Regulated information: 2016 results

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1. Key financial data

EBITDA Profit from continuing operations before depreciation, impairment losses and provisions
EBIT Profit from continuing operations

Operating revenue for 2016: €509.5 million

The Fluxys Belgium group achieved a turnover of €509.5 million in 2016, compared with €538.0 million over the same period in 2015, i.e. a decrease of 5.3%. In accordance with the regulation, this drop in regulated turnover is mainly the result of the decrease in a number of authorised costs that have to be covered by the tariffs: operating expenses, financial expenses and the return authorised by the regulation. This decrease in costs enabled Fluxys Belgium to maintain the tariffs charged to customers at their 2015 level, including a 7% reduction vis-à-vis the previous tariffs.

The tariff proposal for the 2016-2019 regulatory period sets out a new reference framework for Fluxys Belgium, in particular in terms of authorised manageable costs. By controlling its operating costs and through its ongoing efficiency drive, the Fluxys Belgium Group has managed to achieve the new regulatory objectives and to reap the benefits of the relevant incentives.

Very low interest rates affect the Group's net profit

Most of Fluxys Belgium's activities are regulated. The profit from these activities is determined by several regulatory parameters, amongst which the equity invested, the financial structure and the interest rates.

The average linear bond (OLO) interest rate for the year totalled 0.49% in 2016, as opposed to 0.86% in 2015. This decrease had a negative effect on the regulated return on capital invested and therefore also on the profit for 2016. Furthermore, the 2015 results were positively influenced by revaluation surpluses recovered from decommissioning old facilities as part of a decommissioning programme that ended in late 2015. As from 2016, this system of recovering revaluations is longer allowed. As a result, the net profit for 2016 was €48.5 million, a €12.6 million decrease compared with the €61.1 million profit achieved over the same period in 2015.

€139.2 million of investments

Investments in property, plant and equipment came to €139.2 million in 2016, as opposed to €188.1 million in 2015. More than €34.4 million were invested in transmission projects, and around €103.8 million in LNG infrastructure projects.

2. Key events

Transported volumes up, booked capacity down

In 2016, Fluxys Belgium transported slightly more natural gas through its network than in 2015, with mild increases in volumes for both the Belgian market and border-to-border transmission. In spite of this, Fluxys sold less transmission capacity in 2016 than in 2015, reflecting a general trend across Europe. This is because system users are increasingly optimising their capacity portfolios, calculating the minimum capacity that needs to be contracted based on the precise capacity they estimate they will need to supply their customers.

Belgian grid plays a key role in meeting flexibility needs on the Northwest European and UK markets

In the summer Fluxys transported record volumes from the UK, while in the winter record volumes flowed in the opposite direction. As for the storage activity, the changing flexibility needs on the Northwest European market brought about that Fluxys Belgium was able to sell all of its remaining short-term capacity.

Belgian gas trading place ZTP hits record highs (up 50%)

In 2016, the traded quantities on the Zeebrugge Trading Point (ZTP) gas trading place was 50% up on the previous year. ZTP had a number of record-breaking days towards the end of the year, with daily traded quantities exceeding 1 TWh, as opposed to the highest daily traded quantity of 557 GWh in December 2015. There was a slight decrease of 4% in traded quantities on the Zeebrugge Beach gas trading place, probably as a result of the lower volume of LNG delivered. Overall traded quantities on the Belgian gas trading places again increased year-on-year, rising from 936 to 967 TWh.

Favourable utilisation rate at Zeebrugge LNG terminal

In 2016, the Zeebrugge LNG terminal again saw a favourable utilisation rate compared to other terminals in Northwest Europe. Although fewer LNG vessels were unloaded than the previous year, more ships were loaded and small-scale LNG activities increased. The combination of fewer unloaded vessels and more loaded ships led to less gas being sent out from the terminal into the pipeline network.

Success of small-scale LNG continues

In addition to terminalling large LNG volumes, the Zeebrugge LNG terminal is diversifying its offer to capitalise on the new and growing market for small-scale LNG.

• The number of ship loading operations involving small LNG vessels grew again in 2016. A market test held in 2015 showed there was also interest in additional options for loading small LNG ships. As a result, Fluxys LNG is looking into expanding the range of small-scale LNG services on offer.
• The number of LNG tanker-truck loading operations also continued to rise, despite the launch of similar services at other terminals in Northwest Europe. With a view to making sure it can keep responding to the growing level of demand, Fluxys LNG is set to construct a second loading bay at the terminal in 2017.

Second jetty at Zeebrugge LNG terminal operational since late December 2016

The jetty was designed to receive LNG carriers ranging from the smallest ships with a capacity of 2,000 cubic metres of LNG up to large vessels with a capacity of 217,000 cubic metres of LNG. Some 200 loading slots for small LNG carriers at the second jetty have already been booked under long-term contracts. The ability to receive the smallest LNG vessels means that LNG bunker ships can now berth as well: a milestone in the development of small-scale LNG and in particular the development of LNG as a ship fuel. The second jetty also enables the terminal to respond flexibly to demand for simultaneous or consecutive berthings, as using both jetties allows two LNG carriers to be unloaded and/or loaded at the same time.

Natural gas as a transport fuel making considerable progress

Fluxys Belgium, Gas.be (formerly the Royal Association of Belgian Gas Companies), distribution system operators, filling station operators, automotive manufacturers and the various authorities are taking various initiatives to encourage the use of natural gas as a transport fuel. These efforts really paid off in 2016 as the number of vehicles running on natural gas in Belgium more than doubled from 2,600 to 5,400 in the space of just one year. The number of filling stations offering natural gas also rose sharply, from 42 to 74 filling stations in 2016, and according to the schedule will hit the 100 mark in 2017.

3. Fluxys Belgium SA - 2016 results (Belgian GAAP): proposed allocation of profits

Fluxys Belgium SA's net profit amounted to €33.7 million compared with €49.3 million in 2015.

The decrease in the net profit vis-à-vis the previous year was a result of the same factors as for the consolidated result, namely the reduction in OLO rates affecting the authorised return, the new reference framework that has been laid down for manageable costs and the revaluation surpluses recovered in 2015 when decommissioning old facilities.

Since 2010 and barring unforeseen events, Fluxys Belgium has envisaged making an annual allocation of the entire net profit (100%), plus reserves released in line with the depreciation of the revaluation surplus.

Fluxys Belgium will propose to the Annual General Meeting to be held on 9 May 2017 that the same gross dividend as the previous year be paid out, thus releasing €9.9 million of unavailable reserves.

Factoring in a profit carried forward from the previous year of €30.9 million and withdrawal from reserves of €53.3 million, the Board of Directors will propose to the Annual General Meeting allocating the profit as follows:

• €84.3 million for the dividend pay-out; and
• €33.6 million for the profit to be carried forward.

If this proposed distribution of the profit is accepted, the total gross dividend will be €1.20 per share for the 2016 financial year. This amount will be paid as from 18 May 2017.

4. Financial outlook for 2017

The net profit from regulated activities is primarily determined by the equity invested, the financial structure and interest rates (OLOs). The recurring dividend will continue to evolve based on the development of these three parameters. The current financial markets do not allow for accurate projections regarding changes to interest rates and, therefore, the return on regulated activities.

5. External audit

The statutory auditor has confirmed that his audit activities, which have been thoroughly carried out, have not revealed the need for any significant adjustments to the accounting information contained in this press release.

Contacts

6. Annexes

Download the consolidated balance sheet, the consolidated income statement, the consolidated statement of comprehensive income, the statement of changes in equity and the consolidated statement of cash flows as a pdf

>Annexes