The EGL Group contracted a lower gross margin of CHF 502.1 million (-23%) over the previous year.
The main reasons for the decrease were the significantly lower trading result and the weak euro. Net profit also declined over the previous year to CHF 22.2 million (-12%). This was impacted in particular by a write-off of receivables from the grid operator Swissgrid. However, expansion of the customer business with structured products and innovative services (origination) has developed positively.
The lower gross margin was largely attributable to the weaker trading result, low operating hours of the gas-fired combined-cycle power plants in Italy due to continued moderate electricity prices, the declining difference in prices between Italy and Central Europe, as well as the weak euro. On the cost side, personnel expenses were reduced by 18 percent through cost-cutting measures that have been completed in the meantime, and other operating expenses were reduced by 5 percent.
Within the space of one year, EGL reduced operating costs by over CHF 40 million. As a result of the memorandum of understanding concerning the handover of the high-voltage network in Switzerland to the transmission system operator Swissgrid, EGL had to recognise in its income statement a write-off of receivables from Swissgrid in the amount of CHF 39.8 million. Despite this adjustment, EGL is still of the opinion that the book value of CHF 240.9 million after depreciation and before allowances reflects the correct value. EGL’s respective appeals against EICom’s low valuation is still pending with the Federal Administrative Court.
1 Swiss franc = 1.09075 U.S. dollars
[mappress]
LNG World News Staff, January 26, 2012