Regulated information: 2018 results

• Regulated turnover stable
• Net profit: €54.5 million
• Proposal to the Annual General Meeting on 14 May 2019: gross dividend of €1.26 per share (2017: €1.23)
• Investments: €78.1 million, mainly for the construction of the fifth tank at the Zeebrugge LNG terminal
• Cold spell and peak demand for gas-fired power generation: Fluxys Belgium grid once again proves its robustness
• Sharp increase in terminalling of large volumes of LNG at Zeebrugge facility
• Belgium takes a first step towards green gas for consumers

Download the press release as pdf

Key financial data

Income statement in thousands of €	31/12/2018	31/12/2017
Operating Revenue	503,246	510,528
EBITDA*	278,382	283,171
EBIT*	120,601	129,320
Net Profit	54,469	70,321
Balance sheet in thousands of €	31/12/2018	31/12/2017
Investments in property, plant and equipment over the period	78,139	83,354
Total property, plant and equipment	2,181,771	2,250,689
Equity	687,156	713,795
Net Financial Debt*	881,932	950,528
Total consolidated balance sheet	2,914,902	3,290,873

*EBITDA
Earnings Before Interests, Taxes, Depreciation and Amortization or profit/loss from continuing operations, before depreciation, amortization, impairment and provisions, to which earnings from associates and joint ventures and dividends received from unconsolidated entities are added.

*EBIT
Earnings Before Interests and Taxes or profit/loss from continuing operations, to which earnings from associates and joint ventures and dividends received from unconsolidated entities are added.

*Net financial debt
Interest-bearing liabilities net of regulatory liabilities, non-current debt-related loans, cash from early refinancing operations and 75% of the balance of cash, cash equivalents and non-current and current cash investments.

More information about the 2017-2018 evolution of EBITDA, EBIT and net financial debt in the appendices.

Turnover in 2018: €503.2 million. The Fluxys Belgium group generated turnover of €503.2 million in 2018, slightly down compared to the €510.5 million earned during the same period in 2017. In accordance with regulatory principles, this fall in regulated turnover is mainly due to the decline in operating costs, financing costs and taxes, partially offset by an increase in the allowed regulated return.

The persistently low interest rates are affecting the Group's net result. The majority of the activities of the Fluxys Belgium group are regulated. The profit from these activities is determined by various regulatory parameters, including equity invested, financial structure, and OLO interest rates.

In 2018, the average OLO interest rate was 0.81%, up from 0.74% in 2017. This increase has a positive impact on the regulated return on invested capital and consequently on the 2018 annual results.

In 2018, net profits totalled €54.5 million, down €15.8 million compared to 2017 (€70.3 million). However, the net profits in 2017 were exceptionally high due to a one-off impact on deferred taxes booked in the past totalling €16.2 million as a result of the Belgian corporate tax reform.

Investments totalling €78.1 million. In 2018, investments in property, plant and equipment totalled €78.1 million, compared with €83.4 million in 2017. €17.8 million was spent on transmission projects, €0.8 million on storage infrastructure and €59.5 million on LNG infrastructure projects (mainly the construction of a fifth tank at the Zeebrugge LNG terminal).

Key events

The Fluxys Belgium grid once again proves its robustness. Fluxys Belgium's grid and balancing system proved particularly robust in late February and early March 2018. During the cold spell occurring over that period, producers suffered interruptions and technical problems arose elsewhere in the Northwest European gas grid. Under those exceptional circumstances, the Fluxys Belgium system offered the resilience required to support smooth market functioning and competitive prices on the wholesale market.

The Fluxys Belgium grid also was once again ready to cover peak demand from gas-fired power stations for which October and November 2018 were record months as they strove to meet the needs for power generation in Belgium. In November, gas-fired power stations supplied no less than 43% of the generated electricity.

Sharp increase in terminalling of large volumes of LNG at Zeebrugge facility. Compared to the previous year, in 2018 almost twice as many ships came to unload LNG at the Zeebrugge terminal, and more than twice as much LNG was regasified and injected into the grid. Demand for loading large LNG vessels also picked up again.

Furthermore, in May 2018 when ship-to-ship transshipment services began, this marked the start of a new phase in the LNG terminal's diversification. No fewer than 9 direct LNG ship-to-ship transshipment operations were carried out. Once the fifth storage tank will be commissioned in 2019, it will serve as a buffer for transshipments between two vessels that are not docked simultaneously.

Second loading bay for LNG trailers in use. A second loading bay for LNG trailers at the Zeebrugge terminal became operational in December 2018. The additional bay secures the facility’s continued ability to respond smoothly to future demand by doubling capacity from 4,000 to 8,000 loading operations per year. The loading bay receives financial support from the European Commission through the Connecting Europe Facility.

Natural gas for transport on the rise. In 2018, the number of CNG vehicles in Belgium increased by 60% to 14,000 and the number of CNG filling stations rose to more than 100. Strict emission standards for sulphur in the English Channel, North Sea and Baltic Sea also boosted the importance of LNG as a marine fuel. Furthermore, the order book for new LNG-powered vessels is filling up, with even more orders expected to follow by 2020, the year in which sulphur emission standards for all marine traffic will be significantly tightened.

Belgium takes a first step towards green gas for consumers. In 2018, Belgium saw the first unit for the production of biomethane go into service. In this context, Fluxys Belgium teamed up with Belgian gas federation gas.be and the distribution system operators to set up a system of green gas certificates. As a result, consumers in Belgium can buy green gas just as they can buy green electricity.

Fluxys Belgium SA/NV – 2018 profit (according to Belgian standards): proposed allocation of profit

Fluxys Belgium's net profits totalled €47.6 million, up from €44.7 million in 2017. This increase on the previous financial year is due to the same reasons as the changes in the consolidated results, namely the rise in interest rates for linear bonds (OLOs), which affects the regulated return, the efficiency gains, the dividend income and the lower profits from non-regulated activities.

Since 2010, barring unforeseen events, Fluxys Belgium has striven towards distributing 100% of its annual net profits plus the share of reserves freed up as and when the revaluation surplus is depreciated.

At its Annual General Meeting on 14 May 2019, Fluxys Belgium will propose paying out a gross dividend of €1.26 per share by releasing €9.9 million from unavailable reserves.

Taking into account a profit of €43.3 million carried over from the previous financial year and a withdrawal of €50.6 million from the reserves, the Board of Directors will propose to the Annual General Meeting that the profits be allocated as follows:

• €88.5 million as a dividend payment, and
• €53.0 million as profit to be carried forward.

If that profit allocation proposal is adopted, the total gross dividend for the 2018 financial year will total €1.26 per share. This amount will be payable as of 23 May 2019.

Financial outlook for 2019

Under the current tariff methodology, net profits from Belgian regulated activities are determined based on various regulatory parameters, including equity invested, financial structure, and OLO interest rates. Changes in the recurring dividend will primarily continue to depend on the these three parameters. Current financial markets do not permit accurate forecasts regarding changes in interest rates and thus returns on regulated activities.

External audit

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

Annexes