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Annual report 2019 GridServices, s.r.o.
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Annual report 2019 GridServices, s.r.o.
2019
Total sales (CZK m) 4,029
EBITDA (CZK m) 1,232
Operating result (CZK m) 1,174
Profit before taxation (CZK m) 1,176
Profit after taxation (CZK m) 946
Investments (CZK m) 130
Number of employees (FTE) 2,038
Wherever used in the text, the term Company refers to GridServices, s.r.o.
Abbreviations used
OHS Occupational Health and Safety
CAS Czech Accounting Standards
CEO Chief Executive Officer
LTIF lost time injury frequency
EBITDA Earnings before Interest, Taxes, Depreciations and Amortization Charges
a.s. Public limited company
s.r.o. Limited liability company
the innogy Group the innogy Group in the Czech Republic
GasNet GasNet, s.r.o.
GridServices GridServices, s.r.o.
KPI Key performance indicator
the RWE Group entities within RWE AG concern
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Annual report 2019 GridServices, s.r.o.
TABLE OF CONTENTS
1 Statement by the Executive Director ............................................................................................... 4
2 Corporate Information ..................................................................................................................... 5
2.1 General Information .................................................................................................................... 5
2.2 Governing Bodies ......................................................................................................................... 6
2.3 Persons Responsible for the Annual Report and Audit of the Financial Statements ................... 7
3 2019 Management Report............................................................................................................... 8
3.1 Results ......................................................................................................................................... 8
3.2 Business Activities ........................................................................................................................ 8
3.3 Communication ......................................................................................................................... 11
3.4 Human Resources ...................................................................................................................... 11
3.5 Occupational Health and Safety ................................................................................................. 12
3.6 Outlook ...................................................................................................................................... 13
3.7 Subsequent Events .................................................................................................................... 14
4 Financial part ................................................................................................................................. 15
4.1 Financial Statements and Notes to the Financial Statements .................................................... 15
4.2 Notes to the Financial Statements ............................................................................................. 20
5 Independent auditor’s report ........................................................................................................ 33
6 GridServices, s.r.o., Report on Related Party Transactions in the Year Ended 31 December 2019 36
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Annual report 2019 GridServices, s.r.o.
1 Statement by the Executive Director
Ladies and Gentlemen,
A look back on 2019 cannot but start with mentioning an important milestone – a change
in the Company's ownership structure. A consortium of investors headed by Macquarie Infrastructure
and Real Assets (MIRA), which includes British Columbia Investment Management Corporation (BCI)
and Allianz Capital Partners, representing Allianz Group insurance companies, increased its stake in
innogy Grid Holding, a.s., (currently Czech Grid Holding), and consequently its subsidiary GridServices,
s.r.o., to 100%.
The transaction terminated our membership in the innogy Group. We began a process of building
a strong, autonomous, and fully independent servicing company catering to the gas sector.
The investors' interest in buying into the Company testifies to the fact that our business is attractive
to major strong global players. Likewise, it guarantees continuity and symbolizes the culmination
of a partnership of more than six years. As in previous years, our clear priority in 2019 was providing
top-level, professional services to the Distribution System Operator, GasNet, s.r.o.
We succeeded in maintaining a high level of services throughout the reported year. That made
a considerable contribution to the reliable, safe, and economical operation of the gas distribution
system. One of the areas where our focus concentrated was occupational safety. A fundamental pillar
of our business, employees' health is our number one priority. We mainly placed emphasis
on preventing workplace injuries sustained during pedestrian activities and on reducing the risk of traffic
accidents. We successfully deepened cooperation with contractors with regard to occupational safety.
Throughout 2019, GridServices continued to enlarge and improve the portfolio of services for end users
of natural gas. We were very active in providing consulting and brokering furnace subsidies, thanks
to which a highly positive trend was recorded as regards the restoration of gas supply to dormant service
lines. All our services were offered via new online applications, where we are committed to enlarging
the service portfolio with a view to reinforcing the status of natural gas on the energy market.
To conclude, I want to thank all employees and partners for their responsible and conscientious attitude
to work and a job well done. I am certain that their proactive attitude to day-to-day duties will continue
to increase the importance of natural gas.
Likewise, I trust that as in previous years, we will together meet our ambitious objectives in 2020.
Martin Gebauer
Chairman of the Executive Directors
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Annual report 2019 GridServices, s.r.o.
2 Corporate Information
2.1 General Information
Business Name: GridServices, s.r.o.
Registered Office: Plynárenská 499/1
602 00 Brno
Company No.: 279 35 311
Legal Form: Limited liability company
Establishment
The Company was established on 26 July 2007 and is registered under Reg. No. C 57165
in the Commercial Register maintained by the Brno Regional Court. The sole member of the Company
is Czech Grid Holding, a.s., a company with registered office at Limuzská 3135/12, 100 98
Prague 10 – Strašnice, Company No. 243 10 573. The Company has a registered capital
of CZK 75,000,000.
Objects of Business
1. Lease of real estate, residential property, and commercial property.
2. Generation of electricity.
3. Provision of services in the area of occupational health and safety.
4. Accounting consultancy, bookkeeping, and tax administration services.
5. Technical and organizational services in the area of fire safety.
6. Construction, reconstruction, and demolition of structures.
7. Construction design.
8. Installation, repair, inspection, and testing of electrical equipment.
9. Assembly, repair, inspection, and testing of gas equipment and gas vessel filling.
10. Manufacture, trading, and services other than listed in Annexes 1 to 3 to the Trades Licensing Act.
11. Geological works.
12. Land surveying.
13. Design of structures and equipment for mining work.
14. Manufacture, installation, and repair of electric machines and instruments and of electronic
and telecommunication equipment.
15. Chimney maintenance.
16. Production and distribution of heat not subject to licensing using heat production units
with an installed capacity in excess of 50 kW per unit.
Company Profile
GridServices is responsible for the operation and maintenance of the gas assets and distribution system
operated by GasNet, including management, document administration, measurement of consumption
and quality of natural gas, and customer connection and disconnection. In addition, the Company
provides engineering services for infrastructure construction and reconstruction projects. The Company
has its registered office in Brno and operates in all regions of the Czech Republic. The Company has been
conducting business as an independent entity since 1 January 2008.
Foreign Branch or Division
The Company has no branch or division abroad.
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Annual report 2019 GridServices, s.r.o.
2.2 Governing Bodies
Executive Directors of GridServices, s.r.o. in the Year Ended 31 December 2019
Martin Gebauer
Chairman of the Executive Directors
Date of birth:
4 November 1969
Education:
Brno Technical University, Faculty of Civil Engineering
City University London
Other business activities:
None
Pavel Káčer
Executive Director
Date of birth:
29 June 1958
Education:
Brno Technical University, Faculty of Mechanical Engineering
Other business activities:
None
Dušan Malý
Executive Director
Date of birth:
21 March 1974
Education:
University of Economics, Prague, Faculty of Finance and Accounting
MBA, ESCP-EAP, Berlin
Other business activities:
None
Changes in the Company's Governing Body in 2019
Czech Grid Holding, a.s., the sole member exercising the powers of the General Meeting, amended
the Company's Memorandum of Association on 30 September 2019, increasing the number of Executive
Directors to three. Further, effective as of 30 September 2019, the sole member appointed Martin
Gebauer and Dušan Malý as Executive Directors. The Executive Directors elected Martin Gebauer
as the Chairman of the Executive Directors effective as of 7 October 2019.
Czech Grid Holding, a.s., the sole member exercising the powers of the General Meeting, approved
the revocation of procuration granted to Radek Starý, David Fojtík, Petr Báča, and Dagmar Ledererová
effective as of 24 October 2019.
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Annual report 2019 GridServices, s.r.o.
2.3 Persons Responsible for the Annual Report and Audit of the Financial
Statements
Auditor and Audit Firm Responsible for Auditing the Financial Statements for 2019
Audit firm:
PricewaterhouseCoopers Audit, s.r.o.
represented by Václav Prýmek acting under power of attorney
Hvězdova 1734/2c, 140 00 Prague 4
Registered in the Register of Audit Firms of the Chamber of Auditors of the Czech Republic, Registration
No. 021
Auditor in Charge:
Danuše Polívková
Statutory Auditor, Registration No. 2462
Prague, dated 17 March 2020
Person Responsible for Accounting
Lucie Čejková
Chief Accountant
Executive Directors Responsible for the 2019 Annual Report
We, the undersigned, hereby certify that information disclosed in this Annual Report is true and that no
facts of material importance have been omitted or misrepresented.
Martin Gebauer Dušan Malý
Chairman of the Executive Directors Executive Director
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Annual report 2019 GridServices, s.r.o.
3 2019 Management Report
3.1 Results
Revenues, Expenses, Profit
In 2019, earnings before taxes amounted to CZK 1,176,372 thousand, and the Company recorded
CZK 946,400 thousand in profit after taxes.
In 2019, income from the sale of own products and services amounted to CZK 4,028,368 thousand
and mainly consisted of CZK 3,902,029 thousand in proceeds from services provided to the distribution
company GasNet.
Investments
The Company executed investment projects in the framework of the approved investment plan. In 2019,
the Company acquired assets with a total worth of CZK 129,514 thousand, of which CZK 84,547
thousand was invested into the acquisition of vehicles and CZK 37,695 thousand into equipment
and machinery for gas asset maintenance.
All investment projects were executed in the Czech Republic, and all were financed using the Company's
own resources.
Risk Management
Risks to which the Company is exposed are regularly monitored and assessed, and the Company's
management is informed of the current state of risks by means of reports. In 2019, the Company
identified neither any risks liable to jeopardize its existence nor price, credit, liquidity, and cash-flow
risks.
Research and Development
The Company does not carry out research and development.
3.2 Business Activities
Network Operation and Maintenance
The scope of the Company's gas assets remains essentially unchanged over the long term.
Overview of Gas Assets 2019
Length of gas pipelines in km (including service lines) 64,986
Transfer and regulating stations 3,625
Corrosion protection stations 1,094
The main target of network operation and maintenance in 2019 was to ensure the safe, reliable,
and economical operation of gas assets. To fulfill these objectives, operations workers carried out
planned inspections, repaired defects and leaks, and secured round-the-clock emergency service.
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Annual report 2019 GridServices, s.r.o.
As regards operating safety, the number of detected leaks in pipelines continued to decrease. The year-
over-year reduction amounted to 6%. During the reported year, the Company responded to several
emergencies classified as accidents. None of them compromised public safety and the safety
of operations. As part of securing repair and emergency response service, operations workers
responded to 21,323 emergency calls. The internal KPI requirement for reaching the site of a defect
within 60 minutes was complied with in 99.9% of cases.
Efforts aimed at improving energy use intensity regarding self-consumption of energies included
the replacement of 190 boilers and 74 preheating control systems.
Operation and Maintenance Tasks 2019
Planned inspections 70,427
Detected leaks 16,781
Repaired leaks 16,770
Third-party damage to gas facilities 519
Unplanned interruptions in gas supply to customers 6,344
Including unplanned third-party interruptions 4,760
Calls received by the 1239 line 32,338
Onsite emergency interventions 21,323
The operation of the distribution system was managed by the Control Center from sites in Brno and Ústí
nad Labem. We introduced the monitoring of alarm statuses at regulating stations using recording
devices. At present, long-distance monitoring covers 100% of transfer regulating stations and 90%
of regulating stations. Throughout the year, the Control Center secured the receipt of defect reports via
the 1239 line with no interruption. In the reported year, we completed the implementation of measures
securing the SCADA system in accordance with the Cybersecurity Act.
Metering and Technical Services
In 2019, the Company continued the formerly established trend of maintaining a high service quality
standard. Income from non-regulated services increased to more than CZK 14 million. The Company
began installing smart gas meters with a closing valve for selected customers and at certain regulating
stations. Three thousand smart gas meters were installed by the end of the year.
Tasks Performed by Metering and Technical Services 2019
Membrane gas meters up to G 6 297,640
Gas meters over G 6 20,995
Electronic metering systems 23,641
Unauthorized offtake 56,039
Meter readings – Large Customers and Medium Customers 2,281,688
Meter readings – Small Customers and Households 23,536
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Annual report 2019 GridServices, s.r.o.
Network Enlargement
In the reported year, the Company completed 602 construction projects worth in total CZK 2,580
million, executed in accordance with the Distribution System Operator's investment plans, and prepared
444 construction projects worth in total CZK 2,705 million for the coming period. In addition,
engineering tasks were completed as part of the preparation of an additional 353 projects.
In 2019, the Company successfully tested the egeliner method as another trenchless technology option.
Moreover, we put into full use electronic construction site diaries, in the development of which
the Company took active part, and deployed the ZOPS application for monitoring output from
inspections on individual construction sites.
Services provided by the Company included securing expert supervision of the construction of gas assets
carried out by other investors. In 2019, inspections were carried out for 611 relocation and development
projects and 676 service lines and pipeline extensions.
Engineering and Design Services
In 2019, the Company completed design plans for 134 projects, where investment costs totaled
approximately CZK 1,076 million. This way, the Company participated in the planning of 40%
of the volume of the Distribution System Operator's planned investments. Furthermore, we continued
to plan construction projects for subsequent years. In 2019, the Company began the preparation of 88
construction projects.
In addition, we joined the preparation of innovation projects aimed at new ways of using natural gas,
such as the Rapotín biogas station.
Operational Network Management
The main tasks of Operational Network Management in 2019 included digitization, automation,
and support for the connection of new customers to the distribution system. In addition to automating
the connection application process and digitizing the receipt of project documentation, a software
solution using artificial intelligence elements was developed and deployed for sorting and processing
PDF documents received via data box. The system is planned to be used in other administration-
intensive processes in the future.
The number of assessment applications decreased year-over-year, mainly on account
of the simplification of the process for connecting new offtake points, where the requirement was
eliminated to perform an independent assessment of the customer's gas supply facilities during
construction proceedings.
From the more than 21 thousand connection applications received and processed, 10,046 customers
began receiving gas supplies already during the reported year. As many as 9,612 applications concerned
dormant gas grid connections.
As to documentation and GIS, the fully electronic process of acceptance of design documents for gas
asset construction projects was extended to additional project types. Thanks to that, more than 50%
of documents for construction and reconstruction projects are now delivered in digital form.
We continued to provide customers with active assistance for connection to the distribution system
and for switching to natural gas heating systems. In doing so, we used the synergic effect of furnace
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Annual report 2019 GridServices, s.r.o.
subsidies. This service resulted in the construction of over 150 gas grid connections and the installation
of 163 new condensing boilers.
Services Provided by Operational Network Management 2019
Issued assessments 96,059
Issued distribution system connection requirements 21,705
Signed gas asset relocation agreements 732
Gas assets taken over 4,569
Including takeover by electronic means 2,474
Number of provided assessments of vector characteristics for gas assets 37,718
3.3 Communication
The key event in 2019 that affected subsequent external and internal communication at GridServices
was a transaction in which a consortium of investors headed by Macquarie Infrastructure and Real
Assets (MIRA) increased its equity interest in innogy Grid Holding to 100%. The transaction took place
in October, following which the Company, which had hitherto presented itself as an integral part
of the innogy Group, began to pursue communication autonomously, as a fully independent
corporation.
In external communication, the Company focused on providing the public with information on general
rules for the safe and reliable operation of gas appliances. Using press releases and other information
channels, the Company promoted the conduct of preventive inspections and measures improving
the safety of gas appliances.
Furthermore, the Company focused on promoting its services in order to improve safety
and the convenience of using natural gas. These efforts mainly included gas boilers maintenance
and replacement and the replacement of pressure switches in buildings.
3.4 Human Resources
Staffing Levels
In 2019, employee headcount (FTE) in the Company was 2,038. An FTE reduction by 14 employees was
achieved by organizational changes implemented in the course of the reported year.
Wages
In 2019, wages developed in accordance with the Company's business strategy and the remuneration
principles agreed in the Collective Agreement.
The average wage in 2019 amounted to CZK 40,285.
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Annual report 2019 GridServices, s.r.o.
Employee Structure by Education 2019
Elementary 0.2%
Secondary school 39.7%
Complete secondary school 45.5%
University 14.6%
Staff Training and Development
In 2019, the Company focused on expanding and deepening specialized technical knowledge
and the exchange of best practices among employees. We organized mandatory technical training
in accordance with the law.
The Company supported employees enrolled in long-distance study programs at specialized schools
to acquire new skills and improve, deepen, and broaden their qualifications.
We expanded partnerships with selected vocational schools and training facilities through
apprenticeship and scholarship programs.
Social Policy
As in previous years, the Company continued to support and develop the social program in 2019.
Under the benefit scheme, contributions were paid to employees for supplementary retirement savings,
life insurance, individual recreation, entertainment, sports, healthcare, and education.
3.5 Occupational Health and Safety
Occupational Health and Safety
In 2019, 13 occupational injuries were reported, eight involving slipping, tripping, and falling. Two cases
involved a dog bite, and two accidents were related to work on gas assets.
Close attention was paid to contractors. Redefined training for construction site supervisors, extensive
courses for workers working on gas assets, and intensification of OHS inspections on construction sites
contributed to a significant improvement of the level of safety on worksites. There was no incident
relating to work performed by contractors.
During the year, inspections were carried out of compliance with implemented OHS regulations
in collaboration with the trade union and using internal checks and audits, particularly annual
occupational safety reviews.
No government authority carried out an inspection of the Company's performance in the area
of occupational health and safety or fire prevention.
In 2019, employees made a record-high number of suggestions and near-miss reports, which testifies
to increasing OHS awareness on their part. This trend will be supported by a project currently under
preparation, which will focus on motivating workers to pay attention to occupational safety.
The Company pays close attention to worker safety and provides sizeable support. The objective is to
use the close attention paid to this area by the top and middle management to motivate line managers
and all other employees to follow suit. Changing working habits is a long-term process; however, doing
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Annual report 2019 GridServices, s.r.o.
so is essential for preventing injuries. For that reason, strong efforts will continue in this area
in the coming years.
Environmental Protection
Environmental protection is one of the Company's highest priorities. All planned environmental
protection targets and legal requirements were met thanks to the responsible attitude of all employees
and the implementation of the environmental management system.
As a result of implementing new technologies and upgrading its facilities, the Company ensured
conformity to the emission limits in effect since 1 January 2020 as per Act No. 201/2012 Coll. on Air
Protection in connection with the operation of boiler units and regulating stations.
The total production of waste from the Company's operations amounted to approximately 85 tonnes,
nearly 50% of which was recycled.
There was no serious incident in the Company's operations with an adverse impact on the environment
in 2019.
Inspections carried out by government authorities in 2019 found no violations of environmental laws
and regulations.
Contractors were required to perform work in an environmentally responsible manner. Environmental
protection was enforced in the procurement of both goods and services through relevant contractual
provisions.
3.6 Outlook
On 11 March 2018, the companies RWE AG and E.ON SE made an announcement about the agreement,
by which the Group RWE AG would sell its 76.79 % share in innogy SE to the E.ON Group and exchange
some other parts of assets. On 17 September 2019, the European Commision authorised
this transaction. E.ON SE has become the shareholder of innogy SE and therefore indirectly
of innogy Česká republika a.s., which represents, together with its subsidiaries, innogy group
in the Czech Republic. At the same time the condition was set for completion of the takeover
of the shareholding of innogy SE that stated that a part of the assets of the innogy group, among others
also in the Czech Republic, needs to be sold to third parties.
The consortium of investors led by Macquarie Infrastructure and Real Assets, which had previously held
a 49.96% stake in Czech Grid Holdings, a.s., (previously as innogy Grid Holding, a.s.), exercised
the contractual pre-emption right for the remaining 50.04% and as of 30 September 2019 it became
its sole shareholder. This consortium also includes British Columbia Investment Management
Corporation (BCI) and Allianz Capital Partners representing Allianz Group insurance companies.
The Company and its subsidiaries (together the Czech Grid Holding Group) continue in receiving
of services provided by innogy Česká republika a.s. and innogy Zákaznické služby, s.r.o. Relating
contracts will be terminated gradually and under certain conditions.
On 25 February 2020, the companies of the Czech Grid Holding Group concluded a so called Transitional
Service Agreement (“TSA”) with innogy Česká republika a.s. and innogy Zákaznické služby, s.r.o. The
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Annual report 2019 GridServices, s.r.o.
purpose of the TSA is to provide a framework for the operational separation of the Czech Grid Holding
Group from the innogy group in the Czech Republic. The TSA foresees a separation in 2020 of over 60
software applications, so far being used or managed by innogy Česká republika a.s. for the former
integrated innogy group in the Czech Republic. Up to 230 employees (FTE) will be transferred from
innogy group in the Czech Republic to the Czech Grid Holding Group and another up to 125 employees
(FTE) will be transferred from innogy Zákaznické služby, s.r.o., (Customer Care) to the Czech Grid Holding
Group. The plan considers also a purchase of 25 selected buildings by GasNet, s.r.o., from innogy Česká
republika a.s. by Czech Grid Holding Group as well as movable assets being purchased by the Czech Grid
Holding Group. Moreover, around 500 commercial contracts with relevance to the Czech Grid Holding
Group’s activities have to be split and negotiated on a bilateral basis with contractors. The effective
allocation of employees, assets and contracts among the Czech Grid Holding Group entities will be
analysed and decided in the course of 2020.
3.7 Subsequent Events
After the balance sheet data the Transitional Service Agreement was signed, see chapter 3.6.
The existence of novel coronavirus (Covid-19) was confirmed in early 2020 and has spread across
mainland China and beyond, including Czechia, causing disruptions to businesses and economic activity.
The Company considers this outbreak to be a non-adjusting post balance sheet event. As the situation
is fluid and rapidly evolving, we do not consider it practicable to provide a quantitative estimate
of the potential impact of this outbreak on the Company. The impact of this outbreak
on the macroeconomic forecasts, our position and results, if any, will be incorporated into our estimates
of asset impairment and other provisions in 2020.
No other events occurred subsequent to year end that would have a material impact on the financial
statements as at 31 December 2019.
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Annual report 2019 GridServices, s.r.o.
4 Financial part
4.1 Financial Statements and Notes to the Financial Statements
BALANCE SHEET (in thousand Czech crowns)
Ref. ASSETS 31. December 2019 31. December 2018
a
Gross Provision Net Net
b 1 2 3 4
TOTAL ASSETS 2,385,943 (691,240) 1,694,703 1,541,294
B. Fixed assets 1,032,324 (659,832) 372,492 298,375
B. I. Intangible fixed assets 10,283 (7,426) 2,857 5,048
B. I. 2. Royalties 8,463 (5,634) 2,829 4,101
B. I. 2. 1. Software 8,463 (5,634) 2,829 4,101
B. I. 4. Other intangible fixed assets 1,820 (1,792) 28 47
B. I. 5. Advances paid and intangible fixed assets in the course of construction
- - - 900
B. I. 5. 2. Intangible fixed assets in the course of construction
- - - 900
B. II. Tangible fixed assets 1,020,930 (652,406) 368,524 292,216
B. II. 2. Equipment 975,072 (628,001) 347,071 281,921
B. II. 3. Adjustment to acquired fixed assets 30,506 (24,405) 6,101 8,135
B. II. 5. Advances paid and tangible fixed assets in the course of construction
15,352 - 15,352 2,160
B. II. 5. 2. Tangible fixed assets in the course of construction
15,352 - 15,352 2,160
B. III. Long-term investments 1,111 - 1,111 1,111
B. III. 5. Other long-term investments in securities 1,111 - 1,111 1,111
C. Current assets 1,348,536 (31,408) 1,317,128 1,239,194
C. I. Inventories 186,295 (27,711) 158,584 151,011
C. I. 1. Raw materials 32,145 (8,686) 23,459 20,896
C. I. 2. Work in progress and semi-finished products 150,001 (19,025) 130,976 127,299
C. I. 3. Finished goods and goods for resale 4,149 - 4,149 2,816
C. I. 3. 1. Finished goods 2,829 - 2,829 2,369
C. I. 3. 2. Goods for resale 1,320 - 1,320 447
C. II. Receivables 1,161,124 (3,697) 1,157,427 1,083,618
C. II. 1. Long-term receivables 795 - 795 810
C. II. 1. 5. Receivables - other 795 - 795 810
C. II. 1. 5. 2. Long-term advances paid 795 - 795 810
C. II. 2. Short-term receivables 1,160,329 (3,697) 1,156,632 1,082,808
C. II. 2. 1. Trade receivables 364,140 (3,697) 360,443 443,332
C. II. 2. 2. Receivables - subsidiaries and controlling party
770,912 - 770,912 629,798
C. II. 2. 4. Receivables - other 25,277 - 25,277 9,678
C. II. 2. 4. 3. Taxes - receivables from the state 14,831 - 14,831 596
C. II. 2. 4. 4. Short-term advances paid 2,818 - 2,818 2,454
C. II. 2. 4. 5. Estimated receivables 6,701 - 6,701 5,761
C. II. 2. 4. 6. Other receivables 927 - 927 867
C. IV. Cash 1,117 - 1,117 4,565
C. IV. 2. Cash at bank 1,117 - 1,117 4,565
D. Prepayments and accrued income 5,083 - 5,083 3,725
D. 1. Prepaid expenses 4,452 - 4,452 3,655
D. 3. Accrued income 631 - 631 70
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Annual report 2019 GridServices, s.r.o.
BALANCE SHEET – continued (in thousand Czech crowns)
Ref. LIABILITIES AND EQUITY 31. December 2019 31. December 2018
a b c d
TOTAL LIABILITIES AND EQUITY 1,694,703 1,541,294
A. Equity 1,107,328 984,451
A. I. Share capital 75,000 75,000
A. I. 1. Share capital 75,000 75,000
A. II. Share premium and capital contributions 5,030 5,030
A. II. 2. Capital contributions 5,030 5,030
A. II. 2. 1. Other capital contributions 5,030 5,030
A. III. Other reserves 7,500 7,500
A. III. 2. Statutory and other reserves 7,500 7,500
A. IV. Retained earnings / Accumulated losses 73,398 61,386
A. IV. 1. Retained earnings or accumulated losses (+/-) 73,398 61,386
A. V. Profit / (loss) for the current period 946,400 835,535
B. + C. Liabilities 587,375 556,843
B. Provisions 123,408 110,282
B. 2. Income tax provision 23,431 4,326
B. 4. Other provisions 99,977 105,956
C. Liabilities 463,967 446,561
C. I. Long-term liabilities 11,900 1,060
C. I. 8. Deferred tax liability 11,900 1,060
C. II. Short-term liabilities 452,067 445,501
C. II. 3. Short-term advances received 3,225 3,155
C. II. 4. Trade payables 274,954 283,108
C. II. 8. Liabilities - other 173,888 159,238
C. II. 8. 3. Liabilities to employees 66,300 79,112
C. II. 8. 4.
Liabilities for social security and health insurance
35,921 37,890
C. II. 8. 5. Taxes and state subsidies payable 11,599 15,450
C. II. 8. 6. Estimated payables 55,735 22,328
C. II. 8. 7. Other liabilities 4,333 4,458
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Annual report 2019 GridServices, s.r.o.
INCOME STATEMENT (in thousand Czech crowns)
Ref. TEXT Accounting period 2019 2018
a b 1 2
I. Sales of products and services 4,028,368 3,879,304
II. Sales of goods 297 617
A. Cost of sales 1,408,345 1,380,100
A. 1. Cost of goods sold 226 440
A. 2. Raw materials and consumables used 210,917 174,890
A. 3. Services 1,197,202 1,204,770
B. Changes in inventories of finished goods and work in progress 2,819 43,245
C. Own work capitalised (70) (393)
D. Staff costs 1,396,094 1,353,533
D. 1. Wages and salaries 985,217 951,869
D. 2. Social security, health insurance and other social costs 410,877 401,664
D. 2. 1. Social security and health insurance costs 368,627 355,744
D. 2. 2. Other social costs 42,250 45,920
E. Value adjustments in operating activities 52,731 62,957
E. 1. Value adjustments of fixed assets 58,927 57,583
E. 1. 1. Depreciation, amortisation and write off of fixed assets 58,927 57,583
E. 2. Provision for impairment of inventories (6,245) 3,716
E. 3. Provision for impairment of receivables 49 1,658
III. Operating income - other 20,585 16,411
III. 1. Sales of fixed assets 12,498 11,933
III. 2. Sales of raw materials 2,000 1,551
III. 3. Other operating income 6,087 2,927
F. Operating expenses - other 15,279 17,332
F. 1. Net book value of fixed assets sold 1,148 4,665
F. 2. Cost of raw materials sold 52 36
F. 3. Taxes and charges from operating activities 8,188 8,249
F. 4. Operating provisions and complex prepaid expenses (5,980) (6,877)
F. 5. Other operating expenses 11,871 11,259
* Operating result 1,174,052 1,039,558
VI. Interest and similar income 3,159 599
VI. 1. Interest and similar income - subsidiaries or controlling party 3,159 599
J. Interest and similar expenses 87 45
J. 1. Interest and similar expenses - subsidiaries or controlling party 87 45
K. Other financial expenses 752 737
* Financial result 2,320 (183)
** Net profit / (loss) before taxation 1,176,372 1,039,375
L. Tax on profit or loss 229,972 203,840
L. 1. Tax on profit or loss - current 219,131 196,204
L. 2. Tax on profit or loss - deferred 10,841 7,636
** Net profit / (loss) after taxation 946,400 835,535
*** Net profit / (loss) for the financial period 946,400 835,535
Net turnover for the financial period 4,052,409 3,896,931
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Annual report 2019 GridServices, s.r.o.
Statement of changes in shareholder’s equity Year ended 31 December 2019
Share
capital
Other capital funds
Statutory and other
reserves
Retained earnings
Total
As at 1 January 2018 75,000 5,030 7,500 812,914 900,444
Profit distribution paid 0 0 0 (751,528) (751,528)
Net profit for 2018 0 0 0 835,535 835,535
As at 31 December 2018 75,000 5,030 7,500 896,921 984,451
Profit distribution paid 0 0 0 (823,523) (823,523)
Net profit for 2019 0 0 0 946,400 946,400
As at 31 December 2019 75,000 5,030 7,500 1,019,798 1,107,328
19
Annual report 2019 GridServices, s.r.o.
Cash flow statement Year ended 31 December 2019
Ref. TEXT Accounting period
2019 2018
a b 1 2
Cash flows from operating activities
Net profit before tax 1,176,372 1,039,375
A. 1. Adjustments for non-cash movements: 32,269 47,902
A. 1. 1. Depreciation and amortisation of fixed assets 58,927 57,583
A. 1. 2. Change in provisions (12,175) (1,503)
A. 1. 3. Profit from disposal of fixed assets (11,350) (7,268)
A. 1. 5. Net interest expense/(income) (3,072) (554)
A. 1. 6. Other non-cash movements (61) (356)
A * Net cash flow from operating activities before tax and changes in working capital
1,208,641 1,087,277
A. 2. Working capital changes: (68,722) (76,769)
A. 2. 1. Change in receivables and prepayments (74,655) (170,745)
A. 2. 2. Change in short-term payables and accruals 7,261 53,990
A. 2. 3. Change in inventories (1,328) 39,986
A ** Net cash flow from operating activities before tax 1,139,919 1,010,508
A. 3. Interest paid (87) (45)
A. 4. Interest received 2,598 582
A. 5. Income tax paid (200,027) (201,100)
A *** Net cash flow from operating activities 942,403 809,945
B. 1. Acquisition of fixed assets (134,826) (71,871)
B. 2. Proceeds from sale of fixed assets 12,498 11,933
B *** Net cash flow from investing activities (122,328) (59,938)
C. 2. Changes in equity: (823,523) (751,528)
C. 2. 6. Profit distribution paid (823,523) (751,528)
C *** Net cash flow from financing activities (823,523) (751,528)
Net decrease in cash and cash equivalents (3,448) (1,521)
Cash and cash equivalents at the beginning of the year 4,565 6,086
Cash and cash equivalents at the end of the year 1,117 4,565
20
Annual report 2019 GridServices, s.r.o.
4.2 Notes to the Financial Statements
1. General information
1.1. Introductory information about the Company
GridServices, s.r.o., (“the Company”) was registered in the Commercial Register kept with the Regional
Court in Brno, section C, insert 57165 on 26 July 2007 and has its registered office in Plynárenská 499/1,
Brno, Zábrdovice, zip code 602 00, Czech Republic. Identification number of the Company is 279 35 311.
The Company’s primary business activities are construction activities including modifications
and removal of constructions, project activity in construction, assembly, repairs, revisions and tests
of designated gas and electrical equipment.
The Company is not a shareholder having unlimited liability in any other undertaking.
Statutory representatives as at 31 December 2019:
Name Position Day of appointment
Martin Gebauer Chairman of the Board of Directors 30 September 2019
Dušan Malý Statutory Representative 30 September 2019
Pavel Káčer Statutory Representative 1 October 2009
Statutory representative as at 31 December 2018:
Name Position Day of appointment
Pavel Káčer Executive Director 1 October 2009
The following changes occurred in the composition of the Company's bodies in 2019:
The sole shareholder, by decision of the General Meeting in the form of a notarial insert amended the
Company's Deed of incorporation on 30 September 2019 by increasing number of directors to three (3).
On 30 September 2019, the sole shareholder elected Martin Gebauer and Dušan Malý. Martin Gebauer
was elected as Chairman of the Board of Directors by 7 October 2019.
On 15 October 2019 the sole shareholder approved, by decision within the competence of the General
Meeting, the removal of the procuration of Radek Starý, David Fojtík, Petr Báč and Dagmar Ledererová.
Other events
On 11 March 2018, the companies RWE AG and E.ON SE made an announcement about the agreement,
by which the Group RWE AG would sell its 76.79 % share in innogy SE to the E.ON Group and exchange
some other parts of assets. On 17 September 2019, the European Commision authorised
this transaction. E.ON SE has become the shareholder of innogy SE and therefore indirectly
of innogy Česká republika a.s., which represents, together with its subsidiaries, innogy group
in the Czech Republic. At the same time the condition was set for completion of the takeover
of the shareholding of innogy SE that stated that a part of the assets of the innogy group, among others
also in the Czech Republic, needs to be sold to third parties.
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Annual report 2019 GridServices, s.r.o.
The consortium of investors led by Macquarie Infrastructure and Real Assets, which had previously held
a 49.96% stake in Czech Grid Holdings, a.s. (previously as innogy Grid Holding, a.s.), exercised
the contractual pre-emption right for the remaining 50.04% and as of 30 September 2019 it became
its sole shareholder. This consortium also includes British Columbia Investment Management
Corporation (BCI) and Allianz Capital Partners representing Allianz Group insurance companies.
The Company and its subsidiaries (together the Czech Grid Holding Group) continue in receiving
of services provided by innogy Česká republika a.s. and innogy Zákaznické služby, s.r.o. Relating
contracts will be terminated gradually and under certain conditions.
On 25 February 2020, the companies of the Czech Grid Holding Group concluded a so called Transitional
Service Agreement („TSA“) with innogy Česká republika a.s. and innogy Zákaznické služby, s.r.o. The
purpose of the TSA is to provide a framework for the operational separation of the Czech Grid Holding
Group from the innogy group in the Czech Republic. The TSA foresees a separation in 2020 of over 60
software applications, so far being used or managed by innogy Česká republika a.s. for the former
integrated innogy group in the Czech Republic. Up to 230 employees (FTE) will be transferred from
innogy group in the Czech Republic to the Czech Grid Holding Group and another up to 125 employees
(FTE) will be transferred from innogy Zákaznické služby, s.r.o., (Customer Care) to the Czech Grid Holding
Group. The plan considers also a purchase of 25 selected buildings by GasNet, s.r.o., from innogy Česká
republika a.s. by Czech Grid Holding Group as well as movable assets being purchased by the Czech Grid
Holding Group. Moreover, around 500 commercial contracts with relevance to the Czech Grid Holding
Group’s activities have to be split and negotiated on a bilateral basis with contractors. The effective
allocation of employees, assets and contracts among the Czech Grid Holding Group entities will be
analysed and decided in the course of 2020.
2. Accounting policies
2.1. Basis of preparation
The financial statements have been prepared in accordance with Generally Accepted Accounting
Principles in the Czech Republic relevant for large sized companies and have been prepared
under the historical cost convention.
2.2. 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 initially recorded at cost, which includes all costs
related with its acquisition.
Intangible and tangible fixed assets are amortised/depreciated applying the straight-line method
over their estimated useful lives as follows:
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Annual report 2019 GridServices, s.r.o.
Intangible and tangible fixed assets Estimated useful life
Software 3 years
Other intangible fixed assets 6 years
Machinery and Equipment 3 – 15 years
The amortization/depreciation plan is updated during the useful life of the intangible and tangible fixed
assets based on the expected useful life.
A provision for impairment is created when the carrying value of an asset is greater than its estimated
recoverable amount. The estimated recoverable amount is determined based on expected future cash
flows generated by the certain asset.
Repairs and maintenance expenditures of tangible fixed assets are expensed as incurred.
Adjustment to acquired fixed assets represents the difference between the valuations of purchased
parts of the former regional gas companies and the aggregate carrying amount of assets and liabilities
acquired as recorded in the accounts of the original owners. Such differences are amortised
on a straight-line basis over a period of 15 years.
2.3. Other securities and investments
The Company classifies securities and investments, other than investments in subsidiaries
and associates as trading, available-for-sale or held-to-maturity.
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 appropriate 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.
2.4. Inventories
Purchased inventories are stated at the lower of cost and net realisable amount. Cost includes all costs
related with its acquisition (mainly transport costs, customs duty, etc.). The weighted average cost
method is applied for all disposals.
Inventories generated from own production, i.e. work-in-progress and finished goods, are stated
at the lower of production cost and estimated net realisable amount. Production cost includes direct
and indirect materials, direct and indirect wages and production overheads.
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Annual report 2019 GridServices, s.r.o.
Subcontracted supplies and other direct costs related to unfinished projects are expensed as incurred
and simultaneously activated as work-in-progress. Subcontracted supplies are valued at cost.
Work-in-progress is derecognised once the respective revenue is recognised.
A provision is created for slow-moving and obsolete inventory based on an analysis of turnover
and individual evaluation of inventories.
A provision for work-in-progress is created based on the analysis of estimated revenues and costs.
2.5. Receivables
Receivables are stated at nominal value less a provision for doubtful amounts. A provision for doubtful
amounts is created on the basis of an ageing analysis and individual evaluation of the credit worthiness
of the customers. Receivables from related parties have not been provided for.
2.6. 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 exchange 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
and presented net.
2.7. Provisions
The Company recognises provisions to cover its obligations or expenses, when the nature
of the obligations or expenses is clearly defined and it is probable or certain as at the balance sheet
date that they will be incurred, however their precise amount or timing is not known. The provision
recognised as at the balance sheet date represent the best estimate of expenses that will be probably
incurred, or the amount of liability that is required for their settlement.
The Company recognises a provision for its future income tax payable which is presented net
of advances paid for the income tax. If advances paid are higher than the estimated income tax payable
the difference is recognised as a short-term receivable.
2.8. Employment benefits
The Company recognizes a provision relating to rewards, bonuses, untaken holiday and other
employment benefits.
Regular contributions are made to the state to fund the national pension plan. The Company also
provides contributions to defined contribution plans operated by independent pension funds
and capital life insurance. The contribution for pension and life insurance is recognized as an expense.
24
Annual report 2019 GridServices, s.r.o.
2.9. Revenue recognition
Sales are recognised as at the date the services are rendered and are stated net of discounts and value
added tax.
2.10. Related parties
The Company’s related parties are considered to be the following:
parties, which directly or indirectly control the Company, their subsidiaries and associates;
parties, which have directly or indirectly significant influence on the Company;
members of the Company’s or parent company’s statutory and supervisory boards
and management and parties close to such members, including entities in which they have
a controlling or significant influence.
Material transactions and outstanding balances with related parties are disclosed in Note 12 – Related
party transactions.
2.11. Deferred tax
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 asset is recognised if it is probable that
sufficient future taxable profit will be available against which the asset can be utilised.
2.12. Cash-flow statement
The Company has prepared a Cash-flow statement using the indirect method.
Cash and cash equivalents include cash in hand, stamps and vouchers and cash in banks, including bank
overdrafts.
Cash equivalents are short-term highly liquid investments that can be exchanged for a predictable
amount of cash and no significant changes of value over time are expected.
2.13. 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.
Where significant events occur subsequent to the balance sheet date but prior to the preparation
of the financial 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.
2.14. Comparable data
Due to a change in accounting policy regarding the definition of cash equivalents, the financial
statements for the year ended 31 December 2018 have amended the comparative period of the Cash
Flow Statement to reflect this change.
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Annual report 2019 GridServices, s.r.o.
Cash equivalents with a maximum of three months' notice are not considered as cash equivalents
and receivables, respectively liability arising from cash-pooling if it is due within three months
of the end of the reporting period.
3. Intangible fixed assets
(CZK’000) 1 January 2019 Additions /transfers 31 December 2019
Cost
Software 7,403 1,060 8,463
Other intangible fixed assets 1,820 - 1,820
Intangible fixed assets in the course of construction
900 (900) -
Total 10,123 160 10,283
Accumulated amortisation
Software (3,302) (2,332) (5,634)
Other intangible fixed assets (1,773) (19) (1,792)
Total (5,075) (2,351) (7,426)
Net book value 5,048 2,857
(CZK’000) 1 January 2018 Additions /transfers 31 December 2018
Cost
Software 2,599 4,804 7,403
Other intangible fixed assets 1,820 - 1,820
Intangible fixed assets in the course of construction
2,996 (2,096) 900
Total 7,415 2,708 10,123
Accumulated amortisation
Software (1,874) (1,428) (3,302)
Other intangible fixed assets (1,688) (85) (1,773)
Total (3,562) (1,513) (5,075)
Net book value 3,853 5,048
26
Annual report 2019 GridServices, s.r.o.
4. Tangible fixed assets
(CZK’000) 1 January
2019 Additions /transfers
Disposals 31 December
2019
Cost
Equipment 910,861 120,849 (56,638) 975,072
Adjustments to acquired assets 30,506 - - 30,506
Tangible fixed assets in the course of construction
2,160 13,192 - 15,352
Total 943,527 134,041 (56,638) 1,020,930
Accumulated depreciation
Equipment (628,940) (54,542) 55,481 (628,001)
Adjustments to acquired assets (22,371) (2,034) - (24,405)
Total (651,311) (56,576) 55,481 (652,406)
Net book value 292,216 368,524
(CZK’000) 1 January
2018 Additions /transfers
Disposals 31 December
2018
Cost
Equipment 847,367 106,079 (42,585) 910,861
Adjustments to acquired assets 30,506 - - 30,506
Tangible fixed assets in the course of construction
19,430 (12,793) (4,477) 2,160
Total 897,303 93,286 (47,062) 943,527
Accumulated depreciation
Equipment (617,263) (54,037) 42,360 (628,940)
Adjustments to acquired assets (20,338) (2,033) - (22,371)
Total (637,601) (56,070) 42,360 (651,311)
Net book value 259,702 292,216
The adjustment to acquired fixed assets arose on 1 January 2008 on the purchase of Distribution
divisions from the former regional gas companies: Severočeská plynárenská, a.s.,
Severomoravská plynárenská, a.s., Středočeská plynárenská, a.s., Východočeská plynárenská, a.s.
and Západočeská plynárenská, a.s.
5. Other securities and investments
Other securities and investments as at 31 December 2019 and 2018 are represented by a 12% share in Sdružení k vytvoření a využívaní digitální technické mapy města Pardubic.
27
Annual report 2019 GridServices, s.r.o.
6. Inventories
Inventories as at 31 December 2019 and 2018 comprise in particular spare parts for repairs of gas
distribution system.
The Company created a provision for inventories as at 31 December 2019 of CZK 8,686 thousand
(as at 31 December 2018: CZK 7,975 thousand).
Work-in-progress as at 31 December 2019 and 2018 represents unfinished long-term activities relating
to construction of gas facilities.
The Company created a provision for work in progress as at 31 December 2019 amounting
to CZK 19,025 thousand (as at 31 December 2018: CZK 25,982 thousand).
7. Receivables
The overdue receivables as at 31 December 2019 amounted to CZK 5,340 thousand
(as at 31 December 2018: CZK 4,248 thousand).
The provision for doubtful receivables as at 31 December 2019 was CZK 3,697 thousand
(as at 31 December 2018: CZK 3,648 thousand).
Receivables have not been secured and none of them are due after more than 5 years.
The Company has no receivables nor provided any guarantees which are not included in the balance
sheet.
8. Equity
The Company is fully owned by Czech Grid Holding, incorporated in Czech Republic, registered office
at Prague 10 – Strašnice, Limuzská 3135/12, ZIP code 100 98, registration number: 243 10 573.
The ultimate holding company of the group is Czech Gas Networks S.à.r.l., incorporated in Luxembourg.
The consolidated financial statements of the smallest group of entities of which the Company forms can
be obtained at Czech Grid Holding, a.s. registered office.
On 24 May 2019 the sole shareholder approved the financial statements for 2018 and decided about
distribution of 2018 profit of CZK 823,523 thousand.
Until the date of preparation of these financial statements, the Company has not proposed distribution
of the profit earned in 2019.
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Annual report 2019 GridServices, s.r.o.
9. Provisions
(CZK’000) Income tax
provision Other Total
Opening balance as at 1 January 2018 9,222 112,833 122,055
Charge for the year 196,104 69,688 265,792
Used in the year (9,222) (76,565) (85,787)
Advances for Income tax - offset (191,778) - (191,778)
Closing balance as at 31 December 2018 4,326 105,956 110,282
Charge for the year 218,988 61,404 280,392
Used in the year (4,326) (67,383) (71,709)
Advances for Income tax - offset (195,557) - (195,557)
Closing balance as at 31 December 2019 23,431 99,977 123,408
The Company created provisions for employee benefits in amount of CZK 40,620 thousand
(as at 31 December 2018: CZK 37,440 thousand) and provision for holidays in amount
of CZK 19,454 thousand (as at 31 December 2018: CZK 23,706 thousand).
Advances for income tax of CZK 195,557 thousand paid by the Company as at 31 December 2019
(as at 31 December 2018: CZK 191,778 thousand) are netted off with the provision for income tax
of CZK 218,988 thousand as at 31 December 2019 (as at 31 December 2018: CZK 196,104 thousand).
10. Payables, commitments and contingent liabilities
Trade and other payables have not been secured against any assets of the Company and are not due
after more than 5 years.
Liabilities to related parties are disclosed in Note 12 Related party transactions.
The Company does not have any liabilities or commitments that are not recognised in the balance sheet.
The Company has not provided guarantees that are not recognised in the balance sheet.
The management of the Company is not aware of any significant contingent liabilities
as at 31 December 2019.
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Annual report 2019 GridServices, s.r.o.
11. Revenue analysis
Revenue analysis:
(CZK’000) 2019 2018
Revenues - management of gas facilities 3,281,948 3,216,791
Revenues - construction of gas facilities 605,605 540,618
Revenues for other services 140,815 121,895
Total sales of services 4,028,368 3,879,304
Sales of goods 297 617
Revenues from sale of fixed assets and raw materials 14,498 13,484
Other operating income 6,087 2,927
Total revenue from operating activities 4,049,250 3,896,332
12. Related parties transactions
The Company participated in these related party transactions, which are divided into two periods in
2019 with a milestone date of 30 September 2019, when the owner of the parent company changed
(see Note 1.1 General information). The period from 1 January to 30 September 2019 includes
transactions within the RWE AG Group; the period from 1 October to 31 December 2019 only includes
transactions within the MIRA group.
(CZK’000) 1-9 2019 10-12 2019 2018
Revenues
Sales of services 2,807,858 1,094,579 3,797,181
Other operating income - - 6
Interest income 1,836 1,323 599
Total 2,809,694 1,095,902 3,797,786
Costs
Material and energy consumption 17,605 265 140
Services 502,770 1,108 698,012
Other operating expenses 49 - 57
Interest expense 87 - 45
Total 520,511 1,373 698,254
30
Annual report 2019 GridServices, s.r.o.
The following related party balances were outstanding as at:
(CZK’000) 31 December 2019 31 December
2018
Receivables
Trade receivables 340,027 426,139
Other receivables 4,763 5,932
Cash-pooling receivables 770,912 629,798
Total 1,115,702 1,061,869
Liabilities to companies within the consolidation group
Trade payables 610 99,851
Other liabilities 73 5,160
Total 683 105,011
Provided and received loans and receivables and payables from cash-pooling bear interest at market
interest rates.
Company cars are made available for use by the Company’s Management.
A Stock option program was created for management, for which a provision in the amount
of CZK 11,970 thousand has been created as at 31 December 2018 (as at 31 December 2018:
CZK 8,779 thousand).
Besides the above stated, there was no other cash or in kind consideration provided for the year ended
31 December 2019 and 2018 to the statutory representative and management.
13. Employees
2019 2018
Average number of members of management 7 7
Average number of other staff 2,031 2,045
Total number of employees 2,038 2,052
31
Annual report 2019 GridServices, s.r.o.
(CZK’000) Management Other staff Total
2019
Wages and salaries 19,538 965,679 985,217
Social security costs 5,353 363,274 368,627
Other social costs 405 41,845 42,250
Total staff costs 25,296 1,370,798 1,396,094
2018
Wages and salaries 17,034 934,835 951,869
Social security costs 4,658 351,086 355,744
Other social costs 379 45,541 45,920
Total staff costs 22,071 1,331,462 1,353,533
The Company’s Management includes directors and managers, who are directly reporting to them.
Category Company’s Management includes remuneration of Statutory Representatives, who are not
employee of the Company.
Other transactions with the Company’s management are described in Note 12 - Related party
transactions.
14. 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 consolidated financial statements of Czech Grid
Holding, a.s.
15. Income tax
The income tax expense analysis:
(CZK’000) 2019 2018
Current tax expense (19 %) 218,988 196,104
Deferred tax expense 10,841 7,636
Adjustment of prior year tax expense based on final CIT return 143 100
Total income tax expense 229,972 203,840
32
Annual report 2019 GridServices, s.r.o.
The current tax analysis:
(CZK’000) 2019 2018
Net profit before taxation 1,176,372 1,039,375
Tax non-deductible costs 42,608 46,406
Non-taxable income (63,080) (50,267)
Net taxable profit 1,155,900 1,035,514
Tax incentives (633) (644)
Corporate income tax at 19 % 218,988 196,104
The deferred tax was calculated at 19% (the rate enacted for 2019 and subsequent years).
The deferred tax (liability)/asset analysis:
(CZK’000) 31 December
2019 31 December
2018
Deferred tax asset (+) / liability (-) arising from:
Difference between accounting and tax net book value of fixed assets
(36,544) (28,000)
Provisions 24,644 26,940
Net deferred tax asset / (liability) (11,900) (1,060)
16. Subsequent events
After the balance sheet data the Transitional Service Agreement was signed, see Note 1.
The existence of novel coronavirus (Covid-19) was confirmed in early 2020 and has spread across
mainland China and beyond, including Czechia, causing disruptions to businesses and economic activity.
The Company considers this outbreak to be a non-adjusting post balance sheet event. As the situation
is fluid and rapidly evolving, we do not consider it practicable to provide a quantitative estimate
of the potential impact of this outbreak on the Company. The impact of this outbreak
on the macroeconomic forecasts, our position and results, if any, will be incorporated into our estimates
of asset impairment and other provisions in 2020.
No other events occurred subsequent to year end that would have a material impact on the financial
statements as at 31 December 2019.
17 March 2020
Martin Gebauer Dušan Malý
Chairman of the Board of Directors Statutory Representative
33
Annual report 2019 GridServices, s.r.o.
5 Independent auditor’s report
34
Annual report 2019 GridServices, s.r.o.
35
Annual report 2019 GridServices, s.r.o.
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Annual report 2019 GridServices, s.r.o.
6 GridServices, s.r.o., Report on Related Party Transactions in the Year Ended
31 December 2019
6.1 Report on Related Party Transactions in 2019
This Report on Related Party Transactions (Report) carried out during the fiscal year 2019 between the
Company and controlling parties and between the Company and other parties controlled by the same
controlling parties has been prepared by the Executive Directors of GasNet, s.r.o., ("Company")
in accordance with Section 82 et seq. of Act 90/2012 Coll. on Business Corporations and Cooperatives
(Business Corporations Act), as in effect, insofar as such parties are known to the Company. The Report
is attached to the Company's 2019 Annual Report. The Company's members have the right to examine
the Report at the same time and under the same conditions as the Financial Statements.
6.2 Structure of Relations
The Company was a member of the RWE Group until 29 September 2019. The Company was subject
to interlocking directorates within the meaning of Section 79 of the Business Corporations Act, where
at least one key area or activity of the Group's business is coordinated and managed in an addressed
manner with the aim of promoting the Group's long-term interests in line with uniform Group-wide
policies. The Company's membership in the RWE Group was disclosed on the Company's website.
On 30 September 2019, the Company became a member of a group in which the controlling party is
MACQUARIE EUROPEAN INFRASTRUCTURE FUND 4 (MEIF 4 LP), LP ID 014601.
Thus, for the purposes of this Report, the term “Group” means a group of companies controlled by RWE
AG within the RWE Group for the period until 29 September 2019, and a group of companies controlled
by the controlling person MACQUARIE EUROPEAN INFRASTRUCTURE FUND 4 LP for the period from 30
September 2019.
a) Controlling Parties
In the last accounting period, from 1 January 2019 to 21 February 2019, the Company was controlled
by the following controlling parties:
i. Directly
- innogy Grid Holding, a.s., with registered office at Limuzská 3135/12, 100 98 Prague 10 –
Strašnice, Company No. 243 10 573, the sole member of the Company,
ii. Indirectly
- innogy Česká republika a.s., with registered office at Limuzská 3135/12, 100 98 Prague 10 –
Strašnice, Company No. 242 75 051,
- innogy Beteiligungsholding GmbH, with registered office at Opernplatz 1, 45128 Essen,
Federal Republic of Germany,
- innogy Zweite Vermögensverwaltungs GmbH, with registered office at Opernplatz 1, 45128
Essen, Federal Republic of Germany,
- innogy International Participations N.V., with registered office at 5211AK 's-Hertogenbosch,
Willemsplein 4, Kingdom of the Netherlands,
- innogy SE, with registered office at Opernplatz 1, 45128 Essen, Federal Republic of Germany,
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Annual report 2019 GridServices, s.r.o.
- GBV Vierunddreißigste Gesellschaft für Beteiligungsverwaltung mbH, with registered office
at Huyssenallee 2, 45128 Essen, Federal Republic of Germany,
- RWE Aktiengesellschaft, with registered office at Altenessener Str. 35, 45141 Essen, Federal
Republic of Germany, the ultimate controlling company.
In the last accounting period, from 22 February 2019 to 29 September 2019, the Company was
controlled by the following controlling parties:
i. Directly
- innogy Grid Holding, a.s., with registered office at Limuzská 3135/12, 100 98 Prague 10 –
Strašnice, Company No. 243 10 573, the sole member of the Company,
ii. Indirectly
- RWE Czech Gas Grid Holding B.V. with registered office at Amerweg 1, NL-4931NC
Geertruidenberg, Kingdom of the Netherlands,
- RWE Aktiengesellschaft, with registered office at Altenessener Str. 35, 45141 Essen, Federal
Republic of Germany, the ultimate controlling company.
In the last accounting period, from 30 September 2019 to 31 December 2019, the Company was
controlled by the following controlling parties:
i. Directly
- Czech Grid Holding, a.s. (till 15 October named as innogy Grid Holding, a.s.), with registered
office at Limuzská 3135/12, 100 98 Prague 10 – Strašnice, Company No. 243 10 573, the sole
member of the Company,
ii. Indirectly
- Czech Gas Networks Investments S.à r.l., with registered office at 20, Boulevard Royal, L –
2449, Luxembourg, Grand Duchy of Luxembourg,
- Czech Gas Networks S.à r.l., with registered office at 20, Boulevard Royal, L – 2449,
Luxembourg, Grand Duchy of Luxembourg,
- CGN Holdings S.à r.l., with registered office at 20, Boulevard Royal, L – 2449, Luxembourg,
Grand Duchy of Luxembourg,
- Smetana Investments S.à r.l., with registered office at 20, Boulevard Royal, L – 2449,
Luxembourg, Grand Duchy of Luxembourg,
- MEIF 4 Luxembourg C Holdings S.à r.l., with registered office at 20, Boulevard Royal, L – 2449,
Luxembourg, Grand Duchy of Luxembourg,
- MEIF 4 Luxembourg B Holdings S.à r.l., with registered office at 20, Boulevard Royal, L – 2449,
Luxembourg, Grand Duchy of Luxembourg,
- MEIF 4 Luxembourg A Holdings S.à r.l., with registered office at 20, Boulevard Royal, L – 2449,
Luxembourg, Grand Duchy of Luxembourg,
- Macquarie European Infrastructure Fund 4 LP, with registered office at First Floor, Albert
House, South Esplanade, St Peter Port, GY1 1AJ Guernsey, Norman Island, the ultimate
controlling company.
The Executive Directors are aware of no other parties exercising control over the Company.
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Annual report 2019 GridServices, s.r.o.
b) Other Controlled Parties
The Company has requested the above controlling parties to provide a list of other parties controlled
by the same controlling parties in the last accounting period. This Report has been prepared based
on information provided by such parties and based on other facts known to the Company's Executive
Directors. The structure of relations between controlled and controlling parties in the fiscal year 2019
is shown in Annex 1 A (for the period from 1 January 2019 to 21 February 2019), Annex 1 B (for the
period from 22 February 2019 to 29 September 2019) and Annex 1 C (for the period from 30 September
2019 to 31 December 2019) to this Report.
c) Role of the Controlled Party
The Company specializes in providing services of mostly technical nature to the Distribution System
Operator GasNet. These services include securing metering, operation, and maintenance of distribution
systems, documentation, day-to-day management, and network enlargement.
d) Means and Methods for Exercising Control
The controlled party was controlled by the controlling party through the general meeting, the powers
of which were exercised by the controlling party as the sole member exercising the powers of the
general meeting of the controlled party.
6.3 Overview of Transactions
In the last accounting period, the Company completed the following legal act at the behest or in the
interest of the related parties referred to in Section 1 of this Report, which involved assets in excess
of CZK 110,733 thousand, which represents 10% of the Company's equity reported in the most recent
Financial Statements compiled as at 31 December 2019:
- Sale of services to GasNet for the whole accounting period of 2019.
- Purchase of services from innogy Česká republika a.s. for the period from 1 January 2019
to 29 September 2019.
- Cash-pooling transactions with GasNet for the whole accounting period of 2019.
- The Company paid a dividend to innogy Grid Holding, a.s. in an amount exceeding the
value stated above.
6.4 Agreements with Related Parties
Throughout the last accounting period or during a part thereof, the Company and the related parties
referred to in Section 1 of this Report were subject to contractual arrangements arising under the
agreements listed in Annex 2 (regarding the ultimate indirectly controlling company RWE AG)
and in Annex 3 (regarding the ultimate indirectly controlling company Macquarie European
Infrastructure Fund 4 LP through direct control by Czech Gas Networks Investments S.à r.l.).
6.5 Assessment and Settlement of Losses
The Company incurred no losses based on agreements in effect during the reported period between
the Company and other members of the Group, and other dealings and measures undertaken by the
Company at the behest or in the interest of the foregoing entities during the reported period.
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Annual report 2019 GridServices, s.r.o.
6.6 Assessment of Relations and Risks within the Group
Membership in the Group mainly provides the Company with benefits. The Group has strong financial
resources, which benefits the Company particularly during capital-intensive investment projects
into the gas infrastructure executed by subsidiaries. There are no detriments arising from the Company's
membership in the Group. The Company is exposed to no risks with regard to relations within the Group.
6.7 Confidentiality
With regard to relevant stakeholders, information and documents are considered confidential insofar
as they constitute the business secret of the controlling party, the controlled party, and related parties
as well as all information on business transactions liable to cause damage to any relevant stakeholder
in conjunction with other documents of confidential nature.
The Management Report does not contain a detailed list of specific contracts and agreements
considering that such information is considered the trade secret of the relevant parties.
6.8 Summary
This Report was approved by the Company's Executive Directors on 17 March 2020.
Brno, dated 17 March 2020
Martin Gebauer Dušan Malý
Chairman of the Executive Directors Executive Director
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Annual report 2019 GridServices, s.r.o.
ANNEX NO. 1 A Scheme of relations between controlling and controlled parties for the
period from 1 January 2019 to 21 February 2019:
41
Annual report 2019 GridServices, s.r.o.
ANNEX NO. 1 B Scheme of relations between controlling and controlled parties for the
period from 22 February 2019 to 29 September 2019:
42
Annual report 2019 GridServices, s.r.o.
ANNEX NO. 1 C Scheme of relations between controlling and controlled parties for the
period from 30 September 2019 to 31 December 2019:
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Annual report 2019 GridServices, s.r.o.
ANNEX NO. 2
Agreements between the Company and Related Parties in the Last Accounting Period
(from 1 January 2019 to 29 September 2019)
Contracting Party Contract type / Subject-matter Quantity
GasNet, s.r.o. Cash-Pooling Establishment Agreement 2
Amendments 1 – 3 to Cash-Pooling Agreement 3
Agreement on Lease of Non-Residential Premises 1
Amendments 1 – 24 to Agreement on Lease of Non-
Residential Premises 24
Partnership Agreement 1
Contract for the Provision of Technical Services 1
Amendments 1 – 2 to the Contract for the Provision of
Technical Services 2
Master Agreement for Entry into Contracts for the
Provision of Technical Services 1
Agreement on Connection Conditions, Cooperation and
Assistance for Gas Device Implementation and
Agreement on Future Purchase Contract
1
innogy Česká republika a.s. Agreement on Lease of Non-Residential Premises 1
Amendments 1 – 17 to Agreement on Lease of Non-
Residential Premises 17
Commercial Sublease Agreement 2
Amendments 1 – 2 to Agreement on Lease of
Commercial Non-Residential Premises 2
Amendments 1 to Agreement on Lease of Commercial
Non-Residential Premises 1
Master Agreement for Service Level Agreements for
Corporate Services 1
Amendment 1 to SLA for Corporate Services 1
Service Level Agreement for Corporate Services 1
Service Level Agreement for Corporate SAP Systems 1
Amendments 1 – 3 to Service Level Agreement for
Corporate SAP Systems 3
Master Agreement for Service Level Agreements for
Facility Management, Fleet Management, and
Procurement
1
Master Agreement for Entry into Service Level
Agreements for Accounting and Taxation 1
Master Agreement for Service Level Agreements for
Information Technologies and Electronic
Communications
1
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Annual report 2019 GridServices, s.r.o.
Contracting Party Contract type / Subject-matter Quantity
Service Level Agreements for Information Technologies
and Electronic Communications 1
Insurance Premium Payment Agreement 1
Trademark Use Consent 1
Personal Data Processing Agreement 2
Agreement onf the Provision Product Sub-Licence 1
innogy Energie, s.r.o. Master Contract for SLA for Non-Regulated Technical
Services 1
SLA for Non-Regulated Technical Services 1 Agreement on Bundled Gas Supply Services 2
Agreement on Bundled Electricity Supply Services from
the Low-Voltage Grid 1
innogy Energo, s.r.o. Service Level Agreement for Construction of CNG Filling
Stations for Motor Vehicles 1
Lease Agreement 1
Copyright Assignment Agreement 1
Agreement on Operation and Maintenance of Gas
Connection 4
innogy Gas Storage Service Level Agreement – Analysis of Natural Gas 1 Contract for Work 1
innogy Zákaznické služby, s.r.o. Lease Agreement 1
Master Contract for Entry into Agreements on the
Provision of Services by innogy Zákaznické služby, s.r.o. 1
Agreement on the Provision of Services by innogy
Zákaznické služby, s.r.o. 1
Personal Data Processing Agreement 1
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Annual report 2019 GridServices, s.r.o.
ANNEX NO. 3
Agreements between the Company and Related Parties in the Last Accounting Period
(from 30 September 2019 to 31 December 2019)
Contracting Party Contract type / Subject-matter Quantity
GasNet, s.r.o. Cash-Pooling Establishment Agreement 2
Amendments 1 – 3 to Cash-Pooling Agreement 3
Agreement on Lease of Non-Residential Premises 1
Amendments 1 – 24 to Agreement on Lease of Non-
Residential Premises 24
Partnership Agreement 1
Contract for the Provision of Technical Services 1
Amendments 1 – 2 to the Contract for the Provision of
Technical Services 2
Master Agreement for Entry into Contracts for the
Provision of Technical Services 1
Agreement on Connection Conditions, Cooperation and
Assistance for Gas Device Implementation and
Agreement on Future Purchase Contract
1
46
Annual report 2019 GridServices, s.r.o.
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