Annual
report
2019
Financial
Highlights
Performance
Highlights
95% of EU serviced
Letters
Corné Meeuwis
Chief Executive Officer
Thanks to our dedicated,
competent staff JAO evolved
to the company it is right now
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Corné Meeuwis
Chief Executive Officer
Frederik Johnsen
Chief Operations
Officer Member of the
Management Board
Our business keeps growing
and changing, so we have
to continuously be ready to
adapt, understand and deliver
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Frederik Johnsen
Chief Operations Officer
Member of the Management Board
Søren Dupont
Kristensen
Chairman of the
Supervisory Board
We are closely involved in
the process of overseeing
and advising the
Management Board
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Søren Dupont
Kristensen
Chairman of the Supervisory Board
About JAO
The energy flows in
Europe start with us!
JAO is managed by two corporate bodies being the Management Board in charge of the day-to-day management of the company, and the Supervisory Board, which is in charge of conducting supervisory function.

Since 2008, JAO is facilitating the European electricity market by managing cross border transmission capacity auctions for TSOs and MPs.

In 2018, JAO was appointed as the “Single Allocation Platform” for the European Transmission System Operators and started operated as such in January 2019. Our company operates under the framework of the Harmonised Auction Rules and the Single Allocation Platform Cooperation Agreement (SAP CA) approved by all TSOs and National Regulatory Agencies.

In cooperation with our business partners, JAO has designed the tool and infrastructure for dedicated cross border capacity allocation, the e-CAT trading platform. This trading platform is designed to meet our shareholders’ precise and specific requirements: JAO offers auctions of transmission rights in various timeframes; annual, non-calendar annual, seasonal, quarterly, monthly, daily and intra-day.

Moreover, we provide administrative and financial services to TSOs and act as a fall-back for the European Market Coupling. We are the one stop point in delivering quality and value for all stakeholders.

Our Shareholders
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Year’s Hot 11
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Operations
Total Annual Capacity Allocated in 2019
The 2019 was a big year for the operations team, being the first year of operating as the Single Allocation Platform and the onboarding of several borders at the end of 2018. JAO also introduced several new products.

With the increased number of auctions and borders to facilitate, the need to find and develop automated solutions has increased, to push for higher operational efficiency. To better service our growing number of customers (350+ companies), we switched to a ticketing system, JIRA servicedesk, for all communication with market participants. This improved our follow-up procedures and overall customer service.

The uncertainties surrounding Brexit required the handling of multiple scenarios for UK borders. JAO needed to be prepared for switching from implicit to explicit allocation for day-ahead time frame and anticipate the introduction of new rules and the handling of multiple registrations.

A day in the life of an operator is non-stop work with auctions running 365 days a year and throughout every day with constantly increasing activity. From daily auctions early in the morning, to intray explicit auctions, to the post-coupling activities of SDAC and further explicit intraday auctions in the afternoon. On top of this, there are annual, monthly, seasonal, quarterly and weekly auctions run throughout the day for 80 directional borders.
This means, over 13,000 auctions per year, meaning over 35 auctions per day with 350 market participants and a total of over 17,000,000 transactions. The overview on the next page gives an insight into the daily activity of the operations team.

While continuously monitoring capacity curtailment, ensure data publication of relevant auctions, and correctly reporting to NRAs, and answering tickets from market participants in JIRA.

Throughout the day we perform the long-term auctions in addition to the steps mentioned above, usually running from 11:00 – 17:00 every day.

In 2019, we worked closely with TSOs and Entso-e on the revision of the Harmonized Allocation Rules for long-term transmission rights. This revision has resulted in further harmonization and less border specific requirements, allowing for a more streamlined and simpler framework for market participants to participate in long-term capacity auctions across Europe.

Project
No two days are alike in the Project Team. The project team works on various projects from developing new products to enhancing our existing services. Specialists support the launch of new auctions for cross-border transmission capacity and the implementation of services JAO offers to the European Transmission System Operators. JAO maintains the high standards and the required flexibility to efficiently respond to changes. JAO has developed and trained its staff to with industry standard project management methodologies and we have adapted it to fit with the size of the company and to ensure flexibility.
We are never standing still, and we expect further extensions and changes and therefore even more projects are to come in 2020.
Extension of
Long-Term auctions
Congestion income
collection and
distribution
Implementation of
shadow auctions as a
fallback for market
coupling
We are never standing still, and we expect further extensions and changes and therefore even more projects are to come in 2020.
Extension of
Long-Term auctions
Congestion income
collection and
distribution
Implementation of
shadow auctions as a
fallback for market
coupling
Information Technology
The JAO IT department, responsible for managing system and infrastructure providers, maintaining, monitoring and the development of all JAO IT systems, welcomed a 3rd developer in 2019 and formalized two new tester roles and is now has a team of 10 people.

The decision taken 2018 to insource key tasks and knowledge to improve reactivity, flexibility and customer satisfaction, showed its fruits during last year.

With developers, business analysts, testers, system administrators and the IT manager, the department supports the operational activities, ongoing projects and continuous improvements through all the JAO departments and services. The knowledge built within the IT team gives us the possibility to act proactively and not only react in solving problems or discussing technical proposals. A motivated, dynamic and enthusiastic team of experts is ready and eager to face the upcoming challenges for JAO.

Working together with our trusted vendors, 2019 focused on further increasing stability and to take proactive actions to ensure a flawless operation of the auction systems. This is reflected in a 100% availability of the auction system throughout the year 2019.

For the coming year, the big projects for the IT department are the ISO27001 certification and the migration of our auction tool to a PostgreSQL database and upgrading the underlying technology, which both are run in parallel to the day-to-day operations and the multiple ongoing tasks.  The investment in the auction tool’s infrastructure and technology, will allow us to anticipate market participants’ and regulatory needs, giving a solid and stable basis on which to further grow and develop

Human Resources
Our employees are our most valuable asset.

The company offers the opportunity for professional growth and good work-life balance.
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Communication
The activities in communication during 2019 were focused on defining the actions that should attribute to the growth of visibility and awareness about JAO.

Establishing and regularly using the company’s LinkedIn profile helped us to attract followers who are interested on what we do. By portraying our business and people we have managed to engage both an internal and external audience. We also used our social media channel to publish job announcements, where we noticed an increase in quality applications compared to before.

Taking into account the outcome of Annual Customer Satisfaction Survey, we realised that we need to improve user experience of our website and are in the process of completely rebuilding it from the ground up.

Using JIRA simplified all business related communication between Market Participates and JAO, helping us to improve the resolution structure of requests and messages we receive and to increase the response time.

Risk Management
Risk governance
The Risk management governance of JAO is based on three lines of defence that are represented by:
1. The process owners are the 1st line of defence under the responsibility of management for daily business and ensure the proper conduct of business operations by designing and implementing first level controls.

2. The Management Board and the Risk management function stand for the 2nd line of defence and are responsible for Risk oversight and guidance within the company. The Management Board approves the company’s risk strategy and is in charge of the implementation of an effective Risk management structure through the allocation of Risk management roles and responsibilities.

3. TheSupervisory Board, supported by the Audit Committee, is an independent body and gives objective assurance to the shareholders and recommendations to the Management Board on the overall effectiveness of risk management and the system of internal control (mitigation and monitoring activities as performed by the 1st and 2nd lines of defence)

Risk Culture
The Risk culture corresponds to the system of values and behaviours that shapes risk decisions within our organisation. The risk culture of JAO is built around the following values:
1. All employees of JAO are Risk management actors.

2. Effective risk management is only possible if risk-related information is freely shared between actors in a transparent way.

3. The main goal and benefit of risk management is to provide management with anticipated risk information to be effectively used as a key management and strategic tool.

4. Commitment includes the allocation of appropriate resources and budget for developing corrective actions as well as setting the “Tone at the top”.

5. Risk management orientates internal resource allocation by taking into consideration significant risks to cover with induced costs as well as added-value of controls

Risk management objective / goal
The objective / goal of the Risk management function of JAO is to ensure an appropriate and effective internal control environment,supported by Risk management policies. Through the Risk management policy and strategy, JAO pursues the following objectives:
Risk mitigation plan
The outcome of the risk assessment defines the mitigation plan, including a set of response methods and approaches. The Risk mitigation plan is supported by a costbenefit based evaluation and translates into one or a combination of the following risk responses:
Risk profile
During the year 2019, there were no risks identified that threatened the existence of the company, either individually or in their entirety.
Compliance
Compliance and integrity are matters that both require constant attention. The Supervisory Board discussed the quarterly compliance reports and noted the progress made in the implementation of data protection, anti-money laundering and know-your-customer policies as well as forward capacity market specific policies. It is of utmost importance to JAO to act in good faith and fairly, in compliance with the laws and regulations, and to use only means allowed by legislation. Suppliers are selected based on the contents of their business offers and previous references, avoiding any conflict of interest or any exception aimed at influencing the selection. JAO will carry on with its programme to upgrade its core tasks and systems, which will require significant IT developments. Digital capabilities will continue to be enhanced while ensuring regulatory compliance at all times
Finance - Report
The Company closes its fiscal year 2019 with an EBT amount of KEUR 465 which represents a margin level of 5.51%, putting the company close to its 5% EBT margin target.

The Company has also performed investments related to the extension of its services, especially in market coupling related systems to accommodate increase in borders, complexity of MNA and flow-based in CORE region, financial systems, as well as investments related to new services that will be performed from 2020, such as TERRE project for example.

Investments on the database migration and technology upgrade of our action tool has also started, with target go-live in late 2020.

As at December 31, 2019, the Company’s subscribed capital increased to KEUR 125 (2018: KEUR 110) following the adherence of the new shareholders National Power Grid Company Transelectrica S.A., Electricity System Operator EAD and EMS AD Beograd with effective date November 1, 2019. The subscribed capital is issued and fully paid. The subscribed capital is now represented by 1.250 shares (2018: 1.100) without par value and with an accounting value of EUR 100 per share.

Each shareholder holds 50 shares which represent a 4,00% share in the Company
Notes
Note 1 — Significant accounting and valuation methods
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Note 2 — Debtors
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Note 3 — Cash at bank
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Note 4 — Deposits made on business accounts
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Note 5 — Trade creditors
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Note 6 — Net turnover
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Note 7 — Other external expenses
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Note 8 — Subsequent events
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