ac143 million, of which \u20ac64.7 million in Elia Transmission Belgium, \u20ac77.2 million in 50Hertz Transmission and \u20ac1.1 million in the non-regulated activities and Nemo Link segment.
During 2023, \u20ac1.1\u00a0million in borrowing costs were capitalised on software in development (compared with \u20ac0.6\u00a0million in 20220) in the Elia Transmission Belgium segment, based on an average interest rate of 2.01% (1.91% in 2022). No borrowing costs on software in development were capitalised in the 50Hertz Transmission segment.
The Group does not hold individual intangible assets that are material to its financial statements, except capacity entitlements in the Kontek cable (Denmark) that amount to \u20ac13.6 million (with a remaining useful life of 10 years (until 2033) and the ERP (\u20ac32.8 million with a remaining useful life of 4 years - until 2027).
There were no changes in goodwill during the years 2022-2023. The carrying amount is the following:
(in \u20ac million) | Goodwill |
ACQUISITION VALUE | |
Balance at 1 January 2022 | 2,411.1 |
Balance at 31 December 2022 | 2,411.1 |
Balance at 1 January 2023 | 2,411.1 |
Balance at 31 December 2023 | 2,411.1 |
The goodwill relates to the following business combinations and is allocated to the cash generating unit (CGU) Elia Transmission for the acquisition of Elia Asset and Elia Engineering and to the CGU 50Hertz Transmission for the acquisition of the 20% stake in Eurogrid International:
(in \u20ac million) | 2023 |
Acquisition Elia Asset \u2013 2002 | 1,700.1 |
Acquisition Elia Engineering \u2013 2004 | 7.7 |
Acquisition Eurogrid International \u2013 2018 | 703.4 |
Total | 2,411.1 |
IMPAIRMENT TEST FOR CASH-GENERATING UNITS CONTAINING GOODWILL
According to IFRS rules, goodwill should be tested for impairment on at least an annual basis or upon the occurrence of a triggering event. Goodwill is allocated to the CGUs Elia Transmission and 50Hertz Transmission for impairment testing. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually.
The recoverable amount of CGUs is determined by reference to a value in use that is calculated based on different methods (Discounted Cash Flow and Discounted Dividend Model) using cash flow projections drawn up on the basis of the 2023 updated forecast and the 2024-2028 business plan, as approved by the Management Committee and the Board of Directors, and on extrapolated cash flows beyond that time frame.
The forecasts and projections included in the reference scenario were determined on the basis of the estimated investment plans, remuneration defined in the regulatory frameworks, market evolution, market share and margin evolution. As the Group\u2019s asset base consists of assets with long useful lives, the business plan\u2019s projection period was set to encompass the coming two regulatory periods.
The discount rates used correspond to the weighted average cost of capital, which is adjusted in order to reflect the business, market, country and currency risk relating to each goodwill CGU reviewed. The discount rates used are consistent with available external information sources.
The growth rates associated with the terminal values do not exceed the inflation rate or the long-term average growth rate for the market to which the CGU is dedicated.
More details are provided below by CGU.
ACQUISITION OF ELIA ASSET AND ELIA ENGINEERING
The acquisition of Elia Asset (in 2002) and Elia Engineering (in 2004) by the Company resulted in a positive consolidation difference of respectively \u20ac1,700.1\u00a0million and \u20ac7.7 million\u00a0 which could not be allocated to specific assets. This difference has consequently been recognised as goodwill assigned to the regulated activity in Belgium. Since 2004, annual impairment tests have been conducted and have not resulted in the recognition of any impairment losses.
The impairment test was conducted by an independent expert. This impairment test is based on the value in use and uses two main valuation methods to estimate the recoverable amount: 1) a discounted cash flows method (DCF); and 2) a dividend discount model (DDM), both of which are further detached in valuation variants depending on the terminal value calculation.
Future cash flows and future dividends are based on a business plan for the period 2023-2033. As the Group\u2019s asset base consists of assets with long useful lives, the business plan\u2019s projection period was set to encompass the coming two regulatory periods. Note that the regulatory framework within which Elia operates is characterised by an allowed revenues
basis structured around: 1) a fair remuneration of the regulated asset base; and 2) incentives to guarantee the continuity of supply and improve efficiency. Considering that the regulator will allow a fair remuneration of the regulated asset base consistent with market expectations, the estimated regulated asset base for the last forecast year can be considered an indication of the terminal value. This approach does not take into account potential cash flows generated by meeting or beating future efficiency targets.
The valuation methods are subject to different assumptions, the most important of which are outlined below.
1. Discounting of future cash flows (DCF-models):
\u2022Discount rate:
\u2010Cost of Equity of 8.7%;
\u2022Risk-free-rate: 3.1%
\u2022Beta 0.90
\u2022Equity market risk premium 5.5%
\u2022Small firm premium 1.0%
\u2022Country risk premium 0.9%
\u2010Pre-tax Cost of Debt of 4.3%;
\u2010Operational risk premium of -1.1%
\u2010Corporate tax rate of 25%;
\u2010Target gearing (D/(D+E)): 60%;
\u2010Post-tax WACC: 5.4%.
\u2022Terminal value based on two variants:
\u2010Terminal value based on a 1.15x RAB multiple in 2033.
NB: as such, the RAB itself does not take into account the contribution that the incentive remuneration makes to the value creation process.
\u2010Terminal value based on a perpetual growth rate of 3.0%. This long term growth rate is higher than long term expected inflation to capture the returns generated from the significant investments in the business plan.
2. Discounting of future dividends (DDM-models):
\u2022Discount rate:
\u2010Cost of Equity of 8.7%
\u2022Terminal value based on two variants:
\u2010Terminal value based on 1.15x RAB multiple in 2033.
NB: as such, the RAB itself does not take into account the contribution of the incentive remuneration to the value creation process.
\u2010Terminal value based on a perpetual growth rate of 3.0%. This approach assumes that the residual value consists of profit after tax less investments and considers net borrowings (in relation to the investments). However, profit and thus dividend payments in FY33 most likely does not yet reflect the (positive) impact of the investments planned in FY26-FY33.
Conclusion:
\u2022The independent analysis, which was based on a (\u20ac3,901 million) midpoint of the different valuation approaches and variants used did not result in the identification of an impairment of goodwill in the financial year 2023. Moreover, market multiples (based on current enterprise values and current/forecasted EBITDA) were applied for plausibility.
\u2022As the median and the average of the different methods presented above were relatively far apart (\u20ac3.394 million and \u20ac5.425 million respectively), mainly due to differences in assumptions for the terminal value, the expert\u2019s mid-point is based on 75% of the median and 25% of the average, bearing in mind, among other factors, that the median alone might not appropriately reflect the impact of incentive remuneration on the terminal value (see above for more details).
\u2022Compared to 2022, the context has slightly changed, giving greater visibility to the Group on how the rates of return are calculated, taking into account the changing market parameters. Indeed, the discussions on the new tariffs methodology have led to a new mechanism designed to protect ROE against a rise of interest rates. An additional remuneration is foreseen in the methodology in connection with the OLO level. The fact that the regulated return on equity is now directly linked to the evolution of the risk-free rate triggers the use of a negative operational risk premium and an unchanged WACC level compared to 2022 despite an increase in the risk-free rate. This negative premium results from the difference between the average of ROE and the cost of equity, taking into account the beta derived from the peer group (0,66 = market view) and this COE. Considering this evolution and the regulated nature of the businesses grouped with the CGU, a reasonable change in any of the valuation inputs would not result in impairment losses.
ACQUISITION OF EUROGRID INTERNATIONAL
\u2022In April 2018, the acquisition of an extra 20% stake in Eurogrid International by the Group resulted in a goodwill of \u20ac703.4\u00a0million, This consolidation difference\u00a0 has been allocated to the CGU 50Hertz Transmission, since it comprises all income and expenses generated thereof.
\u2022The impairment test was conducted by an independent expert. This impairment test is based on two main valuation methods: 1) a discounted cash flows (DCF) method; and 2) a dividend discount model (DDM). Both of these are further detached in valuation variants depending on the terminal value calculation. Future cash flows and future dividends are based on a business plan for the period 2023-2033 (two regulatory periods). As the Group\u2019s asset base consists of assets with long useful lives, the business plan\u2019s projection period was set to encompass the next two regulatory periods.
The valuation methods are subject to different assumptions, most importantly:
1. Discounting of future cash flows (DCF-models):
\u2022Discount rate:
\u2010Cost of Equity: 8.0%;
\u2022Risk-free-rate: 3.1%
\u2022Beta 0.90
\u2022Equity market risk premium 5.5%
\u2022Country risk premium 0.0%
\u2022Small firm premium 1.0%
\u2022Operational risk premium: -1.0%
\u2010Pre-tax Cost of Debt: 4.3%;
\u2010Corporate tax rate: 30%;
\u2010Target gearing (D/(D+E)): 60%;
\u2010WACC: 5.0%.
\u2022Terminal value based on two variants:
\u2010Terminal value based on a 1.15x RAB multiple in 2033;
\u2010Terminal value based on a perpetual growth rate of 2.0%.
2. Discounting of future dividends (DDM-models):
\u2022Discount rate:
\u2010Cost of Equity: 8.0%
\u2022Terminal value based on two variants:
\u2010Terminal value based on 1.15x RAB multiple in 2033;
\u2010Terminal value based on a perpetual growth rate of 2.0%.
Conclusion:
\u2022Neither the independent analysis, which was based on a (\u20ac4,448 million) midpoint of the different valuation approaches and variants used, nor the sensitivity analysis resulted in the identification of an impairment of goodwill in the financial year 2023. Moreover, market multiples (based on current enterprise values and current/forecasted EBITDA) were applied for plausibility.
\u2022The median and the average of the different methods presented above were relatively close (\u20ac3,271 million and \u20ac3,269 million respectively), as the assumptions for the terminal value were similar. Neither the independent analysis based on a median of the different valuation approaches and variants used, nor the sensitivity analysis resulted in the identification of an impairment of goodwill in the financial year 2023.
CREDIT RISK
Credit risk encompasses all forms of counterparty exposure, i.e. where counterparties may default on their obligations to the Group in relation to lending, hedging, settlement and other financial activities. The Group is exposed to credit risk from its operating activities and treasury activities. With regards to its operating activities, the Group has a credit policy in place, which takes into account customer\u2019s risk profiles. The exposure to credit risk is monitored on an ongoing basis, resulting in a request to issue bank guaranties from the counterparty for some major contracts.
At the end of the reporting period there were no significant concentrations of credit risks. The maximum credit risk is the carrying amount for each financial asset, including derivative financial instruments.
(in \u20ac million) | Notes | 2023 | 2022 |
Immediately claimable deposits | 7.2 | 7.0 | |
Reimbursement rights | 37.1 | 34.6 | |
Other shareholdings | 76.7 | 75.6 | |
Derivatives (Current and Non-current) | 7.2 | 219.7 | |
Other financial assets (Current and Non-current) | (6.6) | 128.2 | 336.9 |
Non-current trade and other receivables | 55.0 | 95.5 | |
Trade and other receivables | (6.9) | 1,066.3 | 1,206.2 |
Current tax assets | (6.10) | 64.4 | 28.6 |
Cash and cash equivalents | (6.11) | 1,368.1 | 4,151.2 |
Deferred charges | (6.9) | 21.4 | 25.1 |
Total | 2,703.3 | 5,843.5 |
The movement in the allowance for expected credit losses in relation to trade receivables during the year was as outlined in the table below:
(in \u20ac million) | Bad debtors | Impairment losses | Remaining balance | |
Balance at 1 January 2022 | 201.4 | (200.8) | 0.5 | |
Changes during the year | 0.8 | (0.8) | 0.0 | |
Balance at 31 December 2022 | 202.2 | (201.7) | 0.5 | |
Balance at 1 January 2023 | 202.2 | (201.7) | 0.5 | |
Changes during the year | 0.5 | (0.7) | (0.2) | |
Balance at 31 December 2023 | 202.7 | (202.3) | 0.4 |
Almost all bad debtors are related to outstanding receivables linked to the regulatory levies in Germany. If a debtor goes bankrupt, 50Hertz Transmission is compensated by the levy system for the loss incurred.
The Group believes that the unimpaired amounts overdue by more than 30\u00a0days are still collectible, based on historical payment behaviour and extensive analysis of customer credit risk, including customers' underlying credit ratings, when available. The credit quality of trade and other receivables is assessed based on a credit policy.
IFRS 9 requires the Group to impair financial assets based on a forward-looking expected credit loss (ECL) approach.
As of 2022, the Group applies an individualised approach for trade receivables, for which the Group has set rules for defining the stage of the concerned asset for Expected Credit Loss (ECL) calculations.
\u2022stage 1 covers financial assets that have not deteriorated significantly since initial recognition. The ECL for stage 1 is calculated on a 12-month basis,
\u2022stage 2 covers financial assets for which the credit risk has significantly increased. The ECL for stage 2 is calculated on a lifetime basis. The decision to move an asset from stage 1 to stage 2 is based on certain criteria such as:
\u2022a significant downgrade in the creditworthiness of a counterparty and/or its parent company and/or its guarantor (if any),
\u2022significant adverse changes in the regulatory environment,
\u2022changes in political or country-related risks, and
\u2022any other aspect the Group may consider relevant.
Regarding financial assets that are more than 30 days past due, the move to stage 2 is not systematically applied as long as the Group has reasonable and supporting information that demonstrates that, even if payments become more than 30 days past due, this does not represent a significant increase in the credit risk since initial recognition.
\u2022stage 3 covers assets for which default has already been observed, such as:
\u2022when there is evidence of failure in credit support from a parent company to its subsidiary (in this case the subsidiary is the Group\u2019s counterparty at risk),
\u2022when a Group entity has initiated legal proceedings against the counterparty for non-payment.
Regarding financial assets that are more than 90 days past due, the presumption can be rebutted if the Group has reasonable and supportable information that demonstrates that even if payments become more than 90 days past due, this does not indicate counterparty default.
The ECL formula applicable in stages 1 and 2 is ECL = EAD x PD x LGD, where:
\u2022for 12-month ECL, Exposure At Default (EAD) equals the carrying amount of the financial asset, to which the relevant Probability of Default (PD) and the Loss Given Default (LGD) are applied;
\u2022for lifetime ECL, the calculation method consists in identifying changes in exposure for each year, especially the expected timing and amount of the contractual repayments, and then applying to each repayment the relevant PD and the LGD, and discounting the figures obtained. ECL is then the sum of the discounted figures; and
\u2022probability of default is the likelihood of default over a particular time horizon (in stage 1, this time horizon is 12 months after the reporting period; in stage 2 this time horizon is the entire lifetime of the financial asset). This information is based on external data from a well-known rating agency. The PD depends on the time horizon and of the rating of the counterparty.
The Group uses external ratings if they are available; or an internal rating for major counterparties with no external rating.
Subsequently, a loss given default is calculated as the percentage of the amount of trade receivables that is not covered by a bank guarantee. The total outstanding amount of trade receivables covered by a bank guarantee totals \u20ac36.4 million. The loss given default is multiplied by the probability of default and the outstanding trade receivables.
This approach is deemed more relevant than the portfolio approach to provide a better assessment of the risk, especially in the current context of volatile market conditions. The impact of this new approach is not significant. Furthermore, any losses would be recoverable through the tariffs.
The model is applied to the trade receivables, all other financial assets being not assessed at risk of impairment considering their nature (regulatory assets, amounts recoverable through future tariffs in compliance with the regulatory frameworks), risk profile (reliable counterparty being for the levies the Belgian/German state) or measurement method (at fair value). More details are provided in the different notes.
There were no changes in goodwill during the years 2022-2023. The carrying amount is the following:
(in \u20ac million) | Goodwill |
ACQUISITION VALUE | |
Balance at 1 January 2022 | 2,411.1 |
Balance at 31 December 2022 | 2,411.1 |
Balance at 1 January 2023 | 2,411.1 |
Balance at 31 December 2023 | 2,411.1 |
The goodwill relates to the following business combinations and is allocated to the cash generating unit (CGU) Elia Transmission for the acquisition of Elia Asset and Elia Engineering and to the CGU 50Hertz Transmission for the acquisition of the 20% stake in Eurogrid International:
(in \u20ac million) | 2023 |
Acquisition Elia Asset \u2013 2002 | 1,700.1 |
Acquisition Elia Engineering \u2013 2004 | 7.7 |
Acquisition Eurogrid International \u2013 2018 | 703.4 |
Total | 2,411.1 |
IMPAIRMENT TEST FOR CASH-GENERATING UNITS CONTAINING GOODWILL
According to IFRS rules, goodwill should be tested for impairment on at least an annual basis or upon the occurrence of a triggering event. Goodwill is allocated to the CGUs Elia Transmission and 50Hertz Transmission for impairment testing. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually.
The recoverable amount of CGUs is determined by reference to a value in use that is calculated based on different methods (Discounted Cash Flow and Discounted Dividend Model) using cash flow projections drawn up on the basis of the 2023 updated forecast and the 2024-2028 business plan, as approved by the Management Committee and the Board of Directors, and on extrapolated cash flows beyond that time frame.
The forecasts and projections included in the reference scenario were determined on the basis of the estimated investment plans, remuneration defined in the regulatory frameworks, market evolution, market share and margin evolution. As the Group\u2019s asset base consists of assets with long useful lives, the business plan\u2019s projection period was set to encompass the coming two regulatory periods.
The discount rates used correspond to the weighted average cost of capital, which is adjusted in order to reflect the business, market, country and currency risk relating to each goodwill CGU reviewed. The discount rates used are consistent with available external information sources.
The growth rates associated with the terminal values do not exceed the inflation rate or the long-term average growth rate for the market to which the CGU is dedicated.
More details are provided below by CGU.
ACQUISITION OF ELIA ASSET AND ELIA ENGINEERING
The acquisition of Elia Asset (in 2002) and Elia Engineering (in 2004) by the Company resulted in a positive consolidation difference of respectively \u20ac1,700.1\u00a0million and \u20ac7.7 million\u00a0 which could not be allocated to specific assets. This difference has consequently been recognised as goodwill assigned to the regulated activity in Belgium. Since 2004, annual impairment tests have been conducted and have not resulted in the recognition of any impairment losses.
The impairment test was conducted by an independent expert. This impairment test is based on the value in use and uses two main valuation methods to estimate the recoverable amount: 1) a discounted cash flows method (DCF); and 2) a dividend discount model (DDM), both of which are further detached in valuation variants depending on the terminal value calculation.
Future cash flows and future dividends are based on a business plan for the period 2023-2033. As the Group\u2019s asset base consists of assets with long useful lives, the business plan\u2019s projection period was set to encompass the coming two regulatory periods. Note that the regulatory framework within which Elia operates is characterised by an allowed revenues
basis structured around: 1) a fair remuneration of the regulated asset base; and 2) incentives to guarantee the continuity of supply and improve efficiency. Considering that the regulator will allow a fair remuneration of the regulated asset base consistent with market expectations, the estimated regulated asset base for the last forecast year can be considered an indication of the terminal value. This approach does not take into account potential cash flows generated by meeting or beating future efficiency targets.
The valuation methods are subject to different assumptions, the most important of which are outlined below.
1. Discounting of future cash flows (DCF-models):
\u2022Discount rate:
\u2010Cost of Equity of 8.7%;
\u2022Risk-free-rate: 3.1%
\u2022Beta 0.90
\u2022Equity market risk premium 5.5%
\u2022Small firm premium 1.0%
\u2022Country risk premium 0.9%
\u2010Pre-tax Cost of Debt of 4.3%;
\u2010Operational risk premium of -1.1%
\u2010Corporate tax rate of 25%;
\u2010Target gearing (D/(D+E)): 60%;
\u2010Post-tax WACC: 5.4%.
\u2022Terminal value based on two variants:
\u2010Terminal value based on a 1.15x RAB multiple in 2033.
NB: as such, the RAB itself does not take into account the contribution that the incentive remuneration makes to the value creation process.
\u2010Terminal value based on a perpetual growth rate of 3.0%. This long term growth rate is higher than long term expected inflation to capture the returns generated from the significant investments in the business plan.
2. Discounting of future dividends (DDM-models):
\u2022Discount rate:
\u2010Cost of Equity of 8.7%
\u2022Terminal value based on two variants:
\u2010Terminal value based on 1.15x RAB multiple in 2033.
NB: as such, the RAB itself does not take into account the contribution of the incentive remuneration to the value creation process.
\u2010Terminal value based on a perpetual growth rate of 3.0%. This approach assumes that the residual value consists of profit after tax less investments and considers net borrowings (in relation to the investments). However, profit and thus dividend payments in FY33 most likely does not yet reflect the (positive) impact of the investments planned in FY26-FY33.
Conclusion:
\u2022The independent analysis, which was based on a (\u20ac3,901 million) midpoint of the different valuation approaches and variants used did not result in the identification of an impairment of goodwill in the financial year 2023. Moreover, market multiples (based on current enterprise values and current/forecasted EBITDA) were applied for plausibility.
\u2022As the median and the average of the different methods presented above were relatively far apart (\u20ac3.394 million and \u20ac5.425 million respectively), mainly due to differences in assumptions for the terminal value, the expert\u2019s mid-point is based on 75% of the median and 25% of the average, bearing in mind, among other factors, that the median alone might not appropriately reflect the impact of incentive remuneration on the terminal value (see above for more details).
\u2022Compared to 2022, the context has slightly changed, giving greater visibility to the Group on how the rates of return are calculated, taking into account the changing market parameters. Indeed, the discussions on the new tariffs methodology have led to a new mechanism designed to protect ROE against a rise of interest rates. An additional remuneration is foreseen in the methodology in connection with the OLO level. The fact that the regulated return on equity is now directly linked to the evolution of the risk-free rate triggers the use of a negative operational risk premium and an unchanged WACC level compared to 2022 despite an increase in the risk-free rate. This negative premium results from the difference between the average of ROE and the cost of equity, taking into account the beta derived from the peer group (0,66 = market view) and this COE. Considering this evolution and the regulated nature of the businesses grouped with the CGU, a reasonable change in any of the valuation inputs would not result in impairment losses.
ACQUISITION OF EUROGRID INTERNATIONAL
\u2022In April 2018, the acquisition of an extra 20% stake in Eurogrid International by the Group resulted in a goodwill of \u20ac703.4\u00a0million, This consolidation difference\u00a0 has been allocated to the CGU 50Hertz Transmission, since it comprises all income and expenses generated thereof.
\u2022The impairment test was conducted by an independent expert. This impairment test is based on two main valuation methods: 1) a discounted cash flows (DCF) method; and 2) a dividend discount model (DDM). Both of these are further detached in valuation variants depending on the terminal value calculation. Future cash flows and future dividends are based on a business plan for the period 2023-2033 (two regulatory periods). As the Group\u2019s asset base consists of assets with long useful lives, the business plan\u2019s projection period was set to encompass the next two regulatory periods.
The valuation methods are subject to different assumptions, most importantly:
1. Discounting of future cash flows (DCF-models):
\u2022Discount rate:
\u2010Cost of Equity: 8.0%;
\u2022Risk-free-rate: 3.1%
\u2022Beta 0.90
\u2022Equity market risk premium 5.5%
\u2022Country risk premium 0.0%
\u2022Small firm premium 1.0%
\u2022Operational risk premium: -1.0%
\u2010Pre-tax Cost of Debt: 4.3%;
\u2010Corporate tax rate: 30%;
\u2010Target gearing (D/(D+E)): 60%;
\u2010WACC: 5.0%.
\u2022Terminal value based on two variants:
\u2010Terminal value based on a 1.15x RAB multiple in 2033;
\u2010Terminal value based on a perpetual growth rate of 2.0%.
2. Discounting of future dividends (DDM-models):
\u2022Discount rate:
\u2010Cost of Equity: 8.0%
\u2022Terminal value based on two variants:
\u2010Terminal value based on 1.15x RAB multiple in 2033;
\u2010Terminal value based on a perpetual growth rate of 2.0%.
Conclusion:
\u2022Neither the independent analysis, which was based on a (\u20ac4,448 million) midpoint of the different valuation approaches and variants used, nor the sensitivity analysis resulted in the identification of an impairment of goodwill in the financial year 2023. Moreover, market multiples (based on current enterprise values and current/forecasted EBITDA) were applied for plausibility.
\u2022The median and the average of the different methods presented above were relatively close (\u20ac3,271 million and \u20ac3,269 million respectively), as the assumptions for the terminal value were similar. Neither the independent analysis based on a median of the different valuation approaches and variants used, nor the sensitivity analysis resulted in the identification of an impairment of goodwill in the financial year 2023.
The non current trade and other receivables are mainly composed by the long term part of the granted investment subsidy (\u20ac55.0 million versus \u20ac95.0 million end of 2022). up to a subsidy of \u20ac99,7 millions out of a total budgeted investment of circa \u20ac600.0 millions.
This subsidy has been granted for the creation of an offshore island (The Princess Elisabeth Island) and within the framework of the Recovery and Resilience Facility (EU instrument to support project of Member States and help the EU emerge stronger and more resilient from the current crisis). This island will serve as a multifunctional energy hub/an extension of the electricity grid in the North Sea. It will connect wind farms from the sea to the mainland and create new connections with neighbouring countries.
At December 31, 2023, an amount of \u20ac55.0 million remains receivable beyond 2024 and is therefore presented as long-term receivable while \u20ac40.0 million have been transferred in short term.
(in \u20ac million) | 2023 | 2022 |
Immediately claimable deposits | 7.2 | 7.0 |
Reimbursement rights | 36.8 | 33.7 |
Other shareholdings | 76.7 | 75.7 |
Other | 0.3 | 0.8 |
Other financial assets (non-current) | 121.0 | 117.2 |
Current derivatives | 7.2 | 219.7 |
Other financial assets (current) | 7.2 | 219.7 |
Other financial assets | 128.2 | 336.9 |
The total other financial assets decreased by \u20ac208.7 million compared with the previous year.
Immediately claimable deposits are measured at fair value. The risk profile of these investments is discussed in Note\u00a08.1. The value as at 31 December 2023 is stable compared to 2022.
Reimbursement rights are linked to the obligations regarding (i) the retired employees falling under specific benefit schemes (Scheme\u00a0B - unfunded plan); and for (ii) health plan and reduced energy pricing plans for retired staff members. See Note\u00a06.14: \u2018Employee benefits\u2019. The reimbursement rights are recoverable through the regulated tariffs. The following principle applies: all incurred pension costs for 'Scheme\u00a0B' retired employees and the costs linked to healthcare and reduced energy pricing plans for retired Elia staff members are defined by the regulator (CREG) as non-controllable expenses that are recoverable through the regulatory tariffs. The decrease in the carrying value of this asset is disclosed in Note 6.14: \u2018Employee benefits\u2019 and mainly explained by the change in discount rate. Considering the nature (regulatory asset) of these financial assets, they are not considered to be at risk of impairment.
Other shareholdings: the Group holds 5.4% (at 100%) of the shares in European Energy Exchange (EEX), Leipzig, Germany, for a total value of \u20ac42.7 million as of the reporting date. These shares are disclosed under Other shareholdings in addition to an 8.0% (at 100%) shareholding in JAO Joint Allocation Office SA, a 6.7% (at 100%) shareholding in TSCNET Services GmbH (Munich, Germany), 6.6% (at 100%) shareholding in decarbon1ze GmbH (acquired in 2023) and a 10.4% (at 100%) shareholding in the Stiftung Kurt-Sanderling-Akademie des Konzerthausorchesters foundation (Berlin, Germany). Other investments are measured at fair value. At each reporting date, a re-measurement is performed to re-evaluate these investments. Any deviation from the previous period is recorded under other comprehensive income. There was no significant remeasurement in 2023.
Derivatives: derivatives show a decrease of \u20ac212.5 million:
\u2022Since 2021, 50Hertz applies hedge accounting for the purpose of reducing the risk of fluctuations in the expected amount of grid losses. Due to the drop in energy prices over the year, the fair value of these contracts has turned negative. Long and short term commodities contracts show a negative fair value. This evolution explains an overall decrease of \u20ac154.4 million.
\u2022This decrease is amplified by the lower fair value of the derivatives contracted in Belgium in connection with the pre-hedging of probable forecast debt transactions (ETB bond issuance). The fair value of these derivatives amounted to \u20ac7,2 million compared to \u20ac65.3 million end of 2022. See Note 8.1 for more info on these derivatives.
The non current trade and other receivables are mainly composed by the long term part of the granted investment subsidy (\u20ac55.0 million versus \u20ac95.0 million end of 2022). up to a subsidy of \u20ac99,7 millions out of a total budgeted investment of circa \u20ac600.0 millions.
This subsidy has been granted for the creation of an offshore island (The Princess Elisabeth Island) and within the framework of the Recovery and Resilience Facility (EU instrument to support project of Member States and help the EU emerge stronger and more resilient from the current crisis). This island will serve as a multifunctional energy hub/an extension of the electricity grid in the North Sea. It will connect wind farms from the sea to the mainland and create new connections with neighbouring countries.
At December 31, 2023, an amount of \u20ac55.0 million remains receivable beyond 2024 and is therefore presented as long-term receivable while \u20ac40.0 million have been transferred in short term.
(in \u20ac million) | 2023 | 2022 |
Immediately claimable deposits | 7.2 | 7.0 |
Reimbursement rights | 36.8 | 33.7 |
Other shareholdings | 76.7 | 75.7 |
Other | 0.3 | 0.8 |
Other financial assets (non-current) | 121.0 | 117.2 |
Current derivatives | 7.2 | 219.7 |
Other financial assets (current) | 7.2 | 219.7 |
Other financial assets | 128.2 | 336.9 |
The total other financial assets decreased by \u20ac208.7 million compared with the previous year.
Immediately claimable deposits are measured at fair value. The risk profile of these investments is discussed in Note\u00a08.1. The value as at 31 December 2023 is stable compared to 2022.
Reimbursement rights are linked to the obligations regarding (i) the retired employees falling under specific benefit schemes (Scheme\u00a0B - unfunded plan); and for (ii) health plan and reduced energy pricing plans for retired staff members. See Note\u00a06.14: \u2018Employee benefits\u2019. The reimbursement rights are recoverable through the regulated tariffs. The following principle applies: all incurred pension costs for 'Scheme\u00a0B' retired employees and the costs linked to healthcare and reduced energy pricing plans for retired Elia staff members are defined by the regulator (CREG) as non-controllable expenses that are recoverable through the regulatory tariffs. The decrease in the carrying value of this asset is disclosed in Note 6.14: \u2018Employee benefits\u2019 and mainly explained by the change in discount rate. Considering the nature (regulatory asset) of these financial assets, they are not considered to be at risk of impairment.
Other shareholdings: the Group holds 5.4% (at 100%) of the shares in European Energy Exchange (EEX), Leipzig, Germany, for a total value of \u20ac42.7 million as of the reporting date. These shares are disclosed under Other shareholdings in addition to an 8.0% (at 100%) shareholding in JAO Joint Allocation Office SA, a 6.7% (at 100%) shareholding in TSCNET Services GmbH (Munich, Germany), 6.6% (at 100%) shareholding in decarbon1ze GmbH (acquired in 2023) and a 10.4% (at 100%) shareholding in the Stiftung Kurt-Sanderling-Akademie des Konzerthausorchesters foundation (Berlin, Germany). Other investments are measured at fair value. At each reporting date, a re-measurement is performed to re-evaluate these investments. Any deviation from the previous period is recorded under other comprehensive income. There was no significant remeasurement in 2023.
Derivatives: derivatives show a decrease of \u20ac212.5 million:
\u2022Since 2021, 50Hertz applies hedge accounting for the purpose of reducing the risk of fluctuations in the expected amount of grid losses. Due to the drop in energy prices over the year, the fair value of these contracts has turned negative. Long and short term commodities contracts show a negative fair value. This evolution explains an overall decrease of \u20ac154.4 million.
\u2022This decrease is amplified by the lower fair value of the derivatives contracted in Belgium in connection with the pre-hedging of probable forecast debt transactions (ETB bond issuance). The fair value of these derivatives amounted to \u20ac7,2 million compared to \u20ac65.3 million end of 2022. See Note 8.1 for more info on these derivatives.
The non current trade and other receivables are mainly composed by the long term part of the granted investment subsidy (\u20ac55.0 million versus \u20ac95.0 million end of 2022). up to a subsidy of \u20ac99,7 millions out of a total budgeted investment of circa \u20ac600.0 millions.
This subsidy has been granted for the creation of an offshore island (The Princess Elisabeth Island) and within the framework of the Recovery and Resilience Facility (EU instrument to support project of Member States and help the EU emerge stronger and more resilient from the current crisis). This island will serve as a multifunctional energy hub/an extension of the electricity grid in the North Sea. It will connect wind farms from the sea to the mainland and create new connections with neighbouring countries.
At December 31, 2023, an amount of \u20ac55.0 million remains receivable beyond 2024 and is therefore presented as long-term receivable while \u20ac40.0 million have been transferred in short term.
(in \u20ac million) | 2023 | 2022 |
Contract assets | 7.2 | 0.9 |
Trade receivables | 544.0 | 748.7 |
Advance payments | 25.1 | 1.9 |
Levies | 7.1 | 80.5 |
VAT and other taxes | 120.4 | 145.6 |
Other | 362.3 | 228.7 |
Trade and other receivables | 1,066.2 | 1,206.2 |
Deferred charges | 15.0 | 20.2 |
Accrued interests | 6.3 | 4.9 |
Deferred charges and accrued revenues | 21.4 | 25.1 |
Total | 1,087.5 | 1,231.4 |
The total current trade and other receivables, deferred charges and accrued revenues decreased by \u20ac143.9 million compared with the previous year. This is mainly explained by a decrease in trade receivables and levies in a context of falling prices.
Contract assets are mainly related to EGI's consulting business and transmission work for third parties. The position increased from \u20ac0.9 million in the previous year to \u20ac7.2 million at year-end.
Trade receivables are non-interest-bearing and generally have payment terms of 15\u00a0to 30\u00a0days. The decrease is driven by both Belgian and German segments due to a significant decrease in energy prices.
The decrease in the levies is mainly attributable to Germany where the offshore receivable reported in 2022 (\u20ac68.9 million) turned negative. The outstanding balance mainly relates to Belgium (\u20ac6.8 million).
\u2018Other receivables\u2019 mainly relate to the margin calls (advances received or paid as part of collateralization agreements set up by the Group to manage counterparty risk on commodity transactions) of the German segments (\u20ac289.5 million).
The Group's exposure to credit and currency risks, and impairment losses related to trade receivables are shown in Note\u00a08.1.
At 31 December, the ageing analysis of trade receivables is as follows:
(in \u20ac million) | 2023 | 2022 |
Not past due | 519.0 | 639.6 |
Past due 0-30 days | 18.6 | 75.6 |
Past due 31-60 days | 8.4 | 29.3 |
Past due 61 days - one year | 2.6 | 1.8 |
Past due one year - two years | 5.5 | 2.8 |
Total (excl. impairment) | 554.1 | 749.1 |
Doubtful amounts | 202.7 | 202.2 |
Amounts write-offs | (202.3) | (201.7) |
Allowance for expected credit losses | (10.4) | (0.9) |
Total | 544.0 | 748.7 |
See Note 8.1 for a detailed analysis of the credit risk incurred in connection with these trade receivables.
The non current trade and other receivables are mainly composed by the long term part of the granted investment subsidy (\u20ac55.0 million versus \u20ac95.0 million end of 2022). up to a subsidy of \u20ac99,7 millions out of a total budgeted investment of circa \u20ac600.0 millions.
This subsidy has been granted for the creation of an offshore island (The Princess Elisabeth Island) and within the framework of the Recovery and Resilience Facility (EU instrument to support project of Member States and help the EU emerge stronger and more resilient from the current crisis). This island will serve as a multifunctional energy hub/an extension of the electricity grid in the North Sea. It will connect wind farms from the sea to the mainland and create new connections with neighbouring countries.
At December 31, 2023, an amount of \u20ac55.0 million remains receivable beyond 2024 and is therefore presented as long-term receivable while \u20ac40.0 million have been transferred in short term.
(in \u20ac million) | 2023 | 2022 |
Immediately claimable deposits | 7.2 | 7.0 |
Reimbursement rights | 36.8 | 33.7 |
Other shareholdings | 76.7 | 75.7 |
Other | 0.3 | 0.8 |
Other financial assets (non-current) | 121.0 | 117.2 |
Current derivatives | 7.2 | 219.7 |
Other financial assets (current) | 7.2 | 219.7 |
Other financial assets | 128.2 | 336.9 |
The total other financial assets decreased by \u20ac208.7 million compared with the previous year.
Immediately claimable deposits are measured at fair value. The risk profile of these investments is discussed in Note\u00a08.1. The value as at 31 December 2023 is stable compared to 2022.
Reimbursement rights are linked to the obligations regarding (i) the retired employees falling under specific benefit schemes (Scheme\u00a0B - unfunded plan); and for (ii) health plan and reduced energy pricing plans for retired staff members. See Note\u00a06.14: \u2018Employee benefits\u2019. The reimbursement rights are recoverable through the regulated tariffs. The following principle applies: all incurred pension costs for 'Scheme\u00a0B' retired employees and the costs linked to healthcare and reduced energy pricing plans for retired Elia staff members are defined by the regulator (CREG) as non-controllable expenses that are recoverable through the regulatory tariffs. The decrease in the carrying value of this asset is disclosed in Note 6.14: \u2018Employee benefits\u2019 and mainly explained by the change in discount rate. Considering the nature (regulatory asset) of these financial assets, they are not considered to be at risk of impairment.
Other shareholdings: the Group holds 5.4% (at 100%) of the shares in European Energy Exchange (EEX), Leipzig, Germany, for a total value of \u20ac42.7 million as of the reporting date. These shares are disclosed under Other shareholdings in addition to an 8.0% (at 100%) shareholding in JAO Joint Allocation Office SA, a 6.7% (at 100%) shareholding in TSCNET Services GmbH (Munich, Germany), 6.6% (at 100%) shareholding in decarbon1ze GmbH (acquired in 2023) and a 10.4% (at 100%) shareholding in the Stiftung Kurt-Sanderling-Akademie des Konzerthausorchesters foundation (Berlin, Germany). Other investments are measured at fair value. At each reporting date, a re-measurement is performed to re-evaluate these investments. Any deviation from the previous period is recorded under other comprehensive income. There was no significant remeasurement in 2023.
Derivatives: derivatives show a decrease of \u20ac212.5 million:
\u2022Since 2021, 50Hertz applies hedge accounting for the purpose of reducing the risk of fluctuations in the expected amount of grid losses. Due to the drop in energy prices over the year, the fair value of these contracts has turned negative. Long and short term commodities contracts show a negative fair value. This evolution explains an overall decrease of \u20ac154.4 million.
\u2022This decrease is amplified by the lower fair value of the derivatives contracted in Belgium in connection with the pre-hedging of probable forecast debt transactions (ETB bond issuance). The fair value of these derivatives amounted to \u20ac7,2 million compared to \u20ac65.3 million end of 2022. See Note 8.1 for more info on these derivatives.
(in \u20ac million) | 2023 | 2022 |
Contract assets | 7.2 | 0.9 |
Trade receivables | 544.0 | 748.7 |
Advance payments | 25.1 | 1.9 |
Levies | 7.1 | 80.5 |
VAT and other taxes | 120.4 | 145.6 |
Other | 362.3 | 228.7 |
Trade and other receivables | 1,066.2 | 1,206.2 |
Deferred charges | 15.0 | 20.2 |
Accrued interests | 6.3 | 4.9 |
Deferred charges and accrued revenues | 21.4 | 25.1 |
Total | 1,087.5 | 1,231.4 |
The total current trade and other receivables, deferred charges and accrued revenues decreased by \u20ac143.9 million compared with the previous year. This is mainly explained by a decrease in trade receivables and levies in a context of falling prices.
Contract assets are mainly related to EGI's consulting business and transmission work for third parties. The position increased from \u20ac0.9 million in the previous year to \u20ac7.2 million at year-end.
Trade receivables are non-interest-bearing and generally have payment terms of 15\u00a0to 30\u00a0days. The decrease is driven by both Belgian and German segments due to a significant decrease in energy prices.
The decrease in the levies is mainly attributable to Germany where the offshore receivable reported in 2022 (\u20ac68.9 million) turned negative. The outstanding balance mainly relates to Belgium (\u20ac6.8 million).
\u2018Other receivables\u2019 mainly relate to the margin calls (advances received or paid as part of collateralization agreements set up by the Group to manage counterparty risk on commodity transactions) of the German segments (\u20ac289.5 million).
The Group's exposure to credit and currency risks, and impairment losses related to trade receivables are shown in Note\u00a08.1.
At 31 December, the ageing analysis of trade receivables is as follows:
(in \u20ac million) | 2023 | 2022 |
Not past due | 519.0 | 639.6 |
Past due 0-30 days | 18.6 | 75.6 |
Past due 31-60 days | 8.4 | 29.3 |
Past due 61 days - one year | 2.6 | 1.8 |
Past due one year - two years | 5.5 | 2.8 |
Total (excl. impairment) | 554.1 | 749.1 |
Doubtful amounts | 202.7 | 202.2 |
Amounts write-offs | (202.3) | (201.7) |
Allowance for expected credit losses | (10.4) | (0.9) |
Total | 544.0 | 748.7 |
See Note 8.1 for a detailed analysis of the credit risk incurred in connection with these trade receivables.
(in \u20ac million) | 2023 | 2022 |
Short-term deposits | 1,163.7 | 3,516.6 |
Balance at bank | 204.4 | 634.6 |
Total | 1,368.1 | 4,151.2 |
Cash and cash equivalents decreased by \u20ac2,783.1 million. This decrease was mainly due to the lower EEG, KWK and StromNEV (levies) surplus of \u20ac352,6 million (-\u20ac2,583.4 million) in Germany and the realisation of the investment program in Belgium and Germany which relied partially on funding from operating cash flow as well as on liquidity stemmed from last year\u2019s capital increase.
Short-term deposits are invested for periods varying from a few days or weeks to several months (generally not exceeding three months), depending on immediate cash requirements, and earn interest in accordance with the interest rates for short-term deposits.
Bank account balances earn or pay interest in line with the variable rates of interest on the basis of daily bank deposit interest rates. The Group's interest rate risk and the sensitivity analysis for financial assets and liabilities are discussed in Note\u00a08.1.
On 9 March 2023, Elia Group SA/NV (\u201cElia Group\u201d) successfully placed \u20ac500 million hybrid securities to be admitted to trading on the Luxembourg Stock Exchange's Euro MTF market.
This transaction was part of a liability management exercise including the refinancing of the existing hybrid bond of \u20ac 700 million issued in 2028 to finance the additional 20% stake in 50Hertz Transmission (Germany) through Eurogrid International SA/NV.
This new hybrid securities will carry a fixed coupon of 5.85% until the 15 June 2028, with a reset every five years thereafter and will be callable from 15 March 2028.
As at 31 December 2023, the unpaid cumulative dividend related to the new hybrid bond amounts to \u20ac15.9 million. A coupon of \u20ac16.4 million was paid to the holders of hybrid securities in 2023.
(in \u20ac million) | 2023 | 2022 |
Non-current borrowings | 9,181.3 | 7,638.6 |
Lease liabilities \u2212\u00a0non-current | 73.5 | 77.0 |
Subtotal non-current borrowings | 9,254.8 | 7,715.6 |
Current borrowings | 622.3 | 772.0 |
Lease liabilities \u2212 current | 14.6 | 13.2 |
Accrued interest | 118.4 | 81.9 |
Subtotal current loans and borrowings | 755.2 | 867.2 |
Total | 10,010.0 | 8,582.8 |
The tables below show the changes in the group's liabilities arising from financing activities, including changes arising from both cash flows and non-cash changes.
(in \u20ac million) | Current interest-bearing loans and borrowings | Non-current interest-bearing loans and borrowings | Total |
Balance at 1 January 2022 | 193.9 | 7,741.7 | 7,935.7 |
Cash flow: repayment of borrowings | (82.3) | (13.3) | (95.8) |
Cash flow: proceeds from withdrawal borrowings | 0.0 | 747.4 | 747.4 |
Accrued interest | 5.5 | 0.2 | 5.7 |
Other | 750.2 | (760.4) | (10.2) |
Balance at 31 December 2022 | 867.2 | 7,715.6 | 8,582.8 |
Balance at 1 January 2023 | 867.2 | 7,715.6 | 8,582.8 |
Cash flow: repayment of borrowings | (772.0) | (15.1) | (787.1) |
Cash flow: proceeds from withdrawal borrowings | 100.0 | 2,062.9 | 2,162.9 |
Accrued interest | 36.5 | 0.5 | 37.0 |
Other | 523.6 | (509.1) | 14.5 |
Balance at 31 December 2023 | 755.2 | 9,254.8 | 10,010.0 |
In 2022, the Group has secured liquidity for the further grid expansion necessary for the energy transition with the issuance of a second Green Bond in the amount of \u20ac750.0 million at a rate of 3.279% and a term of nine years. Repayments of borrowing from 2022 mainly relate to the closing of the commercial paper program (-\u20ac60.0 million) and the capital repayment of the amortising loans (\u20ac22.0 million).
In 2023, the Group successfully issued in Belgium a first green bond of \u20ac500 million with a fixed rate of 3.625%, dedicated to funding eligible green projects. Moreover, in March the Group syndicated a Green Loan of \u20ac600 million from seven banks with a ten-year term, which was fully drawn at year-end. In April, the Group made a re-entry into the market, issuing a 7-year bond of \u20ac650 million at an interest rate of 3.722%. In October, the Group tapped on the bond issued in April, issuing an extra \u20ac150 million under this series at the prevailing market price with a re-offer yield of 4.534%. Finally, the Group concluded a private placement of \u20ac50 million and syndicated another \u20ac120 million bank loan.
Furthermore, Elia Group has secured two bilateral Revolving Credit Facilities, amounting to a total of \u20ac120 million, of which \u20ac100 million was drawn at the end of 2023.
In 2023, the Group redeemed the \u20ac750.0 bond maturing in 2023.
There have been no breaches of the financial covenants of any interest-bearing\u00a0 loans and borrowing in the current period.
Information on the terms and conditions of outstanding interest-bearing loans and borrowings is outlined below:
As per 31 December 2023:
(in \u20ac million) - 31 December 2023 | Maturity | Redemption schedule | Amount | Interest rate |
Eurobond issues 2013/15 years | 2028 | At maturity | 561.5 | 3.25% |
Eurobond issues 2013/20 years | 2033 | At maturity | 204.5 | 3.50% |
Eurobond issues 2014/15 years | 2029 | At maturity | 355.5 | 3.00% |
Eurobond issues 2015/8.5 years | 2024 | At maturity | 503.9 | 1.38% |
Eurobond issues 2017/10 years | 2027 | At maturity | 251.4 | 1.38% |
Senior bond 2018/10 years | 2028 | At maturity | 299.9 | 1.50% |
Eurobond issues 2019/7 years | 2026 | At maturity | 505.9 | 1.38% |
Eurobond issues 2020/10 years | 2030 | At maturity | 796.8 | 0.88% |
Green Bond issue 2023/10 years | 2033 | At maturity | 514.4 | 3.63% |
Amortising bond \u2013 7.7 years | 2028 | Linear | 42.0 | 1.56% |
Amortising bond \u2013 23.7 years | 2044 | Linear | 134.8 | 1.56% |
Bond as part of Debt Issuance Programme 2015 | 2025 | At maturity | 504.7 | 1.87% |
Bond as part of Debt Issuance Programme 2015 | 2023 | At maturity | ||
Bond as part of Debt Issuance Programme 2015 | 2030 | At maturity | 140.0 | 2.62% |
Bond as part of Debt Issuance Programme 2016 | 2028 | At maturity | 756.3 | 1.50% |
Bond as part of Debt Issuance Programme 2020 | 2032 | At maturity | 755.6 | 1.11% |
Bond as part of Debt Issuance Programme 2020 - Private placement | 2040 | At maturity | 199.7 | 3.28% |
Bond as part of Debt Issuance Programme 2021 | 2031 | At maturity | 753.2 | 0.87% |
Bond as part of Debt Issuance Programme 2021 | 2033 | At maturity | 501.0 | 0.74% |
Bond as part of Debt Issuance Programme 2023 | 2030 | At maturity | 814.4 | 3.72% |
Bond as part of Debt Issuance Programme 2023 | 2038 | At maturity | 50.5 | 4.06% |
Registered bond 2014 | 2044 | At maturity | 50.1 | 3.00% |
Total bonds, including accrued interests | 8,696.0 | |||
Amortising term loan | 2033 | Linear | 155.3 | 1.80% |
Revolving Credit Facility | 2024 | At maturity | 100.6 | |
Loan with bankconsortium | 2033 | At maturity | 720.0 | 3,43% to 3,63% |
European Investment Bank | 2025 | At maturity | 100.0 | 1.08% |
Total bank loans | 1,075.9 | |||
Loan with KfW | 2026 | At maturity | 150.1 | 0.90% |
Total other loans | 150.1 | |||
Lease debts | 88.1 | |||
Total loans and borrowings (current and non-current) | 10,010.0 |
As per\u00a031 December 2022:
(in \u20ac million) - 31 December 2022 | Maturity | Redemption schedule | Amount | Interest rate |
Eurobond issues 2013/15 years | 2028 | At maturity | 561.2 | 3.25% |
Eurobond issues 2013/20 years | 2033 | At maturity | 204.5 | 3.50% |
Eurobond issues 2014/15 years | 2029 | At maturity | 355.3 | 3.00% |
Eurobond issues 2015/8.5 years | 2024 | At maturity | 503.8 | 1.38% |
Eurobond issues 2017/10 years | 2027 | At maturity | 251.0 | 1.38% |
Senior bond 2018/10 years | 2028 | At maturity | 299.7 | 1.50% |
Eurobond issues 2019/7 years | 2026 | At maturity | 505.6 | 1.38% |
Eurobond issues 2020/10 years | 2030 | At maturity | 795.6 | 0.88% |
Green Bond issue 2023/10 years | 2033 | At maturity | 0.0 | 3.63% |
Amortising bond \u2013 7.7 years | 2028 | Linear | 133.1 | 1.56% |
Amortising bond \u2013 23.7 years | 2044 | Linear | 52.2 | 1.56% |
Bond as part of Debt Issuance Programme 2015 | 2025 | At maturity | 504.3 | 1.87% |
Bond as part of Debt Issuance Programme 2015 | 2023 | At maturity | 751.7 | |
Bond as part of Debt Issuance Programme 2015 | 2030 | At maturity | 140.0 | 2.62% |
Bond as part of Debt Issuance Programme 2016 | 2028 | At maturity | 756.0 | 1.50% |
Bond as part of Debt Issuance Programme 2020 | 2032 | At maturity | 752.9 | 1.11% |
Bond as part of Debt Issuance Programme 2020 - Private placement | 2040 | At maturity | 755.4 | 3.28% |
Bond as part of Debt Issuance Programme 2021 | 2031 | At maturity | 199.7 | 0.87% |
Bond as part of Debt Issuance Programme 2021 | 2033 | At maturity | 500.9 | 0.74% |
Bond as part of Debt Issuance Programme 2023 | 2030 | At maturity | 0.0 | 3.72% |
Bond as part of Debt Issuance Programme 2023 | 2038 | At maturity | 0.0 | 3.72% |
Registered bond 2014 | 2044 | At maturity | 50.1 | 3.00% |
Total bonds | 8,073.0 | |||
Amortising term loan | 2033 | Linear | 169.5 | 1.80% |
Revolving Credit Facility | 2024 | At maturity | 0.0 | |
European Investment Bank | 2025 | At maturity | 100.0 | 1.08% |
Total bank loans | 269.5 | |||
Loan with KfW | 2026 | At maturity | 150.1 | 0.90% |
Loan with bankconsortium | 2033 | At maturity | 0.0 | 3,43% to 3,63% |
Total other loans | 150.1 | |||
Lease debts | 90.2 | |||
Total loans and borrowings (current and non-current) | 8,582.8 |
(in \u20ac million) | 2023 | 2022 |
Trade debts | 1,308.0 | 1,279.0 |
VAT and other taxes | 17.4 | 29.2 |
Remuneration and social security | 51.3 | 46.6 |
Dividends payable | 1.2 | 1.2 |
Levies | 562.2 | 3,125.7 |
Other | 95.2 | 244.7 |
Accrued liabilities | 114.1 | 77.7 |
Total | 2,149.4 | 4,804.2 |
The trade debts increased by \u20ac29.0 million in a context of increased activity levels and high volatility in energy prices.
The amount for levies can be split into levies related to 50Hertz Transmission (\u20ac457.6 million) and levies related to Elia Transmission (\u20ac104.5 million).
The levies for Elia Transmission decreased compared with the previous year (\u20ac-61.6 million).
The levies include federal levies, which totalled \u20ac72.3 million on 31 December 2023 (\u20ac150.0 million in 2022) and levies for renewable energies in Flanders (\u20ac24.0 million) which have increased due to more positive cogeneration certifications auctioned than foreseen. Levies for the Walloon government decreased to \u20ac5.1 million (\u20ac13.8 million in 2022). The remaining balance mainly consists of strategic reserves (\u20ac1.9 million).
The levies for 50Hertz Transmission significantly decreased by \u20ac2,502.2 million compared to previous year due to the significant decrease of the EEG balance following a change in the regulatory mechanism. In the past, the costs not covered by the marketing revenues were compensated by levying a uniform nationwide EEG surcharge on the electricity distributors. With the reduction of the EEG surcharge to zero on 1 July 2022, compensation will be made through correspondingly high federal subsidies to the EEG account of the TSOs.
The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy.
Carrying amount | Fair value | ||||||||
(in \u20ac million) | Designated at fair value | Fair value through OCI | Amortised cost | Other financial liabilities at amortised cost | Total | Level 1 | Level 2 | Level 3 | Total |
Balance at 31 December 2022 | |||||||||
Other financial assets | 7.0 | 296.1 | 33.8 | 336.9 | 226.6 | 76.4 | 303.1 | ||
Equity instruments at fair value through other comprehensive income | 76.4 | 76.4 | 76.4 | 76.4 | |||||
Equity instruments at fair value through income | 7.0 | 7.0 | 7.0 | 7.0 | |||||
Derivatives | 219.7 | 219.7 | 219.7 | 219.7 | |||||
Regulatory assets | 33.8 | 33.8 | |||||||
Trade and other receivables (Current and Non-current) | 1,367.1 | 1,367.1 | |||||||
Cash and cash equivalents | 4,151.2 | 4,151.2 | |||||||
Loans and borrowings (Current and Non-Current) | (8,582.8) | (8,582.8) | (8,316.6) | 0.0 | (8,356.3) | ||||
Unsecured bond issues | (7,243.0) | (7,243.0) | (7,148.9) | (39.7) | 0.0 | (7,188.6) | |||
Unsecured financial bank loans and other loans | (1,167.7) | (1,167.7) | (1,167.7) | (1,167.7) | |||||
Lease liabilities | (90.2) | (90.2) | |||||||
Accrued interests | (81.9) | (81.9) | |||||||
Other non-current liabilities | (24.7) | (24.7) | |||||||
out of which, Derivatives | (24.7) | (24.7) | (24.7) | (24.7) | |||||
Trade and other payables | (4,804.2) | (4,804.2) | |||||||
Total | 7.0 | 271.4 | 5,552.1 | (13,387.0) | (7,556.5) | n.r. | n.r. | n.r. | n.r. |
Balance at 31 December 2023 | |||||||||
Other financial assets | 7.5 | 83.9 | 36.8 | 128.2 | 14.6 | 76.7 | 91.4 | ||
Equity instruments at fair value through other comprehensive income | 76.7 | 76.7 | 76.7 | 76.7 | |||||
Equity instruments at fair value through income | 7.5 | 7.5 | 7.5 | 7.5 | |||||
Derivatives | 7.2 | 7.2 | 7.2 | 7.2 | |||||
Regulatory assets | 36.8 | 36.8 | |||||||
Trade and other receivables (Current and Non-current) | 1,121.2 | 1,121.2 | |||||||
Cash and cash equivalents | 1,368.1 | 1,368.1 | |||||||
Assets held to hedge long-term borrowings | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Loans and borrowings (Current and Non-Current) | 0.0 | 0.0 | 0.0 | (10,010.0) | (10,010.0) | (8,021.6) | (93.9) | 0.0 | (8,115.5) |
Unsecured bond issues | (8,579.8) | (8,579.8) | (8,021.6) | (93.9) | 0.0 | (8,115.5) | |||
Unsecured financial bank loans and other loans | (1,223.8) | (1,223.8) | 0.0 | ||||||
Lease liabilities | (88.1) | (88.1) | |||||||
Accrued interests | (118.4) | (118.4) | |||||||
Other (non)-current liabilities | (597.6) | (597.6) | |||||||
Derivatives | (225.9) | (225.9) | (225.9) | ||||||
Other (grants, contract liabilities,\u2026) | (371.7) | (371.7) | |||||||
Trade and other payables | (2,149.4) | (2,149.4) | |||||||
Total | 7.5 | (513.7) | 2,526.1 | (12,159.4) | (10,139.6) | n.r. | n.r. | n.r. | n.r. |
The above tables do not include fair value information for financial assets and liabilities not measured at fair value, such as cash and cash equivalents, trade and other receivables, and trade and other payables, as their carrying amount is a reasonable approximation of fair value. We consider that the carrying amount approximates the fair value considering the financial and short-term nature.
FAIR VALUE HIERARCHY
Fair value is the amount for which an asset could be exchanged or a liability settled in an arm's-length transaction. IFRS 7 requires, for financial instruments that are measured in the statement of financial position at fair value and for financial instruments measured at amortised cost for which the fair value has been disclosed, the disclosure of fair value measurements by level in the following fair value measurement hierarchy:
\u2022Level 1: The fair value of a financial instrument that is traded in an active market is measured based on quoted (unadjusted) prices for identical assets or liabilities. A market is considered active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s-length basis.
\u2022Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These maximise the use of observable market data where these are available and rely as little as possible on entity-specific estimates. If all significant inputs required to assess the fair value of an instrument are observable, either directly (i.e. as prices) or indirectly (i.e. derived from prices), the instrument is included in level 2.
\u2022Level 3: If one or more of the significant inputs used in applying the valuation technique is not based on observable market data, the financial instrument is included in level 3. The fair value amount included under \u2018Other financial assets\u2019 has been determined by referring to either: (i) recent transaction prices, known by the Group; for similar financial assets or (ii) valuation reports issued by third parties.
The fair value of financial assets and liabilities, other than those presented in the above table, approximates to their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of other financial assets decreased by \u20ac211.7 million compared to previous year. The decrease mainly results from the fair value of the future contracts entered into by 50Hertz for the purpose of reducing the risk of fluctuations in the expected amount of grid losses (no positive fair value as at 31 December 2023 compared to \u20ac154.4 million last year). This decrease is amplified by the negative variation accounted for in Belgium in connection with the pre-hedging of probable forecast debt transactions (bonds issuance). The fair value of these derivatives amounted to \u20ac7,2 million compared to \u20ac65.3 million end of 2022.
The fair value of the Sicav and the Group\u2019s stake in EEX is stable following no significant remeasurement of the fair value of EEX. This participation in EEX is classified as \"Fair value to FVOCI\" and falls under level 3 in the fair value hierarchy. The fair value has been determined by reference to an evaluation method using discounted cash flows and therefore non-observable market data. The Group uses third party qualified valuers to perform the valuation.
The fair value of sicavs falls into level 1, i.e. valuation is based on the listed market price on an active market for identical instruments.
The fair value of the bank loans and bond issues increased by \u20ac983.0 million, due to the higher nominal value (new bonds as explained in Note 6.13) and higher pricing.
The fair values of the derivative is reported in level 1 based on market-to-market values:
in \u20ac million - Group share | 2023 | 2022 | Variation |
BE - CFH - Green Bond 2023 | 65.30 | (65.30) | |
BE - CFH - Green Bond 2024 | 7.20 | \u2014 | 7.20 |
BE - CFH - FX Forward rate 2024 | (1.10) | \u2014 | (1.10) |
GE - CFH - Grid losses | (224.80) | 129.70 | (354.50) |
Total | (218.80) | 195.00 | (413.80) |
\u2022The derivatives from the price hedge for grid loss procurement, which is measured at fair value in OCI without affecting profit or loss, falls under level 1 of the measurement hierarchy. Its value is determined on the basis of the reporting date valuation of the existing futures contracts, which are fully contracted via the EEX electricity exchange and quoted there. Credit and default risks are avoided with this form of price hedging via exchange transactions. At December 31, 2023, the Group reported derivative financial instruments in a net negative amount of -\u20ac224.8 million.The futures contracts were concluded during the fiscal year at prices between EUR 108 and EUR 174 per MWh. As a result of the volatile price development on the electricity market, derivatives with a negative market value of EUR -224.8m (prior year: \u20ac-24.7 million and positive market value of \u20ac 154.4 million) as a result of the price drop shortly before the end of 2022 were recognised in the consolidated statement of financial position under financial assets and other (non)-current liabilities .At the balance sheet date, the Group had already price-hedged a volume of 3.2 TWh for its expected physical requirements for grid loss energy in subsequent years.
\u2022The Group also uses cash flow hedging (CFH) derivative contracts to hedge future financial transactions. The fair value of these contracts amounts to \u20ac6.1 million in 2023 and relates to a forecasted debt issuance in Belgium and the USD exposure on the forthcoming US acquisition Giga (see also note 8.4).
The fair value of the bonds (including the private placement 2014 for \u20ac135.9 million)) is \u20ac8.021.6 million (prior year: \u20ac7,188.6 million). Fair value was determined by reference to published price quotations in an active market (classified as level 1 in the fair value hierarchy).
In level 2, the Group now reports the fair value of the private placement 2023 (\u20ac50.3 million) and the registered bond (\u20ac43.6 million).
*: In 2023, following the issuance of the new private placement, the Group reassessed the classification of the private placements (2020 and 2023) and reached to the conclusion that the private placement issued in 2020 had been misclassified in the past as level 3 because this bond is listed on the regulated market in Luxembourg (like the other bonds). As such the market price is directly observable, therefore the classification was changed from level 3 to level 1. The private placement newly issued in 2023 and the registered bond 2014 are not publicly listed. The fair market value (of respectively \u20ac50.3 million and \u20ac43.6 million) was derived from observable prices for comparable bonds, as such classification as level 2 is appropriate. Figures 2022 have been restated accordingly with the reclassification of the private placement 2020 in level 1 (\u20ac133.2 million reported as level 3 in published figures 2022) and the registered bond 2014 in level 2 (\u20ac39.7 million reported as level 3 in published figures 2022).
PRINCIPLES OF FINANCIAL RISK MANAGEMENT
The Group aims to identify each risk and sets out strategies to control their economic impact on the Group's results.
The Risk Management Department defines the risk management strategy, monitors risk analyses and reports to management and the Audit Committee. The financial risk policy is implemented by determining appropriate policies and setting up effective control and reporting procedures. Selected derivative hedging instruments are used depending on the assessment of the risk involved. Derivatives are used exclusively as hedging instruments. The regulatory framework in which the Group operates significantly restricts their effects on profit or loss (see the section 'Regulatory framework and tariffs'). The major impact of increased interest rates, credit risk, etc. can be settled in the tariffs, in accordance with the applicable legislation.
MARKET RISK
The market risk takes into account negative effects on the financial position and cash flows of the Group arising as a result of price changes on the market which cannot be otherwise avoided. The activities of the Group extend to the electricity market \u2013 in particular through selling the electricity generated from renewable energy as well as the procurement of energy to cover grid energy losses \u2013 as well as to the market for short-term deposits. In Germany, the Group counteracts the procurement price risk for grid loss energy by hedging prices at an early stage using futures contracts on the EEX electricity exchange.
As the financial costs and the costs for grid losses are passed through to the tariffs, the Group is not really exposed to a change in market conditions. There is no sensitivity analysis to provide on that respect.
FOREIGN CURRENCY RISK\u00a0\u00a0\u00a0\u00a0
The Group is not exposed to any significant currency risk, either from transactions or from exchanging foreign currencies into euro, since it has no material foreign investments or activities and less than 1% of its costs are expressed in currencies other than euros.
As reported in the note 8.4, the Group entered into an agreement to acquire a minority stake in a US company, energyRe Giga Projects USA Holdings.This could increase the Group exposure to foreign currency risks in the future. In connection with this transaction, the Group has entered into forward contracts to lock in the exchange rate to the date the acquisition will be completed. The goal was to fully hedge the first tranche of \u20ac250,0 million. These contracts are accounted for as Cash Flow Hedge (CFH) with their market-to-market value (negative as at 31 December 2023 ; -\u20ac1.1 million) recognised in other comprehensive income.
INTEREST RATE RISK
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's exposure to the risk of changes in market interest rates relates primarily to its long-term debt obligations with floating interest rates. As at 31 December 2023, one interest-rate swap was outstanding in connection with pre-hedging of a forecasted bond issue (nominal amount of \u20ac125,0 million out of \u20ac800,0 million issued in January 2024). The interest rate swaps which were outstanding on 31 December 2022 have been unwound in January 2023, when ETB\u2019s first green bond was issued.
See Note 6.13 for a summary of the outstanding loans and their respective interest rates.
RISKS FROM ENERGY PROCUREMENT
The Group counters the procurement price risk for grid loss energy by hedging prices at an early stage using futures contracts on the EEX power exchange. To cover the required grid loss volumes, the Group enters into daily day ahead transactions on the spot market (EPEX Spot). Due to the availability and liquidity of futures trading, the hedging period for the intended price hedging covers a period of up to two years from the balance sheet date. Credit and default risks are avoided with this form of\u00a0 price hedging via exchange transactions.
Spot market procurement is a highly probable transaction, because the actual occurrence of grid losses is physically determined and must necessarily be compensated for by the grid operator through the purchase of energy. The Group pursues a conservative recovery strategy aligned with the regulatory framework and regulatory recognition of the electricity procurement costs incurred, which enables timely and predictable price hedging. The Group aims at fully hedging the price of the expected volume of grid loss energy.
Price hedging of future required spot market procurement of grid loss energy volumes using futures provides a highly effective hedging method. The price development of the settlement price of EEX fully reflects the price change of the spot price on the EPEX spot market, so that a 100% effectiveness of the hedging relationship can be assumed in this respect. As the volume of electricity required for the grid losses that will arise in the future is not known at the time the hedging transactions are entered into, the Group determines the highly probable volume required (expected value) and derives the procurement strategy for price hedging from this; this expected value forms the basis for the hedging transactions under hedge accounting.
The forecast of the future volume of electricity required to cover grid losses is naturally subject to uncertainties relating to external factors, in particular wind feed-in, the electricity generation mix and the respective grid situation (influenced by generation, consumption and interventions such as redispatch measures). The expected value for grid loss procurement determined with the aid of a model is based on historical experience values, taking into account as best as possible any future changes in the relevant factors and foreseeable events on the basis of available information at the time of procurement planning. Changes in the forecast quantity are monitored on an ongoing basis and lead to an adjustment of the procurement strategy as far as possible.
At the balance sheet date, the Group had already price-hedged a volume of 3.2 TWh for its expected physical requirements for grid loss energy in subsequent years. The futures contracts were concluded during the fiscal year at prices between EUR 108 and EUR 174 per MWh. As a result of the volatile price development on the electricity market, derivatives with a negative market value of \u20ac-224.8 million (prior year: \u20ac-24.7 million and positive market value of \u20ac154.3 million) as a result of the price drop shortly before the end of 2022 were recognised in the consolidated statement of financial position under financial assets and derivative liabilities. In the financial year, a negative result of \u20ac89.3 million was realised from hedging with futures contracts (prior year: positive result of \u20ac390.1 million), which is included in the cost of materials.
CREDIT RISK
Credit risk encompasses all forms of counterparty exposure, i.e. where counterparties may default on their obligations to the Group in relation to lending, hedging, settlement and other financial activities. The Group is exposed to credit risk from its operating activities and treasury activities. With regards to its operating activities, the Group has a credit policy in place, which takes into account customer\u2019s risk profiles. The exposure to credit risk is monitored on an ongoing basis, resulting in a request to issue bank guaranties from the counterparty for some major contracts.
At the end of the reporting period there were no significant concentrations of credit risks. The maximum credit risk is the carrying amount for each financial asset, including derivative financial instruments.
(in \u20ac million) | Notes | 2023 | 2022 |
Immediately claimable deposits | 7.2 | 7.0 | |
Reimbursement rights | 37.1 | 34.6 | |
Other shareholdings | 76.7 | 75.6 | |
Derivatives (Current and Non-current) | 7.2 | 219.7 | |
Other financial assets (Current and Non-current) | (6.6) | 128.2 | 336.9 |
Non-current trade and other receivables | 55.0 | 95.5 | |
Trade and other receivables | (6.9) | 1,066.3 | 1,206.2 |
Current tax assets | (6.10) | 64.4 | 28.6 |
Cash and cash equivalents | (6.11) | 1,368.1 | 4,151.2 |
Deferred charges | (6.9) | 21.4 | 25.1 |
Total | 2,703.3 | 5,843.5 |
The movement in the allowance for expected credit losses in relation to trade receivables during the year was as outlined in the table below:
(in \u20ac million) | Bad debtors | Impairment losses | Remaining balance | |
Balance at 1 January 2022 | 201.4 | (200.8) | 0.5 | |
Changes during the year | 0.8 | (0.8) | 0.0 | |
Balance at 31 December 2022 | 202.2 | (201.7) | 0.5 | |
Balance at 1 January 2023 | 202.2 | (201.7) | 0.5 | |
Changes during the year | 0.5 | (0.7) | (0.2) | |
Balance at 31 December 2023 | 202.7 | (202.3) | 0.4 |
Almost all bad debtors are related to outstanding receivables linked to the regulatory levies in Germany. If a debtor goes bankrupt, 50Hertz Transmission is compensated by the levy system for the loss incurred.
The Group believes that the unimpaired amounts overdue by more than 30\u00a0days are still collectible, based on historical payment behaviour and extensive analysis of customer credit risk, including customers' underlying credit ratings, when available. The credit quality of trade and other receivables is assessed based on a credit policy.
IFRS 9 requires the Group to impair financial assets based on a forward-looking expected credit loss (ECL) approach.
As of 2022, the Group applies an individualised approach for trade receivables, for which the Group has set rules for defining the stage of the concerned asset for Expected Credit Loss (ECL) calculations.
\u2022stage 1 covers financial assets that have not deteriorated significantly since initial recognition. The ECL for stage 1 is calculated on a 12-month basis,
\u2022stage 2 covers financial assets for which the credit risk has significantly increased. The ECL for stage 2 is calculated on a lifetime basis. The decision to move an asset from stage 1 to stage 2 is based on certain criteria such as:
\u2022a significant downgrade in the creditworthiness of a counterparty and/or its parent company and/or its guarantor (if any),
\u2022significant adverse changes in the regulatory environment,
\u2022changes in political or country-related risks, and
\u2022any other aspect the Group may consider relevant.
Regarding financial assets that are more than 30 days past due, the move to stage 2 is not systematically applied as long as the Group has reasonable and supporting information that demonstrates that, even if payments become more than 30 days past due, this does not represent a significant increase in the credit risk since initial recognition.
\u2022stage 3 covers assets for which default has already been observed, such as:
\u2022when there is evidence of failure in credit support from a parent company to its subsidiary (in this case the subsidiary is the Group\u2019s counterparty at risk),
\u2022when a Group entity has initiated legal proceedings against the counterparty for non-payment.
Regarding financial assets that are more than 90 days past due, the presumption can be rebutted if the Group has reasonable and supportable information that demonstrates that even if payments become more than 90 days past due, this does not indicate counterparty default.
The ECL formula applicable in stages 1 and 2 is ECL = EAD x PD x LGD, where:
\u2022for 12-month ECL, Exposure At Default (EAD) equals the carrying amount of the financial asset, to which the relevant Probability of Default (PD) and the Loss Given Default (LGD) are applied;
\u2022for lifetime ECL, the calculation method consists in identifying changes in exposure for each year, especially the expected timing and amount of the contractual repayments, and then applying to each repayment the relevant PD and the LGD, and discounting the figures obtained. ECL is then the sum of the discounted figures; and
\u2022probability of default is the likelihood of default over a particular time horizon (in stage 1, this time horizon is 12 months after the reporting period; in stage 2 this time horizon is the entire lifetime of the financial asset). This information is based on external data from a well-known rating agency. The PD depends on the time horizon and of the rating of the counterparty.
The Group uses external ratings if they are available; or an internal rating for major counterparties with no external rating.
Subsequently, a loss given default is calculated as the percentage of the amount of trade receivables that is not covered by a bank guarantee. The total outstanding amount of trade receivables covered by a bank guarantee totals \u20ac36.4 million. The loss given default is multiplied by the probability of default and the outstanding trade receivables.
This approach is deemed more relevant than the portfolio approach to provide a better assessment of the risk, especially in the current context of volatile market conditions. The impact of this new approach is not significant. Furthermore, any losses would be recoverable through the tariffs.
The model is applied to the trade receivables, all other financial assets being not assessed at risk of impairment considering their nature (regulatory assets, amounts recoverable through future tariffs in compliance with the regulatory frameworks), risk profile (reliable counterparty being for the levies the Belgian/German state) or measurement method (at fair value). More details are provided in the different notes.
LIQUIDITY RISK
Liquidity risk is the risk that the Group may be unable to meet its financial obligations. The Group limits this risk by constantly monitoring cash flows and ensuring that there are always sufficient credit-line facilities available.
The Group\u2019s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans, confirmed and unconfirmed credit facilities, commercial paper programmes, etc. For medium- to long-term funding, the Group uses bonds. The maturity profile of the debt portfolio is spread over several years. The Group Treasury frequently assesses its funding resources taking into account its own credit rating and general market conditions.
Bond issuances realised over the last years , various loan contracted with investors\u00a0 and different\u00a0 banks prove that the Group has access to different sources of funding.
(in \u20ac million) | Face value | Closing balance | Expected cash outflows | 6 months | 6-12 months | 1-2 years | 2-5 years | > 5 years |
Non-derivative financial liabilities | 13,327.1 | 13,296.7 | (14,979.8) | (4,925.7) | (800.5) | (659.5) | (1,923.7) | (6,670.4) |
Unsecured bond issues | 7,273.3 | 7,243.0 | (8,972.9) | (103.5) | (798.2) | (639.3) | (1,620.9) | (5,811.0) |
Unsecured financial bank loans and interest accruals | 1,249.6 | 1,249.6 | (1,202.7) | (18.1) | (2.3) | (20.2) | (302.8) | (859.4) |
Trade and other payables | 4,804.2 | 4,804.2 | (4,804.2) | (4,804.2) | 0.0 | 0.0 | 0.0 | 0.0 |
Total as of 31 December 2022 | 13,327.1 | 13,296.7 | (14,979.8) | (4,925.7) | (800.5) | (659.5) | (1,923.7) | (6,670.4) |
(in \u20ac million) | Face value | Closing balance | Expected cash outflows | 6 months | 6-12 months | 1-2 years | 2-5 years | > 5 years |
Non-derivative financial liabilities | 12,106.8 | 12,071.4 | (13,480.1) | (2,918.7) | (59.6) | (827.5) | (3,111.4) | (6,562.9) |
Unsecured bond issues | 8,615.0 | 8,579.8 | (9,817.7) | (644.4) | (38.0) | (682.2) | (2,834.8) | (5,618.3) |
Unsecured financial bank loans and interest accruals | 1,342.4 | 1,342.2 | (1,513.0) | (124.9) | (21.6) | (145.3) | (276.6) | (944.6) |
Trade and other payables | 2,149.4 | 2,149.4 | (2,149.4) | (2,149.4) | 0.0 | 0.0 | 0.0 | 0.0 |
Total as of 31 December 2023 | 12,106.8 | 12,071.4 | (13,480.1) | (2,918.7) | (59.6) | (827.5) | (3,111.4) | (6,562.9) |
Details of the used and unused back-up credit facilities are set out below:
(in \u20ac million) | Maturity | Available amount | Average basic interest | Amount used | Amount not used |
Sustainable Revolving Credit Facility | 12/10/2025 | 650.0 | Euribor + 0.325%\u00a0 | 0.0 | 650.0 |
Confirmed credit line | 26/2/2027 | 750.0 | Euribor + 0.275% | 0.0 | 750.0 |
Confirmed credit line | 14/2/2026 | 150.0 | Euribor + 0.275% | 150.0 | 0.0 |
Straight Loan EGI | unlimited | 2.5 | Euribor + 0.75% | 0.0 | 2.5 |
Confirmed credit line | 1/12/2024 | 400.0 | Euribor + 0.5% | 0.0 | 400.0 |
Confirmed credit line | 3/7/2025 | 60.0 | Euribor + 0.375% | 50.0 | 10.0 |
Confirmed credit line | 3/7/2025 | 60.0 | Euribor + 0.5% | 50.0 | 10.0 |
Confirmed credit line | 3/2/2025 | 35.0 | Euribor + 0.3% | 0.0 | 35.0 |
Confirmed credit line | unlimited | 150.0 | av. 1M-Euribor +0.275% | 0.0 | 150.0 |
Revolving Credit Facility | 27/2/2027 | 750.0 | Euribor + 0,45% | 0.0 | 750.0 |
IKB Loan | 14/12/2026 | 150.0 | 0.90% | 150.0 | 0.0 |
Green Loan | 31/3/2033 | 600.0 | 3,43% - 3,63% | 600.0 | 0.0 |
IBB_ILB | 25/11/2033 | 120.0 | 3.87% | 120.0 | 0.0 |
BNP OVERDRAFT Facility | unlimited | 150.0 | Euribor + 0,275% | 0.0 | 150.0 |
Confirmed credit line | 31/3/2033 | 600.0 | 3.54% | 600.0 | 0.0 |
Confirmed credit line | 25/11/2033 | 120.0 | 3.871% | 120.0 | 0.0 |
Total | 4,751.5 | 1,840.0 | 2,911.5 |
The Group has had several lines available to guarantee the financing of its activities and to cushion possible variations in levies (even if we can observe a surplus for the last 2 years) or derivatives. Indeed, the high volume of futures contracts contracted by 50Hertz Transmission (Germany) also has an impact on the Group's liquidity management. The daily cash settlement of futures contracts with the exchange can have short-term effects on liquidity, which largely follow the general price trend on the electricity market.
HEDGING ACTIVITIES AND DERIVATIVES
The Group is exposed to certain risks relating to its ongoing business operations. The primary risk managed using derivative instruments is interest rate risk.
All financial derivatives entered into by the Group relate to an underlying transaction or forecast exposure, depending on the expected impact on the statement of profit or loss, and if the IFRS 9 criteria are met, the Group decides on a case-by-case basis whether hedge accounting will be applied.
Derivatives not designated as hedging instruments
The Group had no derivatives which were not designated as hedging instruments.
Derivatives designated as hedging instruments
In 2018, the Group hedged the interest rate risk linked to the acquisition of a 20% stake in 50Hertz Transmission (Germany) for which a bridge loan was initially put in place. To cover the potential exposure to interest rate risk, the Group entered into a pre-hedge interest rate swap agreement in June 2018 to lock in market interest rates at the moment of the issuance of the \u20ac300 million senior bond. The Group applied hedge accounting as the derivative transaction met the requirements under IFRS 9. Upon the settlement of the transaction in September 2018, the portion of the gain or loss on the derivative was recognised within hedging reserves and had an impact of \u20ac5.7million.
These hedging reserves are recycled into profit and loss over the lifetime of the underlying hedged instrument, i.e. the senior bond with 10-year maturity. In 2023, an amount of \u20ac0.6 million was recycled into profit and loss.
The Group recognises derivatives to hedge the price for the future procurement of the physical requirement for grid losses that is expected in subsequent periods and is covered in each case by short-term procurement transactions on the spot market. These derivatives are measured at fair value in OCI with no effect on profit or loss as part of cash flow hedge accounting; they serve as price hedging of the physical demand for electrical energy to cover grid losses (underlying transaction). Due to the availability and liquidity of futures trading, the hedging period for intended price hedging covers a period of up to two years from the balance sheet date. In this context, the Group pursues a conservative hedging strategy oriented towards the regulatory framework and the ability to roll over the electricity procurement costs incurred, which enables timely and predictable price hedging.
The critical term match method measures effectiveness. If the valuation-relevant parameters of the hedged item and hedging instrument match, it is assumed that an effective hedging relationship exists and that changes in value from both items offset each other. The Group strives for full price hedging of the expected volume of grid loss energy (hedge ratio 1:1).
In 2022, the Group entered into Interest Rate Swaps contracts as pre-hedge for probable forecast debt transactions. The purpose of those instruments was to fix the rate at which the Group will borrow in the context of future bond issues planned in 2023. Upon the settlement of the transaction in 2023, the gain resulting from the hedge was recognized within hedging reserves for a total of \u20ac36.5 million. An amount of \u20ac3.4 million was recycled into profit and loss. As per 31 December 2023, \u20ac7.2 million interest rate swap (IRS) remain outstanding in connection with a bond issue forecasted in 2024.
End of 2023, as reported in the note 8.4, the Group entered into an agreement to acquire a minority stake in a US company, energyRe Giga Projects USA Holdings. In connection with this transaction, the Group has entered into forward contracts (EUR-USD 250.0 million) to lock in the exchange rate to the date the acquisition will be completed. The fair value of these contracts was negative at the end of 2023 (-\u20ac1.1 million recognised in other comprehensive income).
CAPITAL RISK MANAGEMENT
The purpose of the Group's capital-structure management is to ensure that the debt and equity ratios related to its regulated activities are as closely aligned as possible with the recommended level set by the relevant regulatory frameworks.
The Company's dividend guidelines involve optimising dividend payments while bearing in mind that self-financing capacity is needed to carry out its legal mission as transmission system operator, finance future CAPEX projects and, more generally, implement the Group\u2019s strategy.
The Company offers its employees the opportunity to subscribe to capital increases that are exclusively reserved for them.
SUSTAINABILITY
Sustainability lies at the heart of Elia\u2019s strategy through its ActNow programme, which sets out the long-term sustainability objectives of the Group. These are guided by the UN Sustainable Development Goals (SDGs) and have been translated into KPIs which are reported to the market and grouped under the following five dimensions: Climate Action; Environment and Circular Economy; Health and Safety; Diversity, Equity and Inclusion; and Governance, Ethics and Compliance.
Furthermore, as a driver of the energy transition, Elia Group is committed to ensuring that its activities are strongly aligned with the EU Taxonomy, a classification system for sustainable economic activities. Elia Group therefore published in 2021 a white paper which outlines the company\u2019s eligibility and alignment with the EU Taxonomy. The paper includes the methodology used for the assessment, highlights the Group\u2019s implementation of sustainable tools and practices, and reinforces its commitment to operating its businesses in a sustainable way.
In 2023, Elia Group was one of the first Belgian companies to be selected to be part of BEL\u00aeESG, the new stock market index linked to sustainability and launched by Euronext.
Elia was named as one of the best employers in Belgium for the sixth time in a row. Its overall score improved again, rising from 86% to 88%. Elia made most of its progress in the areas of \u2018diversity and inclusion\u2019 (+13.53%) and \u2018sustainability\u2019 (+11.67%).
The Group continued to explore the use of innovative devices throughout 2023, including remote inspection technology to increase the efficiency, safety and sustainability of our asset monitoring activities
The movements in the equity-accounted investees are summarised as follows:
(in \u20ac million) | 2023 | 2022 |
Equity accounted investees (opening balance) | 261.2 | 309.6 |
Profit for the year | 30.2 | 39.5 |
Dividends received | -22.2 | (34.2) |
Capital repayment of equity accounted investee | (53.8) | |
Equity accounted investees (closing balance) | 269.1 | 261.2 |
Of which joint ventures | 250.7 | 243.4 |
Of which associates | 18.4 | 17.8 |
NEMO LINK LTD
On 27 February 2015, Elia System Operator and National Grid signed a joint venture agreement to build the Nemo Link Interconnector between Belgium and the UK. This project consists of subsea and underground cables connected to converter stations and an electricity substations in each country, allowing electricity to flow in either direction between the two countries, so giving the UK and Belgium improved reliability and access to electricity and sustainable generation. Each shareholder holds a 50% stake in Nemo Link Ltd, a UK company. The interconnection was commissioned in late January 2019.
To finance the project both shareholders have provided funding to Nemo Link Ltd since 2016 via equity contributions and loans (divided on a 50/50 basis). In June 2019, the loans were incorporated in the share capital (loan swap to equity).
In 2023, Nemo Link Ltd paid out dividends totalling \u20ac40.0 million (\u20ac64.0 million in 2022) to its shareholders.
The joint ventures had no contingent liabilities or significant capital commitments as at 31 December 2023 and 2022.
The following table summarises the financial information of the joint venture, based on its IFRS financial statements and reconciliation with the carrying amount for the Group's interest in the consolidated financial statements.
(in \u20ac million) | 2023 | 2022 |
Percentage ownership interest | 50.0% | 50.0% |
Non-current assets | 564.6 | 591.3 |
Current assets | 87.5 | 29.1 |
Non-current liabilities | 36.3 | 111.2 |
Current liabilities | 114.4 | 22.3 |
Equity | 501.5 | 486.9 |
Group's carrying amount for the interest | 250.7 | 243.4 |
Revenues and other income | 116.5 | 122.0 |
Total depreciation and amortisation | (27.2) | (27.1) |
Other operating expenses | (16.4) | 2.9 |
Net finance costs | (1.3) | (5.6) |
Profit before income tax | 71.6 | 92.3 |
Income tax expense | (16.9) | (18.1) |
Profit for the year | 54.6 | 74.2 |
Total comprehensive income for the year | 54.6 | 74.2 |
Group's share of profit for the year | 27.3 | 37.1 |
Dividends received | 20.0 | 32.0 |
As of 31 December 2023, the Group has 2 associates, both being equity-accounted investees.
\u2022The Group has a 22.2% stake in Coreso SA/NV. Coreso SA/NV is a company that provides coordination services aimed at facilitating the secure operation of the high-voltage grid in several European countries.
\u2022The Group holds a 17.0% stake in HGRT SAS. HGRT SAS is a French company with a 49.0% stake in Epex Spot, the exchange for power spot trading in Germany, France, Austria, Switzerland, Luxembourg and (through its 100% associate APX) the UK, Netherlands and Belgium. As one of the founding partners of HGRT, the Group has a 'golden share', giving it a minimum number of representatives on HGRT\u2019s Board of Directors. This constitutes a significant influence and therefore HGRT is accounted for using the equity method. In 2023, the Group received a dividend of \u20ac2.2\u00a0million from HGRT (\u20ac2.2 million in 2022).
None of these companies are listed on any public exchange.
Just like in 2022 there are no scope changes to be reported in 2023.
The associates had no contingent liabilities or significant capital commitments as at 31 December 2023 and 2022.
The following table illustrates the summarised financial information of the Group's investment in these companies, based on their respective financial statements prepared in accordance with IFRS.
(in \u20ac million) | Coreso | HGRT |
2022 | 2022 | |
Percentage ownership interest | 22.2% | 17.0% |
Non-current assets | 10.1 | 96.9 |
Current assets | 3.1 | 0.7 |
Non-current liabilities | 0.0 | 0.0 |
Current liabilities | 7.9 | 0.0 |
Equity | 5.3 | 97.5 |
Group's carrying amount for the interest | 1.2 | 16.6 |
Revenue | 28.3 | 0.0 |
Other operating expenses | (27.1) | 13.4 |
Profit before income tax | 1.3 | 13.4 |
Income tax expense | (0.5) | (0.1) |
Profit for the year | 0.8 | 13.2 |
Total comprehensive income for the year | 0.8 | 13.2 |
Group's share of profit for the year | 0.2 | 2.2 |
Dividends received | 2.2 | |
(in \u20ac million) | Coreso | HGRT |
2023 | 2023 | |
Percentage ownership interest | 22.2% | 17.0% |
Non-current assets | 17.5 | 99.5 |
Current assets | 4.7 | 1.0 |
Non-current liabilities | 0.0 | 0.0 |
Current liabilities | 16.2 | 0.0 |
Equity | 6.0 | 100.4 |
Group's carrying amount for the interest | 1.3 | 17.1 |
Revenue | 32.6 | 0.0 |
Other operating expenses | (31.2) | 16.1 |
Profit before income tax | 1.5 | 16.1 |
Income tax expense | (0.7) | (0.2) |
Profit for the year | 0.7 | 15.9 |
Total comprehensive income for the year | 0.7 | 15.9 |
Group's share of profit for the year | 0.2 | 2.7 |
Dividends received | 2.2 |
SUBSIDIARIES
Elia Group SA/NV has direct and indirect control of the subsidiaries listed below.\u00a0
Following the issue of a convertible bond (pre-seed investment) in 2021, Decarbon1ze GmbH was initially recognized as a financial asset within the 50Hertz Transmission GmbH. As part of the conversion of the convertible bond into shares in 2023, additional shares were acquired in April 2023; since then, Decarbon1ze GmbH has been recognized as an investment (6.59 shares) within 50Hertz Transmission GmbH.
In December 2023, the Group, through its subsidiary WindGrid, entered a firm agreement to acquire a 35.1% stake in energyRe Giga, a clean energy company in the U.S..
All the entities keep their accounts in euros and have the same reporting date as Elia Group SA/NV.
Name | Country of establishment | Headquarters | Percentage of interest | |
2023 | 2022 | |||
Subsidiaries | ||||
Elia Transmission Belgium SA/NV | Belgium | Bd de l\u2019Empereur 20, 1000 Brussels | 99.99 | 99.99 |
Elia Asset SA/NV | Belgium | Bd de l\u2019Empereur 20, 1000 Brussels | 99.99 | 99.99 |
Elia Engineering SA/NV | Belgium | Bd de l\u2019Empereur 20, 1000 Brussels | 100.00 | 100.00 |
Elia Re SA | Luxembourg | Rue de Merl 65, 2146 Luxembourg | 100.00 | 100.00 |
Elia Grid International SA/NV | Belgium | Bd de l\u2019Empereur 20, 1000 Bussels | 90.00 | 90.00 |
Elia Grid International GmBH | Germany | Heidestra\u00dfe 2, 10557 Berlin | 90.00 | 90.00 |
Elia Grid International LLC | Saudi Arabia | Al Akaria Plaza Olaya Street, Al Olaya Riyadh 11622 | 90.00 | 90.00 |
Elia Grid International Inc. | Canada | 1500-850 2 ST SW, T2P0R8 Calgary | 90.00 | 90.00 |
Eurogrid International SA/NV | Belgium | Bd de l\u2019Empereur 20, 1000 Brussels | 100.00 | 100.00 |
Eurogrid GmbH | Germany | Heidestra\u00dfe 2, 10557 Berlin | 80.00 | 80.00 |
50Hertz Transmission GmbH | Germany | Heidestra\u00dfe 2, 10557 Berlin | 80.00 | 80.00 |
50Hertz Offshore GmbH | Germany | Heidestra\u00dfe 2, 10557 Berlin | 80.00 | 80.00 |
50Hertz Connectors GmbH | Germany | Heidestra\u00dfe 2, 10557 Berlin | 80.00 | 0.00 |
Re.Alto-Energy BV/SRL | Belgium | Bd de l\u2019Empereur 20, 1000 Brussels | 100.00 | 100.00 |
Re.Alto-Energy GmbH | Germany | Ratingstra\u00dfe 9, 40213 Dusseldorf | 100.00 | 100.00 |
WindGrid SA/NV | Belgium | Bd de l\u2019Empereur 20, 1000 Brussels | 100.00 | 100.00 |
WindGrid USA Holding LLC | USA | 1209 Orange Street, Wilmington, New Castle County, Delaware 19801\u00a0 | 100.00 | 0.00 |
Name | Country of establishment | Headquarters | Percentage of interest | |
2023 | 2022 | |||
WindGrid USA LLC | USA | 1209 Orange Street, Wilmington, New Castle County, Delaware 19801\u00a0\u00a0 | 100.00 | 0.00 |
Investments accounted for using the equity-method \u2013 Joint ventures | ||||
Nemo Link Ltd. | United Kingdom | Strand 1-3, London WC2N 5EH | 50.00 | 50.00 |
Investments accounted for using the equity-method \u2013 Associates | ||||
H.G.R.T S.A.S. | France | 1 Terrasse Bellini, 92919 La D\u00e9fense Cedex | 17.00 | 17.00 |
Coreso SA/NV | Belgium | Avenue de Cortenbergh 71, 1000 Brussels | 22.16 | 22.16 |
Investments accounted for using IFRS9 - Other shareholdings | ||||
JAO SA | Luxembourg | 2, Rue de Bitbourg, 1273 Luxembourg Hamm | 7.20 | 7.20 |
Decarbon1ze GmbH | Germany | Msriendorfer Damm 1, 12099 Berlin | 5.28 | 0.00 |
European Energy Exchange AG (EEX) | Germany | Augustusplatz 9, 0409 Leipzig | 4.32 | 4.32 |
TSCNET Services GmbH | Germany | Dingolfinger Strasse 3, 81673 Munich | 5.36 | 5.36 |
Kurt-Sanderling-Akademie des Konzerthausorchesters Berlin | Germany | Gendarmenmarkt, 10117 Berlin | 8.32 | 8.32 |
The movements in the equity-accounted investees are summarised as follows:
(in \u20ac million) | 2023 | 2022 |
Equity accounted investees (opening balance) | 261.2 | 309.6 |
Profit for the year | 30.2 | 39.5 |
Dividends received | -22.2 | (34.2) |
Capital repayment of equity accounted investee | (53.8) | |
Equity accounted investees (closing balance) | 269.1 | 261.2 |
Of which joint ventures | 250.7 | 243.4 |
Of which associates | 18.4 | 17.8 |
NEMO LINK LTD
On 27 February 2015, Elia System Operator and National Grid signed a joint venture agreement to build the Nemo Link Interconnector between Belgium and the UK. This project consists of subsea and underground cables connected to converter stations and an electricity substations in each country, allowing electricity to flow in either direction between the two countries, so giving the UK and Belgium improved reliability and access to electricity and sustainable generation. Each shareholder holds a 50% stake in Nemo Link Ltd, a UK company. The interconnection was commissioned in late January 2019.
To finance the project both shareholders have provided funding to Nemo Link Ltd since 2016 via equity contributions and loans (divided on a 50/50 basis). In June 2019, the loans were incorporated in the share capital (loan swap to equity).
In 2023, Nemo Link Ltd paid out dividends totalling \u20ac40.0 million (\u20ac64.0 million in 2022) to its shareholders.
The joint ventures had no contingent liabilities or significant capital commitments as at 31 December 2023 and 2022.
The following table summarises the financial information of the joint venture, based on its IFRS financial statements and reconciliation with the carrying amount for the Group's interest in the consolidated financial statements.
(in \u20ac million) | 2023 | 2022 |
Percentage ownership interest | 50.0% | 50.0% |
Non-current assets | 564.6 | 591.3 |
Current assets | 87.5 | 29.1 |
Non-current liabilities | 36.3 | 111.2 |
Current liabilities | 114.4 | 22.3 |
Equity | 501.5 | 486.9 |
Group's carrying amount for the interest | 250.7 | 243.4 |
Revenues and other income | 116.5 | 122.0 |
Total depreciation and amortisation | (27.2) | (27.1) |
Other operating expenses | (16.4) | 2.9 |
Net finance costs | (1.3) | (5.6) |
Profit before income tax | 71.6 | 92.3 |
Income tax expense | (16.9) | (18.1) |
Profit for the year | 54.6 | 74.2 |
Total comprehensive income for the year | 54.6 | 74.2 |
Group's share of profit for the year | 27.3 | 37.1 |
Dividends received | 20.0 | 32.0 |
As of 31 December 2023, the Group has 2 associates, both being equity-accounted investees.
\u2022The Group has a 22.2% stake in Coreso SA/NV. Coreso SA/NV is a company that provides coordination services aimed at facilitating the secure operation of the high-voltage grid in several European countries.
\u2022The Group holds a 17.0% stake in HGRT SAS. HGRT SAS is a French company with a 49.0% stake in Epex Spot, the exchange for power spot trading in Germany, France, Austria, Switzerland, Luxembourg and (through its 100% associate APX) the UK, Netherlands and Belgium. As one of the founding partners of HGRT, the Group has a 'golden share', giving it a minimum number of representatives on HGRT\u2019s Board of Directors. This constitutes a significant influence and therefore HGRT is accounted for using the equity method. In 2023, the Group received a dividend of \u20ac2.2\u00a0million from HGRT (\u20ac2.2 million in 2022).
None of these companies are listed on any public exchange.
Just like in 2022 there are no scope changes to be reported in 2023.
The associates had no contingent liabilities or significant capital commitments as at 31 December 2023 and 2022.
The following table illustrates the summarised financial information of the Group's investment in these companies, based on their respective financial statements prepared in accordance with IFRS.
(in \u20ac million) | Coreso | HGRT |
2022 | 2022 | |
Percentage ownership interest | 22.2% | 17.0% |
Non-current assets | 10.1 | 96.9 |
Current assets | 3.1 | 0.7 |
Non-current liabilities | 0.0 | 0.0 |
Current liabilities | 7.9 | 0.0 |
Equity | 5.3 | 97.5 |
Group's carrying amount for the interest | 1.2 | 16.6 |
Revenue | 28.3 | 0.0 |
Other operating expenses | (27.1) | 13.4 |
Profit before income tax | 1.3 | 13.4 |
Income tax expense | (0.5) | (0.1) |
Profit for the year | 0.8 | 13.2 |
Total comprehensive income for the year | 0.8 | 13.2 |
Group's share of profit for the year | 0.2 | 2.2 |
Dividends received | 2.2 | |
(in \u20ac million) | Coreso | HGRT |
2023 | 2023 | |
Percentage ownership interest | 22.2% | 17.0% |
Non-current assets | 17.5 | 99.5 |
Current assets | 4.7 | 1.0 |
Non-current liabilities | 0.0 | 0.0 |
Current liabilities | 16.2 | 0.0 |
Equity | 6.0 | 100.4 |
Group's carrying amount for the interest | 1.3 | 17.1 |
Revenue | 32.6 | 0.0 |
Other operating expenses | (31.2) | 16.1 |
Profit before income tax | 1.5 | 16.1 |
Income tax expense | (0.7) | (0.2) |
Profit for the year | 0.7 | 15.9 |
Total comprehensive income for the year | 0.7 | 15.9 |
Group's share of profit for the year | 0.2 | 2.7 |
Dividends received | 2.2 |
TRANSACTIONS WITH JOINT VENTURES AND ASSOCIATES
Transactions between the Company and subsidiaries that are related parties were eliminated during consolidation and therefore are not recognised in this note.
Transactions with joint ventures and associates (as defined in Note 7.) were not eliminated, so details of these transactions are shown below:
(in \u20ac million) | 2023 | 2022 |
Transactions with joint ventures and associates | (4.2) | (4.0) |
Sales of goods | 1.9 | 1.6 |
Purchases of goods | (6.1) | (5.6) |
Interest and similar revenue | 0.0 | 0.0 |
Outstanding balances with joint ventures and associates | 0.3 | (0.4) |
Long-term debtors | 0.0 | 0.0 |
Trade debtors | 0.3 | (0.4) |
Trade debts | 0.0 | 0.0 |
In 2022 and 2023, entities of the Elia Group had transactions with Nemo Link Ltd. and Coreso SA/NV. The sale of goods relates to corporate services (SLAs) rendered by Elia to Nemo Link Ltd and Coreso SA/NV. Nemo Link Ltd. also rents a building (Herdersbrug) from Elia Asset SA/NV (see also Note 6.18). Purchases of goods mostly relates to services rendered by Coreso SA/NV to the group.
NEMO LINK LTD
On 27 February 2015, Elia System Operator and National Grid signed a joint venture agreement to build the Nemo Link Interconnector between Belgium and the UK. This project consists of subsea and underground cables connected to converter stations and an electricity substations in each country, allowing electricity to flow in either direction between the two countries, so giving the UK and Belgium improved reliability and access to electricity and sustainable generation. Each shareholder holds a 50% stake in Nemo Link Ltd, a UK company. The interconnection was commissioned in late January 2019.
To finance the project both shareholders have provided funding to Nemo Link Ltd since 2016 via equity contributions and loans (divided on a 50/50 basis). In June 2019, the loans were incorporated in the share capital (loan swap to equity).
In 2023, Nemo Link Ltd paid out dividends totalling \u20ac40.0 million (\u20ac64.0 million in 2022) to its shareholders.
The joint ventures had no contingent liabilities or significant capital commitments as at 31 December 2023 and 2022.
The following table summarises the financial information of the joint venture, based on its IFRS financial statements and reconciliation with the carrying amount for the Group's interest in the consolidated financial statements.
(in \u20ac million) | 2023 | 2022 |
Percentage ownership interest | 50.0% | 50.0% |
Non-current assets | 564.6 | 591.3 |
Current assets | 87.5 | 29.1 |
Non-current liabilities | 36.3 | 111.2 |
Current liabilities | 114.4 | 22.3 |
Equity | 501.5 | 486.9 |
Group's carrying amount for the interest | 250.7 | 243.4 |
Revenues and other income | 116.5 | 122.0 |
Total depreciation and amortisation | (27.2) | (27.1) |
Other operating expenses | (16.4) | 2.9 |
Net finance costs | (1.3) | (5.6) |
Profit before income tax | 71.6 | 92.3 |
Income tax expense | (16.9) | (18.1) |
Profit for the year | 54.6 | 74.2 |
Total comprehensive income for the year | 54.6 | 74.2 |
Group's share of profit for the year | 27.3 | 37.1 |
Dividends received | 20.0 | 32.0 |
As of 31 December 2023, the Group has 2 associates, both being equity-accounted investees.
\u2022The Group has a 22.2% stake in Coreso SA/NV. Coreso SA/NV is a company that provides coordination services aimed at facilitating the secure operation of the high-voltage grid in several European countries.
\u2022The Group holds a 17.0% stake in HGRT SAS. HGRT SAS is a French company with a 49.0% stake in Epex Spot, the exchange for power spot trading in Germany, France, Austria, Switzerland, Luxembourg and (through its 100% associate APX) the UK, Netherlands and Belgium. As one of the founding partners of HGRT, the Group has a 'golden share', giving it a minimum number of representatives on HGRT\u2019s Board of Directors. This constitutes a significant influence and therefore HGRT is accounted for using the equity method. In 2023, the Group received a dividend of \u20ac2.2\u00a0million from HGRT (\u20ac2.2 million in 2022).
None of these companies are listed on any public exchange.
Just like in 2022 there are no scope changes to be reported in 2023.
The associates had no contingent liabilities or significant capital commitments as at 31 December 2023 and 2022.
The following table illustrates the summarised financial information of the Group's investment in these companies, based on their respective financial statements prepared in accordance with IFRS.
(in \u20ac million) | Coreso | HGRT |
2022 | 2022 | |
Percentage ownership interest | 22.2% | 17.0% |
Non-current assets | 10.1 | 96.9 |
Current assets | 3.1 | 0.7 |
Non-current liabilities | 0.0 | 0.0 |
Current liabilities | 7.9 | 0.0 |
Equity | 5.3 | 97.5 |
Group's carrying amount for the interest | 1.2 | 16.6 |
Revenue | 28.3 | 0.0 |
Other operating expenses | (27.1) | 13.4 |
Profit before income tax | 1.3 | 13.4 |
Income tax expense | (0.5) | (0.1) |
Profit for the year | 0.8 | 13.2 |
Total comprehensive income for the year | 0.8 | 13.2 |
Group's share of profit for the year | 0.2 | 2.2 |
Dividends received | 2.2 | |
(in \u20ac million) | Coreso | HGRT |
2023 | 2023 | |
Percentage ownership interest | 22.2% | 17.0% |
Non-current assets | 17.5 | 99.5 |
Current assets | 4.7 | 1.0 |
Non-current liabilities | 0.0 | 0.0 |
Current liabilities | 16.2 | 0.0 |
Equity | 6.0 | 100.4 |
Group's carrying amount for the interest | 1.3 | 17.1 |
Revenue | 32.6 | 0.0 |
Other operating expenses | (31.2) | 16.1 |
Profit before income tax | 1.5 | 16.1 |
Income tax expense | (0.7) | (0.2) |
Profit for the year | 0.7 | 15.9 |
Total comprehensive income for the year | 0.7 | 15.9 |
Group's share of profit for the year | 0.2 | 2.7 |
Dividends received | 2.2 |
(in \u20ac million) | 2023 | 2022 |
Immediately claimable deposits | 7.2 | 7.0 |
Reimbursement rights | 36.8 | 33.7 |
Other shareholdings | 76.7 | 75.7 |
Other | 0.3 | 0.8 |
Other financial assets (non-current) | 121.0 | 117.2 |
Current derivatives | 7.2 | 219.7 |
Other financial assets (current) | 7.2 | 219.7 |
Other financial assets | 128.2 | 336.9 |
The total other financial assets decreased by \u20ac208.7 million compared with the previous year.
Immediately claimable deposits are measured at fair value. The risk profile of these investments is discussed in Note\u00a08.1. The value as at 31 December 2023 is stable compared to 2022.
Reimbursement rights are linked to the obligations regarding (i) the retired employees falling under specific benefit schemes (Scheme\u00a0B - unfunded plan); and for (ii) health plan and reduced energy pricing plans for retired staff members. See Note\u00a06.14: \u2018Employee benefits\u2019. The reimbursement rights are recoverable through the regulated tariffs. The following principle applies: all incurred pension costs for 'Scheme\u00a0B' retired employees and the costs linked to healthcare and reduced energy pricing plans for retired Elia staff members are defined by the regulator (CREG) as non-controllable expenses that are recoverable through the regulatory tariffs. The decrease in the carrying value of this asset is disclosed in Note 6.14: \u2018Employee benefits\u2019 and mainly explained by the change in discount rate. Considering the nature (regulatory asset) of these financial assets, they are not considered to be at risk of impairment.
Other shareholdings: the Group holds 5.4% (at 100%) of the shares in European Energy Exchange (EEX), Leipzig, Germany, for a total value of \u20ac42.7 million as of the reporting date. These shares are disclosed under Other shareholdings in addition to an 8.0% (at 100%) shareholding in JAO Joint Allocation Office SA, a 6.7% (at 100%) shareholding in TSCNET Services GmbH (Munich, Germany), 6.6% (at 100%) shareholding in decarbon1ze GmbH (acquired in 2023) and a 10.4% (at 100%) shareholding in the Stiftung Kurt-Sanderling-Akademie des Konzerthausorchesters foundation (Berlin, Germany). Other investments are measured at fair value. At each reporting date, a re-measurement is performed to re-evaluate these investments. Any deviation from the previous period is recorded under other comprehensive income. There was no significant remeasurement in 2023.
Derivatives: derivatives show a decrease of \u20ac212.5 million:
\u2022Since 2021, 50Hertz applies hedge accounting for the purpose of reducing the risk of fluctuations in the expected amount of grid losses. Due to the drop in energy prices over the year, the fair value of these contracts has turned negative. Long and short term commodities contracts show a negative fair value. This evolution explains an overall decrease of \u20ac154.4 million.
\u2022This decrease is amplified by the lower fair value of the derivatives contracted in Belgium in connection with the pre-hedging of probable forecast debt transactions (ETB bond issuance). The fair value of these derivatives amounted to \u20ac7,2 million compared to \u20ac65.3 million end of 2022. See Note 8.1 for more info on these derivatives.
(in \u20ac million) | 2023 | 2022 |
Immediately claimable deposits | 7.2 | 7.0 |
Reimbursement rights | 36.8 | 33.7 |
Other shareholdings | 76.7 | 75.7 |
Other | 0.3 | 0.8 |
Other financial assets (non-current) | 121.0 | 117.2 |
Current derivatives | 7.2 | 219.7 |
Other financial assets (current) | 7.2 | 219.7 |
Other financial assets | 128.2 | 336.9 |
The total other financial assets decreased by \u20ac208.7 million compared with the previous year.
Immediately claimable deposits are measured at fair value. The risk profile of these investments is discussed in Note\u00a08.1. The value as at 31 December 2023 is stable compared to 2022.
Reimbursement rights are linked to the obligations regarding (i) the retired employees falling under specific benefit schemes (Scheme\u00a0B - unfunded plan); and for (ii) health plan and reduced energy pricing plans for retired staff members. See Note\u00a06.14: \u2018Employee benefits\u2019. The reimbursement rights are recoverable through the regulated tariffs. The following principle applies: all incurred pension costs for 'Scheme\u00a0B' retired employees and the costs linked to healthcare and reduced energy pricing plans for retired Elia staff members are defined by the regulator (CREG) as non-controllable expenses that are recoverable through the regulatory tariffs. The decrease in the carrying value of this asset is disclosed in Note 6.14: \u2018Employee benefits\u2019 and mainly explained by the change in discount rate. Considering the nature (regulatory asset) of these financial assets, they are not considered to be at risk of impairment.
Other shareholdings: the Group holds 5.4% (at 100%) of the shares in European Energy Exchange (EEX), Leipzig, Germany, for a total value of \u20ac42.7 million as of the reporting date. These shares are disclosed under Other shareholdings in addition to an 8.0% (at 100%) shareholding in JAO Joint Allocation Office SA, a 6.7% (at 100%) shareholding in TSCNET Services GmbH (Munich, Germany), 6.6% (at 100%) shareholding in decarbon1ze GmbH (acquired in 2023) and a 10.4% (at 100%) shareholding in the Stiftung Kurt-Sanderling-Akademie des Konzerthausorchesters foundation (Berlin, Germany). Other investments are measured at fair value. At each reporting date, a re-measurement is performed to re-evaluate these investments. Any deviation from the previous period is recorded under other comprehensive income. There was no significant remeasurement in 2023.
Derivatives: derivatives show a decrease of \u20ac212.5 million:
\u2022Since 2021, 50Hertz applies hedge accounting for the purpose of reducing the risk of fluctuations in the expected amount of grid losses. Due to the drop in energy prices over the year, the fair value of these contracts has turned negative. Long and short term commodities contracts show a negative fair value. This evolution explains an overall decrease of \u20ac154.4 million.
\u2022This decrease is amplified by the lower fair value of the derivatives contracted in Belgium in connection with the pre-hedging of probable forecast debt transactions (ETB bond issuance). The fair value of these derivatives amounted to \u20ac7,2 million compared to \u20ac65.3 million end of 2022. See Note 8.1 for more info on these derivatives.
(in \u20ac million) | 2023 | 2022 |
Raw materials and consumables | 41.8 | 37.4 |
Work in progress | 17.9 | 0.9 |
Write-downs | (17.1) | (16.7) |
Total | 42.7 | 21.6 |
The warehouse primarily stores replacement and spare parts for maintenance and repair work carried out along the Group's high-voltage substations, overhead lines and underground cables.
The value of inventories increased compared to December 31, 2022. This is an overall change linked to the increase in business and grid investments in a inflationary context.
At 31 December, the ageing analysis of trade receivables is as follows:
(in \u20ac million) | 2023 | 2022 |
Not past due | 519.0 | 639.6 |
Past due 0-30 days | 18.6 | 75.6 |
Past due 31-60 days | 8.4 | 29.3 |
Past due 61 days - one year | 2.6 | 1.8 |
Past due one year - two years | 5.5 | 2.8 |
Total (excl. impairment) | 554.1 | 749.1 |
Doubtful amounts | 202.7 | 202.2 |
Amounts write-offs | (202.3) | (201.7) |
Allowance for expected credit losses | (10.4) | (0.9) |
Total | 544.0 | 748.7 |
See Note 8.1 for a detailed analysis of the credit risk incurred in connection with these trade receivables.
(in \u20ac million) | 2023 | 2022 |
Tax receivables | 64.4 | 28.6 |
Tax liabilities | (5.3) | (26.6) |
Net tax asset/(liability) | 59.1 | 1.9 |
(in \u20ac million) | 2023 | 2022 |
Short-term deposits | 1,163.7 | 3,516.6 |
Balance at bank | 204.4 | 634.6 |
Total | 1,368.1 | 4,151.2 |
Cash and cash equivalents decreased by \u20ac2,783.1 million. This decrease was mainly due to the lower EEG, KWK and StromNEV (levies) surplus of \u20ac352,6 million (-\u20ac2,583.4 million) in Germany and the realisation of the investment program in Belgium and Germany which relied partially on funding from operating cash flow as well as on liquidity stemmed from last year\u2019s capital increase.
Short-term deposits are invested for periods varying from a few days or weeks to several months (generally not exceeding three months), depending on immediate cash requirements, and earn interest in accordance with the interest rates for short-term deposits.
Bank account balances earn or pay interest in line with the variable rates of interest on the basis of daily bank deposit interest rates. The Group's interest rate risk and the sensitivity analysis for financial assets and liabilities are discussed in Note\u00a08.1.
(in \u20ac million) | 2023 | 2022 |
Short-term deposits | 1,163.7 | 3,516.6 |
Balance at bank | 204.4 | 634.6 |
Total | 1,368.1 | 4,151.2 |
Cash and cash equivalents decreased by \u20ac2,783.1 million. This decrease was mainly due to the lower EEG, KWK and StromNEV (levies) surplus of \u20ac352,6 million (-\u20ac2,583.4 million) in Germany and the realisation of the investment program in Belgium and Germany which relied partially on funding from operating cash flow as well as on liquidity stemmed from last year\u2019s capital increase.
Short-term deposits are invested for periods varying from a few days or weeks to several months (generally not exceeding three months), depending on immediate cash requirements, and earn interest in accordance with the interest rates for short-term deposits.
Bank account balances earn or pay interest in line with the variable rates of interest on the basis of daily bank deposit interest rates. The Group's interest rate risk and the sensitivity analysis for financial assets and liabilities are discussed in Note\u00a08.1.
SHARE CAPITAL AND SHARE PREMIUM | ||
Number of shares | 2023 | 2022 |
Number of issued shares at the beginning of the year | 73,515,839 | 68,728,055 |
Issued against cash payment | 5,984 | 4,787,784 |
Number of issued shares at the end of the year | 73,521,823 | 73,515,839 |
Number of treasury shares at the end of the year | 22,079 | 13,480 |
Number of outstanding shares at the end of the year | 73,499,744 | 73,502,359 |
The second tranche of the capital increase for Elia employees decided by the extraordinary shareholders' meeting held on 21 June 2022 (capital increase in two steps/periods: one in 2022 for a maximum of \u20ac5.0\u00a0million and the other in 2023 for a maximum of \u20ac1.0\u00a0million) was completed in April 2023. The capital increase resulted in the creation of 5,984 additional shares without nominal value for a total amount of \u20ac0.2 million capital increase and a \u20ac0.5 million share premium increase.
In 2022, the movements were related to two transactions
\u2022On 24 June 2022, Elia Group SA/NV successfully completed a public offering of new shares to existing shareholders and any holders of an extra-legal preferential right. Through this offering, the capital of Elia Group SA/NV has increased by an amount of \u20ac118.2 million along with an increase in share premium of \u20ac471.9 million for which 4.739.865 new shares have been issued at a subscription price of \u20ac124.5 per share. \u20ac6.9 million of costs were incurred in relation to the capital increase.
\u2022The extraordinary shareholders' meeting held on 21 June 2022 decided to execute a capital increase in two steps/periods (one in 2022 for a maximum of \u20ac5.0\u00a0million and the other in 2023 for a maximum of \u20ac1.0\u00a0million), for a total maximum amount of \u20ac6.0 million for its Belgian employees. The first tranche of this capital increase for employees took place in December 2022. The transaction resulted in the creation of 47,920 new shares for a total amount of \u20ac5.0 million, consisting of a \u20ac1.2 million capital increase and a \u20ac3.8 million increase in share premium.
RESERVES\u00a0\u00a0\u00a0\u00a0
In line with Belgian legislation, 5% of the Company's statutory net profit must be transferred to the legal reserve each year until the legal reserve represents 10% of the capital. As at 31\u00a0December 2023, the Group's legal reserve amounts to \u20ac180.3\u00a0million and represents 9.8% of the capital.
The Board of Directors can propose the pay-out of a dividend to shareholders totalling up to a maximum of the available reserves plus the profit carried forward from the Company\u2019s previous financial years, including the profit for the financial year ending on 31\u00a0December 2023. Shareholders must approve the dividend payment at the Annual General Meeting of Shareholders.
HEDGING RESERVE\u00a0\u00a0\u00a0\u00a0
The hedging reserve comprises the effective portion of the cumulative net change in fair value of cash flow hedging instruments. The Group has commodity derivatives (in Germany to hedge grid losses) and financial derivatives (in Belgium to hedge probable expected transactions).
in \u20ac million - Group share | 2023 | 2022 | Variation |
BE - CFH - Senior Bond 2018 | (2.70) | (3.20) | 0.50 |
BE - CFH - Green Bond 2023 | 33.10 | 51.70 | (18.60) |
BE - CFH - Green Bond 2024 | 7.20 | 13.60 | (6.40) |
BE - CFH - FX Forward rate 2024 | (1.10) | \u2014 | (1.10) |
GE - CFH - Grid losses | (179.90) | 103.80 | (283.60) |
Total | (143.40) | 165.90 | (309.30) |
GE - Tax impact | 54.00 | (31.10) | 85.10 |
BE - Tax impact | (9.10) | (15.50) | 6.40 |
Hedging reserves - net of taxes | (98.60) | 119.20 | (217.80) |
In 2023, the hedging reserve decreased from a positive/credit amount of \u20ac119.2 million to a negative/debit amount of -\u20ac98.6 million. This variation is mainly explained by the negative variation in commodity derivatives in Germany, where the downturn in energy prices had a negative impact on contracts concluded to hedge grid losses.
As the costs for grid losses are almost fully passed through to the tariffs, the fair value of the future contracts has no relevance for the current or future profitability of the company.
The cash flow hedging (CFH) reserve for financial derivatives in Belgium also fell year-on-year.
We refer to notes 6.18 and 8.1 for further details about derivatives.
TREASURY SHARES
The reserve for the Company\u2019s treasury shares comprises the cost of the Company\u2019s shares held by the Group. On 31 December 2023, the Group held 22.079 of the Company\u2019s shares.
Number of treasury shares | 2023 | 2022 |
On 1 January | 13,480 | 7,248 |
Repurchased during the year | 434,830 | 452,289 |
Sold during the year | (426,231) | (446,057) |
Number of treasury shares at the end of the year | 22,079 | 13,480 |
In 2023, the consideration for the acquired or transferred shares amounted to respectively \u20ac49.6 million (\u20ac62.2 million in 2022) and \u20ac48,7 million (\u20ac61.3 million in 2023).
SHARE-BASED PAYMENTS
At 31 May 2021, Eurogrid International SA/NV has granted 1,640 stock options to the employees of RealTo BV/SRL and RealTo GmbH at a strike price of \u20ac100 per stock option at exercise date 31 March 2024. Subsequently, 940 additional stock options have been granted to new employees at the same terms and conditions. In total, 2,560 stock options were granted out of a total of 4.000 options to be offered in the plan. As per 31 December 2023, 940 options are still living. The share-based payments cost amounted to \u20ac0.1 million in 2023 (\u20ac0.2 million). As the stock option plan concerns shares in RealTo BV/SRL and its parent company, the share-based payments are not presented separately in the statement of equity.
DIVIDEND
After the reporting date, the Board of Directors will put forward the dividend proposal outlined below.
Dividend (in \u20ac) | 2023 | 2022 |
Per ordinary share entitled to dividend | 1.99 | 1.91 |
It was proposed and approved, at the Shareholders\u2019 Meeting convened to approve the Elia Group SA/NV financial statements for the year ended 31 December 2022, to pay a dividend of \u20ac1.91 per share, representing a total payout of \u20ac140.4\u00a0million.
The Board of Directors meeting on 29 March 2024 proposed a gross dividend of \u20ac1.99 per share with regard to 2023. This dividend is subject to approval by shareholders at the Annual General Meeting on 21\u00a0May 2024 and is not included as a liability in the Group\u2019s consolidated financial statements.
On 9 March 2023, Elia Group SA/NV (\u201cElia Group\u201d) successfully placed \u20ac500 million hybrid securities to be admitted to trading on the Luxembourg Stock Exchange's Euro MTF market.
This transaction was part of a liability management exercise including the refinancing of the existing hybrid bond of \u20ac 700 million issued in 2028 to finance the additional 20% stake in 50Hertz Transmission (Germany) through Eurogrid International SA/NV.
This new hybrid securities will carry a fixed coupon of 5.85% until the 15 June 2028, with a reset every five years thereafter and will be callable from 15 March 2028.
As at 31 December 2023, the unpaid cumulative dividend related to the new hybrid bond amounts to \u20ac15.9 million. A coupon of \u20ac16.4 million was paid to the holders of hybrid securities in 2023.
SHARE CAPITAL AND SHARE PREMIUM | ||
Number of shares | 2023 | 2022 |
Number of issued shares at the beginning of the year | 73,515,839 | 68,728,055 |
Issued against cash payment | 5,984 | 4,787,784 |
Number of issued shares at the end of the year | 73,521,823 | 73,515,839 |
Number of treasury shares at the end of the year | 22,079 | 13,480 |
Number of outstanding shares at the end of the year | 73,499,744 | 73,502,359 |
The second tranche of the capital increase for Elia employees decided by the extraordinary shareholders' meeting held on 21 June 2022 (capital increase in two steps/periods: one in 2022 for a maximum of \u20ac5.0\u00a0million and the other in 2023 for a maximum of \u20ac1.0\u00a0million) was completed in April 2023. The capital increase resulted in the creation of 5,984 additional shares without nominal value for a total amount of \u20ac0.2 million capital increase and a \u20ac0.5 million share premium increase.
In 2022, the movements were related to two transactions
RESERVES\u00a0\u00a0\u00a0\u00a0
In line with Belgian legislation, 5% of the Company's statutory net profit must be transferred to the legal reserve each year until the legal reserve represents 10% of the capital. As at 31\u00a0December 2023, the Group's legal reserve amounts to \u20ac180.3\u00a0million and represents 9.8% of the capital.
The Board of Directors can propose the pay-out of a dividend to shareholders totalling up to a maximum of the available reserves plus the profit carried forward from the Company\u2019s previous financial years, including the profit for the financial year ending on 31\u00a0December 2023. Shareholders must approve the dividend payment at the Annual General Meeting of Shareholders.
HEDGING RESERVE\u00a0\u00a0\u00a0\u00a0
The hedging reserve comprises the effective portion of the cumulative net change in fair value of cash flow hedging instruments. The Group has commodity derivatives (in Germany to hedge grid losses) and financial derivatives (in Belgium to hedge probable expected transactions).
in \u20ac million - Group share | 2023 | 2022 | Variation |
BE - CFH - Senior Bond 2018 | (2.70) | (3.20) | 0.50 |
BE - CFH - Green Bond 2023 | 33.10 | 51.70 | (18.60) |
BE - CFH - Green Bond 2024 | 7.20 | 13.60 | (6.40) |
BE - CFH - FX Forward rate 2024 | (1.10) | \u2014 | (1.10) |
GE - CFH - Grid losses | (179.90) | 103.80 | (283.60) |
Total | (143.40) | 165.90 | (309.30) |
GE - Tax impact | 54.00 | (31.10) | 85.10 |
BE - Tax impact | (9.10) | (15.50) | 6.40 |
Hedging reserves - net of taxes | (98.60) | 119.20 | (217.80) |
In 2023, the hedging reserve decreased from a positive/credit amount of \u20ac119.2 million to a negative/debit amount of -\u20ac98.6 million. This variation is mainly explained by the negative variation in commodity derivatives in Germany, where the downturn in energy prices had a negative impact on contracts concluded to hedge grid losses.
As the costs for grid losses are almost fully passed through to the tariffs, the fair value of the future contracts has no relevance for the current or future profitability of the company.
The cash flow hedging (CFH) reserve for financial derivatives in Belgium also fell year-on-year.
We refer to notes 6.18 and 8.1 for further details about derivatives.
TREASURY SHARES
The reserve for the Company\u2019s treasury shares comprises the cost of the Company\u2019s shares held by the Group. On 31 December 2023, the Group held 22.079 of the Company\u2019s shares.
Number of treasury shares | 2023 | 2022 |
On 1 January | 13,480 | 7,248 |
Repurchased during the year | 434,830 | 452,289 |
Sold during the year | (426,231) | (446,057) |
Number of treasury shares at the end of the year | 22,079 | 13,480 |
SHARE-BASED PAYMENTS
DIVIDEND
After the reporting date, the Board of Directors will put forward the dividend proposal outlined below.
Dividend (in \u20ac) | 2023 | 2022 |
Per ordinary share entitled to dividend | 1.99 | 1.91 |
It was proposed and approved, at the Shareholders\u2019 Meeting convened to approve the Elia Group SA/NV financial statements for the year ended 31 December 2022, to pay a dividend of \u20ac1.91 per share, representing a total payout of \u20ac140.4\u00a0million.
The Board of Directors meeting on 29 March 2024 proposed a gross dividend of \u20ac1.99 per share with regard to 2023. This dividend is subject to approval by shareholders at the Annual General Meeting on 21\u00a0May 2024 and is not included as a liability in the Group\u2019s consolidated financial statements.
(in \u20ac million) | 2023 | 2022 |
Non-current borrowings | 9,181.3 | 7,638.6 |
Lease liabilities \u2212\u00a0non-current | 73.5 | 77.0 |
Subtotal non-current borrowings | 9,254.8 | 7,715.6 |
Current borrowings | 622.3 | 772.0 |
Lease liabilities \u2212 current | 14.6 | 13.2 |
Accrued interest | 118.4 | 81.9 |
Subtotal current loans and borrowings | 755.2 | 867.2 |
Total | 10,010.0 | 8,582.8 |
The tables below show the changes in the group's liabilities arising from financing activities, including changes arising from both cash flows and non-cash changes.
(in \u20ac million) | Current interest-bearing loans and borrowings | Non-current interest-bearing loans and borrowings | Total |
Balance at 1 January 2022 | 193.9 | 7,741.7 | 7,935.7 |
Cash flow: repayment of borrowings | (82.3) | (13.3) | (95.8) |
Cash flow: proceeds from withdrawal borrowings | 0.0 | 747.4 | 747.4 |
Accrued interest | 5.5 | 0.2 | 5.7 |
Other | 750.2 | (760.4) | (10.2) |
Balance at 31 December 2022 | 867.2 | 7,715.6 | 8,582.8 |
Balance at 1 January 2023 | 867.2 | 7,715.6 | 8,582.8 |
Cash flow: repayment of borrowings | (772.0) | (15.1) | (787.1) |
Cash flow: proceeds from withdrawal borrowings | 100.0 | 2,062.9 | 2,162.9 |
Accrued interest | 36.5 | 0.5 | 37.0 |
Other | 523.6 | (509.1) | 14.5 |
Balance at 31 December 2023 | 755.2 | 9,254.8 | 10,010.0 |
In 2022, the Group has secured liquidity for the further grid expansion necessary for the energy transition with the issuance of a second Green Bond in the amount of \u20ac750.0 million at a rate of 3.279% and a term of nine years. Repayments of borrowing from 2022 mainly relate to the closing of the commercial paper program (-\u20ac60.0 million) and the capital repayment of the amortising loans (\u20ac22.0 million).
In 2023, the Group successfully issued in Belgium a first green bond of \u20ac500 million with a fixed rate of 3.625%, dedicated to funding eligible green projects. Moreover, in March the Group syndicated a Green Loan of \u20ac600 million from seven banks with a ten-year term, which was fully drawn at year-end. In April, the Group made a re-entry into the market, issuing a 7-year bond of \u20ac650 million at an interest rate of 3.722%. In October, the Group tapped on the bond issued in April, issuing an extra \u20ac150 million under this series at the prevailing market price with a re-offer yield of 4.534%. Finally, the Group concluded a private placement of \u20ac50 million and syndicated another \u20ac120 million bank loan.
Furthermore, Elia Group has secured two bilateral Revolving Credit Facilities, amounting to a total of \u20ac120 million, of which \u20ac100 million was drawn at the end of 2023.
In 2023, the Group redeemed the \u20ac750.0 bond maturing in 2023.
There have been no breaches of the financial covenants of any interest-bearing\u00a0 loans and borrowing in the current period.
Information on the terms and conditions of outstanding interest-bearing loans and borrowings is outlined below:
As per 31 December 2023:
(in \u20ac million) - 31 December 2023 | Maturity | Redemption schedule | Amount | Interest rate |
Eurobond issues 2013/15 years | 2028 | At maturity | 561.5 | 3.25% |
Eurobond issues 2013/20 years | 2033 | At maturity | 204.5 | 3.50% |
Eurobond issues 2014/15 years | 2029 | At maturity | 355.5 | 3.00% |
Eurobond issues 2015/8.5 years | 2024 | At maturity | 503.9 | 1.38% |
Eurobond issues 2017/10 years | 2027 | At maturity | 251.4 | 1.38% |
Senior bond 2018/10 years | 2028 | At maturity | 299.9 | 1.50% |
Eurobond issues 2019/7 years | 2026 | At maturity | 505.9 | 1.38% |
Eurobond issues 2020/10 years | 2030 | At maturity | 796.8 | 0.88% |
Green Bond issue 2023/10 years | 2033 | At maturity | 514.4 | 3.63% |
Amortising bond \u2013 7.7 years | 2028 | Linear | 42.0 | 1.56% |
Amortising bond \u2013 23.7 years | 2044 | Linear | 134.8 | 1.56% |
Bond as part of Debt Issuance Programme 2015 | 2025 | At maturity | 504.7 | 1.87% |
Bond as part of Debt Issuance Programme 2015 | 2023 | At maturity | ||
Bond as part of Debt Issuance Programme 2015 | 2030 | At maturity | 140.0 | 2.62% |
Bond as part of Debt Issuance Programme 2016 | 2028 | At maturity | 756.3 | 1.50% |
Bond as part of Debt Issuance Programme 2020 | 2032 | At maturity | 755.6 | 1.11% |
Bond as part of Debt Issuance Programme 2020 - Private placement | 2040 | At maturity | 199.7 | 3.28% |
Bond as part of Debt Issuance Programme 2021 | 2031 | At maturity | 753.2 | 0.87% |
Bond as part of Debt Issuance Programme 2021 | 2033 | At maturity | 501.0 | 0.74% |
Bond as part of Debt Issuance Programme 2023 | 2030 | At maturity | 814.4 | 3.72% |
Bond as part of Debt Issuance Programme 2023 | 2038 | At maturity | 50.5 | 4.06% |
Registered bond 2014 | 2044 | At maturity | 50.1 | 3.00% |
Total bonds, including accrued interests | 8,696.0 | |||
Amortising term loan | 2033 | Linear | 155.3 | 1.80% |
Revolving Credit Facility | 2024 | At maturity | 100.6 | |
Loan with bankconsortium | 2033 | At maturity | 720.0 | 3,43% to 3,63% |
European Investment Bank | 2025 | At maturity | 100.0 | 1.08% |
Total bank loans | 1,075.9 | |||
Loan with KfW | 2026 | At maturity | 150.1 | 0.90% |
Total other loans | 150.1 | |||
Lease debts | 88.1 | |||
Total loans and borrowings (current and non-current) | 10,010.0 |
As per\u00a031 December 2022:
(in \u20ac million) - 31 December 2022 | Maturity | Redemption schedule | Amount | Interest rate |
Eurobond issues 2013/15 years | 2028 | At maturity | 561.2 | 3.25% |
Eurobond issues 2013/20 years | 2033 | At maturity | 204.5 | 3.50% |
Eurobond issues 2014/15 years | 2029 | At maturity | 355.3 | 3.00% |
Eurobond issues 2015/8.5 years | 2024 | At maturity | 503.8 | 1.38% |
Eurobond issues 2017/10 years | 2027 | At maturity | 251.0 | 1.38% |
Senior bond 2018/10 years | 2028 | At maturity | 299.7 | 1.50% |
Eurobond issues 2019/7 years | 2026 | At maturity | 505.6 | 1.38% |
Eurobond issues 2020/10 years | 2030 | At maturity | 795.6 | 0.88% |
Green Bond issue 2023/10 years | 2033 | At maturity | 0.0 | 3.63% |
Amortising bond \u2013 7.7 years | 2028 | Linear | 133.1 | 1.56% |
Amortising bond \u2013 23.7 years | 2044 | Linear | 52.2 | 1.56% |
Bond as part of Debt Issuance Programme 2015 | 2025 | At maturity | 504.3 | 1.87% |
Bond as part of Debt Issuance Programme 2015 | 2023 | At maturity | 751.7 | |
Bond as part of Debt Issuance Programme 2015 | 2030 | At maturity | 140.0 | 2.62% |
Bond as part of Debt Issuance Programme 2016 | 2028 | At maturity | 756.0 | 1.50% |
Bond as part of Debt Issuance Programme 2020 | 2032 | At maturity | 752.9 | 1.11% |
Bond as part of Debt Issuance Programme 2020 - Private placement | 2040 | At maturity | 755.4 | 3.28% |
Bond as part of Debt Issuance Programme 2021 | 2031 | At maturity | 199.7 | 0.87% |
Bond as part of Debt Issuance Programme 2021 | 2033 | At maturity | 500.9 | 0.74% |
Bond as part of Debt Issuance Programme 2023 | 2030 | At maturity | 0.0 | 3.72% |
Bond as part of Debt Issuance Programme 2023 | 2038 | At maturity | 0.0 | 3.72% |
Registered bond 2014 | 2044 | At maturity | 50.1 | 3.00% |
Total bonds | 8,073.0 | |||
Amortising term loan | 2033 | Linear | 169.5 | 1.80% |
Revolving Credit Facility | 2024 | At maturity | 0.0 | |
European Investment Bank | 2025 | At maturity | 100.0 | 1.08% |
Total bank loans | 269.5 | |||
Loan with KfW | 2026 | At maturity | 150.1 | 0.90% |
Loan with bankconsortium | 2033 | At maturity | 0.0 | 3,43% to 3,63% |
Total other loans | 150.1 | |||
Lease debts | 90.2 | |||
Total loans and borrowings (current and non-current) | 8,582.8 |
(in \u20ac million) | Environment | Elia Re | Dismantling Obligations | Employee benefits | Other | Total |
Balance at 1 January 2022 | 11.2 | 4.1 | 110.1 | 1.7 | 6.1 | 133.2 |
Increase | 1.4 | 2.0 | 57.9 | 1.5 | 1.3 | 64.2 |
Reversals | (1.0) | (2.9) | (37.1) | 0.0 | (1.3) | (42.4) |
Utilisation | (0.3) | (0.4) | 0.0 | (0.1) | (0.5) | (1.2) |
Discounting of provisions | (0.2) | 0.0 | 1.1 | 0.0 | 0.0 | 0.9 |
Balance at 31 December 2022 | 11.1 | 2.9 | 132.0 | 3.2 | 5.7 | 154.8 |
Long-term portion | 9.2 | 2.9 | 132.0 | 0.0 | 2.1 | 146.2 |
Short-term portion | 2.0 | 0.0 | 0.0 | 3.2 | 3.4 | 8.6 |
Balance at 1 January 2023 | 11.1 | 2.9 | 132.0 | 3.2 | 5.7 | 154.8 |
Increase | 1.3 | 0.0 | 19.3 | 0.0 | 0.5 | 21.2 |
Reversals | (3.2) | 0.0 | 0.0 | 0.0 | (1.9) | (5.2) |
Utilisation | (0.3) | (1.3) | 0.0 | 0.0 | (0.2) | (1.6) |
Discounting of provisions | 0.0 | 0.0 | 5.0 | 0.0 | 0.0 | 5.1 |
Balance at 31 December 2023 | 9.0 | 1.7 | 156.3 | 3.2 | 4.1 | 174.4 |
Long-term portion | 7.2 | 1.7 | 156.3 | 0.0 | 0.7 | 165.9 |
Short-term portion | 1.8 | 0.0 | 0.0 | 3.2 | 3.4 | 8.4 |
The Group has recognised provisions for the following:
Environment: The environmental provision provides for existing exposure with respect to land decontamination. The \u20ac9.0 million provision mainly relates to the Belgian segment, with only a \u20ac1.7 million provision relating to the German segment. There were no significant movements in the environmental provisions in 2023.
More specifically for the Belgian segment, Elia has conducted soil surveys on over 200 sites in Flanders in accordance with contractual agreements and Flemish legislation. Significant soil contamination was found on a number of sites, with this being mainly attributable to historical pollution arising from earlier or nearby industrial activities (gas plants, incinerators, chemicals, etc.). In the Brussels-Capital and Walloon Regions, Elia also carried out analyses and studies to detect contamination at a number of substations and a number of plots occupied by pylons for overhead power lines. Based on the analyses and studies it conducted, Elia has made provisions for possible future soil remediation costs in line with the relevant legislation.
Environmental provisions are recognised and measured based on an expert appraisal bearing in mind BATNEEC (Best Available Techniques Not Entailing Excessive Costs) as well as on the circumstances known at the end of the reporting period. The timing of the settlement is unclear but for the premises where utilisations occur, the underlying provision is classified as a short-term provision.
Elia Re: An amount of \u20ac1.7 million is included at year-end for Elia Re, a captive reinsurance company. \u20ac0.1 million of this is linked to claims for overhead lines, whilst \u20ac1.6 million is linked to electrical installations. The expected timing of the related cash outflow depends on the progress and duration of the respective procedures.
Dismantling provisions: As part of the Group\u2019s CAPEX programme, the Group is exposed to decommissioning obligations; most of which are related to offshore projects. These provisions take into account the effect of discounting and the expected cost of dismantling and removing the equipment from sites or from the sea. The carrying amount of the provision as at 31 December 2023 is \u20ac156.3 million. The provision increased due a lower discount rate and the reassessment of the costs (inflation and additional projects), especially in Germany where the obligation went from \u20ac114.2 million to \u20ac130.7 million. The Group has applied a case-by-case approach to estimate the cash outflow needed to settle the liability.
Elia Group uses corporate bond rates (minimum AA rating) and sets them out to match the lifetime of the provisions in order to discount the dismantling provisions. In case the discount rate is below 0%, the rate is floored at 0%. The discount rates used in 2023 ranged between 3.12% to 3.97%, depending on the lifetime of the asset to dismantle. Should the discount rate increase by 1%, the dismantling provisions would decrease by \u20ac22.6 million.
Employee benefits: See Note 6.14 for more details of these short-term employee benefits.
\u2018Other' consists of various provisions for litigation to cover likely payment where legal proceedings have been instituted against the Group by a third party or where the Group is involved in legal proceedings. These estimates are based on the value of claims filed or on the estimated level of risk exposure. The expected timing of the related cash outflow depends on the progress and duration of the associated proceedings.
(in \u20ac million) | Environment | Elia Re | Dismantling Obligations | Employee benefits | Other | Total |
Balance at 1 January 2022 | 11.2 | 4.1 | 110.1 | 1.7 | 6.1 | 133.2 |
Increase | 1.4 | 2.0 | 57.9 | 1.5 | 1.3 | 64.2 |
Reversals | (1.0) | (2.9) | (37.1) | 0.0 | (1.3) | (42.4) |
Utilisation | (0.3) | (0.4) | 0.0 | (0.1) | (0.5) | (1.2) |
Discounting of provisions | (0.2) | 0.0 | 1.1 | 0.0 | 0.0 | 0.9 |
Balance at 31 December 2022 | 11.1 | 2.9 | 132.0 | 3.2 | 5.7 | 154.8 |
Long-term portion | 9.2 | 2.9 | 132.0 | 0.0 | 2.1 | 146.2 |
Short-term portion | 2.0 | 0.0 | 0.0 | 3.2 | 3.4 | 8.6 |
Balance at 1 January 2023 | 11.1 | 2.9 | 132.0 | 3.2 | 5.7 | 154.8 |
Increase | 1.3 | 0.0 | 19.3 | 0.0 | 0.5 | 21.2 |
Reversals | (3.2) | 0.0 | 0.0 | 0.0 | (1.9) | (5.2) |
Utilisation | (0.3) | (1.3) | 0.0 | 0.0 | (0.2) | (1.6) |
Discounting of provisions | 0.0 | 0.0 | 5.0 | 0.0 | 0.0 | 5.1 |
Balance at 31 December 2023 | 9.0 | 1.7 | 156.3 | 3.2 | 4.1 | 174.4 |
Long-term portion | 7.2 | 1.7 | 156.3 | 0.0 | 0.7 | 165.9 |
Short-term portion | 1.8 | 0.0 | 0.0 | 3.2 | 3.4 | 8.4 |
The Group has recognised provisions for the following:
Environment: The environmental provision provides for existing exposure with respect to land decontamination. The \u20ac9.0 million provision mainly relates to the Belgian segment, with only a \u20ac1.7 million provision relating to the German segment. There were no significant movements in the environmental provisions in 2023.
More specifically for the Belgian segment, Elia has conducted soil surveys on over 200 sites in Flanders in accordance with contractual agreements and Flemish legislation. Significant soil contamination was found on a number of sites, with this being mainly attributable to historical pollution arising from earlier or nearby industrial activities (gas plants, incinerators, chemicals, etc.). In the Brussels-Capital and Walloon Regions, Elia also carried out analyses and studies to detect contamination at a number of substations and a number of plots occupied by pylons for overhead power lines. Based on the analyses and studies it conducted, Elia has made provisions for possible future soil remediation costs in line with the relevant legislation.
Environmental provisions are recognised and measured based on an expert appraisal bearing in mind BATNEEC (Best Available Techniques Not Entailing Excessive Costs) as well as on the circumstances known at the end of the reporting period. The timing of the settlement is unclear but for the premises where utilisations occur, the underlying provision is classified as a short-term provision.
Elia Re: An amount of \u20ac1.7 million is included at year-end for Elia Re, a captive reinsurance company. \u20ac0.1 million of this is linked to claims for overhead lines, whilst \u20ac1.6 million is linked to electrical installations. The expected timing of the related cash outflow depends on the progress and duration of the respective procedures.
Dismantling provisions: As part of the Group\u2019s CAPEX programme, the Group is exposed to decommissioning obligations; most of which are related to offshore projects. These provisions take into account the effect of discounting and the expected cost of dismantling and removing the equipment from sites or from the sea. The carrying amount of the provision as at 31 December 2023 is \u20ac156.3 million. The provision increased due a lower discount rate and the reassessment of the costs (inflation and additional projects), especially in Germany where the obligation went from \u20ac114.2 million to \u20ac130.7 million. The Group has applied a case-by-case approach to estimate the cash outflow needed to settle the liability.
Elia Group uses corporate bond rates (minimum AA rating) and sets them out to match the lifetime of the provisions in order to discount the dismantling provisions. In case the discount rate is below 0%, the rate is floored at 0%. The discount rates used in 2023 ranged between 3.12% to 3.97%, depending on the lifetime of the asset to dismantle. Should the discount rate increase by 1%, the dismantling provisions would decrease by \u20ac22.6 million.
Employee benefits: See Note 6.14 for more details of these short-term employee benefits.
\u2018Other' consists of various provisions for litigation to cover likely payment where legal proceedings have been instituted against the Group by a third party or where the Group is involved in legal proceedings. These estimates are based on the value of claims filed or on the estimated level of risk exposure. The expected timing of the related cash outflow depends on the progress and duration of the associated proceedings.
(in \u20ac million) | 2023 | 2022 |
Investment grants | 209.6 | 213.9 |
Contract liabilities | 159.5 | 147.2 |
Derivatives | 8.5 | 24.7 |
Other | 2.6 | 1.8 |
Total non-current other liabilities | 380.2 | 387.6 |
Derivatives | 217.4 | 0.0 |
Total current other liabilities | 217.4 | 0.0 |
Of the total investment grants, \u20ac133.3 million relates to 50Hertz Transmission (Germany) and \u20ac76,2 million to Elia Transmission (Belgium). The investment grants are spread over several assets. The most significant projects are:
\u2022In Belgium: the Princess Elisabeth energy island which will serve as an extension of the electricity grid in the North Sea. This grant has been signed in December 2022 for a total amount of \u20ac99,7 million (pre-taxes), out of which \u20ac73,1 million are reported in the Other non-current liability (post taxes);
\u2022In Germany: SuedOstLink and Kriegers Flak Combined Grid Solution.
All were subsidised by the European Union or the Belgian State. The grants are released in profit and loss based on the useful lives of the assets to which they relate. The terms and conditions of the grants were monitored and met as per 31 December 2023.
Contract liabilities remained stable. They mainly relate to upfront payment for last mile connection. At the end of 2023, a liability of \u20ac127.5 million was recognised within Elia Transmission (Belgium) and a liability of \u20ac32.0 million within 50Hertz Transmission (Germany) with that respect. The income is released over the lifetime of the asset where the last mile connection relates to. As already disclosed in Note 5.1, the Group has recognised \u20ac4.8 million of revenue in the reporting period, \u20ac3.3 million of which was included in the contract liability balance at the beginning of the period (\u20ac147.2 million).
(in \u20ac million) | 2023 | 2022 |
Investment grants | 209.6 | 213.9 |
Contract liabilities | 159.5 | 147.2 |
Derivatives | 8.5 | 24.7 |
Other | 2.6 | 1.8 |
Total non-current other liabilities | 380.2 | 387.6 |
Derivatives | 217.4 | 0.0 |
Total current other liabilities | 217.4 | 0.0 |
Of the total investment grants, \u20ac133.3 million relates to 50Hertz Transmission (Germany) and \u20ac76,2 million to Elia Transmission (Belgium). The investment grants are spread over several assets. The most significant projects are:
\u2022In Belgium: the Princess Elisabeth energy island which will serve as an extension of the electricity grid in the North Sea. This grant has been signed in December 2022 for a total amount of \u20ac99,7 million (pre-taxes), out of which \u20ac73,1 million are reported in the Other non-current liability (post taxes);
\u2022In Germany: SuedOstLink and Kriegers Flak Combined Grid Solution.
All were subsidised by the European Union or the Belgian State. The grants are released in profit and loss based on the useful lives of the assets to which they relate. The terms and conditions of the grants were monitored and met as per 31 December 2023.
Contract liabilities remained stable. They mainly relate to upfront payment for last mile connection. At the end of 2023, a liability of \u20ac127.5 million was recognised within Elia Transmission (Belgium) and a liability of \u20ac32.0 million within 50Hertz Transmission (Germany) with that respect. The income is released over the lifetime of the asset where the last mile connection relates to. As already disclosed in Note 5.1, the Group has recognised \u20ac4.8 million of revenue in the reporting period, \u20ac3.3 million of which was included in the contract liability balance at the beginning of the period (\u20ac147.2 million).
(in \u20ac million) | 2023 | 2022 |
Investment grants | 209.6 | 213.9 |
Contract liabilities | 159.5 | 147.2 |
Derivatives | 8.5 | 24.7 |
Other | 2.6 | 1.8 |
Total non-current other liabilities | 380.2 | 387.6 |
Derivatives | 217.4 | 0.0 |
Total current other liabilities | 217.4 | 0.0 |
Of the total investment grants, \u20ac133.3 million relates to 50Hertz Transmission (Germany) and \u20ac76,2 million to Elia Transmission (Belgium). The investment grants are spread over several assets. The most significant projects are:
\u2022In Belgium: the Princess Elisabeth energy island which will serve as an extension of the electricity grid in the North Sea. This grant has been signed in December 2022 for a total amount of \u20ac99,7 million (pre-taxes), out of which \u20ac73,1 million are reported in the Other non-current liability (post taxes);
\u2022In Germany: SuedOstLink and Kriegers Flak Combined Grid Solution.
All were subsidised by the European Union or the Belgian State. The grants are released in profit and loss based on the useful lives of the assets to which they relate. The terms and conditions of the grants were monitored and met as per 31 December 2023.
Contract liabilities remained stable. They mainly relate to upfront payment for last mile connection. At the end of 2023, a liability of \u20ac127.5 million was recognised within Elia Transmission (Belgium) and a liability of \u20ac32.0 million within 50Hertz Transmission (Germany) with that respect. The income is released over the lifetime of the asset where the last mile connection relates to. As already disclosed in Note 5.1, the Group has recognised \u20ac4.8 million of revenue in the reporting period, \u20ac3.3 million of which was included in the contract liability balance at the beginning of the period (\u20ac147.2 million).
(in \u20ac million) | 2023 | 2022 |
Trade debts | 1,308.0 | 1,279.0 |
VAT and other taxes | 17.4 | 29.2 |
Remuneration and social security | 51.3 | 46.6 |
Dividends payable | 1.2 | 1.2 |
Levies | 562.2 | 3,125.7 |
Other | 95.2 | 244.7 |
Accrued liabilities | 114.1 | 77.7 |
Total | 2,149.4 | 4,804.2 |
The trade debts increased by \u20ac29.0 million in a context of increased activity levels and high volatility in energy prices.
The amount for levies can be split into levies related to 50Hertz Transmission (\u20ac457.6 million) and levies related to Elia Transmission (\u20ac104.5 million).
The levies for Elia Transmission decreased compared with the previous year (\u20ac-61.6 million).
The levies include federal levies, which totalled \u20ac72.3 million on 31 December 2023 (\u20ac150.0 million in 2022) and levies for renewable energies in Flanders (\u20ac24.0 million) which have increased due to more positive cogeneration certifications auctioned than foreseen. Levies for the Walloon government decreased to \u20ac5.1 million (\u20ac13.8 million in 2022). The remaining balance mainly consists of strategic reserves (\u20ac1.9 million).
The levies for 50Hertz Transmission significantly decreased by \u20ac2,502.2 million compared to previous year due to the significant decrease of the EEG balance following a change in the regulatory mechanism. In the past, the costs not covered by the marketing revenues were compensated by levying a uniform nationwide EEG surcharge on the electricity distributors. With the reduction of the EEG surcharge to zero on 1 July 2022, compensation will be made through correspondingly high federal subsidies to the EEG account of the TSOs.
The fair values of the derivative is reported in level 1 based on market-to-market values:
in \u20ac million - Group share | 2023 | 2022 | Variation |
BE - CFH - Green Bond 2023 | 65.30 | (65.30) | |
BE - CFH - Green Bond 2024 | 7.20 | \u2014 | 7.20 |
BE - CFH - FX Forward rate 2024 | (1.10) | \u2014 | (1.10) |
GE - CFH - Grid losses | (224.80) | 129.70 | (354.50) |
Total | (218.80) | 195.00 | (413.80) |
\u2022The derivatives from the price hedge for grid loss procurement, which is measured at fair value in OCI without affecting profit or loss, falls under level 1 of the measurement hierarchy. Its value is determined on the basis of the reporting date valuation of the existing futures contracts, which are fully contracted via the EEX electricity exchange and quoted there. Credit and default risks are avoided with this form of price hedging via exchange transactions. At December 31, 2023, the Group reported derivative financial instruments in a net negative amount of -\u20ac224.8 million.The futures contracts were concluded during the fiscal year at prices between EUR 108 and EUR 174 per MWh. As a result of the volatile price development on the electricity market, derivatives with a negative market value of EUR -224.8m (prior year: \u20ac-24.7 million and positive market value of \u20ac 154.4 million) as a result of the price drop shortly before the end of 2022 were recognised in the consolidated statement of financial position under financial assets and other (non)-current liabilities .At the balance sheet date, the Group had already price-hedged a volume of 3.2 TWh for its expected physical requirements for grid loss energy in subsequent years.
HEDGING ACTIVITIES AND DERIVATIVES
The Group is exposed to certain risks relating to its ongoing business operations. The primary risk managed using derivative instruments is interest rate risk.
All financial derivatives entered into by the Group relate to an underlying transaction or forecast exposure, depending on the expected impact on the statement of profit or loss, and if the IFRS 9 criteria are met, the Group decides on a case-by-case basis whether hedge accounting will be applied.
Derivatives not designated as hedging instruments
The Group had no derivatives which were not designated as hedging instruments.
Derivatives designated as hedging instruments
In 2018, the Group hedged the interest rate risk linked to the acquisition of a 20% stake in 50Hertz Transmission (Germany) for which a bridge loan was initially put in place. To cover the potential exposure to interest rate risk, the Group entered into a pre-hedge interest rate swap agreement in June 2018 to lock in market interest rates at the moment of the issuance of the \u20ac300 million senior bond. The Group applied hedge accounting as the derivative transaction met the requirements under IFRS 9. Upon the settlement of the transaction in September 2018, the portion of the gain or loss on the derivative was recognised within hedging reserves and had an impact of \u20ac5.7million.
These hedging reserves are recycled into profit and loss over the lifetime of the underlying hedged instrument, i.e. the senior bond with 10-year maturity. In 2023, an amount of \u20ac0.6 million was recycled into profit and loss.
The Group recognises derivatives to hedge the price for the future procurement of the physical requirement for grid losses that is expected in subsequent periods and is covered in each case by short-term procurement transactions on the spot market. These derivatives are measured at fair value in OCI with no effect on profit or loss as part of cash flow hedge accounting; they serve as price hedging of the physical demand for electrical energy to cover grid losses (underlying transaction). Due to the availability and liquidity of futures trading, the hedging period for intended price hedging covers a period of up to two years from the balance sheet date. In this context, the Group pursues a conservative hedging strategy oriented towards the regulatory framework and the ability to roll over the electricity procurement costs incurred, which enables timely and predictable price hedging.
The critical term match method measures effectiveness. If the valuation-relevant parameters of the hedged item and hedging instrument match, it is assumed that an effective hedging relationship exists and that changes in value from both items offset each other. The Group strives for full price hedging of the expected volume of grid loss energy (hedge ratio 1:1).
In 2022, the Group entered into Interest Rate Swaps contracts as pre-hedge for probable forecast debt transactions. The purpose of those instruments was to fix the rate at which the Group will borrow in the context of future bond issues planned in 2023. Upon the settlement of the transaction in 2023, the gain resulting from the hedge was recognized within hedging reserves for a total of \u20ac36.5 million. An amount of \u20ac3.4 million was recycled into profit and loss. As per 31 December 2023, \u20ac7.2 million interest rate swap (IRS) remain outstanding in connection with a bond issue forecasted in 2024.
End of 2023, as reported in the note 8.4, the Group entered into an agreement to acquire a minority stake in a US company, energyRe Giga Projects USA Holdings. In connection with this transaction, the Group has entered into forward contracts (EUR-USD 250.0 million) to lock in the exchange rate to the date the acquisition will be completed. The fair value of these contracts was negative at the end of 2023 (-\u20ac1.1 million recognised in other comprehensive income).
The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy.
Carrying amount | Fair value | ||||||||
(in \u20ac million) | Designated at fair value | Fair value through OCI | Amortised cost | Other financial liabilities at amortised cost | Total | Level 1 | Level 2 | Level 3 | Total |
Balance at 31 December 2022 | |||||||||
Other financial assets | 7.0 | 296.1 | 33.8 | 336.9 | 226.6 | 76.4 | 303.1 | ||
Equity instruments at fair value through other comprehensive income | 76.4 | 76.4 | 76.4 | 76.4 | |||||
Equity instruments at fair value through income | 7.0 | 7.0 | 7.0 | 7.0 | |||||
Derivatives | 219.7 | 219.7 | 219.7 | 219.7 | |||||
Regulatory assets | 33.8 | 33.8 | |||||||
Trade and other receivables (Current and Non-current) | 1,367.1 | 1,367.1 | |||||||
Cash and cash equivalents | 4,151.2 | 4,151.2 | |||||||
Loans and borrowings (Current and Non-Current) | (8,582.8) | (8,582.8) | (8,316.6) | 0.0 | (8,356.3) | ||||
Unsecured bond issues | (7,243.0) | (7,243.0) | (7,148.9) | (39.7) | 0.0 | (7,188.6) | |||
Unsecured financial bank loans and other loans | (1,167.7) | (1,167.7) | (1,167.7) | (1,167.7) | |||||
Lease liabilities | (90.2) | (90.2) | |||||||
Accrued interests | (81.9) | (81.9) | |||||||
Other non-current liabilities | (24.7) | (24.7) | |||||||
out of which, Derivatives | (24.7) | (24.7) | (24.7) | (24.7) | |||||
Trade and other payables | (4,804.2) | (4,804.2) | |||||||
Total | 7.0 | 271.4 | 5,552.1 | (13,387.0) | (7,556.5) | n.r. | n.r. | n.r. | n.r. |
Balance at 31 December 2023 | |||||||||
Other financial assets | 7.5 | 83.9 | 36.8 | 128.2 | 14.6 | 76.7 | 91.4 | ||
Equity instruments at fair value through other comprehensive income | 76.7 | 76.7 | 76.7 | 76.7 | |||||
Equity instruments at fair value through income | 7.5 | 7.5 | 7.5 | 7.5 | |||||
Derivatives | 7.2 | 7.2 | 7.2 | 7.2 | |||||
Regulatory assets | 36.8 | 36.8 | |||||||
Trade and other receivables (Current and Non-current) | 1,121.2 | 1,121.2 | |||||||
Cash and cash equivalents | 1,368.1 | 1,368.1 | |||||||
Assets held to hedge long-term borrowings | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Loans and borrowings (Current and Non-Current) | 0.0 | 0.0 | 0.0 | (10,010.0) | (10,010.0) | (8,021.6) | (93.9) | 0.0 | (8,115.5) |
Unsecured bond issues | (8,579.8) | (8,579.8) | (8,021.6) | (93.9) | 0.0 | (8,115.5) | |||
Unsecured financial bank loans and other loans | (1,223.8) | (1,223.8) | 0.0 | ||||||
Lease liabilities | (88.1) | (88.1) | |||||||
Accrued interests | (118.4) | (118.4) | |||||||
Other (non)-current liabilities | (597.6) | (597.6) | |||||||
Derivatives | (225.9) | (225.9) | (225.9) | ||||||
Other (grants, contract liabilities,\u2026) | (371.7) | (371.7) | |||||||
Trade and other payables | (2,149.4) | (2,149.4) | |||||||
Total | 7.5 | (513.7) | 2,526.1 | (12,159.4) | (10,139.6) | n.r. | n.r. | n.r. | n.r. |
The above tables do not include fair value information for financial assets and liabilities not measured at fair value, such as cash and cash equivalents, trade and other receivables, and trade and other payables, as their carrying amount is a reasonable approximation of fair value. We consider that the carrying amount approximates the fair value considering the financial and short-term nature.
FAIR VALUE HIERARCHY
Fair value is the amount for which an asset could be exchanged or a liability settled in an arm's-length transaction. IFRS 7 requires, for financial instruments that are measured in the statement of financial position at fair value and for financial instruments measured at amortised cost for which the fair value has been disclosed, the disclosure of fair value measurements by level in the following fair value measurement hierarchy:
\u2022Level 1: The fair value of a financial instrument that is traded in an active market is measured based on quoted (unadjusted) prices for identical assets or liabilities. A market is considered active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s-length basis.
\u2022Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These maximise the use of observable market data where these are available and rely as little as possible on entity-specific estimates. If all significant inputs required to assess the fair value of an instrument are observable, either directly (i.e. as prices) or indirectly (i.e. derived from prices), the instrument is included in level 2.
\u2022Level 3: If one or more of the significant inputs used in applying the valuation technique is not based on observable market data, the financial instrument is included in level 3. The fair value amount included under \u2018Other financial assets\u2019 has been determined by referring to either: (i) recent transaction prices, known by the Group; for similar financial assets or (ii) valuation reports issued by third parties.
The fair value of financial assets and liabilities, other than those presented in the above table, approximates to their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of other financial assets decreased by \u20ac211.7 million compared to previous year. The decrease mainly results from the fair value of the future contracts entered into by 50Hertz for the purpose of reducing the risk of fluctuations in the expected amount of grid losses (no positive fair value as at 31 December 2023 compared to \u20ac154.4 million last year). This decrease is amplified by the negative variation accounted for in Belgium in connection with the pre-hedging of probable forecast debt transactions (bonds issuance). The fair value of these derivatives amounted to \u20ac7,2 million compared to \u20ac65.3 million end of 2022.
The fair value of the Sicav and the Group\u2019s stake in EEX is stable following no significant remeasurement of the fair value of EEX. This participation in EEX is classified as \"Fair value to FVOCI\" and falls under level 3 in the fair value hierarchy. The fair value has been determined by reference to an evaluation method using discounted cash flows and therefore non-observable market data. The Group uses third party qualified valuers to perform the valuation.
The fair value of sicavs falls into level 1, i.e. valuation is based on the listed market price on an active market for identical instruments.
The fair value of the bank loans and bond issues increased by \u20ac983.0 million, due to the higher nominal value (new bonds as explained in Note 6.13) and higher pricing.
The fair values of the derivative is reported in level 1 based on market-to-market values:
in \u20ac million - Group share | 2023 | 2022 | Variation |
BE - CFH - Green Bond 2023 | 65.30 | (65.30) | |
BE - CFH - Green Bond 2024 | 7.20 | \u2014 | 7.20 |
BE - CFH - FX Forward rate 2024 | (1.10) | \u2014 | (1.10) |
GE - CFH - Grid losses | (224.80) | 129.70 | (354.50) |
Total | (218.80) | 195.00 | (413.80) |
\u2022The derivatives from the price hedge for grid loss procurement, which is measured at fair value in OCI without affecting profit or loss, falls under level 1 of the measurement hierarchy. Its value is determined on the basis of the reporting date valuation of the existing futures contracts, which are fully contracted via the EEX electricity exchange and quoted there. Credit and default risks are avoided with this form of price hedging via exchange transactions. At December 31, 2023, the Group reported derivative financial instruments in a net negative amount of -\u20ac224.8 million.The futures contracts were concluded during the fiscal year at prices between EUR 108 and EUR 174 per MWh. As a result of the volatile price development on the electricity market, derivatives with a negative market value of EUR -224.8m (prior year: \u20ac-24.7 million and positive market value of \u20ac 154.4 million) as a result of the price drop shortly before the end of 2022 were recognised in the consolidated statement of financial position under financial assets and other (non)-current liabilities .At the balance sheet date, the Group had already price-hedged a volume of 3.2 TWh for its expected physical requirements for grid loss energy in subsequent years.
\u2022The Group also uses cash flow hedging (CFH) derivative contracts to hedge future financial transactions. The fair value of these contracts amounts to \u20ac6.1 million in 2023 and relates to a forecasted debt issuance in Belgium and the USD exposure on the forthcoming US acquisition Giga (see also note 8.4).
The fair value of the bonds (including the private placement 2014 for \u20ac135.9 million)) is \u20ac8.021.6 million (prior year: \u20ac7,188.6 million). Fair value was determined by reference to published price quotations in an active market (classified as level 1 in the fair value hierarchy).
In level 2, the Group now reports the fair value of the private placement 2023 (\u20ac50.3 million) and the registered bond (\u20ac43.6 million).
*: In 2023, following the issuance of the new private placement, the Group reassessed the classification of the private placements (2020 and 2023) and reached to the conclusion that the private placement issued in 2020 had been misclassified in the past as level 3 because this bond is listed on the regulated market in Luxembourg (like the other bonds). As such the market price is directly observable, therefore the classification was changed from level 3 to level 1. The private placement newly issued in 2023 and the registered bond 2014 are not publicly listed. The fair market value (of respectively \u20ac50.3 million and \u20ac43.6 million) was derived from observable prices for comparable bonds, as such classification as level 2 is appropriate. Figures 2022 have been restated accordingly with the reclassification of the private placement 2020 in level 1 (\u20ac133.2 million reported as level 3 in published figures 2022) and the registered bond 2014 in level 2 (\u20ac39.7 million reported as level 3 in published figures 2022).
The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy.
Carrying amount | Fair value | ||||||||
(in \u20ac million) | Designated at fair value | Fair value through OCI | Amortised cost | Other financial liabilities at amortised cost | Total | Level 1 | Level 2 | Level 3 | Total |
Balance at 31 December 2022 | |||||||||
Other financial assets | 7.0 | 296.1 | 33.8 | 336.9 | 226.6 | 76.4 | 303.1 | ||
Equity instruments at fair value through other comprehensive income | 76.4 | 76.4 | 76.4 | 76.4 | |||||
Equity instruments at fair value through income | 7.0 | 7.0 | 7.0 | 7.0 | |||||
Derivatives | 219.7 | 219.7 | 219.7 | 219.7 | |||||
Regulatory assets | 33.8 | 33.8 | |||||||
Trade and other receivables (Current and Non-current) | 1,367.1 | 1,367.1 | |||||||
Cash and cash equivalents | 4,151.2 | 4,151.2 | |||||||
Loans and borrowings (Current and Non-Current) | (8,582.8) | (8,582.8) | (8,316.6) | 0.0 | (8,356.3) | ||||
Unsecured bond issues | (7,243.0) | (7,243.0) | (7,148.9) | (39.7) | 0.0 | (7,188.6) | |||
Unsecured financial bank loans and other loans | (1,167.7) | (1,167.7) | (1,167.7) | (1,167.7) | |||||
Lease liabilities | (90.2) | (90.2) | |||||||
Accrued interests | (81.9) | (81.9) | |||||||
Other non-current liabilities | (24.7) | (24.7) | |||||||
out of which, Derivatives | (24.7) | (24.7) | (24.7) | (24.7) | |||||
Trade and other payables | (4,804.2) | (4,804.2) | |||||||
Total | 7.0 | 271.4 | 5,552.1 | (13,387.0) | (7,556.5) | n.r. | n.r. | n.r. | n.r. |
Balance at 31 December 2023 | |||||||||
Other financial assets | 7.5 | 83.9 | 36.8 | 128.2 | 14.6 | 76.7 | 91.4 | ||
Equity instruments at fair value through other comprehensive income | 76.7 | 76.7 | 76.7 | 76.7 | |||||
Equity instruments at fair value through income | 7.5 | 7.5 | 7.5 | 7.5 | |||||
Derivatives | 7.2 | 7.2 | 7.2 | 7.2 | |||||
Regulatory assets | 36.8 | 36.8 | |||||||
Trade and other receivables (Current and Non-current) | 1,121.2 | 1,121.2 | |||||||
Cash and cash equivalents | 1,368.1 | 1,368.1 | |||||||
Assets held to hedge long-term borrowings | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Loans and borrowings (Current and Non-Current) | 0.0 | 0.0 | 0.0 | (10,010.0) | (10,010.0) | (8,021.6) | (93.9) | 0.0 | (8,115.5) |
Unsecured bond issues | (8,579.8) | (8,579.8) | (8,021.6) | (93.9) | 0.0 | (8,115.5) | |||
Unsecured financial bank loans and other loans | (1,223.8) | (1,223.8) | 0.0 | ||||||
Lease liabilities | (88.1) | (88.1) | |||||||
Accrued interests | (118.4) | (118.4) | |||||||
Other (non)-current liabilities | (597.6) | (597.6) | |||||||
Derivatives | (225.9) | (225.9) | (225.9) | ||||||
Other (grants, contract liabilities,\u2026) | (371.7) | (371.7) | |||||||
Trade and other payables | (2,149.4) | (2,149.4) | |||||||
Total | 7.5 | (513.7) | 2,526.1 | (12,159.4) | (10,139.6) | n.r. | n.r. | n.r. | n.r. |
The above tables do not include fair value information for financial assets and liabilities not measured at fair value, such as cash and cash equivalents, trade and other receivables, and trade and other payables, as their carrying amount is a reasonable approximation of fair value. We consider that the carrying amount approximates the fair value considering the financial and short-term nature.
FAIR VALUE HIERARCHY
Fair value is the amount for which an asset could be exchanged or a liability settled in an arm's-length transaction. IFRS 7 requires, for financial instruments that are measured in the statement of financial position at fair value and for financial instruments measured at amortised cost for which the fair value has been disclosed, the disclosure of fair value measurements by level in the following fair value measurement hierarchy:
\u2022Level 1: The fair value of a financial instrument that is traded in an active market is measured based on quoted (unadjusted) prices for identical assets or liabilities. A market is considered active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s-length basis.
\u2022Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These maximise the use of observable market data where these are available and rely as little as possible on entity-specific estimates. If all significant inputs required to assess the fair value of an instrument are observable, either directly (i.e. as prices) or indirectly (i.e. derived from prices), the instrument is included in level 2.
\u2022Level 3: If one or more of the significant inputs used in applying the valuation technique is not based on observable market data, the financial instrument is included in level 3. The fair value amount included under \u2018Other financial assets\u2019 has been determined by referring to either: (i) recent transaction prices, known by the Group; for similar financial assets or (ii) valuation reports issued by third parties.
The fair value of financial assets and liabilities, other than those presented in the above table, approximates to their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of other financial assets decreased by \u20ac211.7 million compared to previous year. The decrease mainly results from the fair value of the future contracts entered into by 50Hertz for the purpose of reducing the risk of fluctuations in the expected amount of grid losses (no positive fair value as at 31 December 2023 compared to \u20ac154.4 million last year). This decrease is amplified by the negative variation accounted for in Belgium in connection with the pre-hedging of probable forecast debt transactions (bonds issuance). The fair value of these derivatives amounted to \u20ac7,2 million compared to \u20ac65.3 million end of 2022.
The fair value of the Sicav and the Group\u2019s stake in EEX is stable following no significant remeasurement of the fair value of EEX. This participation in EEX is classified as \"Fair value to FVOCI\" and falls under level 3 in the fair value hierarchy. The fair value has been determined by reference to an evaluation method using discounted cash flows and therefore non-observable market data. The Group uses third party qualified valuers to perform the valuation.
The fair value of sicavs falls into level 1, i.e. valuation is based on the listed market price on an active market for identical instruments.
The fair value of the bank loans and bond issues increased by \u20ac983.0 million, due to the higher nominal value (new bonds as explained in Note 6.13) and higher pricing.
The fair values of the derivative is reported in level 1 based on market-to-market values:
in \u20ac million - Group share | 2023 | 2022 | Variation |
BE - CFH - Green Bond 2023 | 65.30 | (65.30) | |
BE - CFH - Green Bond 2024 | 7.20 | \u2014 | 7.20 |
BE - CFH - FX Forward rate 2024 | (1.10) | \u2014 | (1.10) |
GE - CFH - Grid losses | (224.80) | 129.70 | (354.50) |
Total | (218.80) | 195.00 | (413.80) |
\u2022The derivatives from the price hedge for grid loss procurement, which is measured at fair value in OCI without affecting profit or loss, falls under level 1 of the measurement hierarchy. Its value is determined on the basis of the reporting date valuation of the existing futures contracts, which are fully contracted via the EEX electricity exchange and quoted there. Credit and default risks are avoided with this form of price hedging via exchange transactions. At December 31, 2023, the Group reported derivative financial instruments in a net negative amount of -\u20ac224.8 million.The futures contracts were concluded during the fiscal year at prices between EUR 108 and EUR 174 per MWh. As a result of the volatile price development on the electricity market, derivatives with a negative market value of EUR -224.8m (prior year: \u20ac-24.7 million and positive market value of \u20ac 154.4 million) as a result of the price drop shortly before the end of 2022 were recognised in the consolidated statement of financial position under financial assets and other (non)-current liabilities .At the balance sheet date, the Group had already price-hedged a volume of 3.2 TWh for its expected physical requirements for grid loss energy in subsequent years.
\u2022The Group also uses cash flow hedging (CFH) derivative contracts to hedge future financial transactions. The fair value of these contracts amounts to \u20ac6.1 million in 2023 and relates to a forecasted debt issuance in Belgium and the USD exposure on the forthcoming US acquisition Giga (see also note 8.4).
The fair value of the bonds (including the private placement 2014 for \u20ac135.9 million)) is \u20ac8.021.6 million (prior year: \u20ac7,188.6 million). Fair value was determined by reference to published price quotations in an active market (classified as level 1 in the fair value hierarchy).
In level 2, the Group now reports the fair value of the private placement 2023 (\u20ac50.3 million) and the registered bond (\u20ac43.6 million).
*: In 2023, following the issuance of the new private placement, the Group reassessed the classification of the private placements (2020 and 2023) and reached to the conclusion that the private placement issued in 2020 had been misclassified in the past as level 3 because this bond is listed on the regulated market in Luxembourg (like the other bonds). As such the market price is directly observable, therefore the classification was changed from level 3 to level 1. The private placement newly issued in 2023 and the registered bond 2014 are not publicly listed. The fair market value (of respectively \u20ac50.3 million and \u20ac43.6 million) was derived from observable prices for comparable bonds, as such classification as level 2 is appropriate. Figures 2022 have been restated accordingly with the reclassification of the private placement 2020 in level 1 (\u20ac133.2 million reported as level 3 in published figures 2022) and the registered bond 2014 in level 2 (\u20ac39.7 million reported as level 3 in published figures 2022).
The following table shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy.
Carrying amount | Fair value | ||||||||
(in \u20ac million) | Designated at fair value | Fair value through OCI | Amortised cost | Other financial liabilities at amortised cost | Total | Level 1 | Level 2 | Level 3 | Total |
Balance at 31 December 2022 | |||||||||
Other financial assets | 7.0 | 296.1 | 33.8 | 336.9 | 226.6 | 76.4 | 303.1 | ||
Equity instruments at fair value through other comprehensive income | 76.4 | 76.4 | 76.4 | 76.4 | |||||
Equity instruments at fair value through income | 7.0 | 7.0 | 7.0 | 7.0 | |||||
Derivatives | 219.7 | 219.7 | 219.7 | 219.7 | |||||
Regulatory assets | 33.8 | 33.8 | |||||||
Trade and other receivables (Current and Non-current) | 1,367.1 | 1,367.1 | |||||||
Cash and cash equivalents | 4,151.2 | 4,151.2 | |||||||
Loans and borrowings (Current and Non-Current) | (8,582.8) | (8,582.8) | (8,316.6) | 0.0 | (8,356.3) | ||||
Unsecured bond issues | (7,243.0) | (7,243.0) | (7,148.9) | (39.7) | 0.0 | (7,188.6) | |||
Unsecured financial bank loans and other loans | (1,167.7) | (1,167.7) | (1,167.7) | (1,167.7) | |||||
Lease liabilities | (90.2) | (90.2) | |||||||
Accrued interests | (81.9) | (81.9) | |||||||
Other non-current liabilities | (24.7) | (24.7) | |||||||
out of which, Derivatives | (24.7) | (24.7) | (24.7) | (24.7) | |||||
Trade and other payables | (4,804.2) | (4,804.2) | |||||||
Total | 7.0 | 271.4 | 5,552.1 | (13,387.0) | (7,556.5) | n.r. | n.r. | n.r. | n.r. |
Balance at 31 December 2023 | |||||||||
Other financial assets | 7.5 | 83.9 | 36.8 | 128.2 | 14.6 | 76.7 | 91.4 | ||
Equity instruments at fair value through other comprehensive income | 76.7 | 76.7 | 76.7 | 76.7 | |||||
Equity instruments at fair value through income | 7.5 | 7.5 | 7.5 | 7.5 | |||||
Derivatives | 7.2 | 7.2 | 7.2 | 7.2 | |||||
Regulatory assets | 36.8 | 36.8 | |||||||
Trade and other receivables (Current and Non-current) | 1,121.2 | 1,121.2 | |||||||
Cash and cash equivalents | 1,368.1 | 1,368.1 | |||||||
Assets held to hedge long-term borrowings | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Loans and borrowings (Current and Non-Current) | 0.0 | 0.0 | 0.0 | (10,010.0) | (10,010.0) | (8,021.6) | (93.9) | 0.0 | (8,115.5) |
Unsecured bond issues | (8,579.8) | (8,579.8) | (8,021.6) | (93.9) | 0.0 | (8,115.5) | |||
Unsecured financial bank loans and other loans | (1,223.8) | (1,223.8) | 0.0 | ||||||
Lease liabilities | (88.1) | (88.1) | |||||||
Accrued interests | (118.4) | (118.4) | |||||||
Other (non)-current liabilities | (597.6) | (597.6) | |||||||
Derivatives | (225.9) | (225.9) | (225.9) | ||||||
Other (grants, contract liabilities,\u2026) | (371.7) | (371.7) | |||||||
Trade and other payables | (2,149.4) | (2,149.4) | |||||||
Total | 7.5 | (513.7) | 2,526.1 | (12,159.4) | (10,139.6) | n.r. | n.r. | n.r. | n.r. |
The above tables do not include fair value information for financial assets and liabilities not measured at fair value, such as cash and cash equivalents, trade and other receivables, and trade and other payables, as their carrying amount is a reasonable approximation of fair value. We consider that the carrying amount approximates the fair value considering the financial and short-term nature.
FAIR VALUE HIERARCHY
Fair value is the amount for which an asset could be exchanged or a liability settled in an arm's-length transaction. IFRS 7 requires, for financial instruments that are measured in the statement of financial position at fair value and for financial instruments measured at amortised cost for which the fair value has been disclosed, the disclosure of fair value measurements by level in the following fair value measurement hierarchy:
\u2022Level 1: The fair value of a financial instrument that is traded in an active market is measured based on quoted (unadjusted) prices for identical assets or liabilities. A market is considered active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s-length basis.
\u2022Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These maximise the use of observable market data where these are available and rely as little as possible on entity-specific estimates. If all significant inputs required to assess the fair value of an instrument are observable, either directly (i.e. as prices) or indirectly (i.e. derived from prices), the instrument is included in level 2.
\u2022Level 3: If one or more of the significant inputs used in applying the valuation technique is not based on observable market data, the financial instrument is included in level 3. The fair value amount included under \u2018Other financial assets\u2019 has been determined by referring to either: (i) recent transaction prices, known by the Group; for similar financial assets or (ii) valuation reports issued by third parties.
The fair value of financial assets and liabilities, other than those presented in the above table, approximates to their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of other financial assets decreased by \u20ac211.7 million compared to previous year. The decrease mainly results from the fair value of the future contracts entered into by 50Hertz for the purpose of reducing the risk of fluctuations in the expected amount of grid losses (no positive fair value as at 31 December 2023 compared to \u20ac154.4 million last year). This decrease is amplified by the negative variation accounted for in Belgium in connection with the pre-hedging of probable forecast debt transactions (bonds issuance). The fair value of these derivatives amounted to \u20ac7,2 million compared to \u20ac65.3 million end of 2022.
The fair value of the Sicav and the Group\u2019s stake in EEX is stable following no significant remeasurement of the fair value of EEX. This participation in EEX is classified as \"Fair value to FVOCI\" and falls under level 3 in the fair value hierarchy. The fair value has been determined by reference to an evaluation method using discounted cash flows and therefore non-observable market data. The Group uses third party qualified valuers to perform the valuation.
The fair value of sicavs falls into level 1, i.e. valuation is based on the listed market price on an active market for identical instruments.
The fair value of the bank loans and bond issues increased by \u20ac983.0 million, due to the higher nominal value (new bonds as explained in Note 6.13) and higher pricing.
The fair values of the derivative is reported in level 1 based on market-to-market values:
in \u20ac million - Group share | 2023 | 2022 | Variation |
BE - CFH - Green Bond 2023 | 65.30 | (65.30) | |
BE - CFH - Green Bond 2024 | 7.20 | \u2014 | 7.20 |
BE - CFH - FX Forward rate 2024 | (1.10) | \u2014 | (1.10) |
GE - CFH - Grid losses | (224.80) | 129.70 | (354.50) |
Total | (218.80) | 195.00 | (413.80) |
\u2022The derivatives from the price hedge for grid loss procurement, which is measured at fair value in OCI without affecting profit or loss, falls under level 1 of the measurement hierarchy. Its value is determined on the basis of the reporting date valuation of the existing futures contracts, which are fully contracted via the EEX electricity exchange and quoted there. Credit and default risks are avoided with this form of price hedging via exchange transactions. At December 31, 2023, the Group reported derivative financial instruments in a net negative amount of -\u20ac224.8 million.The futures contracts were concluded during the fiscal year at prices between EUR 108 and EUR 174 per MWh. As a result of the volatile price development on the electricity market, derivatives with a negative market value of EUR -224.8m (prior year: \u20ac-24.7 million and positive market value of \u20ac 154.4 million) as a result of the price drop shortly before the end of 2022 were recognised in the consolidated statement of financial position under financial assets and other (non)-current liabilities .At the balance sheet date, the Group had already price-hedged a volume of 3.2 TWh for its expected physical requirements for grid loss energy in subsequent years.
\u2022The Group also uses cash flow hedging (CFH) derivative contracts to hedge future financial transactions. The fair value of these contracts amounts to \u20ac6.1 million in 2023 and relates to a forecasted debt issuance in Belgium and the USD exposure on the forthcoming US acquisition Giga (see also note 8.4).
The fair value of the bonds (including the private placement 2014 for \u20ac135.9 million)) is \u20ac8.021.6 million (prior year: \u20ac7,188.6 million). Fair value was determined by reference to published price quotations in an active market (classified as level 1 in the fair value hierarchy).
In level 2, the Group now reports the fair value of the private placement 2023 (\u20ac50.3 million) and the registered bond (\u20ac43.6 million).
*: In 2023, following the issuance of the new private placement, the Group reassessed the classification of the private placements (2020 and 2023) and reached to the conclusion that the private placement issued in 2020 had been misclassified in the past as level 3 because this bond is listed on the regulated market in Luxembourg (like the other bonds). As such the market price is directly observable, therefore the classification was changed from level 3 to level 1. The private placement newly issued in 2023 and the registered bond 2014 are not publicly listed. The fair market value (of respectively \u20ac50.3 million and \u20ac43.6 million) was derived from observable prices for comparable bonds, as such classification as level 2 is appropriate. Figures 2022 have been restated accordingly with the reclassification of the private placement 2020 in level 1 (\u20ac133.2 million reported as level 3 in published figures 2022) and the registered bond 2014 in level 2 (\u20ac39.7 million reported as level 3 in published figures 2022).
FAIR VALUE HIERARCHY
Fair value is the amount for which an asset could be exchanged or a liability settled in an arm's-length transaction. IFRS 7 requires, for financial instruments that are measured in the statement of financial position at fair value and for financial instruments measured at amortised cost for which the fair value has been disclosed, the disclosure of fair value measurements by level in the following fair value measurement hierarchy:
\u2022Level 1: The fair value of a financial instrument that is traded in an active market is measured based on quoted (unadjusted) prices for identical assets or liabilities. A market is considered active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm\u2019s-length basis.
\u2022Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These maximise the use of observable market data where these are available and rely as little as possible on entity-specific estimates. If all significant inputs required to assess the fair value of an instrument are observable, either directly (i.e. as prices) or indirectly (i.e. derived from prices), the instrument is included in level 2.
\u2022Level 3: If one or more of the significant inputs used in applying the valuation technique is not based on observable market data, the financial instrument is included in level 3. The fair value amount included under \u2018Other financial assets\u2019 has been determined by referring to either: (i) recent transaction prices, known by the Group; for similar financial assets or (ii) valuation reports issued by third parties.
(in \u20ac million) | 2023 | 2022 |
Accruals and deferred income | 106.8 | 91.4 |
Deferral account from settlement mechanism Belgian regulatory framework | 310.6 | 360.6 |
Deferral account from settlement mechanism German regulatory framework | 284.8 | 131.3 |
Total | 702.2 | 583.3 |
The movements in deferral account from settlement mechanism are as follows: | |||
(in \u20ac million) | Regulatory claims | Regulatory obligations | Total |
Balance at 1 January 2023 | 875.3 | (1,367.2) | (491.9) |
Increase | 377.5 | (754.1) | (376.6) |
Reversals | (8.5) | 130.5 | 121.9 |
Utilisation | 0.0 | 156.7 | 156.7 |
Other (e.g. discounting) | 1.4 | (7.0) | (5.6) |
Balance at 31 December 2023 | 1,245.7 | (1,841.1) | (595.5) |
In the Elia Transmission segment, the deferral account from the settlement mechanism (\u20ac310.6 million) decreased compared with year end 2022 (\u20ac360.6 million). The decrease in the deferral account from the settlement mechanism encompasses the settlement of net surpluses from the prior tariff period (-\u20ac156.7 million), the review of the regulator on previous year\u2019s settlement mechanism (+\u20ac1.2 million) and the operating surplus generated in the current year over the budget approved by the regulator (+\u20ac106.8 million). Any operating surplus/deficit, in relation to the budget of the costs and revenues authorised by the regulator, needs to be returned to/refunded by the consumers and therefore does not form part of the revenues.
In 2023, there was an operational surplus (\u20ac 106.8 million), reported as an additional regulatory obligation. This operating excess is primarily a result of higher tariff sales (\u20ac137.4 million) and non-controllable revenue (\u20ac272.8 million) and is partly offset by increased non controllable and influenceable costs.
In the 50Hertz Transmission segment, the deferral accounts from the settlement mechanism (\u20ac284.8 million) is the nominal amount of \u20ac361.3 million (\u20ac209.3 million as of 31 December 2022) less an interest effect of \u20ac76.5 million (\u20ac78.0 million in 2022). The net liability increased compared to year end 2022 (\u20ac131.3 million).
The release of the deferral account is determined in the tariff setting process. The amounts on the deferral account are recognised on a yearly basis and the release depends on the source of the deferral, some are released in T+1, whilst others are released in T+2 and some are released after a longer period of time.
The future release of the deferral account from the settlement mechanism to the future tariffs is set out in the table below (situation on 31 December 2023):
(in \u20ac million) | Belgian regulatory framework | German regulatory framework |
To be refunded to the tariffs in the current regulatory period | 308.8 | 0.0 |
To be refunded to the tariffs in the next regulatory period (or after) | 0.0 | 284.8 |
Other regulatory transfer | 1.8 | 0.0 |
Total regulatory deferral account | 310.6 | 284.8 |
*Belgium: from 2020 to 2023 ;\u00a0 Germany: from 2019 to 2023 |
(in \u20ac million) | 2023 | 2022 |
Accruals and deferred income | 106.8 | 91.4 |
Deferral account from settlement mechanism Belgian regulatory framework | 310.6 | 360.6 |
Deferral account from settlement mechanism German regulatory framework | 284.8 | 131.3 |
Total | 702.2 | 583.3 |
The movements in deferral account from settlement mechanism are as follows: | |||
(in \u20ac million) | Regulatory claims | Regulatory obligations | Total |
Balance at 1 January 2023 | 875.3 | (1,367.2) | (491.9) |
Increase | 377.5 | (754.1) | (376.6) |
Reversals | (8.5) | 130.5 | 121.9 |
Utilisation | 0.0 | 156.7 | 156.7 |
Other (e.g. discounting) | 1.4 | (7.0) | (5.6) |
Balance at 31 December 2023 | 1,245.7 | (1,841.1) | (595.5) |
In the Elia Transmission segment, the deferral account from the settlement mechanism (\u20ac310.6 million) decreased compared with year end 2022 (\u20ac360.6 million). The decrease in the deferral account from the settlement mechanism encompasses the settlement of net surpluses from the prior tariff period (-\u20ac156.7 million), the review of the regulator on previous year\u2019s settlement mechanism (+\u20ac1.2 million) and the operating surplus generated in the current year over the budget approved by the regulator (+\u20ac106.8 million). Any operating surplus/deficit, in relation to the budget of the costs and revenues authorised by the regulator, needs to be returned to/refunded by the consumers and therefore does not form part of the revenues.
In 2023, there was an operational surplus (\u20ac 106.8 million), reported as an additional regulatory obligation. This operating excess is primarily a result of higher tariff sales (\u20ac137.4 million) and non-controllable revenue (\u20ac272.8 million) and is partly offset by increased non controllable and influenceable costs.
In the 50Hertz Transmission segment, the deferral accounts from the settlement mechanism (\u20ac284.8 million) is the nominal amount of \u20ac361.3 million (\u20ac209.3 million as of 31 December 2022) less an interest effect of \u20ac76.5 million (\u20ac78.0 million in 2022). The net liability increased compared to year end 2022 (\u20ac131.3 million).
The release of the deferral account is determined in the tariff setting process. The amounts on the deferral account are recognised on a yearly basis and the release depends on the source of the deferral, some are released in T+1, whilst others are released in T+2 and some are released after a longer period of time.
The future release of the deferral account from the settlement mechanism to the future tariffs is set out in the table below (situation on 31 December 2023):
(in \u20ac million) | Belgian regulatory framework | German regulatory framework |
To be refunded to the tariffs in the current regulatory period | 308.8 | 0.0 |
To be refunded to the tariffs in the next regulatory period (or after) | 0.0 | 284.8 |
Other regulatory transfer | 1.8 | 0.0 |
Total regulatory deferral account | 310.6 | 284.8 |
*Belgium: from 2020 to 2023 ;\u00a0 Germany: from 2019 to 2023 |
(in \u20ac million) | 2023 | 2022 |
Accruals and deferred income | 106.8 | 91.4 |
Deferral account from settlement mechanism Belgian regulatory framework | 310.6 | 360.6 |
Deferral account from settlement mechanism German regulatory framework | 284.8 | 131.3 |
Total | 702.2 | 583.3 |
The movements in deferral account from settlement mechanism are as follows: | |||
(in \u20ac million) | Regulatory claims | Regulatory obligations | Total |
Balance at 1 January 2023 | 875.3 | (1,367.2) | (491.9) |
Increase | 377.5 | (754.1) | (376.6) |
Reversals | (8.5) | 130.5 | 121.9 |
Utilisation | 0.0 | 156.7 | 156.7 |
Other (e.g. discounting) | 1.4 | (7.0) | (5.6) |
Balance at 31 December 2023 | 1,245.7 | (1,841.1) | (595.5) |
In the Elia Transmission segment, the deferral account from the settlement mechanism (\u20ac310.6 million) decreased compared with year end 2022 (\u20ac360.6 million). The decrease in the deferral account from the settlement mechanism encompasses the settlement of net surpluses from the prior tariff period (-\u20ac156.7 million), the review of the regulator on previous year\u2019s settlement mechanism (+\u20ac1.2 million) and the operating surplus generated in the current year over the budget approved by the regulator (+\u20ac106.8 million). Any operating surplus/deficit, in relation to the budget of the costs and revenues authorised by the regulator, needs to be returned to/refunded by the consumers and therefore does not form part of the revenues.
In 2023, there was an operational surplus (\u20ac 106.8 million), reported as an additional regulatory obligation. This operating excess is primarily a result of higher tariff sales (\u20ac137.4 million) and non-controllable revenue (\u20ac272.8 million) and is partly offset by increased non controllable and influenceable costs.
In the 50Hertz Transmission segment, the deferral accounts from the settlement mechanism (\u20ac284.8 million) is the nominal amount of \u20ac361.3 million (\u20ac209.3 million as of 31 December 2022) less an interest effect of \u20ac76.5 million (\u20ac78.0 million in 2022). The net liability increased compared to year end 2022 (\u20ac131.3 million).
The release of the deferral account is determined in the tariff setting process. The amounts on the deferral account are recognised on a yearly basis and the release depends on the source of the deferral, some are released in T+1, whilst others are released in T+2 and some are released after a longer period of time.
The future release of the deferral account from the settlement mechanism to the future tariffs is set out in the table below (situation on 31 December 2023):
(in \u20ac million) | Belgian regulatory framework | German regulatory framework |
To be refunded to the tariffs in the current regulatory period | 308.8 | 0.0 |
To be refunded to the tariffs in the next regulatory period (or after) | 0.0 | 284.8 |
Other regulatory transfer | 1.8 | 0.0 |
Total regulatory deferral account | 310.6 | 284.8 |
*Belgium: from 2020 to 2023 ;\u00a0 Germany: from 2019 to 2023 |
SUBSIDIARIES
Elia Group SA/NV has direct and indirect control of the subsidiaries listed below.\u00a0
Following the issue of a convertible bond (pre-seed investment) in 2021, Decarbon1ze GmbH was initially recognized as a financial asset within the 50Hertz Transmission GmbH. As part of the conversion of the convertible bond into shares in 2023, additional shares were acquired in April 2023; since then, Decarbon1ze GmbH has been recognized as an investment (6.59 shares) within 50Hertz Transmission GmbH.
In December 2023, the Group, through its subsidiary WindGrid, entered a firm agreement to acquire a 35.1% stake in energyRe Giga, a clean energy company in the U.S..
All the entities keep their accounts in euros and have the same reporting date as Elia Group SA/NV.
Name | Country of establishment | Headquarters | Percentage of interest | |
2023 | 2022 | |||
Subsidiaries | ||||
Elia Transmission Belgium SA/NV | Belgium | Bd de l\u2019Empereur 20, 1000 Brussels | 99.99 | 99.99 |
Elia Asset SA/NV | Belgium | Bd de l\u2019Empereur 20, 1000 Brussels | 99.99 | 99.99 |
Elia Engineering SA/NV | Belgium | Bd de l\u2019Empereur 20, 1000 Brussels | 100.00 | 100.00 |
Elia Re SA | Luxembourg | Rue de Merl 65, 2146 Luxembourg | 100.00 | 100.00 |
Elia Grid International SA/NV | Belgium | Bd de l\u2019Empereur 20, 1000 Bussels | 90.00 | 90.00 |
Elia Grid International GmBH | Germany | Heidestra\u00dfe 2, 10557 Berlin | 90.00 | 90.00 |
Elia Grid International LLC | Saudi Arabia | Al Akaria Plaza Olaya Street, Al Olaya Riyadh 11622 | 90.00 | 90.00 |
Elia Grid International Inc. | Canada | 1500-850 2 ST SW, T2P0R8 Calgary | 90.00 | 90.00 |
Eurogrid International SA/NV | Belgium | Bd de l\u2019Empereur 20, 1000 Brussels | 100.00 | 100.00 |
Eurogrid GmbH | Germany | Heidestra\u00dfe 2, 10557 Berlin | 80.00 | 80.00 |
50Hertz Transmission GmbH | Germany | Heidestra\u00dfe 2, 10557 Berlin | 80.00 | 80.00 |
50Hertz Offshore GmbH | Germany | Heidestra\u00dfe 2, 10557 Berlin | 80.00 | 80.00 |
50Hertz Connectors GmbH | Germany | Heidestra\u00dfe 2, 10557 Berlin | 80.00 | 0.00 |
Re.Alto-Energy BV/SRL | Belgium | Bd de l\u2019Empereur 20, 1000 Brussels | 100.00 | 100.00 |
Re.Alto-Energy GmbH | Germany | Ratingstra\u00dfe 9, 40213 Dusseldorf | 100.00 | 100.00 |
WindGrid SA/NV | Belgium | Bd de l\u2019Empereur 20, 1000 Brussels | 100.00 | 100.00 |
WindGrid USA Holding LLC | USA | 1209 Orange Street, Wilmington, New Castle County, Delaware 19801\u00a0 | 100.00 | 0.00 |
Name | Country of establishment | Headquarters | Percentage of interest | |
2023 | 2022 | |||
WindGrid USA LLC | USA | 1209 Orange Street, Wilmington, New Castle County, Delaware 19801\u00a0\u00a0 | 100.00 | 0.00 |
Investments accounted for using the equity-method \u2013 Joint ventures | ||||
Nemo Link Ltd. | United Kingdom | Strand 1-3, London WC2N 5EH | 50.00 | 50.00 |
Investments accounted for using the equity-method \u2013 Associates | ||||
H.G.R.T S.A.S. | France | 1 Terrasse Bellini, 92919 La D\u00e9fense Cedex | 17.00 | 17.00 |
Coreso SA/NV | Belgium | Avenue de Cortenbergh 71, 1000 Brussels | 22.16 | 22.16 |
Investments accounted for using IFRS9 - Other shareholdings | ||||
JAO SA | Luxembourg | 2, Rue de Bitbourg, 1273 Luxembourg Hamm | 7.20 | 7.20 |
Decarbon1ze GmbH | Germany | Msriendorfer Damm 1, 12099 Berlin | 5.28 | 0.00 |
European Energy Exchange AG (EEX) | Germany | Augustusplatz 9, 0409 Leipzig | 4.32 | 4.32 |
TSCNET Services GmbH | Germany | Dingolfinger Strasse 3, 81673 Munich | 5.36 | 5.36 |
Kurt-Sanderling-Akademie des Konzerthausorchesters Berlin | Germany | Gendarmenmarkt, 10117 Berlin | 8.32 | 8.32 |
PRINCIPLES OF FINANCIAL RISK MANAGEMENT
The Group aims to identify each risk and sets out strategies to control their economic impact on the Group's results.
The Risk Management Department defines the risk management strategy, monitors risk analyses and reports to management and the Audit Committee. The financial risk policy is implemented by determining appropriate policies and setting up effective control and reporting procedures. Selected derivative hedging instruments are used depending on the assessment of the risk involved. Derivatives are used exclusively as hedging instruments. The regulatory framework in which the Group operates significantly restricts their effects on profit or loss (see the section 'Regulatory framework and tariffs'). The major impact of increased interest rates, credit risk, etc. can be settled in the tariffs, in accordance with the applicable legislation.
MARKET RISK
The market risk takes into account negative effects on the financial position and cash flows of the Group arising as a result of price changes on the market which cannot be otherwise avoided. The activities of the Group extend to the electricity market \u2013 in particular through selling the electricity generated from renewable energy as well as the procurement of energy to cover grid energy losses \u2013 as well as to the market for short-term deposits. In Germany, the Group counteracts the procurement price risk for grid loss energy by hedging prices at an early stage using futures contracts on the EEX electricity exchange.
As the financial costs and the costs for grid losses are passed through to the tariffs, the Group is not really exposed to a change in market conditions. There is no sensitivity analysis to provide on that respect.
FOREIGN CURRENCY RISK\u00a0\u00a0\u00a0\u00a0
The Group is not exposed to any significant currency risk, either from transactions or from exchanging foreign currencies into euro, since it has no material foreign investments or activities and less than 1% of its costs are expressed in currencies other than euros.
As reported in the note 8.4, the Group entered into an agreement to acquire a minority stake in a US company, energyRe Giga Projects USA Holdings.This could increase the Group exposure to foreign currency risks in the future. In connection with this transaction, the Group has entered into forward contracts to lock in the exchange rate to the date the acquisition will be completed. The goal was to fully hedge the first tranche of \u20ac250,0 million. These contracts are accounted for as Cash Flow Hedge (CFH) with their market-to-market value (negative as at 31 December 2023 ; -\u20ac1.1 million) recognised in other comprehensive income.
INTEREST RATE RISK
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's exposure to the risk of changes in market interest rates relates primarily to its long-term debt obligations with floating interest rates. As at 31 December 2023, one interest-rate swap was outstanding in connection with pre-hedging of a forecasted bond issue (nominal amount of \u20ac125,0 million out of \u20ac800,0 million issued in January 2024). The interest rate swaps which were outstanding on 31 December 2022 have been unwound in January 2023, when ETB\u2019s first green bond was issued.
See Note 6.13 for a summary of the outstanding loans and their respective interest rates.
RISKS FROM ENERGY PROCUREMENT
The Group counters the procurement price risk for grid loss energy by hedging prices at an early stage using futures contracts on the EEX power exchange. To cover the required grid loss volumes, the Group enters into daily day ahead transactions on the spot market (EPEX Spot). Due to the availability and liquidity of futures trading, the hedging period for the intended price hedging covers a period of up to two years from the balance sheet date. Credit and default risks are avoided with this form of\u00a0 price hedging via exchange transactions.
Spot market procurement is a highly probable transaction, because the actual occurrence of grid losses is physically determined and must necessarily be compensated for by the grid operator through the purchase of energy. The Group pursues a conservative recovery strategy aligned with the regulatory framework and regulatory recognition of the electricity procurement costs incurred, which enables timely and predictable price hedging. The Group aims at fully hedging the price of the expected volume of grid loss energy.
Price hedging of future required spot market procurement of grid loss energy volumes using futures provides a highly effective hedging method. The price development of the settlement price of EEX fully reflects the price change of the spot price on the EPEX spot market, so that a 100% effectiveness of the hedging relationship can be assumed in this respect. As the volume of electricity required for the grid losses that will arise in the future is not known at the time the hedging transactions are entered into, the Group determines the highly probable volume required (expected value) and derives the procurement strategy for price hedging from this; this expected value forms the basis for the hedging transactions under hedge accounting.
The forecast of the future volume of electricity required to cover grid losses is naturally subject to uncertainties relating to external factors, in particular wind feed-in, the electricity generation mix and the respective grid situation (influenced by generation, consumption and interventions such as redispatch measures). The expected value for grid loss procurement determined with the aid of a model is based on historical experience values, taking into account as best as possible any future changes in the relevant factors and foreseeable events on the basis of available information at the time of procurement planning. Changes in the forecast quantity are monitored on an ongoing basis and lead to an adjustment of the procurement strategy as far as possible.
At the balance sheet date, the Group had already price-hedged a volume of 3.2 TWh for its expected physical requirements for grid loss energy in subsequent years. The futures contracts were concluded during the fiscal year at prices between EUR 108 and EUR 174 per MWh. As a result of the volatile price development on the electricity market, derivatives with a negative market value of \u20ac-224.8 million (prior year: \u20ac-24.7 million and positive market value of \u20ac154.3 million) as a result of the price drop shortly before the end of 2022 were recognised in the consolidated statement of financial position under financial assets and derivative liabilities. In the financial year, a negative result of \u20ac89.3 million was realised from hedging with futures contracts (prior year: positive result of \u20ac390.1 million), which is included in the cost of materials.
CREDIT RISK
Credit risk encompasses all forms of counterparty exposure, i.e. where counterparties may default on their obligations to the Group in relation to lending, hedging, settlement and other financial activities. The Group is exposed to credit risk from its operating activities and treasury activities. With regards to its operating activities, the Group has a credit policy in place, which takes into account customer\u2019s risk profiles. The exposure to credit risk is monitored on an ongoing basis, resulting in a request to issue bank guaranties from the counterparty for some major contracts.
At the end of the reporting period there were no significant concentrations of credit risks. The maximum credit risk is the carrying amount for each financial asset, including derivative financial instruments.
(in \u20ac million) | Notes | 2023 | 2022 |
Immediately claimable deposits | 7.2 | 7.0 | |
Reimbursement rights | 37.1 | 34.6 | |
Other shareholdings | 76.7 | 75.6 | |
Derivatives (Current and Non-current) | 7.2 | 219.7 | |
Other financial assets (Current and Non-current) | (6.6) | 128.2 | 336.9 |
Non-current trade and other receivables | 55.0 | 95.5 | |
Trade and other receivables | (6.9) | 1,066.3 | 1,206.2 |
Current tax assets | (6.10) | 64.4 | 28.6 |
Cash and cash equivalents | (6.11) | 1,368.1 | 4,151.2 |
Deferred charges | (6.9) | 21.4 | 25.1 |
Total | 2,703.3 | 5,843.5 |
The movement in the allowance for expected credit losses in relation to trade receivables during the year was as outlined in the table below:
(in \u20ac million) | Bad debtors | Impairment losses | Remaining balance | |
Balance at 1 January 2022 | 201.4 | (200.8) | 0.5 | |
Changes during the year | 0.8 | (0.8) | 0.0 | |
Balance at 31 December 2022 | 202.2 | (201.7) | 0.5 | |
Balance at 1 January 2023 | 202.2 | (201.7) | 0.5 | |
Changes during the year | 0.5 | (0.7) | (0.2) | |
Balance at 31 December 2023 | 202.7 | (202.3) | 0.4 |
Almost all bad debtors are related to outstanding receivables linked to the regulatory levies in Germany. If a debtor goes bankrupt, 50Hertz Transmission is compensated by the levy system for the loss incurred.
The Group believes that the unimpaired amounts overdue by more than 30\u00a0days are still collectible, based on historical payment behaviour and extensive analysis of customer credit risk, including customers' underlying credit ratings, when available. The credit quality of trade and other receivables is assessed based on a credit policy.
IFRS 9 requires the Group to impair financial assets based on a forward-looking expected credit loss (ECL) approach.
As of 2022, the Group applies an individualised approach for trade receivables, for which the Group has set rules for defining the stage of the concerned asset for Expected Credit Loss (ECL) calculations.
\u2022stage 1 covers financial assets that have not deteriorated significantly since initial recognition. The ECL for stage 1 is calculated on a 12-month basis,
\u2022stage 2 covers financial assets for which the credit risk has significantly increased. The ECL for stage 2 is calculated on a lifetime basis. The decision to move an asset from stage 1 to stage 2 is based on certain criteria such as:
\u2022a significant downgrade in the creditworthiness of a counterparty and/or its parent company and/or its guarantor (if any),
\u2022significant adverse changes in the regulatory environment,
\u2022changes in political or country-related risks, and
\u2022any other aspect the Group may consider relevant.
Regarding financial assets that are more than 30 days past due, the move to stage 2 is not systematically applied as long as the Group has reasonable and supporting information that demonstrates that, even if payments become more than 30 days past due, this does not represent a significant increase in the credit risk since initial recognition.
\u2022stage 3 covers assets for which default has already been observed, such as:
\u2022when there is evidence of failure in credit support from a parent company to its subsidiary (in this case the subsidiary is the Group\u2019s counterparty at risk),
\u2022when a Group entity has initiated legal proceedings against the counterparty for non-payment.
Regarding financial assets that are more than 90 days past due, the presumption can be rebutted if the Group has reasonable and supportable information that demonstrates that even if payments become more than 90 days past due, this does not indicate counterparty default.
The ECL formula applicable in stages 1 and 2 is ECL = EAD x PD x LGD, where:
\u2022for 12-month ECL, Exposure At Default (EAD) equals the carrying amount of the financial asset, to which the relevant Probability of Default (PD) and the Loss Given Default (LGD) are applied;
\u2022for lifetime ECL, the calculation method consists in identifying changes in exposure for each year, especially the expected timing and amount of the contractual repayments, and then applying to each repayment the relevant PD and the LGD, and discounting the figures obtained. ECL is then the sum of the discounted figures; and
\u2022probability of default is the likelihood of default over a particular time horizon (in stage 1, this time horizon is 12 months after the reporting period; in stage 2 this time horizon is the entire lifetime of the financial asset). This information is based on external data from a well-known rating agency. The PD depends on the time horizon and of the rating of the counterparty.
The Group uses external ratings if they are available; or an internal rating for major counterparties with no external rating.
Subsequently, a loss given default is calculated as the percentage of the amount of trade receivables that is not covered by a bank guarantee. The total outstanding amount of trade receivables covered by a bank guarantee totals \u20ac36.4 million. The loss given default is multiplied by the probability of default and the outstanding trade receivables.
This approach is deemed more relevant than the portfolio approach to provide a better assessment of the risk, especially in the current context of volatile market conditions. The impact of this new approach is not significant. Furthermore, any losses would be recoverable through the tariffs.
The model is applied to the trade receivables, all other financial assets being not assessed at risk of impairment considering their nature (regulatory assets, amounts recoverable through future tariffs in compliance with the regulatory frameworks), risk profile (reliable counterparty being for the levies the Belgian/German state) or measurement method (at fair value). More details are provided in the different notes.
LIQUIDITY RISK
Liquidity risk is the risk that the Group may be unable to meet its financial obligations. The Group limits this risk by constantly monitoring cash flows and ensuring that there are always sufficient credit-line facilities available.
The Group\u2019s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans, confirmed and unconfirmed credit facilities, commercial paper programmes, etc. For medium- to long-term funding, the Group uses bonds. The maturity profile of the debt portfolio is spread over several years. The Group Treasury frequently assesses its funding resources taking into account its own credit rating and general market conditions.
Bond issuances realised over the last years , various loan contracted with investors\u00a0 and different\u00a0 banks prove that the Group has access to different sources of funding.
(in \u20ac million) | Face value | Closing balance | Expected cash outflows | 6 months | 6-12 months | 1-2 years | 2-5 years | > 5 years |
Non-derivative financial liabilities | 13,327.1 | 13,296.7 | (14,979.8) | (4,925.7) | (800.5) | (659.5) | (1,923.7) | (6,670.4) |
Unsecured bond issues | 7,273.3 | 7,243.0 | (8,972.9) | (103.5) | (798.2) | (639.3) | (1,620.9) | (5,811.0) |
Unsecured financial bank loans and interest accruals | 1,249.6 | 1,249.6 | (1,202.7) | (18.1) | (2.3) | (20.2) | (302.8) | (859.4) |
Trade and other payables | 4,804.2 | 4,804.2 | (4,804.2) | (4,804.2) | 0.0 | 0.0 | 0.0 | 0.0 |
Total as of 31 December 2022 | 13,327.1 | 13,296.7 | (14,979.8) | (4,925.7) | (800.5) | (659.5) | (1,923.7) | (6,670.4) |
(in \u20ac million) | Face value | Closing balance | Expected cash outflows | 6 months | 6-12 months | 1-2 years | 2-5 years | > 5 years |
Non-derivative financial liabilities | 12,106.8 | 12,071.4 | (13,480.1) | (2,918.7) | (59.6) | (827.5) | (3,111.4) | (6,562.9) |
Unsecured bond issues | 8,615.0 | 8,579.8 | (9,817.7) | (644.4) | (38.0) | (682.2) | (2,834.8) | (5,618.3) |
Unsecured financial bank loans and interest accruals | 1,342.4 | 1,342.2 | (1,513.0) | (124.9) | (21.6) | (145.3) | (276.6) | (944.6) |
Trade and other payables | 2,149.4 | 2,149.4 | (2,149.4) | (2,149.4) | 0.0 | 0.0 | 0.0 | 0.0 |
Total as of 31 December 2023 | 12,106.8 | 12,071.4 | (13,480.1) | (2,918.7) | (59.6) | (827.5) | (3,111.4) | (6,562.9) |
Details of the used and unused back-up credit facilities are set out below:
(in \u20ac million) | Maturity | Available amount | Average basic interest | Amount used | Amount not used |
Sustainable Revolving Credit Facility | 12/10/2025 | 650.0 | Euribor + 0.325%\u00a0 | 0.0 | 650.0 |
Confirmed credit line | 26/2/2027 | 750.0 | Euribor + 0.275% | 0.0 | 750.0 |
Confirmed credit line | 14/2/2026 | 150.0 | Euribor + 0.275% | 150.0 | 0.0 |
Straight Loan EGI | unlimited | 2.5 | Euribor + 0.75% | 0.0 | 2.5 |
Confirmed credit line | 1/12/2024 | 400.0 | Euribor + 0.5% | 0.0 | 400.0 |
Confirmed credit line | 3/7/2025 | 60.0 | Euribor + 0.375% | 50.0 | 10.0 |
Confirmed credit line | 3/7/2025 | 60.0 | Euribor + 0.5% | 50.0 | 10.0 |
Confirmed credit line | 3/2/2025 | 35.0 | Euribor + 0.3% | 0.0 | 35.0 |
Confirmed credit line | unlimited | 150.0 | av. 1M-Euribor +0.275% | 0.0 | 150.0 |
Revolving Credit Facility | 27/2/2027 | 750.0 | Euribor + 0,45% | 0.0 | 750.0 |
IKB Loan | 14/12/2026 | 150.0 | 0.90% | 150.0 | 0.0 |
Green Loan | 31/3/2033 | 600.0 | 3,43% - 3,63% | 600.0 | 0.0 |
IBB_ILB | 25/11/2033 | 120.0 | 3.87% | 120.0 | 0.0 |
BNP OVERDRAFT Facility | unlimited | 150.0 | Euribor + 0,275% | 0.0 | 150.0 |
Confirmed credit line | 31/3/2033 | 600.0 | 3.54% | 600.0 | 0.0 |
Confirmed credit line | 25/11/2033 | 120.0 | 3.871% | 120.0 | 0.0 |
Total | 4,751.5 | 1,840.0 | 2,911.5 |
The Group has had several lines available to guarantee the financing of its activities and to cushion possible variations in levies (even if we can observe a surplus for the last 2 years) or derivatives. Indeed, the high volume of futures contracts contracted by 50Hertz Transmission (Germany) also has an impact on the Group's liquidity management. The daily cash settlement of futures contracts with the exchange can have short-term effects on liquidity, which largely follow the general price trend on the electricity market.
HEDGING ACTIVITIES AND DERIVATIVES
The Group is exposed to certain risks relating to its ongoing business operations. The primary risk managed using derivative instruments is interest rate risk.
All financial derivatives entered into by the Group relate to an underlying transaction or forecast exposure, depending on the expected impact on the statement of profit or loss, and if the IFRS 9 criteria are met, the Group decides on a case-by-case basis whether hedge accounting will be applied.
Derivatives not designated as hedging instruments
The Group had no derivatives which were not designated as hedging instruments.
Derivatives designated as hedging instruments
In 2018, the Group hedged the interest rate risk linked to the acquisition of a 20% stake in 50Hertz Transmission (Germany) for which a bridge loan was initially put in place. To cover the potential exposure to interest rate risk, the Group entered into a pre-hedge interest rate swap agreement in June 2018 to lock in market interest rates at the moment of the issuance of the \u20ac300 million senior bond. The Group applied hedge accounting as the derivative transaction met the requirements under IFRS 9. Upon the settlement of the transaction in September 2018, the portion of the gain or loss on the derivative was recognised within hedging reserves and had an impact of \u20ac5.7million.
These hedging reserves are recycled into profit and loss over the lifetime of the underlying hedged instrument, i.e. the senior bond with 10-year maturity. In 2023, an amount of \u20ac0.6 million was recycled into profit and loss.
The Group recognises derivatives to hedge the price for the future procurement of the physical requirement for grid losses that is expected in subsequent periods and is covered in each case by short-term procurement transactions on the spot market. These derivatives are measured at fair value in OCI with no effect on profit or loss as part of cash flow hedge accounting; they serve as price hedging of the physical demand for electrical energy to cover grid losses (underlying transaction). Due to the availability and liquidity of futures trading, the hedging period for intended price hedging covers a period of up to two years from the balance sheet date. In this context, the Group pursues a conservative hedging strategy oriented towards the regulatory framework and the ability to roll over the electricity procurement costs incurred, which enables timely and predictable price hedging.
The critical term match method measures effectiveness. If the valuation-relevant parameters of the hedged item and hedging instrument match, it is assumed that an effective hedging relationship exists and that changes in value from both items offset each other. The Group strives for full price hedging of the expected volume of grid loss energy (hedge ratio 1:1).
In 2022, the Group entered into Interest Rate Swaps contracts as pre-hedge for probable forecast debt transactions. The purpose of those instruments was to fix the rate at which the Group will borrow in the context of future bond issues planned in 2023. Upon the settlement of the transaction in 2023, the gain resulting from the hedge was recognized within hedging reserves for a total of \u20ac36.5 million. An amount of \u20ac3.4 million was recycled into profit and loss. As per 31 December 2023, \u20ac7.2 million interest rate swap (IRS) remain outstanding in connection with a bond issue forecasted in 2024.
End of 2023, as reported in the note 8.4, the Group entered into an agreement to acquire a minority stake in a US company, energyRe Giga Projects USA Holdings. In connection with this transaction, the Group has entered into forward contracts (EUR-USD 250.0 million) to lock in the exchange rate to the date the acquisition will be completed. The fair value of these contracts was negative at the end of 2023 (-\u20ac1.1 million recognised in other comprehensive income).
CAPITAL RISK MANAGEMENT
The purpose of the Group's capital-structure management is to ensure that the debt and equity ratios related to its regulated activities are as closely aligned as possible with the recommended level set by the relevant regulatory frameworks.
The Company's dividend guidelines involve optimising dividend payments while bearing in mind that self-financing capacity is needed to carry out its legal mission as transmission system operator, finance future CAPEX projects and, more generally, implement the Group\u2019s strategy.
The Company offers its employees the opportunity to subscribe to capital increases that are exclusively reserved for them.
SUSTAINABILITY
Sustainability lies at the heart of Elia\u2019s strategy through its ActNow programme, which sets out the long-term sustainability objectives of the Group. These are guided by the UN Sustainable Development Goals (SDGs) and have been translated into KPIs which are reported to the market and grouped under the following five dimensions: Climate Action; Environment and Circular Economy; Health and Safety; Diversity, Equity and Inclusion; and Governance, Ethics and Compliance.
Furthermore, as a driver of the energy transition, Elia Group is committed to ensuring that its activities are strongly aligned with the EU Taxonomy, a classification system for sustainable economic activities. Elia Group therefore published in 2021 a white paper which outlines the company\u2019s eligibility and alignment with the EU Taxonomy. The paper includes the methodology used for the assessment, highlights the Group\u2019s implementation of sustainable tools and practices, and reinforces its commitment to operating its businesses in a sustainable way.
In 2023, Elia Group was one of the first Belgian companies to be selected to be part of BEL\u00aeESG, the new stock market index linked to sustainability and launched by Euronext.
Elia was named as one of the best employers in Belgium for the sixth time in a row. Its overall score improved again, rising from 86% to 88%. Elia made most of its progress in the areas of \u2018diversity and inclusion\u2019 (+13.53%) and \u2018sustainability\u2019 (+11.67%).
The Group continued to explore the use of innovative devices throughout 2023, including remote inspection technology to increase the efficiency, safety and sustainability of our asset monitoring activities
MARKET RISK
The market risk takes into account negative effects on the financial position and cash flows of the Group arising as a result of price changes on the market which cannot be otherwise avoided. The activities of the Group extend to the electricity market \u2013 in particular through selling the electricity generated from renewable energy as well as the procurement of energy to cover grid energy losses \u2013 as well as to the market for short-term deposits. In Germany, the Group counteracts the procurement price risk for grid loss energy by hedging prices at an early stage using futures contracts on the EEX electricity exchange.
As the financial costs and the costs for grid losses are passed through to the tariffs, the Group is not really exposed to a change in market conditions. There is no sensitivity analysis to provide on that respect.
FOREIGN CURRENCY RISK\u00a0\u00a0\u00a0\u00a0
The Group is not exposed to any significant currency risk, either from transactions or from exchanging foreign currencies into euro, since it has no material foreign investments or activities and less than 1% of its costs are expressed in currencies other than euros.
As reported in the note 8.4, the Group entered into an agreement to acquire a minority stake in a US company, energyRe Giga Projects USA Holdings.This could increase the Group exposure to foreign currency risks in the future. In connection with this transaction, the Group has entered into forward contracts to lock in the exchange rate to the date the acquisition will be completed. The goal was to fully hedge the first tranche of \u20ac250,0 million. These contracts are accounted for as Cash Flow Hedge (CFH) with their market-to-market value (negative as at 31 December 2023 ; -\u20ac1.1 million) recognised in other comprehensive income.
INTEREST RATE RISK
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group's exposure to the risk of changes in market interest rates relates primarily to its long-term debt obligations with floating interest rates. As at 31 December 2023, one interest-rate swap was outstanding in connection with pre-hedging of a forecasted bond issue (nominal amount of \u20ac125,0 million out of \u20ac800,0 million issued in January 2024). The interest rate swaps which were outstanding on 31 December 2022 have been unwound in January 2023, when ETB\u2019s first green bond was issued.
See Note 6.13 for a summary of the outstanding loans and their respective interest rates.
RISKS FROM ENERGY PROCUREMENT
The Group counters the procurement price risk for grid loss energy by hedging prices at an early stage using futures contracts on the EEX power exchange. To cover the required grid loss volumes, the Group enters into daily day ahead transactions on the spot market (EPEX Spot). Due to the availability and liquidity of futures trading, the hedging period for the intended price hedging covers a period of up to two years from the balance sheet date. Credit and default risks are avoided with this form of\u00a0 price hedging via exchange transactions.
Spot market procurement is a highly probable transaction, because the actual occurrence of grid losses is physically determined and must necessarily be compensated for by the grid operator through the purchase of energy. The Group pursues a conservative recovery strategy aligned with the regulatory framework and regulatory recognition of the electricity procurement costs incurred, which enables timely and predictable price hedging. The Group aims at fully hedging the price of the expected volume of grid loss energy.
Price hedging of future required spot market procurement of grid loss energy volumes using futures provides a highly effective hedging method. The price development of the settlement price of EEX fully reflects the price change of the spot price on the EPEX spot market, so that a 100% effectiveness of the hedging relationship can be assumed in this respect. As the volume of electricity required for the grid losses that will arise in the future is not known at the time the hedging transactions are entered into, the Group determines the highly probable volume required (expected value) and derives the procurement strategy for price hedging from this; this expected value forms the basis for the hedging transactions under hedge accounting.
The forecast of the future volume of electricity required to cover grid losses is naturally subject to uncertainties relating to external factors, in particular wind feed-in, the electricity generation mix and the respective grid situation (influenced by generation, consumption and interventions such as redispatch measures). The expected value for grid loss procurement determined with the aid of a model is based on historical experience values, taking into account as best as possible any future changes in the relevant factors and foreseeable events on the basis of available information at the time of procurement planning. Changes in the forecast quantity are monitored on an ongoing basis and lead to an adjustment of the procurement strategy as far as possible.
At the balance sheet date, the Group had already price-hedged a volume of 3.2 TWh for its expected physical requirements for grid loss energy in subsequent years. The futures contracts were concluded during the fiscal year at prices between EUR 108 and EUR 174 per MWh. As a result of the volatile price development on the electricity market, derivatives with a negative market value of \u20ac-224.8 million (prior year: \u20ac-24.7 million and positive market value of \u20ac154.3 million) as a result of the price drop shortly before the end of 2022 were recognised in the consolidated statement of financial position under financial assets and derivative liabilities. In the financial year, a negative result of \u20ac89.3 million was realised from hedging with futures contracts (prior year: positive result of \u20ac390.1 million), which is included in the cost of materials.
CREDIT RISK
Credit risk encompasses all forms of counterparty exposure, i.e. where counterparties may default on their obligations to the Group in relation to lending, hedging, settlement and other financial activities. The Group is exposed to credit risk from its operating activities and treasury activities. With regards to its operating activities, the Group has a credit policy in place, which takes into account customer\u2019s risk profiles. The exposure to credit risk is monitored on an ongoing basis, resulting in a request to issue bank guaranties from the counterparty for some major contracts.
At the end of the reporting period there were no significant concentrations of credit risks. The maximum credit risk is the carrying amount for each financial asset, including derivative financial instruments.
(in \u20ac million) | Notes | 2023 | 2022 |
Immediately claimable deposits | 7.2 | 7.0 | |
Reimbursement rights | 37.1 | 34.6 | |
Other shareholdings | 76.7 | 75.6 | |
Derivatives (Current and Non-current) | 7.2 | 219.7 | |
Other financial assets (Current and Non-current) | (6.6) | 128.2 | 336.9 |
Non-current trade and other receivables | 55.0 | 95.5 | |
Trade and other receivables | (6.9) | 1,066.3 | 1,206.2 |
Current tax assets | (6.10) | 64.4 | 28.6 |
Cash and cash equivalents | (6.11) | 1,368.1 | 4,151.2 |
Deferred charges | (6.9) | 21.4 | 25.1 |
Total | 2,703.3 | 5,843.5 |
The movement in the allowance for expected credit losses in relation to trade receivables during the year was as outlined in the table below:
(in \u20ac million) | Bad debtors | Impairment losses | Remaining balance | |
Balance at 1 January 2022 | 201.4 | (200.8) | 0.5 | |
Changes during the year | 0.8 | (0.8) | 0.0 | |
Balance at 31 December 2022 | 202.2 | (201.7) | 0.5 | |
Balance at 1 January 2023 | 202.2 | (201.7) | 0.5 | |
Changes during the year | 0.5 | (0.7) | (0.2) | |
Balance at 31 December 2023 | 202.7 | (202.3) | 0.4 |
Almost all bad debtors are related to outstanding receivables linked to the regulatory levies in Germany. If a debtor goes bankrupt, 50Hertz Transmission is compensated by the levy system for the loss incurred.
The Group believes that the unimpaired amounts overdue by more than 30\u00a0days are still collectible, based on historical payment behaviour and extensive analysis of customer credit risk, including customers' underlying credit ratings, when available. The credit quality of trade and other receivables is assessed based on a credit policy.
IFRS 9 requires the Group to impair financial assets based on a forward-looking expected credit loss (ECL) approach.
As of 2022, the Group applies an individualised approach for trade receivables, for which the Group has set rules for defining the stage of the concerned asset for Expected Credit Loss (ECL) calculations.
\u2022stage 1 covers financial assets that have not deteriorated significantly since initial recognition. The ECL for stage 1 is calculated on a 12-month basis,
\u2022stage 2 covers financial assets for which the credit risk has significantly increased. The ECL for stage 2 is calculated on a lifetime basis. The decision to move an asset from stage 1 to stage 2 is based on certain criteria such as:
\u2022a significant downgrade in the creditworthiness of a counterparty and/or its parent company and/or its guarantor (if any),
\u2022significant adverse changes in the regulatory environment,
\u2022changes in political or country-related risks, and
\u2022any other aspect the Group may consider relevant.
Regarding financial assets that are more than 30 days past due, the move to stage 2 is not systematically applied as long as the Group has reasonable and supporting information that demonstrates that, even if payments become more than 30 days past due, this does not represent a significant increase in the credit risk since initial recognition.
\u2022stage 3 covers assets for which default has already been observed, such as:
\u2022when there is evidence of failure in credit support from a parent company to its subsidiary (in this case the subsidiary is the Group\u2019s counterparty at risk),
\u2022when a Group entity has initiated legal proceedings against the counterparty for non-payment.
Regarding financial assets that are more than 90 days past due, the presumption can be rebutted if the Group has reasonable and supportable information that demonstrates that even if payments become more than 90 days past due, this does not indicate counterparty default.
The ECL formula applicable in stages 1 and 2 is ECL = EAD x PD x LGD, where:
\u2022for 12-month ECL, Exposure At Default (EAD) equals the carrying amount of the financial asset, to which the relevant Probability of Default (PD) and the Loss Given Default (LGD) are applied;
\u2022for lifetime ECL, the calculation method consists in identifying changes in exposure for each year, especially the expected timing and amount of the contractual repayments, and then applying to each repayment the relevant PD and the LGD, and discounting the figures obtained. ECL is then the sum of the discounted figures; and
\u2022probability of default is the likelihood of default over a particular time horizon (in stage 1, this time horizon is 12 months after the reporting period; in stage 2 this time horizon is the entire lifetime of the financial asset). This information is based on external data from a well-known rating agency. The PD depends on the time horizon and of the rating of the counterparty.
The Group uses external ratings if they are available; or an internal rating for major counterparties with no external rating.
Subsequently, a loss given default is calculated as the percentage of the amount of trade receivables that is not covered by a bank guarantee. The total outstanding amount of trade receivables covered by a bank guarantee totals \u20ac36.4 million. The loss given default is multiplied by the probability of default and the outstanding trade receivables.
This approach is deemed more relevant than the portfolio approach to provide a better assessment of the risk, especially in the current context of volatile market conditions. The impact of this new approach is not significant. Furthermore, any losses would be recoverable through the tariffs.
The model is applied to the trade receivables, all other financial assets being not assessed at risk of impairment considering their nature (regulatory assets, amounts recoverable through future tariffs in compliance with the regulatory frameworks), risk profile (reliable counterparty being for the levies the Belgian/German state) or measurement method (at fair value). More details are provided in the different notes.
LIQUIDITY RISK
Liquidity risk is the risk that the Group may be unable to meet its financial obligations. The Group limits this risk by constantly monitoring cash flows and ensuring that there are always sufficient credit-line facilities available.
The Group\u2019s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans, confirmed and unconfirmed credit facilities, commercial paper programmes, etc. For medium- to long-term funding, the Group uses bonds. The maturity profile of the debt portfolio is spread over several years. The Group Treasury frequently assesses its funding resources taking into account its own credit rating and general market conditions.
Bond issuances realised over the last years , various loan contracted with investors\u00a0 and different\u00a0 banks prove that the Group has access to different sources of funding.
(in \u20ac million) | Face value | Closing balance | Expected cash outflows | 6 months | 6-12 months | 1-2 years | 2-5 years | > 5 years |
Non-derivative financial liabilities | 13,327.1 | 13,296.7 | (14,979.8) | (4,925.7) | (800.5) | (659.5) | (1,923.7) | (6,670.4) |
Unsecured bond issues | 7,273.3 | 7,243.0 | (8,972.9) | (103.5) | (798.2) | (639.3) | (1,620.9) | (5,811.0) |
Unsecured financial bank loans and interest accruals | 1,249.6 | 1,249.6 | (1,202.7) | (18.1) | (2.3) | (20.2) | (302.8) | (859.4) |
Trade and other payables | 4,804.2 | 4,804.2 | (4,804.2) | (4,804.2) | 0.0 | 0.0 | 0.0 | 0.0 |
Total as of 31 December 2022 | 13,327.1 | 13,296.7 | (14,979.8) | (4,925.7) | (800.5) | (659.5) | (1,923.7) | (6,670.4) |
(in \u20ac million) | Face value | Closing balance | Expected cash outflows | 6 months | 6-12 months | 1-2 years | 2-5 years | > 5 years |
Non-derivative financial liabilities | 12,106.8 | 12,071.4 | (13,480.1) | (2,918.7) | (59.6) | (827.5) | (3,111.4) | (6,562.9) |
Unsecured bond issues | 8,615.0 | 8,579.8 | (9,817.7) | (644.4) | (38.0) | (682.2) | (2,834.8) | (5,618.3) |
Unsecured financial bank loans and interest accruals | 1,342.4 | 1,342.2 | (1,513.0) | (124.9) | (21.6) | (145.3) | (276.6) | (944.6) |
Trade and other payables | 2,149.4 | 2,149.4 | (2,149.4) | (2,149.4) | 0.0 | 0.0 | 0.0 | 0.0 |
Total as of 31 December 2023 | 12,106.8 | 12,071.4 | (13,480.1) | (2,918.7) | (59.6) | (827.5) | (3,111.4) | (6,562.9) |
Details of the used and unused back-up credit facilities are set out below:
(in \u20ac million) | Maturity | Available amount | Average basic interest | Amount used | Amount not used |
Sustainable Revolving Credit Facility | 12/10/2025 | 650.0 | Euribor + 0.325%\u00a0 | 0.0 | 650.0 |
Confirmed credit line | 26/2/2027 | 750.0 | Euribor + 0.275% | 0.0 | 750.0 |
Confirmed credit line | 14/2/2026 | 150.0 | Euribor + 0.275% | 150.0 | 0.0 |
Straight Loan EGI | unlimited | 2.5 | Euribor + 0.75% | 0.0 | 2.5 |
Confirmed credit line | 1/12/2024 | 400.0 | Euribor + 0.5% | 0.0 | 400.0 |
Confirmed credit line | 3/7/2025 | 60.0 | Euribor + 0.375% | 50.0 | 10.0 |
Confirmed credit line | 3/7/2025 | 60.0 | Euribor + 0.5% | 50.0 | 10.0 |
Confirmed credit line | 3/2/2025 | 35.0 | Euribor + 0.3% | 0.0 | 35.0 |
Confirmed credit line | unlimited | 150.0 | av. 1M-Euribor +0.275% | 0.0 | 150.0 |
Revolving Credit Facility | 27/2/2027 | 750.0 | Euribor + 0,45% | 0.0 | 750.0 |
IKB Loan | 14/12/2026 | 150.0 | 0.90% | 150.0 | 0.0 |
Green Loan | 31/3/2033 | 600.0 | 3,43% - 3,63% | 600.0 | 0.0 |
IBB_ILB | 25/11/2033 | 120.0 | 3.87% | 120.0 | 0.0 |
BNP OVERDRAFT Facility | unlimited | 150.0 | Euribor + 0,275% | 0.0 | 150.0 |
Confirmed credit line | 31/3/2033 | 600.0 | 3.54% | 600.0 | 0.0 |
Confirmed credit line | 25/11/2033 | 120.0 | 3.871% | 120.0 | 0.0 |
Total | 4,751.5 | 1,840.0 | 2,911.5 |
The Group has had several lines available to guarantee the financing of its activities and to cushion possible variations in levies (even if we can observe a surplus for the last 2 years) or derivatives. Indeed, the high volume of futures contracts contracted by 50Hertz Transmission (Germany) also has an impact on the Group's liquidity management. The daily cash settlement of futures contracts with the exchange can have short-term effects on liquidity, which largely follow the general price trend on the electricity market.
CAPITAL RISK MANAGEMENT
The purpose of the Group's capital-structure management is to ensure that the debt and equity ratios related to its regulated activities are as closely aligned as possible with the recommended level set by the relevant regulatory frameworks.
The Company's dividend guidelines involve optimising dividend payments while bearing in mind that self-financing capacity is needed to carry out its legal mission as transmission system operator, finance future CAPEX projects and, more generally, implement the Group\u2019s strategy.
The Company offers its employees the opportunity to subscribe to capital increases that are exclusively reserved for them.
CAPITAL EXPENDITURE COMMITMENT
As at 31 December 2023, the Group had a commitment of \u20ac11,509.0 million (\u20ac3,883.9\u00a0million in 2022) relating to purchase contracts for the installation of property, plant and equipment for further grid extensions.
OTHER CONTINGENCIES AND COMMITMENTS
Commitments
As at 31 December 2023, the Group had a commitment of \u20ac280.8 million (\u20ac347.9\u00a0million in 2022) relating to purchase contracts for general expenses, maintenance and repair costs.
Contingent liabilities
As stated in Note 6.15, the group defends litigation matters relating to business interruptions, contractual claims or disputes with third parties. Generally, in line with good business practice, the group does not recognise any pending proceeding which has not matured and/or where the probability of existing or future exposure is unlikely, where financial impact is not estimable and for which no contingent liabilities are able to be quantified.
Nevertheless, at the end of 2023, it may be relevant to note that, in connection with an open procedure, the group received a judgement that could result in it having to pay compensation amounting to around \u20ac14,0 million. The Group decided to file on appeal against the court\u2019s decision. The group and its lawyers are confident that their arguments will be heard. The probability of an impact in profit or loss is considered remote and no provision has been recognised in connection with this litigation.
Other
Having received approval from the Walloon government and from the CREG, on 22 June 2015 Elia entered into an agreement with Solar Chest for the sale of Walloon green certificates with a total value of \u20ac275 million. Solar Chest's mission is to buy, hold and sell Walloon green certificates for periods of five, six and seven years. In accordance with legislation, Solar Chest conducted several auctions.
In September 2017, Elia sold 2.8 million green certificates to the Walloon Region (i.e. the Walloon Agency for Air and Climate, or AwAC) leading to a net cash inflow of \u20ac181.2 million. This was a result of the Decree of 29 June 2017 amending the Decree of 12 April 2011 relating to the organisation of the regional electricity market and the Decree of 5 March 2008 relating to the creation of the Walloon Agency for Air and Climate. The green certificates transferred by Elia can be gradually resold by the AwAC from 2022 onwards, taking into account the market conditions that exist for green certificates at that time. The legislation also envisages the green certificates being held by the AwAC for a period of up to nine years, after which Elia is required to buy back any unsold certificates. These repurchase
commitments will have no impact on Elia's financial performance, as the cost and expense for the repurchase will be fully recovered through the tariffs for levies. The legislation was supplemented in 2021 by new provisions that allow the Government to decide, after consultation with the LTSO, on the gradual resale to Elia of certain quantities of green certificates held by AwAC.
In November 2018, Elia sold another \u20ac0.7 million in green certificates to the Walloon Region (i.e. the AwAC) which resulted in a net cash inflow of \u20ac43.3 million. As with the transaction in September 2017, Elia might be required to buy back some of the certificates sold from 2023 onwards. Any repurchase will be covered through the tariffs for levies. There were no transactions for sale of green certificates to the AwAC in 2019, 2020, 2021, 2022 or 2023. Considering (i) the state of the Walloon green certificate market and (ii) the amounts actually available following the application of the surcharge in 2022 and 2023, the Walloon Government has decided to ask Elia to buy back certificates held by AwAC for an amount of \u20ac45.5 million in December 2022; and of \u20ac65.0 million in December 2023 .
CAPITAL EXPENDITURE COMMITMENT
As at 31 December 2023, the Group had a commitment of \u20ac11,509.0 million (\u20ac3,883.9\u00a0million in 2022) relating to purchase contracts for the installation of property, plant and equipment for further grid extensions.
OTHER CONTINGENCIES AND COMMITMENTS
Commitments
As at 31 December 2023, the Group had a commitment of \u20ac280.8 million (\u20ac347.9\u00a0million in 2022) relating to purchase contracts for general expenses, maintenance and repair costs.
Contingent liabilities
As stated in Note 6.15, the group defends litigation matters relating to business interruptions, contractual claims or disputes with third parties. Generally, in line with good business practice, the group does not recognise any pending proceeding which has not matured and/or where the probability of existing or future exposure is unlikely, where financial impact is not estimable and for which no contingent liabilities are able to be quantified.
Nevertheless, at the end of 2023, it may be relevant to note that, in connection with an open procedure, the group received a judgement that could result in it having to pay compensation amounting to around \u20ac14,0 million. The Group decided to file on appeal against the court\u2019s decision. The group and its lawyers are confident that their arguments will be heard. The probability of an impact in profit or loss is considered remote and no provision has been recognised in connection with this litigation.
Other
Having received approval from the Walloon government and from the CREG, on 22 June 2015 Elia entered into an agreement with Solar Chest for the sale of Walloon green certificates with a total value of \u20ac275 million. Solar Chest's mission is to buy, hold and sell Walloon green certificates for periods of five, six and seven years. In accordance with legislation, Solar Chest conducted several auctions.
In September 2017, Elia sold 2.8 million green certificates to the Walloon Region (i.e. the Walloon Agency for Air and Climate, or AwAC) leading to a net cash inflow of \u20ac181.2 million. This was a result of the Decree of 29 June 2017 amending the Decree of 12 April 2011 relating to the organisation of the regional electricity market and the Decree of 5 March 2008 relating to the creation of the Walloon Agency for Air and Climate. The green certificates transferred by Elia can be gradually resold by the AwAC from 2022 onwards, taking into account the market conditions that exist for green certificates at that time. The legislation also envisages the green certificates being held by the AwAC for a period of up to nine years, after which Elia is required to buy back any unsold certificates. These repurchase
commitments will have no impact on Elia's financial performance, as the cost and expense for the repurchase will be fully recovered through the tariffs for levies. The legislation was supplemented in 2021 by new provisions that allow the Government to decide, after consultation with the LTSO, on the gradual resale to Elia of certain quantities of green certificates held by AwAC.
In November 2018, Elia sold another \u20ac0.7 million in green certificates to the Walloon Region (i.e. the AwAC) which resulted in a net cash inflow of \u20ac43.3 million. As with the transaction in September 2017, Elia might be required to buy back some of the certificates sold from 2023 onwards. Any repurchase will be covered through the tariffs for levies. There were no transactions for sale of green certificates to the AwAC in 2019, 2020, 2021, 2022 or 2023. Considering (i) the state of the Walloon green certificate market and (ii) the amounts actually available following the application of the surcharge in 2022 and 2023, the Walloon Government has decided to ask Elia to buy back certificates held by AwAC for an amount of \u20ac45.5 million in December 2022; and of \u20ac65.0 million in December 2023 .
CONTROLLING ENTITIES
The core shareholder of Elia Group is Publi-T and this remained unchanged from 2022. Other than the yearly dividend payment, no transactions occurred with the core shareholder in 2023.
The shareholder structure of the Group can be found in Note 7.
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
Key management personnel include Elia's Board of Directors and Elia\u2019s Management Committee, both of which have a significant influence across the entire Elia Group.
The members of Elia\u2019s Board of Directors are not employees of the Group. The remuneration for their mandate is detailed in the Corporate Governance Statement, which forms part of this Annual Report (see the remuneration report).
The other members of key management personnel are hired as employees. The components of their remuneration are detailed below (i.e. excluding the directors who are not employees).
The names of the key management personnel are included in the Corporate Governance report.
Key management personnel did not receive stock options, special loans or other advances from the Group throughout the year.
(in \u20ac million) | 2023 | 2022 |
Short-term employee benefits | 3.9 | 4.0 |
Basic renumeration | 2.7 | 2.6 |
Variable renumeration | 1.1 | 1.4 |
Long-term employee benefits | 0.6 | 0.6 |
Post-employment benefits | 0.7 | 0.6 |
Other variable remuneration | 0.5 | 0.3 |
Total gross remuneration | 5.6 | 5.5 |
Number of persons | 7.8 | 7.4 |
Average gross renumeration per person | 0.7 | 0.7 |
Number of shares (in units) held as at 31 December 2023 | 9,288 | 8,548 |
TRANSACTIONS WITH JOINT VENTURES AND ASSOCIATES
Transactions between the Company and subsidiaries that are related parties were eliminated during consolidation and therefore are not recognised in this note.
Transactions with joint ventures and associates (as defined in Note 7.) were not eliminated, so details of these transactions are shown below:
(in \u20ac million) | 2023 | 2022 |
Transactions with joint ventures and associates | (4.2) | (4.0) |
Sales of goods | 1.9 | 1.6 |
Purchases of goods | (6.1) | (5.6) |
Interest and similar revenue | 0.0 | 0.0 |
Outstanding balances with joint ventures and associates | 0.3 | (0.4) |
Long-term debtors | 0.0 | 0.0 |
Trade debtors | 0.3 | (0.4) |
Trade debts | 0.0 | 0.0 |
In 2022 and 2023, entities of the Elia Group had transactions with Nemo Link Ltd. and Coreso SA/NV. The sale of goods relates to corporate services (SLAs) rendered by Elia to Nemo Link Ltd and Coreso SA/NV. Nemo Link Ltd. also rents a building (Herdersbrug) from Elia Asset SA/NV (see also Note 6.18). Purchases of goods mostly relates to services rendered by Coreso SA/NV to the group.
TRANSACTIONS WITH SHAREHOLDERS
There were no transactions with shareholders in 2023, except for the dividend payment.
TRANSACTIONS WITH RELATED PARTIES
Elia's Management Committee also assessed whether transactions occurred with entities in which they or members of the Board of Directors exercise a significant influence (e.g. positions as CEO, CFO, vice-chair of the Management Committee, etc.).
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
Key management personnel include Elia's Board of Directors and Elia\u2019s Management Committee, both of which have a significant influence across the entire Elia Group.
The members of Elia\u2019s Board of Directors are not employees of the Group. The remuneration for their mandate is detailed in the Corporate Governance Statement, which forms part of this Annual Report (see the remuneration report).
The other members of key management personnel are hired as employees. The components of their remuneration are detailed below (i.e. excluding the directors who are not employees).
The names of the key management personnel are included in the Corporate Governance report.
Key management personnel did not receive stock options, special loans or other advances from the Group throughout the year.
(in \u20ac million) | 2023 | 2022 |
Short-term employee benefits | 3.9 | 4.0 |
Basic renumeration | 2.7 | 2.6 |
Variable renumeration | 1.1 | 1.4 |
Long-term employee benefits | 0.6 | 0.6 |
Post-employment benefits | 0.7 | 0.6 |
Other variable remuneration | 0.5 | 0.3 |
Total gross remuneration | 5.6 | 5.5 |
Number of persons | 7.8 | 7.4 |
Average gross renumeration per person | 0.7 | 0.7 |
Number of shares (in units) held as at 31 December 2023 | 9,288 | 8,548 |
TRANSACTIONS WITH RELATED PARTIES
Elia's Management Committee also assessed whether transactions occurred with entities in which they or members of the Board of Directors exercise a significant influence (e.g. positions as CEO, CFO, vice-chair of the Management Committee, etc.).
No significant events that would result in the financial statements being adjusted occurred after the closing of the financial statements as of 31 December 2023.
However, two major non-adjusting subsequent events can be reported:
\u2022In January 2024, the Group has successfully placed a \u20ac800 million green bond via Elia Transmission Belgium under its \u20ac6 billion Euro Medium Term Notes (\u201cEMTN\u201d) programme and a combined \u20ac1.5 billion green bond via Eurogrid Gmbh. This confirms investors' appetite to support the Group's projects at the heart of the energy transition.
\u2022On 4 December 2023, Elia Group SA/NV entered into an agreement to acquire a 35.1% minority % stake in a energyRe Giga Projects USA Holdings, newly formed subsidiary of energyRe LLC. energyRe is a diversified renewable energy generation and transmission company founded in 2020 and headquartered in New York with expertise in solar, wind, distributive generation, and transmission.
Giga has been formed through the contribution by energyRe of core assets, consisting of energyRe\u2019s onshore transmission, offshore transmission, offshore wind projects and onshore renewable generation projects to be connected to the Clean Path New York transmission line.
The closing of the transaction took place on 1 February 2024. It is expected that Elia Group will deploy US$400 million over three years into energyRe Giga. US$250 million out of the US$400 million have been drawn as part of the closing and Elia Group\u2019s equity stake will increase as the amount is deployed over time, reaching 35.1% once the US$400 million is fully deployed. Proceeds will be fully committed to fund project development in US electricity transmission and renewable energy generation.
The investment will be treated via equity method. Elia will not control Giga but will have\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 a significant influence. This judgment will be supporter quantitatively (minority stake)
and qualitatively (via the governance provisions). The investment will be classified as an associate. A preliminary allocation of the purchase price will be finalized in 2024. This could give rise to goodwill, which will be embedded in the value of the equity method.", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:549300S1MP1NFDIKT460", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f-576": { "value": "8.6. Services provided by the AuditorsThe General Meeting of Shareholders appointed as joint auditors BDO Bedrijfsrevisoren BV (represented by Mr. Micha\u00ebl Delbeke) and EY Bedrijfsrevisoren BV (represented by Mr. Paul Eelen) for the audit of the consolidated financial statements of Elia Group SA/NV and Elia Transmission Belgium SA/NV and the audit of the statutory financial statements of Elia Group SA/NV, Elia Transmission Belgium SA/NV, Elia Asset SA/NV, Elia Engineering SA/NV, Elia Grid International SA/NV, Eurogrid International SA/NV, WindGrid SA/NV and Re.Alto BV/SRL. BDO Bedrijfsrevisoren BV and EY Bedrijfsrevisoren BV are also the statutory auditors of Coreso SA/NV.
50Hertz Transmission (Germany) appointed BDO AG Wirtschaftspr\u00fcfungsgesellschaft for the audit of the consolidated financial statements of Eurogrid GmbH and the statutory financial statements of Eurogrid GmbH, 50Hertz Transmission GmbH, 50Hertz Offshore GmbH and Elia Grid International GmbH.
The following table sets out the fees of the joint auditors and their associates in connection with services delivered with respect to the financial year 2023:
in \u20ac | Belgium | Germany | Total |
Statutory audit and review of consolidated and parent company financial statements | 480,204 | 351,740 | 831,944 |
Non-audit services, of which: | 487,352 | 208,398 | 695,750 |
Services related to legal and regulatory requirements | 47,650 | 47,900 | 95,550 |
Other audit services | 319,333 | 160,498 | 479,831 |
Tax services | 120,369 | 120,369 | |
Total | 967,556 | 560,138 | 1,527,694 |