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RWE Distribuční služby
ANNUAL REPORT 2008
Total sales (CZK m) 2,229
EBITDA (CZK m) 114
Operating result (CZK m) 93
Profit before taxation (CZK m) 101
Profit after taxation (CZK m) 73
Investments (CZK m) 18
Number of employees (converted to FTE) 1,593
The term “Company“ used in the text refers to RWE Distribuční služby, s.r.o.
Key Ratios 2008
3TAbLE Of CONTENTs
TAbLE Of CONTENTs
1. ThE ExECuTIvE‘s sTATEmENT 5
2. mANAgEmENT REPORT FOR 2008 9
2.1 general Information 9
2.2 Results 10
2.3 Business Activities 11
2.4 Communication Activities 14
2.5 human Resources 14
2.6 Information Technologies 15
2.7 Environmental Protection 16
2.8 subsequent Events 16
2.9 Outlook 17
3. FINANCIAl PART 19
3.1 Financial statements 19
3.2 Notes to Financial statements 24
4. AuDITOR‘s REPORT 39
4.1 Auditor‘s Report on the Financial statements 39
4.2 Auditor‘s Report on the Annual Report and the Report on Relations between Related Parties 41
5. RWE DIsTRIBučNí služBy, s.R.O. REPORT ON RElATIONs BETWEEN RElATED PARTIEs As
AT 31 DECEmBER 2008 43
ABBREvIATIONs usED 50
4
5ThE ExECUTivE‘s sTATEmENT
1. ThE ExECUTivE‘s sTATEmENT
ladies and gentlemen,
having launched its operations on 1 January 2008, RWE Distribuční
služby, s.r.o. ("Company") has completed the first year in business that
was marked by the hard work of our employees. The Company was cre-
ated on 26 July 2007 by incorporation in the Commercial Register. Based
on agreements on sale of parts of enterprises, the Company purchased
a stake in severomoravská plynárenská, a.s., východočeská plynáren-
ská, a.s., středočeská plynárenská, a.s., severočeská plynárenská, a.s.,
and Západočeská plynárenská, a.s. effective as of 1 January 2008. RWE
Distribuční služby, s.r.o. is responsible for the operation and mainte-
nance of gas facilities, continuous dispatching and emergency services,
operations management, gas metering, and network construction and
documentation. The Company was established as part of an extensive
project that involved restructuring the RWE group in the Czech Republic
("RWE group"), which necessitated broad coordination with other
RWE group member companies, including the establishment
of the relevant contractual relations and the valuation
of the transferred assets.
The priority of these activities has been and will continue to be ensuring
the secure, reliable, and effective operation of gas processing facilities
and providing high-quality customer service. While our most important
clients are distribution system operators from the ranks of RWE group
members, we also cater to other partners – investors, planners, builders,
municipalities, building authorities, and end customers.
At the beginning of 2008, the Company launched Fenix, one of the most
extensive projects executed by the RWE group in the Czech Republic to
date. The objectives included improving efficiency by reorganizing the
enterprises that had been taken over and unifying processes, regula-
tions, and the standards of provided services. Another purpose of these
measures was to reduce overall costs to allow the Company to be fully
competitive in the future, while preserving the superior quality of all
activities and services.
6 RWE Distribuční služby
The Fenix project focused on optimizing the regional organization, unifying internal guidelines and regula-
tions, fine-tuning network operation and maintenance, harmonizing and improving services secured by inter-
nal and external means, centralizing dispatching management, and, no less importantly, standardizing work
conditions for all employees throughout the Company.
Interim results allowed implementing new measures already in the course of 2008, which helped the Com-
pany surpass the planned financial figures. An important contribution to the positive results was made by
the services Division, particularly the Finance Department that initiated a number of changes and controlled
the Company‘s expenditures. Thus, already the first year of our existence has demonstrated the meaning and
importance of the steps that had led to the Company‘s creation, confirming that we have set out
in the right direction.
The fact that we were able to cope with the exceptional scope of requirements for human resources in con-
nection with the corporate restructuring process has demonstrated our preparedness to provide support to all
employees since the first day of the Company‘s operation. An important event was the successful completion
of the collective bargaining process, which resulted in reaching an accord at the end of 2007 and the subse-
quent signature of a collective agreement for the year 2008.
Considering the predominant nature of the work performed by our staff, we paid close attention to workplace
safety and health protection, which will be an ongoing task in the future.
During the reported year, we had to deal with several disruptions of network operation, which were mostly
caused by third-party damage to gas facilities liable to interrupt gas supplies. These situations were handled
in a professional manner that ensured safety and minimized losses and negative impact on end customers.
In the future, the Company will continue to strive to fulfill its mission – to be an efficient and professional
provider of gas facility services to all our customers.
Ing. Tomáš TichýExecutive, CEO
7ThE ExECUTivE‘s sTATEmENT
Ing. Tomáš Tichý
Executive, CEO
Date of birth: 31 march 1947
Education: Czech Technical university, Prague, Faculty of mechanical Engineering
Membership of bodies of other companies: Chairman of the Board of Directors – Jihomoravská
plynárenská, a.s., Chairman of the supervisory Board – JmP Net, s.r.o., member of the supervisory Board –
gAsFINAl, a.s.
Any other business activities: None
Ing. Karel Mazal
Executive, COO
Date of birth: 21 september 1948
Education: Brno Technical university, Faculty of Electrical Engineering
Membership of bodies of other companies: Chairman of the Board of Directors – gAsFINAl, a.s.,
member of the supervisory Board – českomoravská plynárenská, a.s. – v likvidaci
Any other business activities: None
Changes in the Company‘s governing bodies during 2008 and at the beginning of 2009
At its meeting held on 29 October 2008, the Board of Directors of RWE Transgas, a.s., as the sole member
exercising the powers of the Company‘s general meeting, discussed the resignation of Ing. Patrik Choleva as
the Company‘s Executive effective as of 29 October 2008.
At its meeting held on 17 December 2008, the Board of Directors of RWE Transgas, a.s., as the sole member
exercising the powers of the Company‘s general meeting, appointed Ing. Dušan malý as the Company‘s Execu-
tive effective as of 1 January 2009.
Executives as at 31 December 2008
8
9mANAgEmENT REPORT fOR 2008
2. mANAgEmENT REPORT fOR 2008
Company name: RWE Distribuční služby, s.r.o.
Registered office: Plynárenská 499/1, 657 02 Brno
Company No.: 27935311
Legal form: limited liability company
The Company’s Establishment and Inception:
The Company was established on 26 July 2007. It is incorporated in the Commercial Register administered by
the Brno Regional Court, section C, File 57165.
The sole member of the Company is RWE Transgas, a.s. with its registered office at limuzská 12/3135,
100 98 Prague 10 – strašnice, Company No. 26460815.
Object of Business:
lease of residential and commercial real estate without providing services other than basic services neces-1.
sary for securing the proper operation of residential and commercial real estate
Installation, repair, inspection, and testing of specialty gas equipment2.
Installation, repair, inspection, and testing of specialty electric equipment3.
Construction, reconstruction, and demolition of structures4.
Wholesale5.
Engineering services in capital construction 6.
lease and rental of movables7.
maintenance of motor vehicles and their accessories8.
Administration, financial, and organizational services9.
Technical consulting services in the field of gas distribution, environmental protection, metering, 10.
and control systems
services relating to work safety and health protection in the workplace11.
Brokerage of trade and services12.
Technical and organizational fire prevention services13.
Testing, measuring, analytical, and inspection services14.
Installation of metering devices15.
Organization of specialized training, instruction courses, and other educational events, including lecturing16.
Waste disposal (excepting hazardous waste)17.
Copy services18.
storage and handling of goods19.
Technical services20.
2.1 general Information
10
Provision of software, hardware and software consulting21.
Advertising and marketing22.
Business, financial, organizational, and economic consulting services23.
Accounting consulting, bookkeeping, and tax administration services24.
Data processing, database services, network administration25.
Facility management26.
Preparation and completion of technical designs27.
Electronic communication services – data transmission services28.
Construction design29.
Real estate brokerage 30.
Purchase, sale, storage, and import of fuels and lubricants, with the exception of the operation of fuel 31.
stations and the exclusive purchase, sale, and storage of fuels and lubricants in consumer packaging up to
50 kg per packaging
Preparatory work for construction32.
specialized construction services33.
Production of electric power34.
Revenues, Expenses, Profit
In 2008, the Company earned CZK 72,749 thousand in net profit. Profit before taxation in 2008 amounted to
CZK 100,701 thousand.
sales of own products and services in 2008 totaled CZK 2,229,140 thousand, including CZK 1,874,021 thou-
sand in revenues from slAs and CZK 355,011 thousand in proceeds from services related to gas facilities.
Assets and Liabilities
The balance of the Company‘s assets as at 31 December 2008 totaled CZK 562,327 thousand, an increase by
CZK 487,697 thousand from 2007. Receivables from other RWE group companies relating to the RWE Transgas, a.s.
cash-pooling arrangement accounted for the most important part of the increase – CZK 304,419 thousand.
Investments
During the reported year, the Company executed investment projects in the framework of the approved invest-
ment plan. We acquired assets, mainly gas processing machinery and equipment, with a total value
of CZK 17,527 thousand.
2.2 Results
RWE Distribuční služby
11
All the Company‘s investment projects were executed in the Czech Republic and financed using the
Company‘s own resources.
The scope of planned investments has been optimized from the viewpoint of needs and resources until the
year 2011. Projects foreseen in the approved mid-term plan mainly include investments into gas processing
machinery and equipment. All investments will be made in the Czech Republic. The average annual value of
planned increases in assets during 2009 to 2011 totals approximately CZK 20 million.
Risk Management
All risks are recorded in the Risk Catalog. In addition, they are entered into the risk matrix, which allows
identifying the most serious risks from the viewpoint of the probability of their occurrence and the extent of
potential damage. In 2008, the Risk Committee, which consists of management representatives, did not iden-
tify any risks liable to jeopardize the Company‘s existence.
Research and Development
The Company does not carry research and development of new products.
Organizational Units
According to its incorporation data in the Commercial Register, the Company does not have any organizational
units in the Czech Republic or abroad.
The Company mainly provides technical services to distribution system operators and regional gas companies
from the ranks of RWE group members. Our services include securing the operation and maintenance of distri-
bution networks, operations management, metering, and network construction and documentation.
The Company is also responsible for repairing gas equipment, measuring natural gas consumption and quality,
connecting and disconnecting customers, operating the dispatching center, and running the 1239 emergency
telephone line.
The Company secures the operation and maintenance of 44.9 thousand kilometers of gas pipelines
and 2,327 regulation stations. In addition, we oversee 1.7 million gas meters and other metering devices.
For the general public, the Company offers gas pipeline demarcation.
2.3 Business Activities
mANAgEmENT REPORT fOR 2008
12
Network Operation Management Department
As regards network operation management, the Company provides services targeting the administrative and
technical issues related to the distribution network of individual operators, such as issuing positions on gas
and other structures as part of construction approval proceedings, defining conditions for connection to the
distribution system, administering technical documentation, representing distribution network owners in com-
munication with building authorities, and dealing with ownership issues in connection with gas facilities.
In 2008, the Network Operation management Department issued more than 103 thousand positions for
construction approval proceedings, defined over 24 thousand connection requirements, and took over the
operation of close to 6.5 thousand reconstructed or newly built gas facilities.
SČP Net SMP Net STP Net VČP Net ZČP Net Total
Issued positions 17,266 32,511 17,533 21,799 14,465 103,574
Conditions for connection to the distribution system 4,379 6,557 4,942 5,103 3,290 24,271
Taken over gas facilities 694 2,152 1,512 927 1,084 6,369
Network Construction Department
The Company provides engineering services consisting of the preparation and execution of projects involving
reconstruction and construction of new gas facilities. In 2008, we completed the preparation of more than
430 ventures and executed close to 1,200 small- and large-scale construction projects, including nearly 300
new independent household service lines. At the same time, the Company supervised the construction of gas
facilities financed by third-party investors. During the reported year, we prepared an important change in the
Company‘s organizational structure as part of which activities of the Network Construction Department were
transferred into three centers in Pilsen, hradec Králové, and Ostrava. The objective of this change is to reduce
operating costs of the organizational unit and to improve the effectiveness of the process of preparing and
executing network construction projects.
Metering and Technical Services Department
In 2008, we prepared a restructuring of the metering and Technical services Department, which is to take
effect on 1 January 2009. An important change aimed at reducing costs and significantly improving meter
reading processing was a project that centralized metering administration for customers receiving aggregate
service into one department located in Brno. In 2008, we continued the installation of online transmission
and converter systems for large customers in accordance with the approved strategy of distribution
system operators.
RWE Distribuční služby
13
In 2009, emphasis will mainly be put on further improving the quality and efficiency of all services we
provide. special attention will be paid to the process of disconnecting non-paying customers and detecting
unauthorized offtake.
Network Documentation Department
The tasks of the Network Documentation Department are compiling and managing digital plans, including
technical, financial, and organizational information on gas facilities. Another activity is providing digital docu-
ments pertaining to gas facilities to third parties.
West and North Network Operation and Maintenance Department
The Network Operation and maintenance Department is responsible for the strategic and operational manage-
ment of the Company‘s activities relating to the operation and maintenance of gas facilities for sčP Net,
sTP Net, ZčP Net, včP Net and smP Net. These tasks mainly include conducting inspections, providing emer-
gency services, and rectifying failures in the distribution system. Based on the outcome of network inspec-
tions, the Network Operation and maintenance Department proposes modernization and modification plans
and participates in repair and reconstruction projects.
In 2008, the department inspected 53 transfer stations, 538 odorization stations, and 695 cathodic
protection stations.
The primary mission of the department is to provide high-quality network operation and maintenance services
and to ensure the safe functioning of the gas distribution system.
North Dispatching Department
The North Dispatching Department is responsible for dispatching management in the licensed gas distribu-
tion territories of smP Net and včP Net from regional centers in Ostrava and hradec Králové. The main tasks
of the department comprise monitoring and controlling the high-pressure section of the distribution network,
including transfer and regulation stations, and the continual reception of error reports through the 1239 tele-
phone line. In 2008, we received a total of 44,119 reports, where 12,831 of them were subsequently handled
by the emergency service staff. During the reported year, the dispatching centers carried out long-distance
monitoring of 598 transfer and regulation stations, where detected problems resulted in 1,548 interventions
by operation and maintenance staff, including actions taken in response to station failures caused by extraor-
dinary weather conditions (the Emma windstorm). In 2008, there were 90 cases of unplanned disruption of
distribution, mostly due to third-party pipeline damage, which resulted in 27 extraordinary shutdowns of gas
supplies to end customers.
mANAgEmENT REPORT fOR 2008
14
West Dispatching Department
The West Dispatching Department is responsible for dispatching services in the territory of three balancing
zones – sčP Net, ZčP Net and sTP Net. The department itself is located in three centers based in Ústí nad
labem, Pilsen, and Prague. The department‘s tasks correspond to the responsibilities of the North Dispatch-
ing Department. In 2008, the West Dispatching Department‘s 1239 emergency line received 27,749 reports,
where emergency service staff intervention was necessary in 12,775 cases. During the year under review,
the department monitored 997 regulation stations, where 535 problems required action by the operation
and maintenance staff.
In 2008, the most important change in the area of communication was the beginning of a rebranding process.
unifying all activities conducted by companies associated under the RWE group under a new trademark will
help create a uniform image and simplify market orientation for customers who purchase natural gas from
RWE. The new trademark is planned to be introduced in a gradual manner.
Throughout the reported year, the Company‘s communication activities mainly focused on providing informa-
tion and advice to end customers. The objective was to improve the safety of the operation of gas appliances
and offtake equipment.
Employees
The average employee headcount (full-time equivalent) in the Company in 2008 was 1,593 workers.
Wages
Wages developed in accordance with the Company‘s business strategy and the remuneration and salary
growth principles agreed under the Collective Agreement. In 2008, the average monthly wage was
CZK 27,554.
Employee Training and Career Development
In 2008, close attention was paid to employee training, obligatory legislative and gas-sector training in par-
ticular. In addition, we focused on improving language proficiency, management skills, technical abilities,
and IT knowledge, including the use of development centers and modern experience-based learning methods.
2.5 human Resources
RWE Distribuční služby
2.4 Communication Activities
15
The Company supported possibilities of increasing and deepening qualifications under part-time
study programs.
Employee Structure by Education (%) (31 December 2008)
Employees with a high potential to grow had the opportunity to participate in Perspectives, a two-year pro-
gram that flexibly responds to new trends in training for young managers. We have executed a pilot program
aimed at identifying and training external instructors and established close partnerships with selected schools
and universities.
Social Policy
The Company developed and supported its social program for employees. using the social Fund‘s personal
accounts, we disbursed contributions for individual recreation, cultural and sporting events, healthcare, and
education. The Company offered employees and their family members the possibility to use our own recrea-
tional facilities. We paid contributions for the employee retirement savings program. At the end of the year,
the Company provided employees with free vitamin packages and flu vaccination as part of the healthcare
Prevention Program.
IT services are outsourced to RWE Interní služby, a.s. The main IT activity in 2008 was a sAP ECC 6.0 upgrade
(sAP Classic, hR, Is-u, Is-u-BW). This project has been successfully completed.
The IT security policy has been fully implemented throughout the Company.
mANAgEmENT REPORT fOR 2008
Primary 3 %
Secondary 46 % 43 % Complete Secondary
8 % University
2.6 Information Technologies
16
Based on the outcome of the 2007 services project, mobile and IP telephony services were centralized under
the TElCO service in cooperation with RWE Interní služby, a.s.
As part of the Fenix project, central systems for organizational changes and workflow processes were defined
for the Company. We reviewed locally operated sW, where emphasis was put on its future optimization and
standardization. hW and sW requirements for the conduct of work tasks at individual workstations were
defined throughout the Company.
under the applicable contractual agreements (slA), the Company provides environmental protection services
to 13 RWE group member companies. The year under review was marked by defining basic processes, particu-
larly in the area of waste disposal and air protection.
In 2008, the Company began implementing the IsO 14 001 environmental management system and became
an active member of the Argus commission, which manages environmental management system implementa-
tion in all RWE group companies on a countrywide scale. The Company approved its environmental protection
policy in January 2008, subscribing to a proactive approach to the continuing alleviation of the impact of the
operation and maintenance of the natural gas distribution system on the environment. since environmental
protection is one of our main priorities, we have declared our determination not only to comply with legisla-
tive requirements, but also to improve the diffusion of information to our employees and to promote the use
of environment-friendly technologies. One of our objectives is passing the Company‘s positive attitude to
ecology on to our suppliers and creating conditions that enable them to protect the environment
to the maximum extent.
There were no extraordinary events relating to the operation and maintenance of the natural gas distribution
system, which would result in environmental damage. As part of three inspections conducted by state govern-
ment authorities, the companies for which the Company secures methodological environmental protection
management did not receive any fines.
On 27 January 2009, an extraordinary event occurred in the ZčP Net gas system. The DN 500, PN 40
sviňomazy – vřesová pipeline near the municipality of Křepkovice ruptured, causing a massive leak of natural
RWE Distribuční služby
2.7 Environmental Protection
2.8 subsequent Events
17
gas and a complete interruption of natural gas supplies in six municipalities with a total of 1,795 customers,
including 21 Key Account (Industrial) clients. The accident did not cause any injuries. In view of the serious-
ness and extent of the event, the distribution system operator, ZčP Net, declared a state of emergency in the
Karlovy vary Region on 28 January 2009.
Thanks to the professional and dedicated action of the Company‘s employees and excellent cooperation be-
tween the Karlovy vary Region Crisis staff, the individual components of the Integrated Rescue system,
and contractors, the consequences of the accident were rectified on 29 January 2009. On the same day, gas
supplies to all affected customers were restored, and the state of emergency was called off.
The Company‘s principal objective in 2009 will be completing the Fenix project and ensuring a gradual transi-
tion to the new organizational structure of the Network Operation and maintenance Department. Positive
effects of the restructuring process are expected already this year, namely improved quality of provided serv-
ices and cost savings. Emphasis will be put on completing the harmonization of all processes and activities
using comparison techniques and the implementation of best solutions.
As to relations with our most important partners – RWE group distribution system operators, attention will
mainly be paid to further improving processes and service level agreements (slA) with the aim to ensure full
conformity to all relevant standards in accordance with generally binding legal regulations, technical stand-
ards, and internal guidelines.
securing the reliable and secure operation of gas facilities and ensuring the safety and health protection of
our employees will remain our ongoing and most important task.
mANAgEmENT REPORT fOR 2008
2.9 Outlook
18
19fiNANCiAL PART
3. fiNANCiAL PART
BALANCE SHEET (in thousand Czech crowns)
31.12.2008 31.12.2007
Gross Provision Net Net
TOTAL ASSETS 592,481 (30,154) 562,327 74,630
B. Fixed assets 112,295 (21,569) 90,726 -
B. I. Intangible fixed assets 865 (197) 668 -
B. I. 3. software 450 (137) 313 -
6. Other intangible fixed assets 392 (60) 332 -
7. Intangible fixed assets in the course of construction 23 - 23 -
B. II. Tangible fixed assets 110,319 (21,372) 88,947 -
B. II. 2. Constructions 32 (1) 31 -
3. Equipment 79,697 (19,337) 60,360 -
7. Tangible fixed assets in the course of construction 84 - 84 -
9. Adjustment to acquired fixed assets 30,506 (2,034) 28,472 -
B. III. Long-term investments 1,111 - 1,111 -
B. III. 3. Other long-term investments in securities 1,111 - 1,111 -
C. Current assets 477,729 (8,585) 469,144 74,595
C. I. Inventories 11,502 (5,805) 5,697 -
C. I. 1. Raw materials 11,502 (5,805) 5,697 -
C. II. Long-term receivables 11,411 - 11,411 -
C. II. 1. Trade receivables 90 - 90 -
7. Other receivables 563 - 563 -
8. Deferred tax asset 10,758 - 10,758 -
C. III. Short-term receivables 454,634 (2,780) 451,854 78
C. III. 1. Trade receivables 112,485 (2,780) 109,705 -
2. Receivables - controlling entities / subsidiaries 304,111 - 304,111 -
6. Taxes and state subsidies receivable 0 - 0 78
7. short-term advances paid 1,765 - 1,765 -
8. Anticipated assets 36,023 - 36,023 -
9. Other receivables 250 - 250 -
C. IV. Financial assets 182 - 182 74,517
C. Iv. 1. Cash in hand 182 - 182 -
2. Cash at bank 0 - 0 74,517
D. I. Accruals and deferrals 2,457 - 2,457 35
D. I. 1. Prepaid expenses 2,294 - 2,294 35
3. Accrued revenue 163 - 163 -
3.1 Financial statements
20 RWE Distribuční služby
BALANCE SHEET – continued (in thousand Czech crowns)
31.12.2008 31.12.2007
TOTAL LIABILITIES AND EQUITY 562,327 74,630
A. Equity 146,648 73,899
A. I. Share capital 75,000 75,000
A. I. 1. share capital 75,000 75,000
A. I. Retained earnings (1,101) -
A. I. 2. Accumulated losses (1,101) -
A. V. Profit (loss) for the current period (+/-) 72,749 (1,101)
B. Liabilities 415,626 730
B. I. Provisions 95,090 -
B. I. 3. Income tax provision 38,710 -
4. Other provisions 56,380 -
Short-term liabilities 320,536 730
1. Trade payables 117,488 84
2. liabilities - controlling entities / subsidiaries - 308
5. liabilities to employees 43,926 192
6. liabilities for social security and health insurance 20,309 119
7. Taxes and state subsidies payable 40,355 26
8. short-term advances received 51,614 -
10. Anticipated liabilities 44,763 1
11. Other payables 2,081 -
C. I. Accruals and deferrals 53 1
C. I. 1. Accruals 53 1
21fiNANCiAL PART
INCOME STATEMENT (in thousand Czech crowns)
Accounting period
Year ended 31 December 2008
Period from 26 July to
31 December 2007
II. sales of production 2,229,140 -
II. 1. sales of own products and services 2,229,140 -
B. Cost of sales 1,287,932 428
B. 1. Raw materials and consumables 119,042 173
2. services 1,168,890 255
+ Added value 941,208 (428)
C. staff costs 755,212 658
C. 1. Wages and salaries 539,899 272
2. Emoluments of board members - 215
3. social security costs and health insurance costs 195,917 170
4. Other social costs 19,396 1
D. Taxes and charges 753 27
E. Depreciation of long-term assets 21,576 -
III. sale of long-term assets and raw materials 101 -
2. sale of raw materials 101 -
F. Net book value of long-term assets and raw materials sold 2,775 -
2. Net book value of raw materials sold 2,775 -
g. Increase / (decrease) in operating provisions 64,964 -
Iv. Other operating income 2,519 -
h. Other operating charges 5,769 -
* Operating result 92,779 (1,113)
x. Interest income 8,194 20
N. Interest expense 34 1
xI. Other financial income 19 -
O. Other financial expense 257 7
* Financial result 7,922 12
Q. Tax on profit or loss on ordinary activities 27,952 -
Q. 1. - current 38,710 -
2. - deferred (10,758) -
** Profit or loss on ordinary activities after taxation 72,749 (1,101)
*** Net profit (loss) for the financial period 72,749 (1,101)
*** Net profit (loss) before taxation 100,701 (1,101)
22 RWE Distribuční služby
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
Year ended 31 December 2008
Share capital CZK’000
Retained Earnings/(Accumulated losses)
CZK’000Total
CZK’000
As at 26 July 2007 500 - 500
Increase of share capital 74,500 - 74,500
Net loss for 2007 - (1,101) (1,101)
As at 31 December 2007 75,000 (1,101) 73,899
Net profit for 2008 - 72,749 72,749
As at 31 December 2008 75,000 71,684 146,648
23fiNANCiAL PART
CASH FLOw STATEMENT
Year ended 31 December 2008
Year ended 31 December 2008
CZK’000
Period from 26 July to 31 December 2007
CZK’000
Cash flows from operating activities
Net profit/(loss) on ordinary activities before tax 100,701 (1,101)
A.1 Adjustments for non-cash movements: 78,381 (19)
A.1.1 Depreciation and amortisation of fixed assets 21,576 -
A.1.2 Change in provisions 64,965 -
A.1.5 Net interest expense/(income) (8,160) (19)
A * Net cash flow from operating activities before tax, changes in working capital
179,082 (1,120)
A.2 Working capital changes: 287,182 310
A.2.1 Change in receivables and prepayments 46,348 (113)
A.2.2 Change in short-term payables and accruals 236,899 423
A.2.3 Change in inventories 3,935 -
A ** Net cash flow from operating activities before tax 466,264 (810)
A.3 Interest paid (34) (1)
A.4 Interest received 8,031 20
A *** Net cash flow from operating activities 474,261 (791)
Cash flows from investment activities
B.1 Acquisition of fixed assets (17,419) -
B *** Net cash flow from investment activities (17,419) -
Cash flows from financing activities
C.2 Changes in equity: - 75,000
C.2.1 Cash inflow from the increase of share capital - 75,000
C *** Net cash flow from financing activities - 75,000
Cash flows from purchase of part of a business (226,758) -
Net increase in cash and cash equivalents 230,084 74,209
Cash and cash equivalents as at the beginning of the year 74,209 -
Cash and cash equivalents as at the end of the year 304,293 74,209
24 RWE Distribuční služby
Year ended 31 December 2008
1 gENERAl INFORmATION
RWE Distribuční služby, s.r.o. (“the Company”) was incorporated on 26 July 2007 and has its registered office
at Brno, Plynárenská 499/1, ZIP 657 02, Czech Republic. The Company’s business activities are specialized
construction activities, preparation works for constructions and assembling, repairs, revisions and tests
of designated gas equipment, real estate administration and maintenance.
The Company’s ID number is 279 35 311.
The sole shareholder of the Company is RWE Transgas, a.s.
The Directors as at 31 December 2008 and 31 December 2007 were:
Appointed on
Tomáš Tichý 6 september 2007
Karel mazal 6 september 2007
Patrik Choleva resigned from his position of Director on 29 October 2008.
Dušan malý was appointed to the position of Director on 1 January 2009.
The Company is organised as follows:
Directors represent the statutory body that controls the Company’s activities and acts on behalf of the Company.
Administration of the Company is divided into three divisions: The Network services Division, Operations
and maintenance Division and services Division. These divisions are directly managed by Directors.
The Company is located in four competency centres in Brno, Ostrava, hradec Králové and Pilsen.
The Company ensures operation and maintenance of 44.9 thousand km of gas network, 2,327 regulatory sta-
tions and ensures administration of 1.7 million gas meters and other metering equipment.
3.2 Notes to Financial statements
25fiNANCiAL PART
The reason for incorporation of the Company was unification of rules, procedures and activities connected
with administration of gas property within the whole RWE group in the Czech Republic which is considered to
further improve the quality of services provided to customers and to achieve savings which could not be
accomplished by individual regional gas companies.
The main objective of the Company is to provide mainly technical services to gas distributors and regional gas
companies within RWE group in the Czech Republic. This concerns ensuring the operation and maintenance
of distribution networks, administration, construction and documentation of networks and metering.
2 PURCHASE OF PART OF A BUSINESS
As at 1 January 2008 the Company purchased part of the business – divisions of distribution - from individual
regional gas companies - severočeská plynárenská, a.s.; severomoravská plynárenská, a.s.; středočeská plyná-
renská, a.s.; východočeská plynárenská, a.s.; Západočeská plynárenská, a.s – in total amount
of CZK 226,758 thousand.
Assets and liabilities purchased by the Company as a part of a business were as at the purchase day recog-
nized in the accounting values that were taken from audited financial statement of the selling companies as at
31 December 2007.
Adjustment to acquired fixed assets is represented by the difference between the valuation of purchased part
of the business by using the discounted cash flow method and the aggregate carrying amount of assets and
liabilities acquired as recorded in the accounts of the selling companies.
26 RWE Distribuční služby
Assets and liabilities acquired as a part of a business:
Purchase of part of a business CZK’000
software 450
Other intangible fixed assets 392
Intangible assets in the course of construction 23
Intangible fixed assets 865
Constructions 32
Equipment 62,261
Tangible fixed assets 62,293
long-term investments in securities 1,111
Long-term investments 1,111
Fixed assets 64,269
Raw materials 15,437
Inventories 15,437
long-term advances paid 5
Other receivables 895
Long-terms receivables 900
Trade receivables 192,716
short-term advances paid 317
Anticipated assets 273
Other receivables 137
Short-term receivables 193,443
Current assets 209,780
Prepaid expenses 5,300
TOTAL ASSETS 279,349
Trade payables 27,976
liabilities to employees 34,232
short-term advances received 45
Anticipated liabilities 18,522
Short-term liabilities 80,775
Accruals 2,322
TOTAL LIABILITIES 83,097
ACCOUNTING VALUE OF PURCHASED PART OF A BUSINESS 196,252
Adjustment to acquired fixed assets 30,506
TOTAL VALUE OF PURCHASED PART OF A BUSINESS 226,758
27fiNANCiAL PART
3 ACCOUNTING POLICIES
3.1 Basis of preparation
The financial statements have been prepared in accordance with generally Accepted Accounting Principles
in the Czech Republic and have been prepared under the historical cost convention.
3.2 Intangible and tangible fixed assets
All intangible and tangible assets with a useful life longer than one year and a unit cost of more than
CZK 60 thousand (CZK 10 thousand) are treated as intangible and tangible fixed assets.
Purchased intangible and tangible fixed assets are recorded at cost, which includes all costs incurred in bring-
ing the assets to their present location and condition.
Intangible and tangible fixed assets are depreciated applying the straight-line method over their estimated
useful lives as follows:
software 4 years
Other intangible fixed assets 6–7 years
Constructions 30 years
machinery and equipment 3–15 years
The depreciation rates used differ from those allowable for taxation purposes.
A provision for impairment is established when the carrying value of an asset is greater than its estimated
recoverable amount.
Repairs and maintenance expenditures of tangible fixed assets are charged to expenses as incurred. Enhance-
ments of intangible and tangible fixed assets are capitalised.
Adjustment to acquired fixed assets represents the difference between the valuation of purchased part of
a business and the aggregate carrying amount of assets and liabilities acquired as recorded in the accounts of
the original owner. such differences are amortised on a straight-line basis over a period of 15 years.
3.3 Other securities and investments
The Company classifies securities and investments, other than investments in subsidiaries and associates as
trading, held-to-maturity or available-for-sale. Currently the Company holds only available for sale investments.
28 RWE Distribuční služby
securities and investments intended to be held for an indefinite period of time, which may be sold in response
to liquidity requirements, are classified as available-for-sale. These investments are included in non-current
assets unless management has the express intention of holding the investment for less than 12 months from
the balance sheet date, in which case they are included in current assets. management determines the appro-
priate classification of investments as at the time of purchase and the classification is reviewed on
a regular basis.
All securities and investments are initially recorded at cost, including transaction costs. held-to-maturity
investments are subsequently accounted for at amortised cost. Other investments are subsequently accounted
for at fair value. The fair value is determined as the market value of the securities as at the balance sheet date.
measurement of non-traded securities is based on management estimates based on recognised models or
valuation techniques.
3.4 Inventories
Inventories are stated at the lower of cost and net realisable amount. Cost includes the appropriate overheads
incurred to bring inventory to its present state and location (mainly transport costs etc.). The weighted aver-
age cost method is applied for all disposals.
A provision is created for slow-moving and obsolete inventory based on an analysis of turnover and individual
evaluation of inventories.
3.5 Receivables
Receivables are stated at nominal value less a provision for doubtful amounts. A provision for bad debts is
created on the basis of an ageing analysis and individual evaluation of the recoverability of the receivables.
Receivables from related parties have not been provided for.
3.6 Foreign currency translation
Transactions denominated in a foreign currency are translated and recorded at the rate of exchange ruling
as at the transaction date.
Cash, receivables and liabilities balances denominated in foreign currencies have been translated at the ex-
change rate published by the Czech National Bank as at the balance sheet date. All exchange gains and losses
on cash, receivables and liabilities balances are recorded in the income statement.
3.7 Revenue recognition
sales are recognised as at the date the services are rendered and are stated net of discounts and value Added Tax.
29fiNANCiAL PART
3.8 Provisions
Provisions are recognised when the Company has a present obligation, it is probable that an outflow of
resources will be required to settle the obligation, and a reliable estimate of the amount can be made. When
recognising provisions, the Company considers all predictable risks and potential losses.
3.9 Interest costs
All interest expenses are expensed.
3.10 Deferred taxation
Deferred tax is recognised on all temporary differences between the carrying amount of an asset or liability
in the balance sheet and its tax base. Deferred tax assets are recognised if it is probable that sufficient future
taxable profit will be available against which the assets can be utilised.
3.11 Related parties
The Company’s related parties are considered to be the following:
– shareholders, of which the Company is a subsidiary or an associate, directly or indirectly, and other subsidiar-
ies and associates of these shareholders; and/or
– members of the Company’s or parent company’s statutory and supervisory bodies and management
and parties close to such members, including entities in which they have a controlling or significant influence;
and/or
– subsidiaries and associates.
material transactions and outstanding balances with related parties are disclosed in Note 15.
3.12 Cash flow statement
The Company has prepared a cash flow statement following the indirect method. Cash equivalents represent
short-term liquid investments, which are readily convertible for a known amount of cash.
The Company uses so-called cash-pooling within the group. A receivable/ (liability) that arises from cash-pool-
ing is presented in the Cash Flow statement as a part of the item Cash and Cash equivalents.
3.13 Subsequent events
The effects of events, which occurred between the balance sheet date and the date of preparation of the
financial statements, are recognised in the financial statements in the case that these events provide further
evidence of conditions that existed as at the balance sheet date.
30 RWE Distribuční služby
Where significant events occur subsequent to the balance sheet date but prior to the preparation of the finan-
cial statements, which are indicative of conditions that arose subsequent to the balance sheet date, the effects
of these events are disclosed, but are not themselves recognised in the financial statements.
4 INTANGIBLE FIXED ASSETS
Cost
31 December 2007
CZK’000
Purchase of part of a business
1 January 2008CZK’000
Additions/transfersCZK’000
DisposalsCZK’000
31 December 2008
CZK’000
software - 450 - - 450
Other intangible fixed assets - 392 - - 392
Intangible fixed assets in the course of construction
- 23 - - 23
Total - 865 - - 865
Accumulated amortisation
31 December 2007
CZK’000
Purchase of part of a business
1 January 2008CZK’000
AdditionsCZK’000
DisposalsCZK’000
31 December 2008
CZK’000
software - - 137 - 137
Other intangible fixed assets - - 60 - 60
Total - - 197 - 197
Net book value - 865 668
5 TANGIBLE FIXED ASSETS
Cost
31 December 2007
CZK’000
Purchase of part of a business
1 January 2008CZK’000
Additions/transfersCZK’000
DisposalsCZK’000
31 December 2008
CZK’000
Buildings, halls and other constructions - 32 - - 32
Equipment - 62,261 17,443 (7) 79,697
Tangible fixed assets in the course of construction
- - 84 - 84
Adjustment to acquired fixed assets - 30,506 - - 30,506
Total - 92,799 17,527 (7) 110,319
31fiNANCiAL PART
Accumulated depreciation
31 December 2007
CZK’000
Purchase of part of a business
1 January 2008CZK’000
AdditionsCZK’000
DisposalsCZK’000
31 December 2008
CZK’000
Buildings, halls and other constructions - - 1 - 1
Equipment - - 19,344 (7) 19,337
Adjustment to acquired fixed assets - - 2,034 - 2,034
Total - - 21,379 (7) 21,372
Net book value - 92,799 88,947
The Company does not have any assets acquired via finance or operating lease.
6 OTHER SECURITIES AND INVESTMENTS
Other securities and investments are represented by 12 % share in Association for creation and use of a digital
technical map of the city of Pardubice.
7 INVENTORIES
Inventories as at 31 December 2008 consist in particular of spare parts for repairs of gas distribution system.
The Company created provision for inventories as at 31 December 2008 in the amount CZK 5,805 thousand.
The Company did not own any inventories as at 31 December 2007.
8 RECEIVABLES
Receivables outstanding have not been secured as at 31 December 2008 and none of them are due after 5
or more years.
Receivables – controlling entities/ subsidiaries as at 31 December 2008 represent cash equivalents from cash-
-pooling, see Note 18 Cash flow statement.
Anticipated assets as at 31 December 2008 are represented mainly by receivables from unbilled project prepa-
ration and realization of constructions in the amount of CZK 34,023 thousand.
32 RWE Distribuční služby
The overdue receivables as at 31 December 2008 amounted to CZK 11,759 thousand.
As at 31 December 2007 the Company did not have any overdue receivables.
The provision related to doubtful receivables as at 31 December 2008 was CZK 2,780 thousand
(2007: CZK 0 thousand).
9 EQUITY
The Company is fully owned by RWE Transgas, a.s., based in Praha 10, strašnice, limuzská 12/3135, 100 98,
identification number 264 60 815, registered in the Commercial Register kept with the Regional Court in
Praha, section B, insert 7240. The ultimate holding company is RWE Ag, with the seat in Opernplatz 1,
45128 Essen, incorporated in germany.
The loss of CZK 1,101 thousand for 2007 was approved and transferred by the decision of the sole shareholder
on 7 may 2008 to accumulated losses.
The statutory reserve fund is created from the profit of the Company according to law and may not be distrib-
uted to shareholders, but may be used to offset losses.
10 PROVISIONS
31 December 2008CZK’000
Income tax provision 38,710
Other provisions 56,380
Total provisions 95,090
Other provisions are represented by provision for restructuring in the amount of CZK 44,849 thousand, provi-
sion for untaken holiday of employees in the amount of CZK 10,050 thousand and provision for management’s
option share plan in the amount of CZK 1,481 thousand.
As at 31 December 2007 the Company did not have any provisions.
33fiNANCiAL PART
11 PAYABLES AND COMMITMENTS
Trade and other payables have not been secured over any assets of the Company and none of them are due
after 5 or more years.
Taxes and state subsidies payable as at 31 December 2008 are represented in particular by value added tax in
the amount of CZK 33,875 thousand (as at 31 December 2007: CZK 0 thousand).
short term advances received as at 31 December 2008 in the amount of CZK 51,614 thousand are represented
by items related to project preparation and realization of constructions (as at 31 December 2007:
CZK 0 thousand).
liabilities overdue were as at 31 December 2008 CZK 45,772 thousand (as at 31 December 2007:
CZK 0 thousand). The Company does not have any overdue payables related to social or health insurance or
any other overdue payables to tax authorities or other state institutions.
For liabilities with related parties see Note 15 Related party transactions and balances.
12 TAXATION
Income tax expense consists of the following:
2008CZK’000
Current tax expense (2008: 21%, 2007: 24%) 38,710
Deferred tax expense (10,758)
Total income tax expense 27,952
The Company did not have any tax obligation for the period from 26 July till 31 December 2007.
The deferred tax as at 31 December 2008 is calculated at 20% (the rate enacted for 2009) and 19% (the rate
enacted for 2010 and following) depending on the period of temporary differences expected reversal.
The Company did not have any deferred tax asset/liability at 31 December 2007.
34 RWE Distribuční služby
Deferred tax asset can be analysed as follows:
31 December 2008CZK’000
Deferred tax from:
– Accelerated tax depreciation of fixed assets (1,068)
– Provision for inventories and receivables 1,590
– Other provisions 10,236
Net deferred tax asset 10,758
13 REVENUE ANALYSIS
Revenue from operating activities (all domestic) has been generated as follows:
2008CZK’000
Revenues from sale of electricity 108
Revenues from services 2,229,032
Other operating revenues 2,519
Total 2,231,659
The major part of the Company’s revenues from services consists of revenues from inspection of regulatory
stations, repairs, maintenance of gas pipelines and gas fixtures.
Other operating revenues are represented mainly by write off of anticipated assets in the amount
of CZK 2,439 thousand.
The Company had no revenues for the period from 26 July to 31 December 2007.
14 EMPLOYEE ANALYSIS
Employee costs Average number of employees during the year
Year ended 31 December 2008
CZK’000
Period from 26 July to 31 December 2007
CZK’000
2008 2007
members of management 8,924 290 2 3
Other staff 746,288 368 1,591 10
Total 755,212 658 1,593 13
35fiNANCiAL PART
members of management are represented by Directors.
With the purchase of part of a business as at 31 January 2008 1,569 employees were transferred to the Com-
pany together with their rights and obligations resulting from their employment contract and further
77 employees were newly hired.
Other transactions with employees are described in Note 15 Related party transactions and balances.
15 RELATED PARTY TRANSACTIONS AND BALANCES
Year ended 31 December 2008
CZK’000
Period from 26 July to 31 December 2007
CZK’000
Costs:
RWE Transgas, a.s. 15,861 -
Regional gas companies 83,436 -
Other gas distribution companies 1,592 -
Other related companies within RWE group 505,390 -
Interest expense:
RWE Transgas, a.s. 34 -
Total 606,313 -
Revenues:
Regional gas companies 1,288 -
Other gas distribution companies 2,169,464 -
Other related companies within RWE group 6,052 -
Interest income:
RWE Transgas, a.s. 8,187 1
Total 2,184,991 1
36 RWE Distribuční služby
The following related party balances were outstanding as at:
31 December 2008CZK’000
31 December 2007CZK’000
Receivables
RWE Transgas, a.s. 304,111 -
Regional gas companies 373 -
Other gas distribution companies 98,486 -
Other related companies within RWE group 609 -
Accrued income
RWE Transgas, a.s. 163 -
Total receivables and accrued income 403,742 -
Payables
RWE Transgas, a.s. 4,614 337
Regional gas companies 8,377 7
Other gas distribution companies 496 -
Other related companies within RWE group 57,376 -
Total payables 70,863 344
Receivables and payables arose under standard market conditions.
Company cars are made available for use by Directors and other management. Total remuneration for Direc-
tors was CZK 654 thousand for the year ended 31 December 2008 (period from 26 July to 31 December 2007:
CZK 215 thousand). This remuneration is part of the staff costs.
16 FEES PAID AND PAYABLE TO THE AUDIT COMPANY
The information relating to the fees paid and payable for services performed by the audit company
PricewaterhouseCoopers Audit, s.r.o. is included in the annual report of the parent company RWE Ag
of the consolidation unit.
17 CONTINGENT LIABILITIES
The management of the Company is not aware of any significant unrecorded contingent liabilities
as at 31 December 2008.
37fiNANCiAL PART
18 CASH FLOW STATEMENT
Cash and cash equivalents disclosed in the cash flow statement can be analysed as follows:
31 December 2008CZK’000
31 December 2007CZK’000
Cash on hand and in transit 123 -
Cash in bank - 74,517
Cash equivalents included in short-term investments 59 -
Receivable/(liability) arising from cash-pooling 304,111 (308)
Cash and cash equivalents 304,293 74,209
19 RECENT VOLATILITY IN GLOBAL FINANCIAL MARKETS
The ongoing global economic recession which commenced in the middle of 2008 has resulted in, among other
things, a lower level of capital market funding, lower liquidity levels across the banking sector, and, at times,
higher interbank lending rates and very high volatility in stock markets.
management of the Company evaluated all information available and currently does not assume significant
impact of the economic recession on the Company`s business, specifically on liquidity and funding of the
Company. management of the Company believes it is taking all the necessary measures to support the sustain-
ability and growth of the Company’s business under the current circumstances.
20 SUBSEQUENT EVENTS
No events have occurred subsequent to year-end that would have a material impact on the financial state-
ments as at 31 December 2008.
2 march 2009
Tomáš Tichý Dušan Malý Executive, CEO Executive, CFO
38
39AUDiTOR‘s REPORT
4. AUDiTOR‘s REPORT
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDER OF RWE DISTRIBUčNí SLUžBY, S.R.O.
We have audited the accompanying financial statements of RWE Distribuční služby, s.r.o. (“the Company”), which
comprise the balance sheet as at 31 December 2008, the income statement, statement of changes in equity
and cash flow statement for the year then ended and notes, including a summary of significant accounting poli-
cies (“the financial statements”). Details of the Company are disclosed in note 1 to these financial statements.
Statutory Directors’ Responsibility for the Financial Statements
The statutory Directors are responsible for the preparation and fair presentation of the financial statements
in accordance with Czech accounting legislation. This responsibility includes: designing, implementing and
maintaining internal control relevant to the preparation and fair presentation of financial statements that are
free from material misstatement, whether due to fraud or error; selecting and applying appropriate account-
ing policies; and making accounting estimates that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with the Act on Auditors of the Czech Republic, International standards on Audit-
ing and the related application guidance of the Chamber of Auditors of the Czech Republic. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assur-
ance whether the financial statements are free from material misstatement.
PricewaterhouseCoopers Audit, s.r.o. registered seat Kateřinská 40/466, 120 00 Prague 2, Czech Republic, Identification Number: 40765521, regis-tered with the Commercial Register kept by the municipal Court in Prague, section C, Insert 3637, and in the Register of Audit Companies with the Chamber of Auditors of the Czech Republic under licence No 021.
© 2009 PricewaterhouseCoopers Audit, s.r.o. All rights reserved. “PricewaterhouseCoopers“ refers to the Czech firm of PricewaterhouseCoopers Audit, s.r.o. or, as the context requires, the network of member firms of PricewaterhouseCoopers International limited, each of which is a separate and independent legal entity.
4.1 Auditor‘s Report on the Financial statements
PricewaterhouseCoopers Audit, s.r.o.Kateřinská 40/466120 00 Praha 2česká republikaTelefon +420 251 151 111Fax +420 251 156 111
40 RWE Distribuční služby
Shareholder of RwE Distribuční služby, s.r.o.
Independent auditor’s report
Auditor’s Responsibility (continued)
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the Company’s preparation and fair presenta-
tion of the financial statements in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit
also includes evaluating the appropriateness of the accounting policies used and the reasonableness of account-
ing estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Company
as at 31 December 2008, its financial performance and its cash flows for the year then ended in accordance
with Czech accounting legislation.
2 march 2009
PricewaterhouseCoopers Audit, s.r.o.represented by
Václav Prýmek Petr ŠobotníkDirector Auditor, licence No. 113
Note: Our report has been prepared in Czech and in English. In all matters of interpretation of information, views or opinions, the Czech version of our report takes precedence over the English version.
41AUDiTOR‘s REPORT
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDER OF RWE DISTRIBUčNí SLUžBY, S.R.O.
We have audited financial statements of RWE Distribuční služby, s.r.o. (“the Company”) for the year ended 31 December 2008 disclosed in the annual report in chapter 3 and issued the opinion dated 2 march 2009 and disclosed in chapter 4.
Report on the Annual ReportWe have verified that the other information included in the annual report of the Company for the year ended 31 December 2008 is consistent with the financial statements referred to above. The statutory directors are re-sponsible for the accuracy of the annual report. Our responsibility is to express an opinion on the consistency of the annual report with the financial statements based on our verification procedures.
Auditor’s ResponsibilityWe conducted our verification procedures in accordance with the International standards on Auditing and the related application guidance of the Chamber of Auditors of the Czech Republic. Those standards require that we plan and perform the verification procedures to obtain reasonable assurance about whether the other information included in the annual report which describes matters that are also presented in the financial statements is, in all material respects, consistent with the relevant financial statements. We believe that the verification procedures performed provide a reasonable basis for our opinion.
OpinionIn our opinion, the other information included in the annual report of the Company for the year ended 31 December 2008 is consistent, in all material respects, with the abovementioned financial statements.
PricewaterhouseCoopers Audit, s.r.o., registered seat Kateřinská 40/466, 120 00 Prague 2, Czech Republic, Identification Number: 40765521, registered with the Commercial Register kept by the municipal Court in Prague, section C, Insert 3637, and in the Register of Audit Companies with the Chamber of Auditors of the Czech Republic under licence No 021.
© 2009 PricewaterhouseCoopers Audit, s.r.o. All rights reserved. "PricewaterhouseCoopers" refers to the Czech firm of PricewaterhouseCoopers Audit, s.r.o. or, as the context requires, the network of member firms of PricewaterhouseCoopers International limited, each of which is a separate and independent legal entity.
4.2 Auditor‘s Report on the Annual Report and the Report on Relations between Related Parties
PricewaterhouseCoopers Audit, s.r.o.Kateřinská 40/466120 00 Praha 2česká republikaTelefon +420 251 151 111Fax +420 251 156 111
42 RWE Distribuční služby
Shareholder of RwE Distribuční služby, s.r.o.Independent auditor’s report
Report on review of the Report on RelationsIn addition we have also reviewed the accompanying report on relations between the Company and its con-trolling party and between the Company and the other persons controlled by the same controlling party for the year ended 31 December 2008 (the “Report”). The completeness and accuracy of the Report is the respon-sibility of the statutory Directors of the Company. Our responsibility is to review the accuracy of information included in the Report.
Scope of ReviewWe conducted our review in accordance with the International standard on Review Engagements 2410 and related application guidance of the Chamber of Auditors of the Czech Republic for review of the report on relations. These standards require that we plan and perform the review to obtain moderate assurance as to whether the Report is free of material misstatement. A review is limited primarily to inquiries of Company per-sonnel, analytical procedures and examination, on a test basis, of factual accuracy of data. A review therefore provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.
ConclusionBased on our review, nothing has come to our attention that causes us to believe that the accompanying Report has not been properly prepared, in all material respects, in accordance with the requirements of Article 66a of the Commercial Code.
16 march 2009
PricewaterhouseCoopers Audit, s.r.o.represented by
Václav Prýmek Petr ŠobotníkDirector Auditor, licence No. 113
Translation note: This version of our report is a translation from the original, which was prepared in Czech. All possible care has been taken to ensure that the translation is an accurate representation of the original. however, in all matters of interpretation of information, views or opinions, the Czech version of our report takes precedence over this translation.
43RWE DisTRibUčNí sLUžby, s.R.O. REPORT ON RELATiONs bETWEEN
RELATED PARTiEs As AT 31 DECEmbER 2008
5. RWE DisTRibUčNí sLUžby, s.R.O. REPORT ON RELATiONs bETWEEN RELATED PARTiEs As AT 31 DECEmbER 2008
Whereas RWE Distribuční služby, s.r.o. (“Company“) has not entered into a controlling contract as a controlled
entity that would be in effect during 2008, the Company has compiled this report on relations between the
Company and controlling parties and between the Company and other parties controlled by the same control-
ling parties (“related parties“) for 2008, insofar as such persons are known to the Company. The report was
compiled in accordance with section 66a(9) of Act No. 513/1991 Coll., the Commercial Code, as amended. The
report constitutes an integral part of the Company‘s Annual Report for 2008, and the Company‘s members will
have the report available at the same time and under the same conditions as the annual financial statements.
1. Controlling Parties
Throughout the last fiscal reporting period, the Company was controlled by the following parties:
a) Directly
– RWE Transgas, a.s., with its registered office at limuzská 12/3135, 100 98 Prague 10, Company
No. 26460815, was the sole member of the Company, and it was directly controlled by its shareholder –
RWE gas International B.v.
b) Indirectly
– RWE gas International B.v. with its registered office at Diamantlaan 15, 2132 Wv hoofddorp,
Kingdom of the Netherlands was the sole shareholder of RWE Transgas, a.s.,
– RWE Energy Aktiengesellschaft (“RWE Energy Ag“) with its registered office at Rheinlanddamm 24,
44139 Dortmund, Federal Republic of germany which was the sole member of RWE gas International B.v.,
and
– RWE Aktiengesellschaft (“RWE Ag“) with its registered office at Opernplatz 1, 45128 Essen,
Federal Republic of germany, was the sole shareholder of RWE Energy Ag.
2. Other Related Parties
The Company has requested the above listed controlling parties to provide a list of other parties that were
controlled by the same controlling parties in the last fiscal reporting period. The present report was compiled
by the Company based on information provided by the controlling parties and other available information.
The ties and the controlling structure between companies within the RWE group as at 31 December 2008 are
shown on the third page of the cover of this Annual Report.
3. Contracts Signed by the Company and Related Parties, Services Rendered, and Payments Received
In the last fiscal reporting period, the Company and related parties signed the contracts listed in Annex No. 1.
The Company has not incurred any damage by performing these contracts, including contracts signed in
preceding accounting periods. For this reason, there was no need to secure compensation for damage or enter
into any agreements to this effect. The value of services rendered and payments made between related parties
in the last fiscal reporting period is specified in Note 15 of the Notes to the Financial statements as
at 31 December 2008.
44
4. Other Legal Acts Completed in the Interest of Related Parties
On 1 January 2008, Agreements on sale of Part of Enterprise came into effect, under which the Company
acquired a part of the enterprise (Asset services) of individual regional gas companies: severočeská plynáren-
ská, a.s., severomoravská plynárenská, a.s., středočeská plynárenská, a.s., východočeská plynárenská, a.s.,
and Západočeská plynárenská, a.s.
5. Measures Adopted or Implemented in the Interest or at the Request of Related Parties
During the last fiscal reporting period, the Company did not adopt or implement any measures in the interest
or at the request of related parties.
6. Non-Existence of Damage
In the last fiscal reporting period, the Company incurred no damage under contracts with related parties,
other legal acts completed in the interest of related parties, or measures carried out in the interest or at the
request of such parties, which were executed or adopted prior to the past fiscal period.
7. Confidentiality
This report does not contain any information that would constitute the Company‘s trade secret.
8. Summary
This report was compiled and approved by the Company‘s executives on 16 march 2009, and it has been
presented for examination to the Company‘s auditor who reviews the financial statements in accordance with
the law.
Brno, 16 march 2009
Ing. Tomáš Tichý Ing. Dušan Malý Ing. Karel MazalExecutive, CEO Executive, CFO Executive, COO
RWE Distribuční služby
45
ANNEX NO. 1
Contracts Signed between the Company and Related Parties in the Last Accounting Period
Contracting party Contract type/subject matter Quantity
RWE Transgas, a.s. marketing services Agreement 1
Annexes No. 1 and 2 to marketing services Agreement 2
Public Relations services Agreement 2
Insurance Premium Payment Agreement 1
slA Access Agreement 1
slA Consulting – P & O services Agreement 1
Annex No. 1 to slA Consulting - P & O services Agreement 1
Non-Disclosure Agreement 1
RWE Transgas Net, s.r.o. Argus Consulting services Agreement 1
RWE Interní služby, a.s. Transport services Agreement 1
Annex No. 1 to Transport services Agreement 1
Facility management services Agreement 1
Annex No. 1 to Facility management services Agreement 1
Purchasing and logistics services Agreement 1
Annex No. 1 to Purchasing and logistics services Agreement 1
security management services Agreement 1
Annex No. 1 to security management services Agreement 1
Information Technology services Agreement 1
Annexes No. 1 and 2 to Information Technology services Agreement 2
Central Payroll Processing services Agreement 1
Annex No. 1 to Central Payroll Processing services Agreement 1
mobile Telephone and IP Telephone lease, logistics, and Billing services Agreement 1
Annexes No. 1 and 2 to mobile Telephone and IP Telephone lease, logistics, and Billing services Agreement
2
vehicle Fleet maintenance services Agreement 1
Annex No. 1 to vehicle Fleet maintenance services Agreement 1
RWE Zákaznické služby, s.r.o. security management services Agreement 1
Annex No. 1 to security management services Agreement 1
RWE Plynoprojekt, a.s. master Work Agreement – Regular Annual servicing and Error Rectification at Děhylov, Štramberk, Třanovice, and lobodice Central Odorization stations
1
Jihomoravská plynárenská, a.s. Commercial lease Agreement 1
Annex No. 1 to Commercial lease Agreement 1
RWE DisTRibUčNí sLUžby, s.R.O. REPORT ON RELATiONs bETWEEN
RELATED PARTiEs As AT 31 DECEmbER 2008
46
Contracting party Contract type/subject matter Quantity
JmP Net, s.r.o. security management services Agreement 1
Annexes No. 1 and 2 to security management services Agreement 2
severočeská plynárenská, a.s. security management services Agreement 1
Commercial lease Agreement 1
Annex No. 1 to Commercial lease Agreement 1
sčP Net, s.r.o. human Resources services Agreement 1
Annex No. 1 to human Resources services Agreement 1
Technical Dispatching services Agreement 1
Annexes No. 1, 2, and 3 to Technical Dispatching services Agreement 3
gas Facility Construction services Agreement 1
Annexes No. 1, 2, and 3 to gas Facility Construction services Agreement 3
gas Facility Construction Planning services Agreement 1
Annexes No. 1, 2, and 3 to gas Facility Construction Planning services Agreement 3
Agreement on gas Facility Construction supervision services for Third-Party Investors 1
Annexes No. 1, 2, and 3 to Agreement on gas Facility Construction supervision services for Third-Party Investors
3
Network Operation and maintenance services Agreement 1
Annexes No. 1, 2, and 3 to Network Operation and maintenance services Agreement 3
gas Asset Operations management services Agreement 1
Annexes No. 1, 2, and 3 to gas Asset Operations management services Agreement 3
Network Documentation services Agreement 1
Annexes No. 1, 2, and 3 to Network Documentation services Agreement 3
metering services Agreement 1
Annexes No. 1, 2, 3, and 4 to metering services Agreement 4
security management services Agreement 1
Annexes No. 1 and 2 to security management services Agreement 2
severomoravská plynárenská, a.s. Annex No. 1 to Agreement on sale of Part of Enterprise 1
security management services Agreement 1
Purchase Agreement – Office Equipment 1
Commercial lease Agreement 1
Annex No. 1 to Commercial lease Agreement 1
RWE Distribuční služby
47
Contracting party Contract type/subject matter Quantity
smP Net, s.r.o. Annexes No. 1, 2, and 3 to Technical Dispatching services Agreement 3
Annexes No. 1, 2, and 3 to gas Facility Construction services Agreement 3
Annexes No. 1, 2, and 3 to gas Facility Construction Planning services Agreement 3
Annexes No. 1, 2, and 3 to Agreement on gas Facility Construction supervision services for Third-Party Investors
3
Annexes No. 1, 2, and 3 to Network Operation and maintenance services Agreement 3
Annexes No. 1, 2, and 3 to gas Asset Operations management services Agreement 3
Annexes No. 1, 2, and 3 to Network Documentation services Agreement 3
Annexes No. 1, 2, 3, and 4 to metering services Agreement 4
security management services Agreement 1
Annexes No. 1 and 2 to security management services Agreement 2
středočeská plynárenská, a.s. security management services Agreement 1
Commercial lease Agreement 1
Annex No. 1 to Commercial lease Agreement 1
Commercial sublease and services Agreement 1
Annex No. 1 to Commercial sublease and services Agreement 1
sTP Net, s.r.o. Technical Dispatching services Agreement 1
Annexes No. 1, 2, and 3 to Technical Dispatching services Agreement 3
gas Facility Construction services Agreement 1
Annexes No. 1, 2, and 3 to gas Facility Construction services Agreement 3
gas Facility Construction Planning services Agreement 1
Annexes No. 1, 2, and 3 to gas Facility Construction Planning services Agreement 3
Agreement on gas Facility Construction supervision services for Third-Party Investors 1
Annexes No. 1, 2, and 3 to Agreement on gas Facility Construction supervision services for Third-Party Investors
3
Network Operation and maintenance services Agreement 1
Annexes No. 1, 2, and 3 to Network Operation and maintenance services Agreement 3
gas Asset Operations management services Agreement 1
Annexes No. 1, 2, and 3 to gas Asset Operations management services Agreement 3
Network Documentation services Agreement 1
Annexes No. 1, 2, and 3 to Network Documentation services Agreement 3
metering services Agreement 1
Annexes No. 1, 2, 3, and 4 to metering services Agreement 4
security management services Agreement 1
Annexes No. 1 and 2 to security management services Agreement 2
RWE DisTRibUčNí sLUžby, s.R.O. REPORT ON RELATiONs bETWEEN
RELATED PARTiEs As AT 31 DECEmbER 2008
48
Contracting party Contract type/subject matter Quantity
východočeská plynárenská, a.s. security management services Agreement 1
Commercial lease Agreement 1
Annex No. 1 to Commercial lease Agreement 1
Commercial sublease Agreement 1
Annex No. 1 to Commercial sublease Agreement 1
včP Net, s.r.o. Annexes No. 1, 2, and 3 to Technical Dispatching services Agreement 3
Annexes No. 1, 2, and 3 to gas Facility Construction services Agreement 3
Annexes No. 1, 2, and 3 to gas Facility Construction Planning services Agreement 3
Annexes No. 1, 2, and 3 to Agreement on gas Facility Construction supervision services for Third-Party Investors
3
Annexes No. 1, 2, and 3 to Network Operation and maintenance services Agreement 3
Annexes No. 1, 2, and 3 to gas Asset Operations management services Agreement 3
Annexes No. 1, 2, and 3 to Network Documentation services Agreement 3
Annexes No. 1, 2, 3, and 4 to metering services Agreement 4
security management services Agreement 1
Annexes No. 1 and 2 to security management services Agreement 2
Západočeská plynárenská, a.s. security management services Agreement 1
Commercial lease Agreement 1
Annex No. 1 to Commercial lease Agreement 1
RWE Distribuční služby
49
Contracting party Contract type/subject matter Quantity
ZčP Net, s.r.o. Technical Dispatching services Agreement 1
Annexes No. 1, 2, and 3 to Technical Dispatching services Agreement 3
gas Facility Construction services Agreement 1
Annexes No. 1, 2, and 3 to gas Facility Construction services Agreement 3
gas Facility Construction Planning services Agreement 1
Annexes No. 1, 2, and 3 to gas Facility Construction Planning services Agreement 3
Agreement on gas Facility Construction supervision services for Third-Party Investors 1
Annexes No. 1, 2, and 3 to Agreement on gas Facility Construction supervision services for Third-Party Investors
3
Network Operation and maintenance services Agreement 1
Annexes No. 1, 2, and 3 to Network Operation and maintenance services Agreement 3
gas Asset Operations management services Agreement 1
Annexes No. 1, 2, and 3 to gas Asset Operations management services Agreement 3
Network Documentation services Agreement 1
Annexes No. 1, 2, and 3 to Network Documentation services Agreement 3
metering services Agreement 1
Annexes No. 1, 2, 3, and 4 to metering services Agreement 4
security management services Agreement 1
Annexes No. 1 and 2 to security management services Agreement 2
Agreement on Assignment of Rights and Obligations 1
RWE DisTRibUčNí sLUžby, s.R.O. REPORT ON RELATiONs bETWEEN
RELATED PARTiEs As AT 31 DECEmbER 2008
50 RWE Distribuční služby
Ag Aktiengesellschaft (public limited company)
a.s. Public limited company
hR human Resources
hW hardware
Ič Company No.
IP Internet protocol
Is-u Customer Information system
IT Information technology
slA service level Agreement
s.r.o. limited liability company
sW software
vTl high pressure (pressures up to 4 mPa)
sčP Net sčP Net, s.r.o.
smP Net smP Net, s.r.o.
sTP Net sTP Net, s.r.o.
včP Net včP Net, s.r.o.
ZčP Net ZčP Net, s.r.o.
AbbREviATiONs UsED
Scheme of the relations between and control of companies along the relevant line within the RWE Group
as at 31 December 2008
RWE Aktiengesellschaft 100.00% RWE Energy Aktiengesellschaft 1.00% RWE Energy hungária Tanácsadó Kft. 100.00% RWE gas International B.v. 100.00% RWE Transgas, a.s. 100.00% RWE Transgas Net, s.r.o. 100.00% RWE gas storage, s.r.o. 100.00% RWE Interní služby, a.s.* 100.00% RWE Distribuční služby, s.r.o. 100.00% RWE Zákaznické služby, s.r.o. 100.00% RWE Plynoprojekt, a.s.* 100.00% RWE Key Account CZ, s.r.o. 100.00% RWE gas slovensko, s.r.o. 100.00% gasnet, s.r.o. v likvidaci 18.09% severomoravská plynárenská, a.s. 2.95% východočeská plynárenská, a.s. 2.46% Jihomoravská plynárenská, a.s. 100.00% severočeská plynárenská, a.s. 100.00% sčP Net, s.r.o. 100.00% Západočeská plynárenská, a.s. 100.00% ZčP Net, s.r.o. 100.00% středočeská plynárenská, a.s. 100.00% sTP Net, s.r.o. 63.62% východočeská plynárenská, a.s. 100.00% včP Net, s.r.o. 49.64% severomoravská plynárenská, a.s. 100.00% smP Net, s.r.o. 52.25% gAsFINAl, a.s. 47.66% Jihomoravská plynárenská, a.s. 100.00% JmP Net, s.r.o. 47.75% gAsFINAl, a.s. 100.00% českomoravská plynárenská, a.s. - v likvidaci 100.00% RWE Energy Nederland N.v. 99.00% RWE Energy hungária Tanácsadó Kft.
* As from 1 January 2009 the legal form of this company was changed from a public limited company to a limited liability company
RWE Distribuční služby, s.r.o.
Plynárenská 499/1657 02 Brno
T +420 532 221 111F +420 545 578 571E [email protected] www.rwe.cz