Annual report 2002 - KU Leuven · Distrigas • Annual Report 2002 • page 4. Distrigas • Annual Report 2002 •page 5 October 2002 Distrigas participates in enhancement of reverse

Annual report 2002

Shareholders’ guide

Distrigas share

The Distrigas share is quoted on theFirst Market of Euronext Brussels.

Agenda of the shareholders

> 13 May 2003 – Ordinary andExtraordinary General Meeting

> 23 May 2003 – Payment ofdividends

> 27 August 2003 - Press release ofthe Board of Directors regardingthe half-yearly results

Payment of dividends

The net dividend after withholdingtax for the 2002 financial year will beEUR 23.01 per share. Dividendson bearer shares will be payableon presentation of coupon No. 2 at the counters of Fortis Bank, ING Belgium, KBC and Dexia Bank Belgium.

Investor relations

Jan Van BrabantTel.: +32 (0)2 518 65 99Fax: +32 (0)2 518 62 85e-mail: [email protected]

Distrigas share (in EUR) 2002

> Gross dividend 30.68

> Withholding tax 7.67

> Net dividend 23.01

Distrigas • Annual Report 2002 • page 1

2nd financial year | Reports to the Annual General Meeting on 13 May 2003

Distrigas

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 6

Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . page 8

Summary of the consolidated financial statements . . page 11

Activities of the subsidiaries . . . . . . . . . . . . . . . page 14

Summary of the financial statements of Distrigas S.A. page 15

Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . page 17

Corporate governance . . . . . . . . . . . . . . . . . . page 18

Management Report . . . . . . . . . . . . . . . . . . . . . . . page 30

Distrigas reinforces its position in Europe . . . . . . . page 32

Natural gas sales . . . . . . . . . . . . . . . . . . . . . page 34

Natural gas supply . . . . . . . . . . . . . . . . . . . . page 40

Legal and regulatory framework . . . . . . . . . . . . page 44

Corporate citizenship . . . . . . . . . . . . . . . . . . . page 48

Consolidated Accounts . . . . . . . . . . . . . . . . . . . . . page 52

Statutory Financial Statements . . . . . . . . . . . . . . . . page 78

Content


Distrigas

Key events

January 2002 First deliveries to Rhodia

First deliveries were made to the Rhodia chemicalscomplex in Chalampé, France. Following a contractsigned in 2001, Distrigas will supply a total of nearly3 billion m3 of natural gas over a period of five years.

July-August 2002 Interconnector stop

Transmission of British natural gas from the UnitedKingdom to the Continent via the Interconnectorwas interrupted for five weeks due to pollution byliquid hydrocarbons from the UK network.

Distrigas-customers have not been inconveniencedat any time by this interruption. Thanks to Distrigas'diversified portfolio of purchase contracts,continuity of natural gas delivery to customers wasmaintained. Distrigas also supplied gas to severaltrading partners in order to make up for theshortfall in their UK source, so that they couldcontinue to honour their commitments, and thusensured the liquidity of the Zeebrugge hub.



October 2002 Distrigas participates in enhancement of reverseflow capacity of the UK Continent Interconnector

Distrigas has supported the project from the outsetand has significantly contributed to the go-aheaddecision by underwriting slightly more than onequarter of the reverse flow capacity increase (i.e.transmission capacity towards the UK). This willreinforce Distrigas’ trading position in theZeebrugge and Bacton markets and createadditional opportunities in its marketing of border-to-border transit capacity through Belgium and insupplying the UK market, which is expected tobecome a net importer of natural gas by the middleof the decade.

December 2002 20 years of supplying Algerian LNG to Distrigasand receipt of the thousandth shipment

To mark this occasion Sonatrach and Distrigassigned a letter of intent for the supply of natural gasvia the Medgaz project, an underwater pipeline thatwill link Algeria directly to Spain. The volume sup-plied will be at least one billion cubic metres by2006.

January 2003 Delivery of a new tanker

In South Korea, Distrigas and Bergesen christenedthe Berge Boston, a new carrier with a capacity of138,000 m3 for transporting LNG (liquefied naturalgas). The ship, owned jointly by Bergesen (51%) andDistrigas S.A. (49%), will be chartered under a long-term contract to Tractebel LNG North America LLC.

Distrigas


Foreword

The year 2002 was a major milestone for Distrigas.First, the year covered the first completeaccounting period of our new company, a year inwhich our focus was resolutely centered onmarketing natural gas and international transportcapacity. In addition, the year was significantbecause great advances were made in the settingup of a genuine European gas market. As evidencedby the figures, the phase was successfullyconcluded, both from the financial and sales pointof view.

Pursuing growth

In accordance with the targets set two years ago,Distrigas intends to hold on to at least 5% of theWestern European market, which is growing at anannual rate of 2.5% to 3%. This growth target is asizeable challenge because competition hasbecome increasingly fierce. First, 58% of thedomestic market has been eligible in Belgium since2001 and has been opening at a faster pace than inthe past. Starting as early as 1 July 2003, allconsumers living in Flanders will be free to choosetheir natural gas supplier, regardless the volume oftheir consumption. The regions of Wallonia andBrussels have also opted to accelerate the openingof their markets. Based on the current data, it isexpected that the rate of market opening inBelgium will increase from 65% at 1 January to 83%by 1 July 2003.

Whilst our competitors in Belgium are takingadvantage of the easy access to a very well-connected network, and are benefiting from thelegal unbundling between system operator andcommercial businesses, the same cannot be said ofall the players located beyond Belgium's borders. Itwould appear that liberalisation is not beingintroduced in all European Union countries at thesame pace; there are instances where the declaredlevel of market liberalisation in some countriesdoes not match the reality on the supply markets.

However, for Distrigas the greatest sales potentiallies precisely in developing its activities in Europe.This mission was accomplished in 2002: sales outsideBelgium - and our trading and arbitrage activities inthe short-term markets - grew by 28% in 2002. Thislargely offset the losses sustained in the Belgian endusers' market.

Sales of natural gas on the rise

In Belgium sales of natural gas increased slightly in2002. Sales to local distribution companies fell by 3.4%mainly due to exceptionally mild weather anddespite the increased penetration of natural gas onthe residential heating market. The increased salesto direct industrial customers compensated for thefall of sales to local distribution companies. Marketbreakthroughs were achieved on the one hand inFrance, Spain and Italy, and on the other hand ingas trading on the short-term markets.


It should be noted that the price of natural gas inBelgium continues to be very competitive relative tothat in other European countries, in all the leadingcustomer segments. In addition, this yearresidential customers again greatly benefited fromthe tariff measures introduced by the authorities.

Competitive natural gas and internationaltransport capacity

Distrigas has made the best of its ability to operatesuccessfully on markets increasingly open tocompetition. Our major long-term asset in anincreasingly open market continues to be ourdiversified and competitive portfolio of gaspurchase contracts that provide off-take flexibility.Long-term purchases are the backbone of oursupply services to customers, while opportunitieson the short-term gas and liquefied natural gas(LNG) markets are a complementary tool forenhancing the competitiveness of our prices andincreasing volume flexibility.

Distrigas also offers international transportcapacity: border to border capacity across Belgium(transit), pipeline capacity outside Belgium andLNG shipping capacity.

We expect this activity to develop, with the Britishmarket's growing demand for natural gas beingtranslated into increasing exports to that market.Distrigas has reserved more than a quarter of theplanned increase in interconnector reverse flowcapacity, which will enable us to take up thechallenge.

Distrigas reaffirmed its ambitions in 2002. Staffmembers contributed to the company's growth bydedicating themselves daily to providing betterservices to our customers. Their on-going andconstantly renewed commitment has alreadyproduced new commercial advances in 2003. Ourmost sincere thanks go out to all of them.

Willy Bosmans Jean-Pierre HansenChief Executive Officer Chairman of

the Board of Directorsand of the Executive

Committee

Directors’ Report

Summary of the consolidated financial statements . page 11

Activities of the subsidiaries . . . . . . . . . . . . . . page 14

Summary of the financial statements of Distrigas S.A. page 15

Prospects . . . . . . . . . . . . . . . . . . . . . . . . . page 17

Corporate governance . . . . . . . . . . . . . . . . . . page 18

Distrigas


directors’ report

In accordance with the provisions of the CompaniesAct, we hereby present our report on the companyand its group for the financial year 2002, andsubmit, for your approval, the annual accountsclosed on 31 December 2002.

A description of the activities during calendar year2002 can be found in the Foreword by the Chairman

of the Board and the Chief Executive Officer, and inthe Management report. The main features of last year were thedevelopment of gas sales activities in a Europeansetting and the accelerated opening up of the gasmarket. Following the demerger of the formerDistrigas, particular attention was also paid to thecompany's organisation.

Distrigas subsidiaries


Finpipe

Etac

Distri RE

Transfin

Huberator

Distrigas & C°

Interconnector(UK) Ltd

InterconnectorZeebrugge Terminal

56%

■ Consolidated subsidiaries■ Non-consolidated subsidiaries

75%

99.99%

51%

2 % + active partner

5%

99.8%

98%

5%

10%


Consolidated key figures (in EUR million) 2002 2001(1)

> Turnover 3,605.91 1,759.86

> Profit on ordinary activities before income taxes of the consolidated enterprises 89.35 16.29

> Consolidated profit 70.47 10.16

> Cash flow 72.92 89.53

> Capital and reserves 220.63 174.58

> Fixed assets 171.95 165.14

(1) See comments above.

Summary of the consolidated income statement (in EUR million) 2002 2001(1)

> Operating result 94.37 18.38

> Financial result -5.02 -2.09

> Profit on ordinary activities before income taxes of the consolidated enterprises 89.35 16.29

> Extraordinary result 16.61 0.79

> Income taxes -37.55 -7.97

> Result of companies accounted for by the equity method 2.06 1.05

> Consolidated profit 70.47 10.16Share of third parties 2.86 1.41Share of the group 67.61 8.75

(1) See comments above.

Summary of the consolidated financial statements

Introduction

Following the unbundling at the end of 2001 of Distrigas into two companies - the new Distrigas andFluxys - the results for 2001 cover the period from 1 July 2001 to 31 December 2001 for Distrigas S.A.and its consolidated subsidiaries.The variations between FY 2001 and FY 2002 are not meaningful, since sales of gas - which accountfor most of the turnover of Distrigas S.A. - experience significant seasonal fluctuations from the firstto the second half of the year. The differences between 2001 and 2002 are therefore not shown.

Consolidation scope

There was no change to the scope of consolidationcompared with the previous financial year. Theannotated results below therefore still include thoseof Distrigas S.A. and those of subsidiaries Distrigas &C° S.C.A., Finpipe G.I.E., Transfin S.A. (all of which werefully consolidated) as well as ETAC B.V. and Distri RE(consolidated using the equity method).

Turnover

Turnover from sales of natural gas (EUR 3,460 million)accounts for 96% of total turnover. The increase ofnearly 9% in terms of volume sold compared with2001 (in annual figures), did not have a similarimpact on turnover, since prices dropped by around16% during the same period (on average and takingall customers together) – even though prices beganto level off in the third quarter of 2002 with a slightupturn seen in the fourth quarter.

Transit generated a turnover of EUR 113 million,accounting for 3% of the total. It continues to rise,albeit not as strongly as in previous years (around4% compared to 2001 in annual figures).

Other activities accounted for EUR 33 million interms of turnover, of which EUR 21 million wasgenerated by Finpipe G.I.E. from the lease of theZeebrugge-Blaregnies and RTR pipelines.

Operating profit

The operating profit was generated by Distrigas S.A.and its subsidiary Distrigas & C°, in nearly equalshares, as well as by its subsidiary Finpipe G.I.E.

Since FY 2001 for Distrigas S.A. only covered the secondhalf, it is very difficult to make any useful comments ona comparison of the operating result with 2002.However, it should be noted that the competitivepressure announced in the “Outlook for 2002” sectionof the 2001 annual report have clearly been felt in themarket in 2002.

The subsidiary Distrigas & C°’s operating result rosesignificantly compared with 2001 due to the combinedeffect of an increase in turnover and the elimination ofnon-recurrent charges accounted for in 2001.

Financial result

The consolidated financial result comprises on theone hand charges for loans taken out by subsidiaryFinpipe G.I.E. to finance leased assets and, on the otherhand, the financial revenue generated by Distrigas S.A.and Distrigas & C°, in particular the inflow ofdividends on their holdings in Interconnector (UK) Ltd.

Extraordinary result

The consolidated extraordinary result related to atax reduction by a local authority for previous years.

The net result of equity-accounted companiesincludes, as last year, a share in the result of sub-sidiary ETAC B.V.

directors’ report



Summary of the consolidated balance sheet (in EUR million) 2002 2001(1)

Fixed assets 171.95 165.14

> Intangible assets 0.04 0.00

> Tangible assets 119.63 123.26

> Financial assets 52.28 41.88

Current assets 1,319.23 1,571.63

> Amounts receivable after one year 148.88 165.43

> Stocks and contracts in progress 181.50 190.81

> Amounts receivable within one year 575.68 700.02

> Investments 361.61 498.96

> Cash at bank and in hand 36.90 0.33

> Deferred charges and accrued income 14.66 16.08

Total assets 1,491.18 1,736.77

Capital and reserves 220.63 174.58

> Capital 66.23 66.23

> Share premium account 0.04 0.04

> Revaluation surpluses 1.49 1.49

> Reserves 152.87 106.82

Third party interests 11.18 11.13

Provisions and deferred taxes 215.89 220.86

Creditors 1,043.48 1,330.20

> Amounts payable after one year 114.53 165.84

> Amounts payable within one year 759.16 1,022.72

> Accrued charges and deferred income 169.79 141.64

Total liabilities 1,491.18 1,736.77

(1) See comments in introduction, page 11.


directors’ report

Distri RE S.A. (99.99% owned by Distrigas)

Distri RE is a Luxembourg-registered reinsurancecompany that ensures more efficient managementand control of certain risks associated withDistrigas' activities. These are risks which theinsurance and reinsurance market is unable tocover or for which cover is too expensive.

As in previous years, this company broke evenduring the financial year.

Finpipe G.I.E. (56% owned by Distrigas)

Finpipe is an economic interest grouping formed in1991 which owns the Zeebrugge-Blaregnies pipeline(transit of Norwegian gas via Zeepipe) and the RTR

pipeline linking Zeebrugge to Eynatten, with branchesto Zelzate. For these pipelines, a leasing agreementhas been concluded with Fluxys.

The profit for the financial year is EUR 6.38 million.

Distrigas & C° S.C.A. (2% owned by Distrigas)Transfin S.A. (99.8% owned by Distrigas)

Distrigas & C°, a partnership limited by shares, isresponsible for the development of internationalactivities, such as the sale of border-to-border capacity(transit) in Belgium and the sale of transport capacityoutside the Belgian market. The marketing of capacity ofthe RTR and Zeebrugge-Blaregnies pipelines is assignedto Distrigas & C°. Distrigas is the active partner andTransfin the passive partner in Distrigas & C°.

The profit for the financial year amounts to EUR 29.01million.

ETAC B.V. (75% owned by Distrigas)

ETAC B.V. (European Transport Company) set up byDistrigas and Gaz de France, markets the capacity ofthe pipeline between 's-Gravenvoeren and Blaregnies,property of SEGEO S.A. (Société Européenne duGazoduc Est-Ouest). Shareholders of SEGEO S.A. areGaz de France and Fluxys.

The profit for the financial year amounts to EUR 10.37million. This profit was appropriated to theshareholders, in accordance with the Articles ofAssociation. Distrigas' share in 2002 was EUR 2.06million.

Interconnector (UK) Ltd (5% owned by Distrigas)

Interconnector (UK) Ltd (IUK) was set up by aconsortium of European gas companies to build andoperate the Interconnector pipeline between theBritish gas network (Bacton) and continentalEurope (Zeebrugge). Distrigas owns 10% (5%directly and 5% through Distrigas & C°).

Interconnector Zeebrugge Terminal (51% owned by Distrigas)

When this project was set up, InterconnectorZeebrugge Terminal (IZT) entrusted the formerDistrigas with the financing of the Interconnectorreception terminal in Zeebrugge via a leasingagreement. Fluxys as the lessor retains its rights andobligations arising from the leasing agreement, whilethe new Distrigas is a shareholder in the companyInterconnector Zeebrugge Terminal. FurthermoreFluxys is also responsible for the exploitation andmaintenance of IZT via a service contract.

The net profit of the financial year amounts to EUR 0.08million.

Activities of the subsidiaries


Summary of the financial statements of Distrigas S.A.

Key figures (in EUR million) 2002 2001(1)

> Turnover 3,471.52 1,693.69

> Profit on ordinary activities before taxes 41.96 10.38

> Profit 38.66 6.14

> Cash flow 22.45 72.64

> Capital and reserves 158.63 141.52

> Fixed assets 43.50 33.48


Summary of the Distrigas S.A. income statement (in EUR million) 2002 2001(1)

> Operating profit 33.98 0.32

> Financial result 7.98 10.06

> Profit on ordinary activities before taxes 41.96 10.38

> Extraordinary result 16.61 -0.09

> Income taxes -19.91 -4.15

> Net result 38.66 6.14


Appropriation of the result of Distrigas S.A. (in EUR million) 2002

The Board of Directors proposes to the Annual General Meeting to appropriate the net result as follows:

> Result to be appropriated 40.19

> Result for the financial year 38.66

> Profit brought forward 1.53

> Appropriation 40.19

> To the available reserves 17.00

> Dividends 21.56

> Brought forward 1.63


Accordingly, it is proposed to the Annual General Meeting to pay a gross unit dividend of EUR 30.68,representing a net dividend of EUR 23.01.


directors’ report

Summary of the Distrigas S.A. balance sheet (in EUR million) 2002 2001(1)

Fixed assets 43.50 33.48

> Intangible assets 0.04 0.00

> Tangible assets 2.97 3.39

> Financial assets 40.49 30.09

Current assets 1,123.64 1,385.57

> Stocks and contracts in progress 181.50 190.81

> Amounts receivable after one year 559.87 685.13

> Investments 333.81 496.15

> Cash at bank and in hand 36.81 0.32

> Deferred charges and accrued income 11.65 13.16

Total assets 1,167.14 1,419.05

Capital and reserves 158.63 141.52

> Capital 66.23 66.23

> Share premium account 0.04 0.04

> Revaluation surpluses 1.49 1.49

> Reserves 89.24 72.23

> Profit carried forward 1.63 1.53

Provisions and deferred taxes 210.89 215.86

Creditors 797.62 1,061.67

> Amounts payable after one year 7.49 48.05

> Amounts payable within one year 622.29 872.88

> Accrued charges and deferred income 167.84 140.74

Total liabilities 1,167.14 1,419.05



When looking at the prospects of Distrigas we haveto take into account the accelerated development ofthe natural gas market in Europe. Although thiscarries certain risks it also offers manyopportunities.

Risks? Because effective competition in Belgiumcould lead to lower margins on natural gas salesand a smaller market share for Distrigas on itsdomestic market. The opening up of the Belgianmarket has led to much easier access, both interms of logistics (with numerous points of entry tothe Belgian network and good connections with therest of Europe) and in terms of the regulatoryframework.

Opportunities? Because market liberalisationoffers a lot of opportunities. We will continue activeprospecting of industrial customers and energycompanies in Western Europe. Good results havealready been obtained in the first quarter of 2003,mainly in France and Spain.

The Distrigas activity of international capacity tradeis expected to grow, especially through the risingdemand for natural gas in the UK, which is expectedto become import-depended by the middle of thedecade. The planned increase in the reverse flowcapacity of the Interconnector pipeline, in whichDistrigas has already reserved more than a quarterof the capacity, will enable us to meet this demandeffectively.

Finally, our 49% co-ownership of the Berge Bostontanker in partnership with the Bergesen shippingcompany will also help to generate income in 2003.This large methane carrier has been madeavailable on long-term charter to Tractebel LNGNorth America.

Prospects


directors’ report

Corporate Governance

100%

Suez (via SGB)

Tractebel

Belgian Shell

Publigas

Belgian StateFirst market of Euronext Brussels

Distrihold

38.45%

16.67%

16.71% 1 golden share

16.75%

16.62%

50% + 1 50% - 1A shares: 33.25%D shares: 5.20%

C shares A shares

B shares

D shares(of which 5.20% owned by Tractebel)

Shareholders


Board of DirectorsExecutive director

Willy BosmansChief Executive OfficerWilly Bosmans is responsible for the Electricity andGas Europe (EGE) business unit of Tractebel,member of the Tractebel General Management andChief Executive Officer of Electrabel. He wasappointed director of Distrigas on the nomination ofthe category A shareholders (Tractebel). His currentterm of office expires at the end of the AnnualGeneral Meeting in 2007.

Non-executive directors

Jean-Pierre HansenChairman of the Board of Directors and of the Executive CommitteeJean-Pierre Hansen is Chairman of the TractebelGeneral Management, Chief Executive Officer ofTractebel and Chairman of the Board of Directorsand the Executive Committee of Fluxys. He is amember of the Executive Committee and of theGeneral Management Committee of Suez, of whichhe became General Operational Manager on 8January 2003. At the beginning of 2002 he wasappointed director of Arcelor and Vice-Chairman ofthe Federation of Belgian Enterprises. He wasappointed Governor of the National Bank of Belgiumin March 2002. He was appointed Chairman of theBoard of Directors of Distrigas on the nomination ofthe category A shareholders (Distrihold-Tractebel).His current term of office expires at the end of theAnnual General Meeting in 2007.

Jean-Pierre ConnerotteDirectorJean-Pierre Connerotte is General Manager GridManagement of Electrabel. He was appointeddirector of Distrigas on the nomination of thecategory A shareholders (Distrihold-Tractebel). Hiscurrent term of office expires at the end of theAnnual General Meeting in 2007.

Jean-Pierre DepaemelaereDirector Jean-Pierre Depaemelaere is a member of theTractebel General Management and General ManagerCorporate Human Resources of the TractebelGroup. He is Advisor to the Suez InternationalManagement and Institutional Relations department.He was appointed director of Distrigas on thenomination of the category A shareholders (Distrihold-Tractebel). His current term of office expires at theend of the Annual General Meeting in 2007.

Yvan DuponDirector Yvan Dupon is General Manager Distribution atElectrabel and an Electrabel director. He wasappointed director of Distrigas on the nomination ofthe category A shareholders (Tractebel). Hiscurrent term of office expires at the end of theAnnual General Meeting in 2007.


directors’ report

Jacques LaurentDirectorJacques Laurent is a director of Tractebel andadvisor to the Chairman of the Tractebel GeneralManagement. He was appointed director ofDistrigas on the nomination of the category Ashareholders (Distrihold-Tractebel). His currentterm of office expires at the end of the AnnualGeneral Meeting in 2007.

Claude MarinowerDirectorClaude Marinower is Chairman of IMEA and amember of the Antwerp City Council. He wasappointed director on the nomination of thecategory A shareholders (Distrihold-Publigas). Hiscurrent term of office expires at the end of theAnnual General Meeting in 2007.

Patrick MoenaertDirectorPatrick Moenaert is Mayor of Bruges. He wasappointed director of Distrigas on the nomination ofthe category A shareholders (Distrihold-Publigas).His current term of office expires at the end of theAnnual General Meeting in 2007.

Walter PeeraerDirectorWalter Peeraer is Chief Executive Officer of Fluxys.He was appointed director of Distrigas on thenomination of the category A shareholders(Tractebel). His current term of office expires at theend of the Annual General Meeting in 2007.

Jacques PivinDirectorJacques Pivin is honorary member of Parliamentand honorary Mayor. He was appointed director ofDistrigas on the nomination of the category Ashareholders (Distrihold-Publigas). He wasreplaced by Philippe Pivin on 1 January 2003.

Philippe PivinDirectorPhilippe Pivin is lawyer at the Brussels bar, Mayor ofKoekelberg, first Vice-Chairman of the Sibelga inter-municipal company and Vice-Chairman of Intermixt.He was provisionally appointed director on 26February 2003, with effect from 1 January 2003, onthe nomination of the category A shareholders(Distrihold-Publigas), to replace Jacques Pivin. TheAnnual General Meeting in 2003 will be invited topronounce on his definitive appointment.

Jozef RoosDirectorJozef Roos is honorary professor at the CatholicUniversity of Louvain (KUL), Chief Executive Officerof UGINE & ALZ Belgium, Chairman of the VlaamsEconomisch Verbond and Executive Vice-Presidentof Arcelor. He was appointed director of Distrigas onthe nomination of the category A shareholders(Tractebel). His current term of office expires at theend of the Annual General Meeting in 2007.

Etienne SnyersDirectorEtienne Snyers is a member of the Tractebel GeneralManagement. He was appointed director of Distrigason the nomination of the category A shareholders(Tractebel). His current term of office expires at theend of the Annual General Meeting in 2007.


Robert UrbainDirectorRobert Urbain is Minister of State, honorary memberof Parliament, Mayor of Boussu-Hornu and Chairmanof the Walloon Regional Council of Intermixt. He wasappointed director of Distrigas on the nomination ofthe category A shareholders (Distrihold-Publigas).His current term of office expires at the end of theAnnual General Meeting in 2007.

Michel Van HeckeDirectorMichel Van Hecke is director of various companies,Professor emeritus and Doctor of economic sci-ence. He was appointed director of Distrigas on thenomination of the category A shareholders(Tractebel). His current term of office expires at theend of the Annual General Meeting in 2007.

Emmanuel van InnisDirectorEmmanuel van Innis is a director of Tractebel andmember of the Tractebel General Management. OnMarch 2003 he was appointed member of theExecutive Committee of Suez, with responsibility forHuman Resources. He was appointed director ofDistrigas on the nomination of the category Ashareholders (Distrihold-Tractebel). His currentterm of office expires at the end of the AnnualGeneral Meeting in 2007.

Baron Emmanuel de BethuneDirectorBaron Emmanuel de Bethune is Chairman of theBoard of Directors of SPE and Chairman of theVlaamse Energie Holding (Flemish Energy Holding).He was appointed director of Distrigas on the nom-ination of the category B shareholders (Publigas).His current term of office expires at the end of theAnnual General Meeting in 2007.

Claude GrégoireDirectorClaude Grégoire is Chief Executive Officer of SPEand Chief Executive Officer of Socofe. He wasappointed director of Distrigas on the nomination ofthe category B shareholders (Publigas). His currentterm of office expires at the end of the AnnualGeneral Meeting in 2007.

Daniel TermontDirectorDaniel Termont is Alderman for the Port, EconomicDevelopment and Festivities of the city of Ghent,Chairman of TMVW and Chairman of Publigas. Hewas appointed director of Distrigas on the nomina-tion of the category B shareholders (Publigas). Hiscurrent term of office expires at the end of theAnnual General Meeting in 2007.

Renger BieremaDirectorRenger Bierema is Director Technology of ShellInternational Gas Ltd. He was appointed director ofDistrigas on the nomination of the category Cshareholders (Belgian Shell). He was replaced byMichael O'Callaghan on 1 July 2002.


directors’ report

Marc BrykmanDirectorMarc Brykman is Chairman and Chief ExecutiveOfficer of Belgian Shell and Chairman of theBelgian Petroleum Federation. He was appointeddirector of Distrigas on the nomination of the cate-gory C shareholders (Belgian Shell). His currentterm of office expires at the end of the AnnualGeneral Meeting in 2007.

Pierre CambresierDirectorPierre Cambresier is Finance Manager of BelgianShell. He was appointed director of Distrigas on thenomination of the category C shareholders (BelgianShell). His current term of office expires at the endof the Annual General Meeting in 2007.

Michael O'CallaghanDirectorMichael O'Callaghan is Director Europe, Russia &Caspian of Shell International Gas Ltd. He wasprovisionally appointed director on 1 July 2002, onthe nomination of the category C shareholders(Belgian Shell), to replace Renger Bierema. TheAnnual General Meeting in 2003 will be invited topronounce on his definitive appointment.

General Manager

Jean Vermeire attends the meetings of the Board ofDirectors in his capacity as General Manager.

Secretariat

Natasha Seghers is Secretary to the Board of Directors.


Composition of the Board of Directors

Pursuant to the agreement of 24 May 1994 betweenthe State of Belgium, Ackermans & Van Haren andTractebel on the privatisation of Société Nationaled'Investissement (National Investment Corporation)and its branches, specific rules were drawn up forthe consultation procedure between theshareholders, the composition of the Board ofDirectors and the number of directors of the formerDistrigas. The same rules also apply to the newDistrigas (under the terms of an agreement of 19November 2001 between Tractebel, Belgian Shelland Publigas).

CompositionPursuant to Article 11 of the Articles of Association,the Board of Directors consists of 21 members:

> 15 directors appointed on the nomination of thecategory A shareholders (Tractebel, Distrihold-Tractebel and Distrihold-Publigas);

> 3 directors appointed on the nomination of thecategory B (Publigas) shareholders;

> 3 directors appointed on the nomination of thecategory C (Belgian Shell) shareholders.

Consultation procedureThe above-mentioned consultation procedure isincluded in Article 16 of the Articles of Associationand is formulated as follows:

The directors appointed on the proposal of category Bshareholders, acting unanimously, or those appointedon the proposal of category C shareholders, also actingunanimously, may require that the ExecutiveCommittee or Board of Directors postpones anydecision to be taken on any of the matters listed below.In that event, the Executive Committee or Board ofDirectors may not take any decision on these mattersfor a period of fifteen days from the date of the meetingof the body in question. The matters referred to in thepreceding paragraph are:

> the financial policy and dividend policy ofDistrigas;

> establishing and reviewing the annual budget;> the acquisition or disposal of interests in other

companies (including investments in newlycreated companies);

> the conclusion, amendment or dissolution ofagreements with a capitalised value exceedingEUR 12,500,000;

> any change in the core business of Distrigas or itsgeographical area of activity.


directors’ report

DirectorsThe members of the Board of Directors areappointed for a period of six years. Retiringmembers may be reappointed. The Articles ofAssociation do not stipulate an age limit formembers of the Board of Directors, nor has theBoard made any such stipulation.

Independent directorsAt present there are no independent directors on theBoard of Directors, as the consultation procedureoutlined above offers a sufficient guarantee ofdecisions by the governing bodies being taken in theinterests of the company and the shareholders as awhole.

However, under the Act of 2 August 2002, certaindecisions taken by listed companies must besubmitted to a committee of three independentdirectors. This new requirement comes into effect on1 January 2004, by which time Distrigas will take thenecessary measures to comply.

Powers and matters for discussion

Pursuant to Article 18 of the Articles of Association,the Board has extensive powers to perform actspertaining to the administration and organisation ofthe company.

The main subjects dealt with by the Board ofDirectors in 2002 were as follows:

> the change of the company’s registered office;> the supplier’s permit obtained by the new

Distrigas (under the terms of the Federal GasAct) and the supplier’s permit obtained fromVREG for selling gas through the Flemishdistribution network;

> gas procurement in the deregulated market;> gas sales;> international activities, such as the subscription

for additional reverse flow capacity within theInterconnector pipeline, in connection with theplanned construction of a new compression unitin Zeebrugge;

> storage capacity requirements;> the annual and half-yearly accounts of the

company and its subsidiaries.

Frequency of meetings

The Board of Directors met on four occasions in2002. This frequency is sufficient to prepare theGeneral Meeting of Shareholders and to examineand approve the annual accounts, half-yearlyaccounts, the annual report and the budgets for thecoming financial year.


Decision-making by the Board

QuorumPursuant to Article 15 of the Articles of Association,the Board of Directors may only deliberate and takedecisions if at least half of the directors are presentor represented. Each director may confer on one ofhis colleagues the right to represent him.

MajorityDecisions of the Board are taken by a majority ofvotes cast by the directors present or represented.

Organisation and supervision of day-to-daymanagement

Pursuant to Article 19 of the Articles of Association,the Chief Executive Officer and the members of theExecutive Committee are appointed by the Board.The Board also lays down rules for representationin matters of day-to-day management (Article 20 ofthe Articles of Association). The ExecutiveCommittee supervises the day-to-day management(see below).

Rules for the performance of a director's duties

The statutory provisions relating to theperformance of a director's duties are applicable infull. The Articles of Association make no specificadditional provisions in this regard.

Directors' emoluments

On 14 May 2002 the General Meeting decided to setthe directors' fees at an index-linked annual total ofEUR 100,000.

No percentage of profits was awarded, nor did thecompany grant any loans to directors. The directorsdid not carry out any unusual transactions with thecompany.

Pursuant to Article 19 of the Articles of Association,the Board of Directors is authorised to make specialpayments to a director who, whilst not ChiefExecutive Officer, undertakes specific work for thecompany. The Board also has the right to reimbursetravel and other expenses incurred by directors.


directors’ report

Committee formed by the Board of Directors

Executive Committee

ChairmanJean-Pierre Hansen (Distrihold-Tractebel)

MembersJean-Pierre Depaemelaere (Distrihold-Tractebel)Willy Bosmans (Tractebel)Jacques Laurent (Distrihold-Tractebel)Claude Grégoire (Publigas)Patrick Moenaert (Distrihold-Publigas)Renger Bierema (Belgian Shell) until 30 June 2002Michael O'Callaghan (Belgian Shell) as of 1 July 2002

General Manager Jean Vermeire attends themeetings of the Executive Committee, with theapproval of the Board of Directors.

SecretariatNatasha Seghers acts as Secretary to the ExecutiveCommittee.

Composition of the Executive Committee

Pursuant to the Articles of Association, theChairman of the Executive Committee is appointedby the Board of Directors, and the ExecutiveCommittee has 7 members:

> 5 members chosen from the directors appointedon the nomination of the category A shareholders;

> 1 member chosen from the directors appointed onthe nomination of the category B shareholders;

> 1 member chosen from the directors appointedon the nomination of the category C shareholders.

Powers

Pursuant to the Articles of Association, theExecutive Committee prepares the decisions to besubmitted for approval to the Board of Directors.The Executive Committee’s reports to the Board ofDirectors serve as a basis for decision-making.Pursuant to the Articles of Association, theExecutive Committee supervises activities relatingto day-to-day management. The Chief ExecutiveOfficer, supported by the General Manager and themembers of the management team, reportsmonthly to the Executive Committee on activitiesrelating to day-to-day management.

In accordance with the law of 2 August 2002, aproposal will be submitted to the General Meetingon 13 May 2003 to change the name of the “Comité dedirection/Directiecomité” to “Executive Committee”,with the same powers and the same method ofoperation as before.


Frequency of meetings and decision-making

The Executive Committee met on nine occasions in2002. As laid down by Article 19 of the Articles ofAssociation, the decisions of the ExecutiveCommittee are taken by the majority of votes castby the members present or represented.

Emoluments of members of the ExecutiveCommittee

Pursuant to Article 19 of the Articles of Association,the Board of Directors determines theremuneration of the members of the ExecutiveCommittee. The Board of Directors has not madeany provision for special emoluments for themembers of the Executive Committee.

Day-to-day management

By the Chief Executive Officer and the ManagementTeam.

The Management Team

Willy BosmansChief Executive Officer

Jean VermeireGeneral Manager, also responsible for supportfunctions

Joseph CastermansMarketing & Sales Manager

Erwin Van BruyselGas Supply & International Capacity Trade Manager

Powers of the Management Team

The Management Team is headed by the ChiefExecutive Officer, or in his absence by the GeneralManager. The Management Team is responsible forthe internal organisation of the company. The ChiefExecutive Officer takes his decisions under thesupervision of the Executive Committee. Decisionsthat do not relate to day-to-day management areprepared by the Management Team and submittedto the Executive Committee and to the Board ofDirectors. The Chief Executive Officer is responsiblefor implementing the decisions of these two bodies.

Frequency of meetings

Meetings of the Management Team are held on aweekly basis.


Auditor

The Extraordinary General Meeting of Shareholdersof 30 November 2001 appointed the civil co-operative company Deloitte & Touche, Réviseursd’entreprises S.C. s.f.d. S.C.R.L., as auditors for aperiod of three years. The term of office thereforeexpires at the end of the 2004 Annual GeneralMeeting. The Auditor is represented by Mr.Josephus Vlaminckx, company auditor. Theauditor’s fee for 2002 was EUR 40,000.

In financial year 2002 special fees of EUR 286,172.36for special services were paid to the Auditor,Deloitte & Touche, Réviseurs d’entreprisesS.C. s.f.d. S.C.R.L. or to companies having arelationship of professional collaboration with theAuditor.

Profit appropriation policy

The profit appropriation policy is embodied in Article31 of the Articles of Association. For as long as thestatutory reserve does not reach 10% of the capital,5% of the profit must be appropriated to thatreserve. The profit balance, increased or decreasedby the results carried forward, is at the disposal ofthe Annual General Meeting of Shareholders which,on the proposal of the Board, will appropriate atleast 75% of that part of the balance resulting fromcurrent results for the year after tax, for dividendsand bonuses.

The amount appropriated for that purpose must bedivided up as follows:

> at least 97% as dividend on the shares, pro ratatemporis et liberationis;

> not more than 3% for the Board of Directors,which must distribute it according to its internalrules.

On the proposal of the Board, the General Meetingof Shareholders may carry forward the balance, ifany, or appropriate it to the reserves.

The company’s policy is to strengthen its capital andreserves by regular appropriations to the reserves,in accordance with the intention of the provisions ofthe Articles of Association on profit appropriation.This is necessary in order to strengthen thecompany’s financial position in a rapidly changingmarket and to safeguard the continuingdevelopment of the company in the European gasmarket.

directors’ report


Subsidiaries

The Board of Directors supervises the progress ofthe subsidiaries' activities at least twice a year, byexamining the consolidated accounts (annual andhalf-yearly). The Board of Directors is also informedof any significant events and developmentsaffecting the subsidiaries.

Golden share held by the Belgian State

The Act of 26 June 2002, dealing with the specialrights attached to the golden share in the newDistrigas held by the Belgian State, was publishedin the Official Gazette of 31 July 2002.

This Act officially transfers one Distrigas share tothe State, giving the latter the same rights that itheld in the old Distrigas under the terms of theRoyal Decree of 16 June 1994, namely:

> the right to oppose certain transfers of strategicassets if such transfers are prejudicial to federalinterests in relation to energy;

> the right to appoint two representatives of thefederal government to attend the meetings of theBoard of Directors and the Executive Committeein an advisory capacity (see below). Theserepresentatives may lodge an appeal with theminister against any decision which in theiropinion infringes federal energy policy;

> the right to a casting vote in case of a vote beingblocked in the General Meeting of Shareholderson a matter concerning the objectives of thefederal energy policy.

The Secretary of State for Energy and SustainableEnergy, Olivier Deleuze, has appointed the followingpersons as representatives of the federalgovernment:

> Luc Barbé, Head of the Energy Department; > Ferdinand Sonck, General Manager of the Energy

Administration.

Distrigas

Management Report

Distrigas reinforces its position in Europe . . . . . . . . . . . . page 32

Natural gas sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 34

Natural gas supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 40

Legal and regulatory framework . . . . . . . . . . . . . . . . . . . . . . page 44

Corporate citizenship. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 48


The G parameterThe political situation around the world influenced prices upwards as of the third quarter


EUR

/MW

h

management report | introduction

Distrigas reinforces its

Distrigas in the market evolution

Despite the tough economy and the acceleratedpace of liberalisation in the Belgian market,Distrigas exceeded the 20 billion m3 sales mark forthe second year, and more than compensated for itsloss of market share on its home market throughsales in Western Europe, where it intends to hold onto at least a 5% share in this growing area.

Overall sales of natural gas increased by 8.8% in2002, despite domestic sales being influenceddownward by weather conditions that were milderthan in 2001. Natural gas continues to gain marketshare at the expense of other forms of energy, thusconfirming its competitiveness.

Competitive prices for natural gas

In 2002, European natural gas generally benefitedfrom its competitive price compared with otherfuels. The downward trend of 2001 continued duringthe first half of 2002, after which prices roseslightly.

In Belgium, the G parameter – based on Distrigas'average import price at the Belgian border – is usedas a benchmark for setting the price of gas itsupplies to its customers. It follows oil prices, butwith a certain lag.

The sharp drop in the G parameter in 2001continued in the first half of 2002.


Source: ENERGY ADVICE

EUR

/MW

h

Natural gas prices for industrial consumers in EUR/MWhSmall and medium industries, consuming 10,000 MWh/year, VAT excl., taxes incl.

■ Germany■ Italy■ The Netherlands■ France■ Spain■ Belgium

Compared to neighbouring countries, Belgian prices for industrial clients are the mostcompetitive in Europe

position in Europe

However since late August 2002, the risks ofconflict in the Middle East have caused a significantupturn in the prices of oil products. This led to an increase in the G parameter, reachingapproximately EUR 13.01/MWh in December.Bearing in mind the fluctuation in oil product pricesin late 2002, it is expected that the G parameter willcontinue to grow moderately until the secondquarter of 2003.

Compared with other European countries, the priceof natural gas in Belgium is very competitive for allmain customer segments.

Increased competition

2002 was a crucial year in the opening up of the gasmarket in Belgium. Competition is now greater thanever in the segment of industrial customers, includingthose supplied by public distribution, and all of themhave been systematically approached by numerouscompetitors. In February 2003, more than 30 eligiblesites had opted for an operator whose natural gas isnot supplied by Distrigas.

management report | gas sales

Sales up despite tough

Distrigas sells mainly to three types of customer: natural gas distribution companies,

industrial organisations and power producers.


economy

Ingrid Leyen

Key Account Manager

Anticipating the needs of our clients

In a market in the midst of change and open to competition,

it is a substantial asset for us to intimately know our clients and their needs.

This allows us to respond exactly to their requirements and develop truly tailor-made solutions for them.

The fall in sales to this segment is mainly due to theclimate conditions. 2002 was 15% warmer than anormal year (based on the last 30 years’ average).

Due to this weather effect, sales to this segment didnot reflect the increase in the number of domesticcustomers by around 40,000. If the influence of theweather conditions is factored out, then sales to theresidential, tertiary and craft sectors actually roseby 4.5% last year. By the end of 2002 the Belgian gasmarket had nearly 2.5 million residential andtertiary sector customers, nearly 2 million of themusing natural gas for heating.

The table below shows the breakdown of Distrigassales according to the categories of customer. Notethat 2002 was the first full year of activity for the“new” Distrigas*. For the sake of comparison, thefigures for 2001 have been restated to represent aperiod of 12 months.

Sales to local distribution companies in BelgiumSales up after eliminating weather conditions

Residential, tertiary and crafts sectors down 4.1%The intermunicipal distribution companies’ residential,tertiary and craft customers consumed 65.17 millionMWh, a fall of 4.1% compared to 2001.

Natural gas sales (in 1,000 MWh) 2002 2001 2002/ Breakdown of 2001 sales 2002

> Local distribution companies 78,052 80,809 -3.4% 29%Residential, tertiary and craft sectors 65,168 67,938 -4,1% 24%Industrial customers 12,884 12,871 +0.1% 5%

> Direct industrial customers 54,100 52,112 +3.8% 20%

> Power generation 38,733 37,480 +3.3% 15%

> Sales outside Belgium and trading 95,224 74,164 +28.4% 36%

Total 266,109 244,565 +8.8% 100%

Total in billion m3 (1m3(n) = 0.01163 MWh) 22.9 21 +8.8%

* Anticipating the provisions of the European directive, Distrigas, formerly a bundled company, was unbundled into two companies at the end of 2001:the new Distrigas and Fluxys. The new Distrigas concentrates on natural gas and international capacity trade. Fluxys offers natural gas transportservices, natural gas storage and LNG-terminal services in Belgium.



Natural gas now accounts for 44% of the market fordomestic heating, ahead of fuel oil (43%). Over aperiod of 10 years, natural gas has attracted morethan 400,000 new users in this market.

The main reason for this favourable trend is thegreater availability of natural gas, thanks toinvestments in transport and distributioninfrastructure. However, it is also thanks to theinherent advantages of natural gas, such as thelower cost of heating installations andconsumption. In addition, numerous efforts havebeen made to promote natural gas as a heatingfuel, with advertising campaigns, incentives for newconnections, etc.

The gas industry has granted tariff reductionsamounting to EUR 110 million (4.5 billion Belgianfrancs) over a period of three years, in line with therecommendations of the Electricity & Gas Board ofControl. A large proportion of the reductions(including discounts and the waiving of the fixedcharge for less well-off customers) applies toresidential customers.

Industrial consumers: status quo

In 2002, sales to the public distribution companies’industrial customers totalled 12.88 million MWh,unchanged for the last two years, despite difficulteconomic conditions. This customer segmentrepresents nearly 5% of Distrigas sales.

1 500

1 750

2 000

2 250

2 500

2 750

3 000

1983 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 2000 01 02

Number of degree-days* in 2002,a particularly mild year

In 2002 there were 2,090 degree-days, whereas there are 2,348 in a reference year and2,458 in a “normal” year. This represents a decrease of 11% compared with 2001 and 15%compared with a “normal” year.

* Degree-days: the number of degree-days in a day is calculated related to a heating limit determinedexperimentally at 16.5 °C. The number of degree-days is the difference between the referential temperatureof 16.5 °C and the average day temperature. On annual basis the sum of the total number of degree-days foreach day is made.

3,000

2,750

2,500

2,250

2,000

1,750

1,500


Direct sales to industrial customers inBelgium: +3.8%Despite the slowdown in the economy

Despite the slowdown in the economy, sales toindustrial customers totalled 54.10 million MWh, anincrease of 3.8% compared with 2001, mainlybecause of the improved competitiveness andenvironmental performance of natural gas. Formost of the year, natural gas was very competitivecompared with other fuels thanks to the fall in gasprices from late 2001 onwards.

In Belgium, there were increases in sales to theagro-food industry (up 20%) and to thepetrochemical, steel, non-ferrous metals, paperand glass industries. Sales to the chemical industryrose slightly by 2%. In the lime and cementindustry, however, natural gas suffered fromcompetition from other types of fuel used to fire thekilns. The brick industry too experienced a fall insales (down 8%) due to low activity in theconstruction sector. Finally, an economy-induceddecline in consumption was noticed in the carindustry.

Sales for power generation in Belgium: +3.3%Natural gas, the energy of the future for powerproducers

Sales of natural gas for power production amountedto 38.73 million MWh, up 3.3% compared with 2001.In 2002, natural gas was used to generate 16,479GWhe, compared with 14,762 GWhe in 2001.This increase represents the competitiveness ofnatural gas in the fuel mix used by electricityproducers, despite stagnation in the overall demandfor electricity.

With a market share of more than 20% for powergeneration, natural gas has become an essentialenergy source since the 1990s, thanks to CCGT(combined-cycle gas turbine) power stations: quickand cheap to build, with energy efficiencies of around55% and CO2 emissions lower than those of othertypes of conventional power station.

Numerous sources predict that in the future, naturalgas should make further inroads into this segment,due in particular to the political undertakings topromote gas as a fuel and to meet the requirementsof the Kyoto protocol (see the chapter on RationalUse of Energy).

Sales outside Belgium and trading: +28.4%An effective way of optimising the portfolio

Within Europe, Distrigas continued its penetrationof Western European markets, especially in Francewhere several industrial sites opted for Distrigas astheir gas supplier. Deliveries began in January 2002to the Rhodia chemical plant, our first largeindustrial customer in France, under the terms of afive-year contract made in 2001.

Also in 2002, Distrigas continued to supply naturalgas to power companies in Germany, Spain andItaly. Sales to Soteg, for supplying the Grand Duchyof Luxembourg, were maintained at the same levelas in 2001.


Sales

Transport or shipping capacity

Storage capacity

Key markets outside Belgium

>

>

>


The trading (arbitrage) activities perfectlycomplement our other activities, enabling us tooptimise our portfolio of gas purchases and salesover the long term. For example, Distrigas takesadvantage of the flexibility afforded by its long-termcontracts to sell quantities of natural gas on theEuropean power exchanges (spot markets) whenprices are high.

After doubling between 2000 and 2001, arbitragesales continued to increase in 2002, on the Bactonand Zeebrugge spot markets in particular.

In July and August 2002, when the Interconnectorpipeline had to be shut down for technical reasons,Distrigas supplied gas to several counterparties tomake up for the shortfall in gas from the UK. This enabled the parties concerned to meet theircommitments, as well as maintaining the liquidityof the Zeebrugge hub.

Distrigas also supplied gas to Huberator, theZeebrugge hub operator, so that the latter couldprovide its own customers with a backup service tocover interruptions in the normal supply.

Finally, the LNG swap agreements made in 2001between Distrigas and Sonatrach, Gas Natural andTractebel LNG North America expired on 31 March2002.


In Ghlin (Belgium), Gas Services advised thealuminium producer Remi Claeys Aleurope toinstall regenerative burners that alternatelygenerate heat and recover it from the combustiongases. This not only raised the efficiency of thesmelting furnace but also increased the smeltingcapacity, enabling the investment to pay for itself insix months.

Several measurement campaigns were carried outby Gas Services for the fertiliser plant operated byTimac Potasco, a subsidiary of the French groupRoullier. On the basis of the results, new burnerswere installed, yielding higher energy efficiency andlower CO2 emissions, and making the companymore competitive.

Distrigas made a temporary gas supply available tothe Ghent-based steel company Sidmar whilemodifications were being carried out to a gasexpansion station, in order to keep the Sidcometpilot plant going. The plant was kept continuouslysupplied over a period of eight hours by four tankertrucks, so making it possible to avoid the complexand costly operation of shutting down the plant andstarting it up again.

In the past few years the company has made substantial investments in further development of support

services for its customers. These services are aimed at process support and RUE and can lead to ideas

for operational improvements (OPEX) as well as profitable investment propositions (CAPEX).

The equipment for these environment, energy and process measurements are adapted to the business.

For example, Distrigas Gas Services disposes of a mobile lab van and of remote meter-reading devices

(data loggers) with a mobile phone connection. The audits carried out in real time by the industrial

customers enable them to analyse thoroughly process-thermie, emission and consumption.

The measurement campaigns carried out in 2002 were the basis for innovating projects with dozens

of companies. A growing number of industrial customers call on Gas Services to draw up a CO2 balance

for them and to offer advice on how to optimise their use, distribution and production of energy.

To ensure supplies of natural gas to Western Europe at competitive prices,

Distrigas seeks to optimise its procurement portfolio and diversify its sources.

For this purpose it has long-term contracts with natural gas producers,

and makes up its portfolio with short-term purchases.

A flexible, diversified

management report | natural gas supply


25%31%

27%17%

Composition of purchasing portfolio in 2002 At the end of 2002 Sonatrach and Distrigas alsoannounced the signature of a letter of intent for thesupply of natural gas via the Medgaz underwaterpipeline between Algeria and Spain, amounting toat least 1 billion m3 per year by 2006.

Restructure of the purchasing marketsChanging situation

The Norwegian and Dutch purchasing markets, twolong-term sources of supply for Distrigas, changedsignificantly in 2002.

In Norway, which is not an EU member but followsthe same rules for deregulation of its market,contracts with the various producers are no longermanaged centrally: each Norwegian supplier is nowresponsible for marketing its own output andmanaging its own contracts. This new marketsituation represents an attractive opportunity forDistrigas and its customers, since the largernumber of players should bring increasedcompetition.

Meanwhile, in The Netherlands, discussions arebeing held with a view to restructuring the gasindustry. It is highly likely that Gasunie, a long-timeDistrigas supplier, will be split into a gas transportcompany and two sales companies.

As laid down in the long-term purchasing contracts,the triennial price review was carried out in 2002with the Norwegian and Dutch producers, takingmarket developments into account.

portfolio of purchases

20 years of supply with Algerian LNGExtending the activities with the Medgaz project

At the end of 2002, Distrigas and Sonatrachcelebrated 20 years of Algerian liquefied naturalgas (LNG) being supplied to Distrigas, whichcoincided with the thousandth cargo of LNG. Thesupply contract was made in 1975 with the Algeriancompany Sonatrach, initially for a period of 20 yearsbut subsequently extended on various occasions.Since 1982 more than 70 billion m3 of natural gashas been supplied by Sonatrach to Distrigas.

The Algerian natural gas, which made up 17% of theDistrigas supply in 2002, is carried by sea in twolarge tankers, namely the “Methania” and the“Mourad-Didouche” (the latter being chartered byDistrigas from the Algerian company SNTM Hyproc,a subsidiary of the Sonatrach group).

■ The Netherlands ■ Algeria ■ Norway

Short-term sources

of supply

Long-termsources ofsupply

Wim De Boeck

Pipeline Gas Supply & Logistics - The Netherlands & Norway

Long-term stability

All our clients should be able to count on a supplier who is able to ensure natural gas deliveries in all

circumstances. Our supply portfolio is long-term in scope and diversified by nature, and forms the backbone of our

business. It provides the best guarantee to our clients whilst allowing us to offer great flexibility in our services.

Diversified sourcesThe emergence of new suppliers

In view of the expected growth in demand fornatural gas in Europe, Distrigas has begunnegotiations to extend its portfolio with long-termpurchases from diversified sources.

With regard to LNG, new projects being consideredfor the European market are either underdevelopment or concern the extension of existingliquefaction plants. These LNG production projectsare located mainly in North and sub-SaharanAfrica, as well as in the Middle East. Finally, with regard to the supply of pipeline gas,apart from Norway and The Netherlands, anincreasingly important role in supplying WesternEurope should be played by Russia.

Spot purchases of pipeline gas and LNG cargoesSeizing opportunities on the worldwide LNG market

In order to optimise its portfolio, Distrigas is addingto its long-term purchases by taking advantage ofopportunities for spot purchases on the Zeebruggeand Bacton markets, and for purchasing cargoes ofLNG. Five such cargoes were acquired in 2002, fromNigeria, Oman and Qatar. Natural gas prices in theUSA and Asia (in particular Japan and Korea),temporary oversupply at the wellhead or excessLNG tanker capacity can all influence the worldwideLNG market, making LNG producers more or lesskeen on spot operations in Europe.

Distrigas expands its LNG shipping capacityThe Berge Boston joins the tanker fleet

In January 2003 the Berge Boston tanker wasdelivered by the Daewoo shipyard in Korea. This138,000 m2 methane carrier is owned 49% byDistrigas and 51% by the Oslo-based Bergesencompany, the world’s largest LNG shipper.Managed by Bergesen, the ship is operated on long-term charter by Tractebel LNG North America LLC,a Tractebel subsidiary based in Boston. TractebelLNG North America plans to use the tanker mainlyfor supplying LNG to its import terminal in Everett,to the north of Boston. The charter contract runs for20 years, with an option to extend it by a further 9years. The joint ownership of the new tanker willenable Distrigas to play a larger part in the fast-growing LNG industry.

Methania

An arbitration procedure between Distrigas andCMB concerning the Methania was settled in favourof Distrigas, which can now count on making use ofthis tanker for its remaining technical life, or atleast until 2014.


management report | natural gas supply


Expanding the international transport capacity

Distrigas also markets border-to-border transportcapacity in Belgium. This gas transit activity makesit possible to physically connect up markets inEurope and to promote the company’s security ofsupply by means of long-term transport contracts.

Transit capacity in Belgium: 48 billion m3

In Belgium, the contracted long-term capacityamounts to some 48 billion m3 annually. To this isadded the spare capacity sold by Distrigas undershort-term contracts, mainly for transport to orfrom the Zeebrugge hub.

Transport capacity outside Belgium: participation in the Interconnectorcapacity upgrade

Through its stake in the Interconnector underwaterpipeline between Zeebrugge in Belgium and Bactonin the UK, Distrigas has a direct connection with theUK gas market. This pipeline has the particularadvantage of being bidirectional, enabling thedirection of flow to be reversed (20 billion m3 per yearfrom Bacton to Zeebrugge; 8.5 billion m3 in theopposite direction). Through Interconnector,significant quantities of gas transit between the UKand the continent via Belgium, some of it beingtraded on the Zeebrugge hub.

Interconnector stopNo impact on Distrigas customers

Transmission of British natural gas from the UnitedKingdom to the Continent via the Interconnector wasinterrupted in July and August 2002 due to pollution byliquid hydrocarbons from the UK network. Transport ofgas was resumed after various cleaning operations.

Distrigas-customers have not been inconvenienced atany time by this interruption. Thanks to Distrigas'diversified portfolio of purchase contracts, continuity ofnatural gas delivery to customers was maintained.

Enhancement of the Interconnector reverse flow capacityOne quarter reserved for Distrigas

In October last year, Interconnector UK Ltd. (IUK),owner and operator of Interconnector, decided toincrease the reverse flow capacity from Zeebruggeto Bacton by installing compressors at theInterconnector Zeebrugge Terminal (IZT). Theinvestment will bring the reverse flow capacity to16.5 billion m3 per year by the end of 2005.

Distrigas has supported this project from theoutset, and made a significant contribution to IUK’sinvestment decision by reserving slightly more thana quarter of the increased reverse flow capacity.This will reinforce Distrigas’ trading position in theZeebrugge and Bacton markets and createadditional opportunities in its marketing of border-to-border transit capacity through Belgium and insupplying the UK market, which is expected tobecome a net importer of natural gas by the middleof the decade.

management report | legal and regulatory framework

The Energy Council held in Brussels in November 2002 laid down the rules and the timetable

for the opening up of the European energy market. However, Belgium had already introduced

many of the measures, in anticipation of these developments. Distrigas looks on this situation

as an opportunity, as it will enable the company to expand beyond its traditional borders,

even if the opening up does not go ahead at the same rate in all EU member states.

Opening up of the market,


Continued opening up of the European marketEU Council of Energy Ministers lays down the rules

The agreement reached at the Council meetingheld in Brussels was based on a compromise putforward by the Danish presidency, namely a projectaimed at speeding up the deregulation of the gasand electricity industries within the EU.

Under the terms of the agreement, both marketswill be opened to competition for non-residentialcustomers by 1 July 2004 at the latest, with fullopening up for all customers by 1 July 2007. Itincludes provisions for transport network operatorsand distribution network operators to be separatefrom one another, along with public serviceobligations, regulation missions, third-party accessto gas storage installations, and rules for tariffsetting.

The requirement for the transport and distributionnetworks to be separate does not necessary meanthat ownership of the gas transport and distributioncompanies has to be separate from ownership ofthe gas sales companies.

In addition, the EU Commission has asked to beable to present special reports before 1 January2006, summarising the experience gained inderegulation of the markets, together with anyrelevant proposals to the Parliament and theCouncil of Ministers.

Finally, the political agreement lays down thataccess to storage installations and ancillaryservices must either be organised on the basis ofnegotiated access, or must be regulated accordingto published tariffs. It also specifies that when themarket is sufficiently competitive, then access tothese services can be organised with the help ofmarket instruments. The agreement furtherclarifies the circumstances under which access tothe storage installations can be limited.

Michaël Gillis

Legal Counsel

Mastering change and creating opportunities

The opening up of the gas market on a European scale is a challenge. However it also offers

an opportunity that Distrigas intends to seize with a vengeance. The acceleration of the liberalisation

process that we are seeing today allows us to grow internationally.

growth opportunity

Opening up gains pace in BelgiumEach region imposes its own rate

The federal law of 16 July 2001 lowered the eligibilitythreshold to 5 million m3 per year for eachconsumption site, and in 2002 the speed of openingup of the market accelerated at regional level.

As of 1 January 2003 the Flemish region in Belgiumopened up the market for those consumersconsuming in excess of 1 million m3 (12 GWh) andconnected to public distribution networks. Allconsumers based in Flanders will be free to choosetheir gas supplier starting on 1 July 2003.

On 28 October 2002, VREG (the Flemish regulatorybody) appointed network operators on a provisionalbasis. The “Technical regulation governing accessto the distribution network” was officially publishedon 27 November 2002. Prior to that, in October, theFlemish Government issued a degree laying downthe conditions to be met by holders of a supplier’slicence.

Meanwhile, the decree on the organisation of theregional gas market in Wallonia was adopted on 18December 2002 and published in the BelgianOfficial Gazette on 11 February. It allows for theimmediate eligibility – when it becomes law – of endcustomers who consume more than 1 million m3

(12 GWh) per year, as well as those who have aquality cogeneration unit.

Practically, the opening level of the Belgian marketwill increase from 65% as of 1 January to 83% as of1 July 2003.


management report | legal and regulatory framework

Degree (%) of opening up of the European gas market in 2002

> Austria 100%

> Belgium 58%

> Denmark 35%

> Finland derogation

> France 20%

> Germany 100%

> Greece derogation

> Ireland 82%

> Italy 96%

> Luxembourg 72%

> The Netherlands 60%

> Portugal derogation

> Spain 79%

> Sweden 47%

> UK 100%


Gas supplyDistrigas obtains the necessary permits

In accordance with the provisions of the federal gaslaw, Distrigas submitted an application for a permitto supply natural gas to eligible customersconnected to the transport network. The permit wasgranted on 17 April 2002, for a period of five years.

At regional level, the Flemish legislation imposes asimilar system of permits for operators to supplynatural gas to eligible end customers connected tothe distribution networks, and Distrigas obtainedthe necessary permit on 6 December 2002.

Turning deregulation into a growth opportunity Distrigas moves early and positions itself in Europe

Market developments are going ahead at a greatrate in several EU countries, with companies thatwere basically national in scope becomingcommercial players on a European scale, with salesorchestrated from a central headquarters. Severalproducers are now transforming themselves intoEurope-wide sellers, and Europe is becoming asingle, unified market.

management report | corporate citizenship

Distrigas has always favoured the emergence of a dynamic environmental policy,

encouraging rational use of energy (RUE) by its customers and promoting the use of gas

as an environment-friendly source of energy. In managing its human resources too,

the company aims to be as pro-active as possible.

Corporate citizenship


Meanwhile the campaign launched by Distrigas in2001 continued in 2002. This campaign, managed bythe ARGB (the association representing the gasindustry in Belgium), aims to promote high-performance, direct applications of natural gas inindustrial processes.

Finally, it is worth noting the growing use of naturalgas by electricity producers. CCGT (combined-cyclegas turbine) power stations are increasinglypopular; during the past ten years, 7 such CCGTplants have been built in Belgium and Luxembourg,with total capacity of 2,901 MW. Given the interestshown in this technology by European electricityproducers, it is highly likely that natural gas willmake up an increasing part of their fuel mix.

Encouraging rational use of energy (RUE)Cogeneration: combined production of electricityand heat

When it comes to protection of the environment,Distrigas is pursuing a two-track policy, namelypromoting more efficient use of energy thanks tospecially-designed installations, and helpingcustomers to reduce the CO2 emissions generatedby their processes.

One very effective way of promoting rational use ofenergy is to encourage integrated energy managementand the use of high-grade cogeneration systems.These generate heat as well as electricity, offeringenergy efficiencies of 80% on average. Cogen unitscome in all sizes, suitable for powering anythingfrom a hospital to a heavy industry site.

Ivo Slootmaekers

HR & Administration Manager

Putting the accent on co-workers’ development

One of the major challenges in the human resources plan was the organisation of the new Distrigas.

There were two objectives. One was to form a lean and mean entity.

The second was to broaden the co-workers’ skills base so as to give Distrigas the best tools

to confront the competition in the European energy market.

Meeting the commitments of the KyotoprotocolNatural gas for reducing CO2 emissions

Natural gas produces less CO2 per unit of heatgenerated than do other fossil fuels. This is due notonly to the inherent properties of natural gas butalso to the way it is transported and its direct,efficient applications. Natural gas therefore has animportant role to play in reducing nationalemissions of greenhouse gases.

The Belgian government presented its Climate Planin March 2002, aimed at bringing greenhouseemissions down 7.5% below their 1990 level by2012. In this way, Belgium is subscribing to theEuropean objectives laid down in the Kyoto protocol.Since CO2 emissions have increased by 10% since1990, the total required effective reduction is by17.5%. An interim balance will be drawn up in 2005,by which time the government wants the rise inemissions to be halted. The Regions, whichparticipated in the drawing up of the Climate Plan,already took various measures in 2002.

In this regard Distrigas puts its Gas Servicescompetence centre at the disposal of its industrialcustomers, several dozen of which called on theseservices in 2002. In response, Gas Services carriedout measurement campaigns to draw up a CO2

balance for the companies concerned, andsuggested innovations in thermal processes so asto make the most efficient and rational use of theenergy.

Human resources: building a strong, tightly-knit teamPutting the emphasis on personal development

The main development in 2002 was the furthersetting up of the “new” Distrigas.

Putting the demerger into practiceThe demerger of the company and the creation of the“new” Distrigas was a major operation, demandingsignificant efforts from all employees. Indeed it wasthanks to these efforts that the demerger could befinalised in a relatively short time.

On 4 February 2002, Distrigas moved out of itsformer offices at 31 Avenue des Arts and moved intonew premises at 10 Rue de l’Industrie in Brussels. Thedepartment took advantage of the move tosuccessfully migrate all the NT servers to Windows2000.

RationalisationOnce the move had been completed, the HumanResources team turned its attention to rationalisingits own organisation, to make it even leaner andmore efficient. It was decided right from thebeginning to outsource certain services (such aspayroll management, IT, facility management, etc.)for the sake of efficiency and performance, and thelevel of staffing was held at 81 people on31 December 2002.


management report | corporate citizenship


Setting up representative bodiesA local Collective Labour Agreement (CLA) wasfinalised and signed, governing joint consultationsbetween both sides of industry after the demerger.This CLA provides the framework for developingjoint relations within the company on anindependent basis. A union delegation was formed,and the safety activities were resumed on 1 July2002 under the aegis of the Committee for AccidentPrevention and Protection at Work. The jointFluxys-Distrigas Works Council continued tooperate until the end of 2002.

Communicate, harmonise, developInternal communication was one of the mainpriorities for Human Resources in 2002.In addition to direct communication, which remainsof primary importance in a company with the size ofDistrigas, new channels of communication were setup. These included regular meetings of executivesfrom each department, bi-monthly conferences oncommercial subjects, information sessions forexecutives and bi-monthly breakfasts for membersof personnel with the general manager. In addition,an intranet was set up to convey important internalmessages.

When it came to recruitment and personnelrequirements planning, a double challenge had tobe faced, namely to restore the balance within thecompany following the inevitable disruption causedby the demerger, and to put the emphasis on awider range of competences and added value, so asto meet the heightened competition on theEuropean energy market.

A responsible companyCaring for the environment

As one of the major players in the nationaleconomy, Distrigas also seeks to participate in thedevelopment of social life.

Natural Gas Fund

Distrigas has participated actively in the NaturalGas Fund for Nature since 1995. This fundencourages projects that set an example inecological or social terms, and that are open to thepublic. Priority is given to densely populated areaswhere greenery is scarce, and in the past two yearsthe fund has concentrated on schools.So far the fund has distributed just over 2 millioneuros to 103 projects (out of a total of just over 250candidate projects).

Bruges 2002 and the Festival of Wallonia

Distrigas also supported large-scale events lastyear, such as “Bruges 2002 - Cultural Capital ofEurope,” which lasted throughout the year, togetherwith the “Festival of Wallonia.” Events such as theseenable Distrigas to contribute to the development ofcultural activities in various parts of the country.

Consolidated Accounts

Distrigas


INTRODUCTION

Considering the significance of the turnover and the capital and reserves of the parent company in theconsolidated accounts, a detailed presentation of the company accounts and the related comments inthis report would duplicate the explanations given in the consolidated accounts.With the agreement of the Banking & Finance Commission, it has therefore been decided to limit thepresentation to a short version of the company accounts of DISTRIGAS S.A.The Statutory Auditor has approved the company accounts of DISTRIGAS S.A. without qualification.

These documents have been filed with the National Bank of Belgium.

They are available on request at the following address:

DISTRIGAS S.A.Corporate & Marketing CommunicationsRue de l'Industrie 10B-1000 Brussels


summary of consolidated balance sheet on 31 December 2002

(IN MILLION EUR)

LIABILITIES 2002 2001

Capital and reserves 220.63 174.58Minority interests 11.18 11.13Provisions 215.89 220.86Long-term amounts payable 114.53 165.84Short-term amounts payable 759.16 1,022.72Accrued charges and deferred income 169.79 141.64

Total 1,491.18 1,736.77

ASSETS 2002 2001

Fixed assets 171.95 165.14Long-term amounts receivable 148.88 165.43Stocks 181.50 190.81Short-term amounts receivable 575.68 700.02Liquid assets 398.51 499.29Deferred charges and accrued income 14.66 16.08

Total 1,491.18 1,736.77


summary of consolidated income statement on 31 December 2002

(IN MILLION EUR)

INCOME STATEMENT 2002 2001

Operating resultsIncome 3,606.41 1,759.92Charges 3,512.04 1,741.54

94.37 18.38Financial resultsIncome 21.72 18.84Charges 26.74 20.93

-5.02 -2.09

Extraordinary resultsIncome 16.61 0.88Charges 0.00 0.09

16.61 0.79

Consolidated gross profit 105.96 17.08

Income taxes -37.55 -7.97

Profit of consolidated companies 68.41 9.11

Result of companies accounted for by equity method 2.06 1.05

Consolidated profit 70.47 10.16

Minority interests share 2.86 1.41

Share of the group 67.61 8.75

(IN THOUSAND EUR)

COMMENTS ON THE ASSETS

1. Intangible assets (42)The intangible assets only represent software.

2. Tangible assets (119,626)Investments during the financial year amount to 15,247and represent the acquisition (tranche 2002) of a methanecarrier built in co-ownership. Depreciation of the financial year amounts to 18,881 and isbroken down per legal entity as follows: 424 for Distrigas;5,752 for Finpipe and 12,705 for Distrigas & C°.

The acquisition values on 31 December 2002 amount to215,922, whereas the recorded redemption funds amountto 96,296.

3. Financial assets (52,283)The breakdown of consolidated financial assets is as follows:

a Consolidated companies accounted for by the equitymethod ETAC B.V. 4,184DISTRI RE S.A. 1,859

6,043

b Other non-consolidated companiesI.Z.T. S.C.R.L. 63CITENSY S.A. 218INTERCONNECTOR UK ltd 24,642GASELEC & CO S.C.S. 124GASELEC S.C.R.L. 15RHODIGAZ S.A.S. 19HUBERATOR S.A. 25

25,106

Cautionnement V.A.T. 21,13452,283

4. Amounts payable within one year (148,884)This heading includes the part of the long-term amountpayable by the company FLUXYS to the subsidiaryFINPIPE G.I.E., in connection with the sale and leasing ofRTR pipelines.

5. Stocks and contracts in progress (181,499)This item, booked in Distrigas S.A., comprises the book valueof the natural gas stock (138,134), the advances paid inconnection with purchases of Norwegian gas to supply powerstations as of 1997 (42,888) and also stock bunker C (477).

The book value of the natural gas stock rose by 37,936compared to 31 December 2001 thanks to an importincrease of the amount of stocks (+47.2%). However, this isreduced by a decrease by 17.39% of the average unit priceof the stocks by 17.39%.

Finally, the advances paid in connection with a purchase ofNorwegian gas for the supply of power stations aredecreased by 47,160 compared to 31 December 2001.

6. Amounts receivable within one year (575,682)This heading mainly comprises the amounts owed bycustomers of the group for natural gas supply and otherservices for a total amount of 565,843, of which 18,507 forFinpipe E.S.V. and 2,990 for Distrigas & C° respectively.

The decrease of the customer account is mainly due to adecrease of natural gas prices in December 2002compared to December 2001.

Other amounts receivable in this item mainly representBelgian and foreign taxes to be recovered.

7. Investments (361,609) and cash at bank and in hand (36,897)

The investments of Distrigas & C° (26,469), Finpipe (1,250)and Transfin (78) are added to those of Distrigas (333,812).

It mainly concerns short term investments, made to themarket conditions.

The decrease of 100,785 compared to 31 December 2001corresponds with the regulation of the payment inconnection with the demerger between Distrigas andFluxys. This payment was refunded to Fluxys during thefirst semestre 2002 (-58,734).

The logical result of this payment is represented in thedecrease of the item 'Other amounts payable' on theliabilities balance.

8. Deferred charges and accrued income (14,662)This item comprises expenses invoiced but not yet due,amounting to 9,817, together with acquired incomeamounting to 1,834.

consolidated balance sheet on 31 December 2002



(IN THOUSAND EUR)


ASSETS 31/12/2002 31/12/2001 Difference

FIXED ASSETS 171,951 165,142 6,809

I. Formation expenses 0 0 0

II. Intangible assets 42 0 42

III. Positive consolidation differences 0 0 0

IV. Tangible assets 119,626 123,260 -3,634A. Land, buildings and homes 562 608 -46B. Plant and machinery 72,232 78,362 -6,130C. Furniture, vehicles and equipment 0 0 0D. Leasing and other similar rights 0 0 0E. Other tangible assets 0 0 0F. Assets under construction and advance payments 46,832 44,290 2,542

V. Financial assets 52,283 41,882 10,401A. Enterprises accounted for using the equity method 6,043 6,043 0

1. Participating interests 6,043 6,043 0B. Other enterprises 46,240 35,839 10,401

1. Investments and shares 25,106 25,106 02. Amounts receivable 21,134 10,733 10,401

CURRENT ASSETS 1,319,233 1,571,624 -252,391

VI. Amounts receivable after one year 148,884 165,427 -16,543A. Trade debtors 148,884 165,427 -16,543B. Other amounts receivable 0 0 0

VII. Stocks and contracts in progress 181,499 190,810 -9,311A. Stocks 181,499 190,810 -9,311

1. Raw materials and consumables 477 0 4774. Goods purchased for resale 138,134 100,762 37,3726. Advance payments 42,888 90,048 -47,160

B. Contracts in progress 0 0 0

VIII. Amounts receivable within one year 575,682 700,021 -124,339A. Trade debtors 565,844 680,805 -114,961B. Other amounts receivable 9,838 19,216 -9,378

IX. Investments 361,609 498,957 -137,348B. Other investments 361,609 498,957 -137,348

X. Cash at bank and in hand 36,897 334 36,563

XI. Deferred charges and accrued income 14,662 16,075 -1,413

1,491,184 1,736,766 -245,582

(IN THOUSAND EUR)



1. Capital and reserves (220,632)

The capital and reserves of the group amount to 220,632 in2002. This is a rise of 46,049 compared to the previousfinancial year, where the total amount can be found in theconsolidated reserves.

2. Consolidated reserves (152,868)

The total consolidated reserves amount to 152,868 on31 December 2002. This is a rise of 46,049 compared to31 December 2001.

These amounts may be broken down as follows:

LEGAL ENTITY 2002 2001 DIFFERENCEDISTRIGAS 90,863 73,764 +17,099TRANSFIN 55 60 -5DISTRIGAS & C° 57,801 28,846 +28,955ETAC 4,149 4,149 0TOTAL 152,868 106,819 +46,049

3. Minority interests (11,183)

This item represents the minority interests in Finpipe(11,066), in Transfin (3) and in Distrigas & C° (114) against11,066.3 and 57 respectively at 31 December 2001.

4. Provision for liabilities and charges (215,893)

Mainly provisions entered on the liabilities side of Distrigas S.A.'sbalance sheet. This heading includes provisions set asideto allow for the measures taken by the federal authoritiesin connection with the deregulation of the gas market,together with the risks associated with carrying outcontracts and orders.The determined difference in this item, compared to31 December 2001, amounts to - 4,963.

5. Amounts payable within one year (114,532)

In addition to advances on orders recorded by Distrigas S.A.(7,488), this item comprises the financial amounts payablewithin one year by the subsidiaries FINPIPE G.I.E. (94,332)and DISTRIGAS & C° (22,097).

On 31 December 2001 this heading amounts to 165,839.

The difference of 51,307 mainly corresponds with the partof the excess (40,560) to item IX.A. “Current portion ofamounts payable after one year” and of the financial debtsof FINPIPE (9,232) to be repaid in 2003.

6. Financial amounts payable within one year (112,930)

This item mainly represents the leasing of Finpipe againstits loaners for the amount of 12,706. This is a decrease of15,226 compared to 31 December 2001.

7. Trade debts (513,641)

This item mainly represents invoices received or to be receivedfor the supply of gas booked in Distrigas S.A. (499,992),a decrease of 194,664 compared to 31 December 2001.This is mainly due to the decrease of natural gas prices inDecember 2002 compared to December 2001.

8. Other amounts payable (24,981)

This heading fully comprises the amounts booked in theaccounts of Distrigas S.A.

The difference of 42,075 compared to 31 December 2001 ismainly due to the rise of the item “payment of dividends tothe shareholders”, that follows from the destination of theresult (+16,948). This is being reduced with the payment toFluxys made up in connection to the partial demerger (-58,464). (see also comments assets, VII).

9. Accrued charges and deferred income (169,787)

This item mainly comprises amounts booked inDistrigas S.A.

COMMENTS ON THE LIABILITIES


LIABILITIES 31/12/2002 31/12/2001 Difference

CAPITAL AND RESERVES 220,632 174,583 46,049

I. Capital 66,228 66,228 0II. Share premium account 42 42 0III. Revaluation surpluses 1,494 1,494 0IV. Consolidated reserves 152,868 106,819 46,049V. Negative consolidation differences 0 0 0VI. Translation differences 0 0 0VII. Capital subsidies 0 0 0

MINORITY INTERESTS 11,182 11,126 56

VIII. Minority interests 11,182 11,126 56

PROVISIONS AND DEFERRED TAXES 215,893 220,857 -4,964

IX. A. Provisions for liabilities and charges 215,893 220,857 -4,9643. Major repairs and maintenance 0 0 04. Other liabilities and charges 215,893 220,857 -4,964

CREDITORS 1,043,477 1,330,200 -286,723

X. Amounts payable after one year 114,532 165,839 -51,307A. Financial debts 107,044 117,791 -10,747

3. Leasing and other similar obligations 0 0 04. Credit institutions 56,031 60,954 -4,9235. Other loans 51,013 56,837 -5,824

C. Advances received on contracts in progress 7,488 48,048 -40,560

XI. Amounts payable within one year 759,158 1,022,722 -263,564A. Current portion of amounts payable after one year 44,632 51,232 -6,600B. Financial debts 112,930 128,169 -15,239

1. Credit institutions 224 237 -132. Other loans 112,706 127,932 -15,226

C. Trade debts 513,641 704,781 -191,1401. Suppliers 513,641 704,781 -191,140

E. Taxes, remuneration and social security 62,974 71,483 -8,5091. Taxes 61,441 71,483 -10,0422. Remuneration and social security 1,533 0 1,533

F. Other amounts payable 24,981 67,057 -42,076

XII. Accrued charges and deferred income 169,787 141,639 28,148

1,491,184 1,736,766 -245,582

(IN THOUSAND EUR)


(IN THOUSAND EUR)


COMMENTS ON THE RESULTS

Taking into account the fact that the accounts closed on31 December 2001 only represent the second semester of2001 and given the seasonal activities of Distrigas S.A. it isbetter not to give any comments on the difference 2002-2001 in order to avoid that the reader draws wrongconclusions on incomplete information.

1. Turnover (3,605,908)

See comments in annual report: “Summary of the consolidatedincome statement”.

2. Raw materials, consumables and goods for resale (3,364,518)

This heading fully comprises the amounts recorded inDistrigas S.A.

This item represents the purchase of natural gas and thecharges in connection with third party access (229,034),storage (38,857) and the LNG terminal in Zeebrugge(57,000), invoiced by Fluxys and Fluxys LNG (owner of theLNG terminal since 1 July 2002), and also thetransportation and storage charges abroad (12,959).

3. Services and different goods (138,836)

These amounts are broken down as follows:

Direct purchases for ordinary activities 548Rent 2,068Consulting, studies, outsourcing, service level agreement 5,440Fees for the use of storage and installations of third parties 36,281Insurances 14,098Financial compensations for customers 17,572Other charges 1,418Fees for the use of the transit network 58,039TOTAL 135,464

4. Amounts written off stocks and trade debtors (-14,662)

Changes during the year are composed as follows: - Additions stocks: 564 - Additions and trade debtors: 199- Repayments and trade debtors: 15,426.

5. Income from financial assets (4,343)

This heading represent the recovery of the dividends onparticipations in Interconnector (UK).

For operating, financial and extraordinary results: see alsocomments in the annual report

consolidated income statement on 31 December 2002


(IN THOUSAND EUR)

CONSOLIDATED INCOME STATEMENT 31/12/2002 31/12/2001 Difference

I. Operating income 3,606,409 1,759,923 1,846,486A. Turnover 3,605,908 1,759,856 1,846,052B. Increase; Decrease in stocks of finished goods,

work and contracts in progress 0 0 0C. Own construction capitalized 0 0 0D. Other operating income 501 67 434

II. Operating charges 3,512,043 1,741,545 1,770,498A. Raw materials, consumables and goods for resale 3,364,518 1,580,314 1,784,204

1. Purchases 3,402,932 1,645,747 1,757,1852. Increase; Decrease in stocks -38,414 -65,433 27,019

B. Services and other goods 138,836 79,900 58,936C. Remuneration, social security costs and pensions 8,927 0 8,927D. Depreciation of and other amounts written off

formation expenses, intangible and tangible fixed assets 18,891 10,063 8,828E. Increase; Decrease in amounts written off stocks,

contracts in progress and trade debtors -14,662 8,936 -23,598F. Increase; Decrease in provisions

for liabilities and charges -4,964 62,295 -67,259G. Other operating charges 497 37 460

III. Operating profit 94,366 18,378 75,988

IV. Financial income 21,726 18,846 2,880A. Income from financial fixed assets 4,343 0 4,343B. Income from current assets 14,901 11,285 3,616C. Other financial income 2,482 7,561 -5,079

V. Financial charges 26,745 20,933 5,812A. Interest and other debt charges 14,014 17,157 -3,143C. Amounts written off current assets

other than those mentioned under II.E 3,183 0 3,183D. Other financial charges 9,548 3,776 5,772

Financial result -5,019 -2,087 -2,932

VI. Profit on ordinary activities before income taxes of the consolidated enterprises 89,347 16,291 73,056

VII. Extraordinary income 16,606 876 15,730C. Adjustments to amounts

written off financial fixed assets 0 0 0D. Adjustments to provisions

for extraordinary liabilities and charges 0 0 0E. Gain on disposal of fixed assets 0 876 -876F. Other extraordinary charges 16,606 0 16,606


(IN THOUSAND EUR)

CONSOLIDATED INCOME STATEMENT 31/12/2002 31/12/2001 Difference

VIII. Extraordinary charges 0 87 -87A. Extraordinary depreciation of and extraordinary

amounts written off formation expenses, intangible and tangible fixed assets 0 0 0

D. Provisions for extraordinary liabilities and charges 0 0 0E. Loss on disposal of fixed assets 0 0 0F. Other extraordinary charges 0 87 -87

Extraordinary result 16,606 789 15,817

IX. Profit before income taxes of the consolidatedenterprises 105,953 17,080 88,873

XI. Income taxes 37,546 7,972 29,574A. Income taxes 37,546 7,972 29,574B. Adjustments of income taxes and write-back

of taxes provisions 0 0 0

XII. Profit of consolidated companies 68,407 9,108 59,299

XIII. Share in the result of enterprises accounted for using the equity method 2,062 1,049 1,013

XIV. Consolidated profit 70,469 10,157 60,312A. Minority interest share in the result 2,863 1,406 1,457B. Group share in the result 67,606 8,751 58,855




(IN THOUSAND EUR)


APPROPRIATION ACCOUNT 31/12/2002 31/12/2001

Total result for the financial year 70,469 10,157Group's share in the result 67,606 8,751Minority interests share in the result 2,863 1,406

Appropriation to the reserves 46,049 4,142

Profit available for distribution by Distrigas 21,557 4,609Dividends 21,557 4,609

Minority interests share in the result 2,863 1,406

notes on the consolidated balance sheeton 31 December 2002


I. CONSOLIDATION CRITERIA

The consolidated accounts are drawn up in accordance withthe provisions of the Royal Decree of 30 January 2001.

The accounts are drawn up in thousand EUR.

In 2002, the consolidation perimeter includes the DISTRIGAS,FINPIPE, DISTRIGAS & CO, TRANSFIN, ETAC and DISTRI REcompanies. Pursuant to the true and fair view principle, theequity method has been applied to ETAC in order to give anoptimum reflection of the economic interests of the group.Considering the activities of a nature very different fromthose of the DISTRIGAS group, DISTRI RE has been consol-idated according to the equity method.

The CITENSY, GASELEC S.C.R.L., GASELEC & C° S.C.S.,I.Z.T. S.C.R.L. and RHODIGAZ S.A.S. are not consolidated sinceDISTRIGAS does not control them. They have not beenconsolidated according to the equity method due to theirsmall relative importance.



II. a. FULLY CONSOLIDATED COMPANIES

NAME REGISTERED OFFICE National V.A.T. No. Percentage of capital held

FINPIPE G.I.E. Rue de l'Industrie 10 - B-1000 Brussels 444.889.015 56.000887 % DISTRIGAS & C° S.C.A. Rue de l'Industrie 10 - B-1000 Brussels 464.255.658 99.804 % TRANSFIN S.A. Rue de l'Industrie 10 - B-1000 Brussels 464.236.654 99.80 %

b. COMPANIES EXCLUDED FROM THE CONSOLIDATION UNDER ART. 107.1° BECAUSE OF THEIR NEGLIGIBLE SIZENone

III. COMPANIES CONSOLIDATED BY THE PROPORTIONATE METHOD None

IV. a. COMPANIES ACCOUNTED FOR BY THE EQUITY METHOD


DISTRI RE S.A. Avenue de la Gare 65 - L-1611 Luxembourg - 100.00 %ETAC B.V. F. Roeskestraat 123 -1077 EE Amsterdam NL 8072.38.491.B 01 75.00 %

b. COMPANIES NOT ACCOUNTED FOR BY THE EQUITY METHOD UNDER ART. 107.1° BECAUSE OF THEIR NEGLIGIBLE SIZE


CITENSY S.A. Avenue Palmerston 4 - B-1000 Brussel 446.602.945 33.333 % GASELEC S.C.R.L. Rue de l'Industrie 10 - B-1000 Brussels 453.524.092 49.920 % GASELEC & CO S.C.S. Rue de l'Industrie 10 - B-1000 Brussels 453.477.671 99.900 % I.Z.T. S.C.R.L. Rue de l'Industrie 10 - B-1000 Brussels 454.318.009 51.00 % RHODIGAZ S.A.S. Quai Alphonse Le Gallo 26 - F- 92512 - 50.00 %

Boulogne-Billancourt France



VI. ACCOUNTING PRINCIPLES

1. INVENTORY

General rules

Assets are valued at their acquisition or cost price, and areentered in the balance sheet at this value, minus therelevant depreciation and write-downs. Assets that havebeen contributed are valued at the agreed value of thecontribution. They do not include taxes and costs involvedin the contribution; if the latter are not fully entered in theincome statement for the financial year in which thecontribution is made, they are entered under “Formationexpenses.”

Tangible and financial assets may be revalued if theirvalue, determined in relation to their usefulness to thecompany, shows a sure and lasting increase comparedwith their book value. However, such a revaluation iscarried out only if it is justified by the profitability of thecompany's activities, or at least the part of the activitiesconcerned.

Assets, liabilities and commitments in foreign currenciesEntry in the accounts on conclusion of the transactionAccounts in which debts or amounts receivable areexpressed in foreign currency are valued at the rateobtaining on the day of the operation. However, if thevariation in the rate does not have any impact on thecompletion of the operation, the standard rate or anaverage rate over certain periods may be chosen.

Valuation at year endAt the end of the year and in accordance with advisorynotice issued by the Accounting Standards Commission(bulletin N° 20 of December 1987, section VII A and B),monetary assets and liabilities are valued at the rateobtaining at year end, as are rights and obligations. This evaluation gives rise to translation differences whichare totalled up for each currency. Unless they are coveredby a particular hedging operation, the negative differencesfor each currency are posted to the income statement,while the positive differences are entered as accruedassets.

Formation expensesFormation expenses are not included in the assets unlessthey are posted during the year in which they are incurred.

Intangible assetsIntangible assets other than those acquired from thirdparties are entered in the assets at their cost price only ifthis does not exceed a prudent estimate of the useful valueof these assets, or of their future profitability for thecompany.

Tangible assetsSmall items of equipment, consumables and supplies thatare constantly renewed and whose acquisition value isnegligible in relation to the balance sheet total may beentered in the assets as a fixed amount if their quantity,value and composition does not vary significantly from oneyear to the next. In such a case, the cost of renewing theseitems is charged to operating expenses.

The rights to use certain tangible assets which thecompany enjoys under leasing or similar contracts areposted to the assets, up to the amount of the instalmentspaid under the contract, representing the reconstitution ofthe value of the asset in the form of capital, as laid down inthe contract.

Financial assetsInvestments and other shareholdings entered under theheading of “Financial assets” are subject to write-downs inthe event of lasting loss or depreciation justified by thesituation, profitability or prospects of the company in whichthe investment has been made or the shares held. Receivables or fixed-interest stock entered under financialassets are subject to write-downs if their repayment whendue is wholly or partly uncertain or jeopardized.The costs related to the acquisition of financial assets arecharged against the income statement of the year duringwhich they were incurred.

Amounts receivable after one yearAmounts receivable after one year are subject to write-downs if their repayment when due is wholly or partlyuncertain or jeopardized.



StocksSTOCKS OF GAS

Gas stocks are valued according to the last in/first out(LIFO) method. New stocks of natural gas are valued at theaverage monthly purchasing costs, taking into account theG factor.

STOCKS OF RAW MATERIALS AND CONSUMABLES

Raw materials and consumables are held in the inventoryaccording to the weighted average price method. For certainitems, individual prices for each are valued each elementor group of elements may be established and classifiedby year of purchase. Such stocks can be depreciated withinthe limits allowed by the tax authorities, according to thetype of stocked item.

CONTRACTS IN PROGRESS

Contracts being carried out for third parties are valued attheir cost price, taking into account the directly attributablecosts. However, in the case of certain large projects,the cost price pay include the financial charges for capitalborrowed to finance the operation.

WRITE-DOWNS

If necessary, write-downs are recorded to take into accounteither the market value or the risks justified by the nature ofthe assets under consideration or by the activity carried out.

Amounts receivable within one year - Investments - Cash at bank and in handThe items under this heading may be written down whentheir market value at the end of the financial year is lowerthan their purchase price. Further write-downs arerecorded to take account of changes in the sales or marketvalue, or the risks justified by the nature of the assetsunder consideration or by the activity carried out.

2. GAS PURCHASES

The gas acquisition cost is calculated in accordance withthe recommendations issued by the Electricity and GasBoard of Control, taking the G factor into account.

Options on currencies purchased to cover gas purchasesOptions on currencies purchased to cover the exchange riskon a future operation are recorded under “Investments” attheir acquisition cost. They are not written down unless thefuture transaction is not sufficiently likely or will not becarried out.

At each closing, the potential impact on the futureoperation is estimated. If a loss is expected, then provisionis set aside to cover it.

3. DEPRECIATION AND AMORTISATION

Depreciation and amortisation are applied as follows:

Formation expensesFormation expenses are amortised as appropriate, at arate of at least 20% per financial year for the amountsactually spent; however, the amortisation on loan issueexpenses and discount charges can be spread over thetotal duration of the loan.

Intangible assetsIntangible assets whose use is limited in time areamortised according to the period of use or probable use.Computer software is depreciated at a rate of 20%.Intangible assets whose use is not limited in time may onlybe written down in the event of lasting losses ordepreciation.


Tangible assetsTangible assets whose use is limited in time aredepreciated in stages according to the period of use orprobable use.Such assets are subject to additional or extraordinarydepreciation when, due to their deterioration or to changesin economic or technological circumstances, their bookvalue exceeds their useful value for the company.Tangible assets that have been retired or that are no longerused on a lasting basis for the company's activities aresubject to extraordinary depreciation, so as to bring theirvalue into line with the probable disposal value.Tangible assets whose use is not limited in time may onlybe written down in the event of lasting losses ordepreciation.

Depreciation methods

a.1.Straight-line depreciationThe main depreciation rates used are as follows:- 3% for administrative buildings,- 5% for industrial buildings,- 20% for equipment, vehicles and furniture- 25% for IT equipment,- 33.33% for prototypes.

4. PROVISION AND LOSS OF VALUE

Allowance is made for foreseeable risks, possible lossesand losses of value arising during the report year orprevious years.Allowance is also made for expenses and income related tothe year or to previous years without consideration of thedate of payment or receipt of these expenses and income,except when the receipt of such income is uncertain.

In particular, provisions are constituted to cover thefollowing:a. the cost of major repairs and major maintenance work,

and of moving pipelines;b. the risk of losses or expenses arising for the company

through personal or real sureties constituted to guaranteethird party debts or commitments, commitmentsrelative to the acquisition or disposal of assets,the execution of orders placed or received, current orfuture currency positions, current or future commoditypositions, technical guarantees associated with salesand services already carried out by the company, andlitigation in progress.

5. TAXES

The tax expenses for the financial year are determined onthe closing date on the basis of the estimated tax amount,taking into account pre-payments made and withholdingtaxes due.

6. RESTATEMENTS AND ELIMINATIONS

The consolidated accounts are presented withoutsignificant restatement, thanks to the use of standardaccounting principles throughout the group.

7. CLOSING DATE

The consolidated accounts are closed on 31 December, i.e. the closing date of the parent company. If the accountsof a subsidiary are closed between 30 September and31 December, they are used as they are; if the closing dateis prior to 30 September, then interim accounts are drawnup as per 31 December for the purposes of consolidation.


(IN THOUSAND EUR)


VII. STATEMENT OF FORMATION EXPENSESNone

VIII. STATEMENT OF INTANGIBLE ASSETS

Costs for Concessions, Goodwill Advance Totalstudies and patents, payments

development licences,etc.

A. Acquisition valueAt end of previous year 0 0 0 0 0Changes during the year

Acquisitions, including own construction 0 52 0 0 52Sales and disposals 0 0 0 0 0Transfers from one heading to another 0 0 0 0 0Variations in consolidation scope 0 0 0 0 0

At year end 0 52 0 0 52

C. Depreciation and write-downs At end of previous year 0 0 0 0 0Changes during the year

Recorded 0 10 0 0 10Written back 0 0 0 0 0Acquired from third parties 0 0 0 0 0Cancelled 0 0 0 0 0Transfers from one heading to another 0 0 0 0 0Variations in consolidation scope 0 0 0 0 0

At year end 0 10 0 0 10

D. Net book value at year end 0 42 0 0 42

notes on the consolidated balance sheet on 31 December 2002

(IN THOUSAND EUR)

IX. STATEMENT OF FINANCIAL ASSETS

A. Acquisition valueAt end of previous year 1,029 135,278 0 0 0 64,368 200,675Changes during the year

Acquisitions, includingown construction 0 0 0 0 0 15,247 15,247Sales and disposals 0 0 0 0 0 0 0Transfers from one heading to another 0 0 0 0 0 0 0Variations in consolidation scope 0 0 0 0 0 0 0

At year end 1,029 135,278 0 0 0 79,615 215,922

C. Depreciation and write-downsAt end of previous year 420 56,917 0 0 0 20,078 77,415Changes during the year

Recorded 46 6,130 0 0 0 12,705 18,881Written back 0 0 0 0 0 0 0Acquired from third parties 0 0 0 0 0 0 0Cancelled 0 0 0 0 0 0 0Transfers from one heading to another 0 0 0 0 0 0 0Variations in consolidation scope 0 0 0 0 0 0 0

At year end 466 63,047 0 0 0 32,783 96,296

D. Net book value at year end 563 72,231 0 0 0 46,832 119,626



Lands,buildings

andresidences

Plants andmachinery

Furnitures,vehicules

andequipment

Leasing &similar

rights

Others Assetsunder

constructionand advance

payments

Total


(IN THOUSAND EUR)


X. STATEMENT OF FINANCIAL ASSETS A. Companies B. Otheraccounted for by companies

the equity method1. Participating interests and shares

a. Acquisition valueAt end of previous year 2,513 25,203 Changes during the year

Acquisitions - - Disposals and withdrawals - - Variation in consolidation scope - -

At year end 2,513 25,203

b. Capital gainsAt end of previous year - 1,494 Changes during the year

Variation in consolidation scope - - At year end - 1,494

c. Depreciation and write-downsAt end of previous year - - At year end - -

d. Uncalled share capitalAt end of previous year 620 1,591 Changes during the year

Variation in consolidation scope - - At year end 620 1,591

e. Variation in capital and reservesAt end of previous year 4,149 Changes during the year

Variation in consolidation scope - Equity method -

At year end 4,149 Net book value at year endAccumulated write-downs at year end 6,042 25,106

2. Amounts receivableNet book value at end of previous year 10,733 Changes during the year

Additions 11,457Repayments - 1,056Write-back of write-downs -Other -

Net book value at year end 21,134Accumulated write-downs at year end 0

(IN THOUSAND EUR)


XI. STATEMENT OF RESERVES AND PROFIT CARRIED FORWARD

Net book value at end of previous year 106,818 Changes during the year:

Given reserves in connection with the demerger - Result generated 67,606 Appropriation of results: dividends -21,557

Value at year end 152,867

XII. STATEMENT OF CONSOLIDATION DIFFERENCES None

XIII. STATEMENTS OF AMOUNT PAYABLEAmounts payable with residual term of -1 year 1 and 5 years + 5 yearsA. Breakdown of amounts payable after one year

A. Financial debts 2. Unsubordinated loans 0 0 0 3. Leasing and similar obligations 0 0 0 4. Credit institutions 3,409 38,988 17,043 5. Other loans 5,823 29,118 21,895

Total 9,232 68,106 38,938

C. Amounts received 35,400 7,488 0 D. Other debts 0 0 0 Total 44,632 75,594 38,938

B. Amounts payable or portion thereof guaranteed by: Belgian public authorities and real guaranteesNone


(IN THOUSAND EUR)


XIV. RESULTS On 31/12/2002

A. Net turnoverGas sales 3,459,509 Finpipe 21,360 Distrigas & C° 113,032 Other services and products 12,007 Total 3,605,908

B. Persons employed and personnel costs1. Quantitative informations:

Average number of persons employed during the year 75.7- Management 37.3- Employees 38.4- Workers 0.0- Others 0.0

2. Information relating to charges- Direct remuneration and social benefits 5,937 - Employer's social security benefits 1,919 - Employer's premiums for non-statutory insurance schemes 80- Other personnel costs 120 - Pensions 871

Total 8,927

D. Income taxes1. Income taxes for the financial year: 37,546

a) Taxes and withholding taxes due or paid 39,563 b) Excess of income tax prepayments and withholding taxes included in assets - 2,017 c) Estimated additional charges 0

(included in liabilities)2. Income taxes for previous years: 0

a) Additional charges for income taxes due or paid 0


(IN THOUSAND EUR)


XV. RIGHTS AND COMMITMENTS NOT REFLECTED IN THE BALANCE SHEET

A. 5. Forward market- Gas purchase and transport contracts:

Distrigas cumulated take or pay commitments, except these taken over by electricity producers, can be estimated at EUR 18.3 billion based on the current average price.

- Additional short-term contracts Gas purchases 138,833Gas sales 186,858

- Currency bought on the forward market 0- Currency sold on the forward market 108,248- Interest rate hedging 352,628

C. Litigation and other commitments - Litigation

Recours against a third party: gas activity 159Guarantees constituted by third parties for the benefit of the company.Rental guarantees 345Other guarantees given 461

- Commitments receivedGas activities

Bank sureties 700Other activities

Bank sureties 25,323- Commitments received- Commitments given

Commitments in favour of DISTRI RE 9,916Other commitments given PM

D. Credits not used by the company 71,265

E. Complementary pension schemea) Description of the systems:

* System based on 'objective to be reached'The senior staff recruited before 1 May 1999 as well as the statutory staff receive a capital correspondingto a pension that, in the case of a complete carreer, is equal to 75% of the last annual income, less theamount of a theoretical legal pension. A reducing factor is applied if the carreer is not complete.

* System based on “Fixed premiums”The senior staff recruited after 1 May 1999 receives a capital made up of personal premiums andemployers' premiums which reach up to 4 times the amount of the personal premiums.

* In case of decease before retirement, a capital in favour of the surviving spouse and benefits for theorphans are provided in both systems.

b) Measures taken by the company to cover this charge.In order to guarantee the above-mentioned capitals and pensions, the company pays both employer's andpersonal contributions to the following institutions: Pensiobel Ancien A.S.B.L., Pensiobel sector A.S.B.L.,Elgabel A.S.B.L., Powerbel A.S.B.L., Enerbel A.S.B.L. and Contassur S.A.


(IN THOUSAND EUR)


XVI. RELATIONS WITH AFFLILIATED ENTERPRISES LINKED BY PARTICIPATING INTERESTS(not included in the consolidation)

A. Affiliated enterprises B. Enterprises linked by participating interests

On 31/12/2002 On 31/12/2001 On 31/12/2002 On 31/12/2001

1. Financial assets- Participating interests 88 88 25,018 25,018 - Amounts receivable 0 0 0 0

2. Amounts receivable - Within one year 6 10 0 57

3. Investments- Amounts receivable 151,778 367,770 0 0

4. Amounts payable- Within one year 112,706 131,874 562 615

7. Financial resultsIncome from financial assets 0 0 4,343 0 Income from current assets 12,739 6,939 0 0 Interest and other debt charges 4,239 5,583 0 0

XVII. DIRECTORS

2.a.Direct and indirect remuneration to the directors 90


statutory auditor's report on the consolidated financial statementsfor the year ended December 31, 2002


TO THE SHAREHOLDERS' MEETING OF THE COMPANY

To the Shareholders,

In accordance with legal and statutory requirements, we are pleased to report to you on our audit assignment which youhave entrusted to us.

We have audited the consolidated financial statements as of and for the year ended December 31, 2002, which have beenprepared under the responsibility of the Board of Directors and which show a balance sheet total of EUR 1,491,184 (000)and an income statement resulting in a consolidated profit for the year of EUR 70,469 (000). We have also examined theconsolidated Directors' report.

Unqualified audit opinion on the financial statements

We conducted our audit in accordance with the standards of the “Institut des Reviseurs d’Entreprises/Instituut der Bedrijfs-revisoren”. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether theconsolidated financial statements are free of material misstatement taking into account the legal and statutoryrequirements applicable to consolidated financial statements in Belgium.

In accordance with these standards, we considered the group's administrative and accounting organization of yourcompany as well as its internal control procedures. We have obtained explanations and information required for our audit.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidatedfinancial statements. An audit also includes assessing accounting policies used, the basis for consolidation and significantestimates made by management, as well as evaluating the overall consolidated financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements give a fair and true view of the group’s assets, liabilities, consolidatedfinancial position as of December 31, 2002 and the consolidated results of its operations for the year then ended, and theinformation given in the notes to the consolidated financial statements is adequate.

statutory auditor's report on the consolidated financialstatements for the year ended December 31, 2002


Additional certifications (and information)

We supplement our report with the following certifications (and information) which do not modify our audit opinion on theconsolidated financial statements:

• The consolidated directors’ report contains the information required by the Companies Code and is consistent with theconsolidated financial statements.

Antwerp, April 1, 2003

The Statutory Auditor,

DELOITTE & TOUCHEReviseurs d’Entreprises SC s.f.d. SCRLRepresented by Jos VLAMINCKX

Distrigas

Statutory Financial Statements


balance sheet of Distrigas S.A.on 31 December 2002


ASSETS 31/12/2002 31/12/2001 Difference

FIXED ASSETS 43,495 33,476 10,019Intangible assets 42 0 42Tangible assets 2,967 3,391 -424Financial assets 40,486 30,085 10,401

CURRENT ASSETS 1,123,645 1,385,573 -261,928Stocks and contracts in progress 181,500 190,811 -9,311Amounts receivable within one year 559,867 685,135 -125,268Investments 333,812 496,146 -162,334Cash at bank and in hand 36,815 319 36,496Deferred charges and accrued income 11,651 13,162 -1,511

1,167,140 1,419,049 -251,909

LIABILITIES 31/12/2002 31/12/2001 Difference

CAPITAL AND RESERVES 158,626 141,527 17,099Capital 66,228 66,228 0Share premium account 41 41 0Revaluation surpluses 1,494 1,494 0Reserves 89,233 72,233 17,000Profit carried forward 1,630 1,531 99

PROVISIONS AND DEFERRED TAXES 210,893 215,857 -4,964

AMOUNTS PAYABLE 797,621 1,061,665 -264,044Amounts payable after one year 7,488 48,049 -40,561Amounts receivable within one year 622,287 872,878 -250,591Accrued charges and deferred income 167,846 140,738 27,108

1,167,140 1,419,049 -251,909

(IN THOUSAND EUR)


INCOME STATEMENT 31/12/2002 31/12/2001 Difference

Operating income 3,472,005 1,694,028 1,777,977Operating charges 3,438,021 1,693,707 1,744,314

Operating result 33,984 321 33,663Financial income 23,801 19,405 4,396Financial charges 15,825 9,346 6,479

Financial result 7,976 10,059 -2,083

Profit on ordinary activities before taxes 41,960 10,380 31,580Extraordinary income 16,607 0 16,607Extraordinary charges 0 88 -88

Extraordinary result 16,607 -88 16,695

Profit for the year before taxes -19,911 -4,152 -15,759

Profit for the year 38,656 6,140 32,516

Profit for the year available for appropriation 38,656 6,140 32,516

(IN THOUSAND EUR)

balance sheet of Distrigas S.A.on 31 December 2002

income statement Distrigas S.A.on 31 December 2002


APPROPRIATION ACCOUNTS 31/12/2002 31/12/2001 Difference

A. Profit available for appropriation 40,187 6,140 34,0471. Profit for the year available for approriation 38,656 6,140 32,5162. Profit brought forward 1,531 0 1,531

B. Drawings on capital and reserves 0 0 02. On reserves 0 0 0

C. Appropriation to capital and reserves 17,000 0 17,0002. To the statutory reserve 0 0 03. To other reserves 17,000 0 17,000

D. Result to be carried forward 1,630 1,531 991. Profit to be carried forward 1,630 1,531 99

F. Distribution of profit 21,557 4,609 16,9481. Dividends 21,557 4,609 16,948

If the above distribution is accepted, and taking into account the tax requirements, the net dividend after withholding taxwould be 23.01 EUR against EUR 4.92 for the year 2001.

(IN THOUSAND EUR)

(IN THOUSAND EUR)


additional information on Distrigas S.A. on 31 December 2002

STATEMENT OF CAPITAL 31/12/2002 31/12/2001 Difference

A.1. Issued capitalAt end of previous year 66,228 0 66,228Changes during the year 0 66,228 -66,228At year end 66,228 66,228 0

A.2. Structure of the capitalRegistered shares 621,977 621,996 -19Bearer shares 80,659 80,640 19

G. Shareholder structure

Declared by Date of Type Number of voting %declaration of share rights declared

Tractebel S.A. [affiliated to S.G.B.]* 12/12/2001 A & D 270,194 38.45Distrihold S.A. [affiliated to Tractebel]* 12/12/2001 A 117,696 16.75Publigas* 12/12/2001 B 116,812 16.62Belgian Shell N.V.* 12/12/2001 C 117,106 16.67

621,808 88.49

*acting in concert

(IN THOUSAND EUR)


additional information on Distrigas S.A.on 31 December 2002

TAXES 31/12/2002 31/12/2001 Difference

A. Breakdown of heading 670/31. Income taxes for the current year 19,911 4,152 15,759

a) Taxes and withholding taxes due or paid 21,695 4,431 17,264b) Excess of income tax prepayments

and withholding taxes included in assets -1,784 -279 -1,5052. Income taxes for previous years

a) Additional charges for income taxes due or paid

B. Discrepancy between profit before taxes and estimated taxable profitProfit before taxes 58,567 10,292 48,275Tax components: -9,625 43 -9,668- Income definitely taxed -2,063 0 -2,063- Disallowed expenses 777 43 734- Exempted profit according to agreement -8,339 0 -8,339

Total 48,942 10,335 38,607

Head officeDistrigas S.A.Rue de l'Industrie 10B-1000 BrusselsTel.: +32 (0)2 557 31 01Fax: +32 (0)2 557 31 02VAT: BE 476.201.605Trade Register nr. 654 126D/2003/8732/3

Responsible editor: Thierry Rotsart

This report is also available in Dutch and French.For a copy in these languages, please contact Annelies Van Keymeulen:Tel.: +32 (0)2 557 30 91Fax: +32 (0)2 557 31 02e-mail: [email protected]

Documents

Annual report 2002 - KU Leuven · Distrigas • Annual Report 2002 • page 4. Distrigas • Annual Report 2002 •page 5 October 2002 Distrigas participates in enhancement of reverse