Facts & Figures

Earnings and profitability

Earnings
Although sales volumes have decreased and tax burden has raised, the Business Group closed Year 2010 with a positive result primarily down to the extraordinary adaptability of the Group as well as to its traditional business and operational culture. Like in previous years, the foundation of our reliable performance has been the availability of Csepel II Station, an outstanding high availability even by world-class standards which has continued unbroken to make us one of the most reliable and flexible gas-fired power stations in Hungary. Those achievements have been realised thanks to the committed efforts of a very skilled and enthusiastic team who are experienced in working together. The economic crisis has caused continued substantial reductions in power generation volumes in 2010, too. Volume of power generation has been at 794 GWh against the figures of 975 GWh in the year before and 2171 GWh in 2008. Heat production has not seen any major change in volume, and we have fully met our contractual obligations in district heat supply in spite of the low levels of power generation.

The operating result of the Business Group has further decreased owing to the recession. The reduction in net sales income, experienced as the result of market and economy processes, has been balanced out by the Group by introducing a cost saving scheme, and thus the Group has been able to meet the Owner's expectations. Cost saving measures have not affected existing job positions because regarding workforce efficiency, the Group had had an outstanding high performance already in previous years. The extra tax was introduced retroactively and it has touched a sore spot of the industry sector, adding to the tax burden on the Group while revenues have been decreasing, and this has also deteriorated the significant drop in profits after taxation.

Profitability
The owners of ALPIQ Csepel Kft invested USD 260 million into building Csepel II Station in the period between 1997 and 2000. The Power Station started  operation on 1 November 2000 to supply MVM and, through it, the public utility consumers. 

Project return rates (ROA) are presented in the next graph:

In the past period return on assets rates of the Group have been around the level normal in business life. The recession seen in the past two years has been caused primarily by the drop in demand owing to the economy crisis. An early consolidation of economic situation is globally desirable, and therefore domestic markets will hopefully soon experience recovery which can stop further deterioration of profitability levels. A remarkable fact is that 2009 and 2010 profitability levels have not exceeded the level of annual earnings on state securities of 10 to 15-year term, based on data from state securities auctions in late February 2011.

Production, sales and supply

Business Units within  the ALPIQ Csepel Group have again reliably performed their contractual liabilities in 2010, providing excellent quality of services. Settlement with our customers and suppliers has been performed smoothly just like in previous years. Our companies have realised sales revenues 7.5% below the 2009 figure and 38.5% below the level before the crisis. That process has been driven by the drop in customer demand caused by the economy crisis as well as by the excessive fluctuations in oil prices. Like in previous year, in 2010 focus in power generation has again been on producing electricity for the peak periods and on the provision of balancing and system-level reserves. The following figures reflect how factors that have a strong effect on sales revenue tendencies have changed since previous years:

Sales revenue factor	2007	2008	2009	2010
Generation (GWh)	2,166	2,171	975	794
Heat production (GJ)	1,120,729	1,118,930	1,053,615	1,110,212
Percentage of CHP operation	87%	87%	49%	46%
Availability	99.83%	99.30%	99.66%	99.97%
Forced outage (MW)	6.0	2.0	1.6	0.1
Number of starts (No.)	139	145	178	274
Distillate firing	0.0%	0.0%	3.9%	0.4%
Annual average spot of Brent crude (USD/Bbl)	72.44	96.94	61.74	79.61

Cost management

The economy crisis has influenced the energy demand in Hungary, as well. As a consequence, electricity production of the Business Group has further decreased from the levels normal in previous years. Regarding cost structure, the most appearing effect of the drop in production is that the percentage of gas cost, the cost type accounting for the majority of variable costs, has reduced to 69.4% from the 2008 figure of 76.7%. The reduction in our 2010 maintenance costs has been due to the pre-planned periods of subsequent major outages. The level of costs incurred reflect the fact that 2010 has seen just a smaller-scale inspection and repair programme causing an outage of a few days only.

In other costs incurred, a cost saving of HUF 320 million has been achieved against the level of previous year, dominantly due to our cost efficiency measures. In spite of cost saving measures, the volume of operating costs above fuel costs has increased in total mainly owing to the crisis tax introduced in 2010 and having a stronger impact on energy sector.

Liquidity and financial position

Group finance position has been steady in 2010 with liabilities met in due time. In spite of the recession, the Company has successfully maintained its solvency, and has not been forced to introduce any such cost saving scheme that would have resulted in the termination of jobs or the reduction of production capacities. Loans  have been repaid  and interests have been paid at the rate and to the extent as stated in the contracts, and without involving a new current account or other credit source.