Annual Report 2017 Enovos Luxembourg S.A.

54 55 Part I Our Mission 6 Part II Our Achievements 14 Part III Annual Accounts 22 Annual Report 2017 Enovos Luxembourg Note 20 – Financial derivatives The Company is further engaged in spot and forward electricity and gas trading on organised markets and by private sales. These transactions are carried out using various instruments. Among these instruments are forward contracts, which involve final delivery of electricity and gas, swap contracts, which entail promises of payment to and from counterparties in conjunction with the difference between a fixed price and a variable price indexed on underlying products, options and other contractual agreements. These contracts are not accounted for on the balance sheet, as the Company has opted to not take up the option to use fair value accounting in its annual accounts. Only the unrealised losses are accounted for in the income statement, in accordance with prudence principles. Derivative financial instruments – Unrealised gains (losses) on Sell positions 31/12/2017 31/12/2016 € € Financial derivatives on electricity futures (60,572,177) (45,991,803) Other financial derivatives (6,844,026) (11,228,475) Total (67,416,203) (57,220,278) Derivative financial instruments – Unrealised gains (losses) on Buy positions 31/12/2017 31/12/2016 € € Financial derivatives on electricity futures 60,466,089 45,696,441 Other financial derivatives 6,623,645 11,131,578 Total 67,089,734 56,828,019 The total nominal value (purchases and sales) of derivatives contracts and the net fair value break down as follows: 31/12/2017 31/12/2016 € € Nominal value Fair value Nominal value Fair value Financial derivatives on electricity futures 227,619,882 (106,088) 196,813,480 (295,362) Other financial derivatives 79,243,460 (220,381) 77,448,170 (96,897) The net fair value of the derivative contracts amounts to a loss of EUR 326,469. A provision of EUR 218,710 is recorded in the books of the company to account for this negative position (see also note 11.2. – Other provisions). Note 21 – Related parties transactions During the financial year, the Company did not conclude any significant transactions with related parties which were not done at market conditions. Note 22 – Off-balance-sheet commitments Commercial commitments The Company concluded a number of forward contracts for the purchase and sale of electricity and gas as part of its usual operations. The Company has thus contracted purchase commitments for physical delivery of electricity and gas amounting to EUR 1.44 billion, as of 31 st December 2017 (2016: EUR 1.12 billion). The amount of the aforementioned forward purchase contracts includes only forward contracts signed with counterparties. In addition, the Company holds several long-term gas-sourcing contracts, for which the off balance sheet commitments as of 31 st December 2017 amount to EUR 101.61 million (2016: EUR 224.4 million), and long-term electricity-sourcing contracts amounting to EUR 120 million (2016: EUR 125.2 million). In addition, Enovos Luxembourg S.A. has natural gas purchase commitments from the 1 st January 2018 until 2025 for a volume of 41.68 TWh, for which prices will be settled, with retroactive effect as from January 1 st 2018, and which are currently under discussion. Enovos Luxembourg S.A. furthermore has a power-sourcing contract from 1 st of January 2018 until 2037 with a total volume of 8,766 TWh. The cross-border gas-transportation capacity commitments account for EUR 35.78 million and run until 2025 (2016: EUR 43.96 million). For its activities as an electricity distributor in Belgium, the Company is obliged to deliver a certain amount of quota (green) certificates and guarantee of origin certificates to local regulators. In order to respect its obligations, the Company, as of 31 st December 2017, has a commitment, for the period 2018-2021, to purchase certificates valued at EUR 6.1 million from producers of alternative sources of energy (2016: EUR 7.4 million). The Company further entered into a variety of financially settled derivative contracts (mainly futures and swaps in gas, electricity and allowances) in order to hedge the procurements for customer business and assets. As of 31 st December 2017, the unrealised profit of these transactions amounts to EUR 0.262 million (2016: loss of EUR 0.204 million). Financial commitments Enovos Luxembourg S.A. also provided a letter of comfort amounting to EUR 200,000 (2016: EUR 200,000) to ensure commitments arising from a bank loan agreement entered into by Windpark Mosberg GmbH. In the context of the sale of NPG BIO I, the Company has given the buyer a feedstock supply guarantee of EUR 1,000,000 for 2018. In December 2017, the Company has provided a guarantee of EUR 4,796,788 to ensure commitments arising from a loan agreement between SW Saarbrücken und Enovos Deutschland SE.