Financial report 2012
Torsås
Herrljunga
Hallabro
Bodö
Skara
Ulricehamn
Bromölla
Nynäshamn
Kristianstad
Photographers
Petter Duvander (cover), Josefin Hofvander (5)
Höör
Landskrona
Lund
Ystad
Eslöv
Hörby
Contents
Lomma
Örtofta
Skurup
Sustainability - part of our business concept
4
Excerpt from the 2012 Annual Report
6
Income statement
9
Balance sheet
10
Pledged securities and contingent liabilities
11
Summary of changes in share equity
12
Cash flow analysis
13
Supplementary disclosures regarding cash flow analysis
14
Sustainability
- part of our business concept
Lunds Energikoncernen presented a sustainability report for the first time in 2011. At the
time, it provided a method for evaluating the present situation and reporting what we have
already achieved. We are now taking the next step in this process by allowing sustainability
issues to play a central role in our operations and business concept.
In 2012, Lunds Energikoncernen commenced
a journey of change, entailing innovation and a
new approach to our operations and organisation. This journey means that we are actively
including sustainability in our core operations,
and also establishing a new Strategic Business
Development unit. This unit will be responsible
for developing and driving the Group’s business
intelligence, sustainability and CSR/CSV issues
and introducing them into the Group’s operations and reality.
The energy sector is a key player as we move
toward a sustainable society and thus has a major
responsibility. We have based our work on a future scenario in 2021 and an energy supply based
on today’s social trends.
In the transport sector, fossil fuels are giving way
to a full palette of other fuels, and we currently
invest in three of them: electricity, gas and biodiesel. This trend also demonstrates how people
are increasingly interested in producing their own
energy, which is a driving force behind the development of new services in small-scale electricity
production and smart grids. The price trend
for solar cells entails, for example, that a more
wide-scale installation of solar cells in properties
in southern Sweden will become profitable. The
strong interest in building out wind power will
also continue.
As an energy company, environmental issues play
a key role in our sustainability practices and in
1998, we were one of the first energy companies
in Sweden to acquire ISO 14001 certification.
Our environmental objectives are high and our
key figures for 2012 show that we are constantly
4 Annual Report 2012 Lunds Energikoncernen
moving forward. But sustainability involves far
more than environmental practices. For us, it
also includes accepting responsibility for future
generations by contributing to the progress of
our owner municipalities and their sustainable
development efforts.
Our operations are committed to meeting the
municipal regulatory requirements of acting in
the public interest, while also complying with the
Swedish Companies Act in terms of good financial
housekeeping. This balance provides the basis of
our operations and is both a challenge and one of
our greatest strengths in sustainability practices.
In today’s society, we are increasingly dependent
on constant access to different forms of energy. In
other words, the energy supply is a vital parameter as we move toward a sustainable society, and
welfare and growth are key components.
Favourable profitability and financial stability are
essential for long-term sustainable development.
This year’s results were a vast improvement on
last year, due to a higher production volume
and the insurance compensation we received. In
2012, earnings amounted to SEK 240 million,
compared with SEK 68 million in 2011.
For a municipal energy company, profit maximization is not our primary driver. We provide
both commercial and public benefit, by ensuring
that municipal residents have the best-possible
access to energy while accounting for our social,
financial and environmental responsibilities. We
are also subject to yield requirements from our
owner municipalities, which means that some of
our profit is redistributed to municipal residents
in the form of municipal services.
”For us, it also includes accepting responsibility for future generations
by contributing to the progress of our owner municipalities and their
sustainable development efforts.”
In recent years, we have set an upward trend in
terms of customer satisfaction. The new approach
to our organisation and operations includes a
greater focus on the development of customer relations based on closer collaboration, with clarity
and professionalism as our guiding principles.
Our investment in research and innovation will
also increase, in close collaboration with universities and colleges, to produce new and attractive
customer solutions. This will provide latitude for
meeting the future challenges and demands we
face.
Our aim is that all employees and owners will
be familiar with our sustainability practices and
what they entail at an overall level. We would
also like our customers, suppliers and local residents to be aware of our endeavours. Continuous
dialogue will increase our understanding of each
other and how we can work toward a sustainable
society.
During the spring of 2013, the Group’s vision
and strategy work and implementation of the organisational changes that were identified in 2012
will continue. The new organisation, in which
sustainability and commitment are the guiding
principles, will be launched on 1 May.
Lund, March 2013
Sylvia Michel, President and CEO
Annual Report 2012 Lunds Energikoncernen 5
Excerpt from
the 2012 Annual Report
This is an excerpt from the Lunds Energi Group’s annual report for 2012. The complete document is available to
order from our Customer Services and on our website, where you can also download a digital copy immediately.
The references to notes in tables on the following pages are still there, although the notes themselves can only
be found in the 2012 Annual Report. Last year’s figures are given in brackets.
Operations in general
Lunds Energikoncernen AB (publ) is a sub-group that
is owned by Kraftringen AB (556527-9758), with
its registered office in Lund. This company is in turn
owned by the municipalities of Lund (82.4 %), Eslöv
(12.0 %), Hörby (3.5 %) and Lomma (2.1 %).
The business encompasses energy production and energy distribution, contract operations and IT communication. The company owns and manages properties
and facilities for the business’ requirements, shares and
participations in companies in the energy sector, as well
as conducting services related to the business.
The company is run according to business principles,
with due observance of the municipal purpose of the
business as well as the principles set out in the Articles
of Association and owners’ directives The Group must
have a strong local presence, and must conduct and
develop local energy activities with the focus on a good
environment, high delivery reliability, a high level of
service and rational energy usage.
Lunds Energikoncernen has published a Sustainability
Report since 2011 as a supplement to the Group’s
financial reporting. The purpose of the Sustainability
Report is to disclose the Group’s economic, environmental and social impact. Measuring, presenting and
taking responsibility for what the organisation has
achieved by implementing sustainability initiatives
increases transparency for the Group’s stakeholders.
Significant events during the year
In 2012, the Group conducted an analysis of its existing operations and long-term conditions in the energy
sector. This led to a decision concerning a new vision,
business concept and changed organisational structure.
In 2013, the Group’s corporate structure will be consolidated through a number of mergers.
Standard & Poor’s rating is set at BBB+/negative
outlook/A–2/K-1. The Group’s small-scale operation
6 Annual Report 2012 Lunds Energikoncernen
is viewed negatively, although this is compensated by
strong owner support and the stability within the monopolies. The “negative outlook” assessment principally
reflects the project risks in the Örtofta building project.
The Group’s changeover from fossil dependence to more
efficient electricity and district heating production via
renewable energy sources continued during the year.
Construction of a biofuel-fired combined heat and
power plant, Örtoftaverket, commenced in 2012 and is
expected to be in full operation by the first half of 2014.
The well developed district heating network in the Eslöv-Lund-Lomma area, which is provided with heating
from Sweden’s largest geothermal heating system (heat
storage in bedrock ) makes it possible to utilise surplus
heat from the region’s industries, agriculture and largescale households. In 2012, the 25 year-old geothermal
wells in Värpinge, Lund, were extensively renovated.
Electricity production in Norway was negatively impacted by low energy prices and a slightly less favourable
exchange rate compared with preceding years. However,
the earnings trend improved compared with 2011 due
to a higher production volume and insurance compensation received for operational problems in 2011.
A new model for regulating earnings from electricity
supply networks entered into force in 2012. As a result,
during 2011, the Energy Markets Inspectorate established the permitted extent of electricity supply network
earnings, known as the earnings framework, for the period 2012-2015. The Group’s allocated earnings framework has been appealed, as it is not considered to have
been calculated according to applicable regulations.
In 2012, extensive reconstruction and reinvestment in
the power transmission and distribution network was
implemented to further enhance supply reliability.
The electricity trading operation showed a positive
trend. In 2012, the Group succeeded in maintaining
its market position despite intensifying competition.
The successful launch of new portfolio administration
services, combined with strong sales initiatives, resulted
in a number of contracts with major consumers of both
electricity and gas.
At the beginning of 2012, a partnership with Quadracom strengthened operations in the Open City Network. Growth increased in the black fibre operations.
Development of the Group’s energy contracts was relatively favourable despite a declining market and intense
competition.
Lunds Energikoncernen AB (publ) is the Parent
Company of 12 (14) companies and prepares its
own consolidated accounts. The Parent Company’s
activities include development work and Group-wide
support functions.
On 1 January 2012, Kviinge Energi AB was divested to
Brittedals Elnät Ekonomisk Förening.
Turnover and profit trend
Operating profit amounted to SEK 267.1 million
(109.5). Profit after financial items amounted to SEK
239.6 million (68.3). Profit for the year amounted to
SEK 270.5 million (50.0) for the Group.
In the closing accounts for 2011, consolidated goodwill, etc. was written down by SEK 41.8 million, and
SEK 30.4 million was reserved for future price hedging
contracts in respect of fuel purchases. The reversal of
provisions in 2011 had a positive impact of SEK 30.4
million in 2012. The results were also positively impacted by insurance compensation received and increased
profitability in Norwegian electricity production.
Net sales rose 2 per cent to SEK 2,682 million (2,623).
Of these sales, electricity and electricity distribution
accounted for SEK 1,572 million (1,638), district
heating for SEK 701 million (662), gas for SEK 219
million (146), district cooling SEK 23 million (21),
contracting SEK 6 million (5) and other items SEK
161 million (151).
strategy focus and organisation, including a consolidation of the Group’s operations and increased
customer focus.
Risk exposure and financial instruments
By nature of its business, the Group is exposed to
various types of financial risk. Financial risks refer to
fluctuations in the Group’s profits and cash flow as a
result of changes in energy prices (principally oil, natural gas and electricity), exchange rates, interest rates,
refinancing and credit risks. The Group’s risk policy
is determined by the Group’s Board of Directors, and
forms a framework of guidelines and regulations in the
form of risk mandates and limits for all financial risks
on the energy, interest and currency markets. Responsibility for the Group’s market risks associated with
energy sales, principally electricity, district heating and
natural gas, is handled by the Group’s associated company, Modity Energy Trading AB. Correspondingly,
the financial transactions and risks are handled by the
Parent Company’s finance unit. The overall objective
is to supply cost-effective financing and hedging of all
energy prices, and to minimise the effects of market
fluctuations on the Group’s results. In order to follow
up the development and control of operations that are
exposed to risks, the CEO is assisted by a Risk Committee and a Risk Controller.
Environmental information
In 2012, carbon dioxide emissions decreased compared
with the preceding year, despite a somewhat higher
level of production. With planned investments in new
facilities, including the biopower and heat plant in
Örtofta, our focus on fossil-free heating production by
2020 remains firm. The Group has facilities with compulsory licences in Lund, Lomma, Eslöv, Klippan and
Ljungbyhed for the production of district heating, district cooling and electricity. All facilities have permits
for operations in accordance with the Environmental
Protection Act or the Environmental Code.
Investments during the year amounted to SEK 648
million (194).
The environmental impact of the business consists
primarily of emissions to the air from the combustion
of fuels (renewable/non-renewable) for the production
of electricity and heat. Since 1998, the Group has held
environmental certification in accordance with the ISO
14001 standard.
Expectations in respect of future developments
The Group’s profit for 2013 is expected to be on a par
with the owners’ yield requirements. In December
2012, the Board of Directors adopted a new business
Governance of the company
The Board of Directors has decided, as far as is deemed
appropriate and feasible, to adapt its working methods to the Swedish Code of Corporate Governance.
Annual Report 2012 Lunds Energikoncernen 7
According to the Code’s rules, the Board of Directors
must issue a report annually in which it e.g. explains
departures from the regulations. A corporate governance report has been prepared for 2012 and will be
published separately.
Significant events after the balance sheet date
In January 2013, as part of the Group’s ongoing consolidation process, the Board of Directors decided to
merge the following subsidiaries and their operations,
Kraftringen Produktion AB, Kraftringen Försäljning
AB, Nynäshamn Energi Försäljning AB and Kraftringen Öppet Stadsnät AB with the Parent Company
Lunds Energikoncernen AB. A decision was also made
to merge the two subsidiaries, Nynäshamn Energi AB
and Kraftringen Nät AB.
No other events occurred after the balance-sheet date
or before the signing of this annual report that are deemed to be significant. The balance sheet and income
statement, as well as the allocation of profits, will be
determined at the Annual General Meeting on 23 April
2013.
Proposed allocation of the company’s profit or loss
The Board of Directors proposes that disposable funds,
amounting to SEK 539,871,931.29, be allocated as
follows:
Balance carried forward 539,871,931
Total 539,871,931
As far as the company’s profits and financial position
in general are concerned, please refer to the following
income statement and balance sheet and the associated
notes to the accounts.
Financial overview, the past 5 years
Amounts in SEK million (if not specified otherwise)
2012
2011
2010
2009
2008
2 820
239,6
42,9 %
9,1 %
–
0,00
–
0,0
2 721
68,3
42,1 %
2,8 %
–
0
–
0,0
3 408
139,3
40,1 %
5,9 %
–
12,33
–
60,0
3 022
144,0
39,7 %
6,3 %
–
12,33
–
60,0
2 841
165,1
37,0 %
7,4 %
–
12,30
–
59,8
Amounts in SEK million (if not specified otherwise)
2012
2011
2010
2009
2008
Investments
648
194
292
264
465
Turnover
Profits after net interest income/expense
Equity ratio
Yield equity
Dividend per share (SEK)
Group contribution per share (SEK)
Dividend
Group contribution
Investments over the past 5 years
8 Annual Report 2012 Lunds Energikoncernen
Income statement
2012-01-01
–2012-12-31
2011-01-01
–2011-12-31
2 681 820
98 434
39 555
2 623 136
64 285
33 911
2 819 810
2 721 332
-69 277
-1 596 125
-345 511
-301 183
-66 439
-1 645 778
-312 178
-301 942
-239 823
-825
-283 846
-1 671
267 067
109 478
9
9 353
7 665
10
12
-3 253
4 923
-38 507
1 182
5 730
-55 782
Profit after financial items
13
239 582
68 273
Tax on year’s profit
Minority share of the profit/loss for the year
15
31 619
-727
-17 368
-939
270 474
49 965
55,57
10,27
Amounts in TSEK
Net turnover
Capitalised work for own account
Other operating income
Operating expenses
Raw materials and consumables
Purchase of energy and energy taxes
Other external costs
Personnel costs
Depreciation and write-downs of tangible
and intangible assets
Other operating expenses
Note
1
2
3, 4
5
6
7
Operating profit
Profit from financial items
Profit/loss from shares in associated companies
Result from securities and receivables
accounted for as fixed assets
Other interest income and similar profit items
Interest expenses and similar profit/loss items
Profit/loss for the year
Profit per share
Profit per share (SEK)
11
Annual Report 2012 Lunds Energikoncernen 9
Balance sheet
Assets
Amounts in TSEK
Fixed assets
Intangible assets
Electricity certificate and emission rights
Usage rights hydro-electric power
Computer software
Goodwill
Advance payments regarding intangible assets
Tangible assets
Buildings and land
Machinery and other technical assets
Equipment, tools, fixtures and fittings
New plants being built and advance payments
for tangible assets
Financial fixed assets
Participations in associated companies
Assets in associated companies
Other long-term security holdings
Deferred tax asset
Other long-term receivables
Note
2012-12-31
2011-12-31
16
15 746
268 013
22 786
3 297
4 166
14 628
267 853
31 903
5 209
1 241
314 009
320 835
149 113
2 527 838
16 470
159 072
2 620 310
20 220
16
16
16
17
18
19
20
21
23
24
25
33
26
Total fixed assets
Current assets
Stock, etc.
Raw materials and consumables
Current receivables
Accounts receivable
Receivables from Parent Company
Income taxes recoverable
Established but non-invoiced revenue
Other receivables
Prepaid expenses and accrued income
Cash and bank balances
Total current assets
Total assets
10 Annual Report 2012 Lunds Energikoncernen
787 422
271 622
3 480 843
3 071 225
39 761
28 209
4 164
-
39 297
818
28 394
9 717
-
72 134
78 225
3 866 985
3 470 284
71 985
82 338
71 985
82 338
273 690
147 052
5 306
5 330
71 238
357 593
220 615
27 168
9 140
15 083
51 198
313 142
860 208
636 346
21 111
72 537
27
28
29
953 304
791 222
4 820 289
4 261 506
Balance sheet
Equity and debts
Amounts in TSEK
Note
Shareholders’ equity
Share capital
Restricted reserves
Non-restricted reserves
Profit/loss for the year
Minority interest
Allocations
Allocations for pensions and
similar obligations
Allocations for deferred tax
Other provisions
Long-term liabilities
Other liabilities to credit institutes
Other liabilities
Current liabilities
Liabilities to credit institutions
Overdraft
Accounts payable
Current tax debts
Other liabilities
Accrued expenses and deferred income
Total equity and liabilities
32
33
34
35
30
36
2012-12-31
2011-12-31
48 672
1 488 833
257 700
270 474
48 672
1 275 578
421 997
49 965
2 065 679
1 796 213
1 905
2 187
29 027
489 260
446
29 314
542 541
30 857
518 733
602 712
1 200 000
162
700 000
162
1 200 162
700 162
347 499
4 802
198 522
16 400
88 558
378 031
603 522
—
107 060
9 434
85 709
354 507
1 033 811
1 160 232
4 820 289
4 261 506
2012-12-31
2011-12-31
—
—
—
—
—
—
Pledged securities and
contingent liabilities
Amounts in TSEK
Pledged assets
For own liabilities and provisions
Floating charges
Contingent liabilities
Guarantee commitments for the benefit of associated companies *
1 029 700
1 554 918
1 029 700
1 554 918
* According to the division of responsibility in the shareholder agreement between the owner companies (Lunds Energikoncernen AB and Öresundskraft AB) of Modity Energy Trading AB, the Group’s right of recourse as at the balance
sheet date amounts to SEK 159 767 thousand (277,377).
The corresponding figure for Öresundskraft AB at the same time amounts to SEK 0 thousand (27,527).
Annual Report 2012 Lunds Energikoncernen 11
Summary of changes
in share equity
Share capital
Non-distributable
reserves
Non-restricted
reserves
48 672
1 211 547
485 743
64 031
-64 031
49 965
38
-10
257
1 275 578
471 962
213 254
-213 254
270 474
-5 550
1 460
3 082
1 488 833
528 174
Amounts in TSEK
Group
Closing balance in accordance with balance sheet on 31 December 2010
Movement between restricted and non-restricted equity
Profit/loss for the year
Group contribution
Tax effect on Group contribution
Translation difference *
Equity on 31-12-2011
48 672
Movement between restricted and non-restricted equity
Profit/loss for the year
Group contribution
Tax effect on Group contribution
Translation difference*
Equity on 31-12-2012
48 672
Accumulated translation difference in foreign subsidiaries’ net assets amounts to -3 494 TSEK (-6 576).
The share capital consists of 4,867,242 shares and has a quota value of SEK 10.
*
12 Annual Report 2012 Lunds Energikoncernen
Cash flow analysis
2012-01-01
–2012-12-31
2011-01-01
–2011-12-31
239 582
218 528
68 273
317 119
458 110
385 392
-2 179
-17 746
455 932
367 646
10 354
-237 288
114 725
-52 067
55 975
-38 162
343 723
333 392
Investment activities
Sale of subsidiary
Acquisition of intangible assets
Acquisition of tangible assets
Sale of tangible assets
Acquisition of financial assets
Sale/decrease in financial assets
7 565
-7 823
-647 867
7 423
-2 250
25
—
-7 535
-194 384
2 191
-9 749
1 245
Cash flow from investment activities
-642 927
-208 232
Financing operations
Loans raised
Amortisation of loans
Dividends paid
248 779
—
-1 010
—
-136 576
-1 051
Cash flow from financing activities
247 769
-137 627
Cash flow for the year
Liquid assets at beginning of year
Exchange rate difference in liquid assets
-51 435
72 537
8
-12 467
85 004
1
21 111
72 537
Amounts in TSEK
Current operations
Profit after financial items
Adjustments for non-cash items, etc.
Taxes paid
Cash flow from operating activities before changes in operating capital
Cash flow from changes in operating capital
Increase (-) /Decrease (+) in inventories
Increase (-) /Decrease (+) in current receivables
Increase (+) /Decrease (-) in current liabilities
Cash flow from operating activities
Liquid assets at end of year
Annual Report 2012 Lunds Energikoncernen 13
Supplementary disclosures regarding cash flow
analysis
Amounts in TSEK
Paid interest and dividends received
Dividends received
Interest received
Interest paid
Adjustments for non-cash items, etc.
Less: profit participations in associated companies
Received dividends
Depreciation and write-downs of assets
Unrealised currency rate differences
Capital result from sale of fixed assets
Capital result from sale of operations/subsidiary
Pension allocations
Other provisions
Other earnings items not affecting liquidity
2012-01-01
–2012-12-31
2011-01-01
–2011-12-31
2 080
4 019
43 785
2 386
4 333
49 440
-8 736
4 914
254 877
-574
487
-1 742
-287
-30 411
-7 665
292 601
77
3 635
—
-7 820
29 728
—
6 563
218 528
317 119
9 955
—
91
—
—
—
—
—
Total assets
10 046
—
Allocations
1 721
Current liabilities
2 502
—
Total liabilities and provisions
4 223
—
Sales price
7 565
—
Sales price received
Less: Liquid assets in the sold business operation
7 565
7 565
—
—
—
—
Sale of subsidiaries and other business units
Sold assets and liabilities
Tangible assets
Raw materials and consumables
Current receivables
Liquid assets
Effect on liquid assets
Liquid assets
The following are included as liquid assets:
Cash and bank balances
The above items have been classified as liquid assets on the basis that:
• There is an insignificant risk of value fluctuations.
• They can easily be turned into cash.
• They have a duration of 3 months at the most from date of acquisition.
14 Annual Report 2012 Lunds Energikoncernen
21 111
72 537
21 111
72 537
Annual Report 2012 Lunds Energikoncernen 15
Lunds Energikoncernen AB (publ)
Box 25
221 00 Lund
Visiting address: Scheelevägen 16
Telephone
Fax
+46(0)46-12 97 70 +46(0)46-35 60 72
E-mail
info@lundsenergikoncernen.se
Environmental certification: ISO 14001
CIN: 556100-9852
Website
www.lundsenergikoncernen.se