Alpiq Group results of operations

In financial terms, Alpiq's first year of operations was impacted by three major factors: the integration of the combined Atel, EOS and EDF (Swiss) operations, the global financial and economic crisis, and the rulings and requirements of the Swiss Federal Electricity Commission (ElCom). While the merger of the businesses of Atel, EOS and EDF (Swiss) will generate enormous potential and opportunities in the medium term, we had to contend with considerable integration costs in the short term. With the financial and economic crisis, and the ensuing negative effects on energy demand, energy prices and market liquidity, our business development was constrained and adversely affected in a variety of ways. And lastly, the ElCom interventions and directives had the effect of reducing Alpiq's earnings by well over CHF 50 million in comparison with previous years.

Against this backdrop, the Alpiq Group generated consolidated revenue of CHF 14.8 billion, a year-on-year decrease of 7.4 %. With EBITDA at CHF 1,545 million and EBIT at CHF 1,064 million, operating profits were down on the comparative prior year levels (CHF 1,627 million and CHF 1,147 million), but nonetheless came in ahead of expectations considering the tense economic climate.

This performance was primarily driven by the positive contributions from energy trading and sales in Switzerland, Western Europe and the southern part of Central Europe. Added to this, power generation in Switzerland and Central Europe outpaced expectations. Another boost came from the investment returns on the decommissioning and nuclear waste disposal funds for nuclear power stations. Conversely, as mentioned above, our results were negatively impacted by the integration costs, declining demand for energy, significantly lower prices and margins, reduced market liquidity and the costs of ancillary services. The Energy Services segment managed to offset the effects of the adverse economic conditions in part by working off the high backlog of orders on hand but, despite its good performance, was unable to match the record figures posted a year earlier.

On a like-for-like basis, excluding the effects of exchange rate movements and changes in the consolidated Group during the year, EBITDA was down by 4.1 % and EBIT by 5.9 %.

Net finance costs improved by 23.7 % year on year. Exchange rates of the principal currencies for Alpiq remained constant on balance over 2009, following the negative impact of the strong Swiss franc on foreign currency translation in the previous year. In contrast, the efforts of various European governments to extend the tax base left their mark, resulting in a 12 % increase in tax expense despite lower pre-tax profit.

Coming in at CHF 676 million, Alpiq's reported Group profit for the year was CHF 56 million or 7.7 % lower than a year earlier. On a like-for-like basis, excluding changes in the consolidated Group and the effects of foreign currency translation, the decline was CHF 42 million or 5.7 %.