Presentation half-year results 2011 22 August 2011 www.alliander.com
Disclaimer This presentation for the first half of 2011 is a translation of the Dutch presentation on the consolidated results for the first half 2011 of Alliander N.V. Although this translation has been prepared with the utmost care, deviations form the Dutch presentation might nevertheless occur. In such cases, the Dutch presentation prevails. ‘We’, ‘Alliander’, ‘the company’, ‘the Alliander group’ or similar expressions are used in this presentation as synonyms for Alliander N.V. and its subsidiaries, Liander refers to the grid manager Liander N.V. and its subsidiaries. The name Endinet refers to the Endinet group, including grid manager Endinet B.V. Stam refers to Stam Heerhugowaard Holding B.V. and its subsidiaries and Liandon refers to Liandon B.V. Alliander N.V. is the sole shareholder of Liander N.V., Endinet Groep B.V., Liandon B.V., Alliander Telecom N.V., Alliander Participaties B.V., Stam Heerhugowaard Holding B.V. and Alliander AG. Parts of this presentation contain forward-looking information. These parts may –without limitation– include statements on government measures, including regulatory measures, on Alliander’s share and the share of its subsidiaries and joint ventures in existing and new markets, on industrial and macroeconomic trends and on the impact of these expectations on Alliander’s operating results. Such statements are preceded by, followed by or contain words such as ‘believes’, ‘expects’, ‘thinks’, ‘anticipates’ or similar expressions. These prospective statements are based on the current assumptions and are subject to known and unknown factors and other uncertainties, many of which are beyond Alliander’s control, so that future actual results may differ materially from these statements. This presentation has been prepared with due regard to the accounting policies applied in the preparation of the 2010 financial statements of Alliander N.V., which can be found on www.alliander.com. All financial information shown throughout this presentation has not been audited. Alliander half-year results 2011 2
Content 1. Highlights 2. Alliander at a glance 3. Half-year results 2011 4. Appendices Alliander half-year results 2011 3
Highlights first half 2011 • Half-year result 2011: € 119 million • Higher revenue due to increase in tariffs • Slightly increased OPEX Financial results • Higher CAPEX and position • Credit rating changes: 2011 − S&P rating upgrade from A/A-1/stable outlook to A+/A-1/positive outlook − Moody’s rating unchanged at Aa3/P-1/stable outlook • Extension of maturity date RCF: € 600 million to 15 July 2016 • Decrease of average electricity outage • Stable customer satisfaction Strategic and • Increase of external staff operational • Start of digitisation of distribution substations by implementing SASensors and GSM developments outage alarms • Participations in Locamation and Plugwise through Alliander Participaties B.V. • Merger of Alliander N.V. and Alliander Finance B.V. • Supreme Court is likely to overturn Court decision on Unbundling Act Regulatory • Regulatory developments developments • Dutch Upper House passed Bills involving the introduction of the smart meter • Gradual introduction of new market model • X-factors for new regulatory period (2011 – 2013) allowing tariff increases Alliander half-year results 2011 4
Content 1. Highlights 2. Alliander at a glance 3. Half-year results 2011 4. Appendices Alliander half-year results 2011 5
Stable public shareholder base Alliander Shareholders: Alliander’s grid coverage regions largely Provinces & Municipalities coincide with the shareholders base Amsterdam 9% ��� Friesland Other 24% Noord-Holland 9% Noord-Holland Friesland Amsterdam 13% Gelderland Gelderland Endinet (2) 45% 100% owned by Dutch provinces and municipalities and privatisation is not allowed by law (1) Includes province of Flevoland, and various municipalities located in the provinces of Gelderland, Friesland, Flevoland, Zuid-Holland and Noord-Holland (2) Endinet acquired as per 1 July 2010 Alliander half-year results 2011 6
Market positions Number of connections (x1,000) • Alliander and Endinet together have 3 million electricity customers and 6.000 5.556 2.6 million gas customers in Endinet the Netherlands Acquisition 5.000 4.657 Electricity connections • Alliander has combined Gas connections market position of 38% 2.861 3.818 4.000 2.610 3.000 1.949 Intergas acquisition by 2.000 Enexis 2.137 1.000 1.899 1.869 558 392 106 191 206 133 105 148 452 54 54 32 148 186 137 0 101 51 Alliander Enexis Stedin Endinet Delta Cogas Intergas Rendo Westland Source: EnergieNed “Energy in the Netherlands” 2010 publication Alliander half-year results 2011 7
Overview Dutch energy networks Electricity Networks Gas Networks 2 2 12 1 5 5 1 6 2 6 1 3 1 7 7 6 3 7 3 5 2 2 1 8 4 4 1 1 1 Liander and Endinet (1) RENDO Netbeheer BV (5) COGAS (6) ENEXIS and Intergas (2) Westland Energie Infrastructuur BV (7) Stedin (3) Delta Netwerkbedrijf BV (4) Source: EnergieNed “Energy in the Netherlands” 2010 publication, adjusted for Endinet acquisition by Alliander and Intergas acquisition by Enexis Alliander half-year results 2011 8 8
Position in Dutch energy value chain Production and Transmission Distribution Supply trade Liberalised Regulated Regulated Liberalised Vattenfall/Nuon Vattenfall/Nuon Tennet Alliander RWE/Essent RWE/Essent Gas Transport Services Enexis (GTS) Dutch energy value chain has been partially liberalised over the years Alliander half-year results 2011 9
Alliander’s businesses: stable cash flow profile • Regional Grid Manager: Management of • Regional Grid Manager in Eindhoven • Service, maintenance and automation of regional electricity and gas grids and Oost-Brabant region. Management complex energy infrastructures, of regional electricity and gas grids including for TenneT • Electricity & gas metering business • Electricity & gas metering business • Clients are in the stable and regulated • Regulated assets network sector • Regulated assets • Low risk profile due to • Stable and predictable regulatory environment • Low risk profile due to regulatory cash flow environment Grid manager Network company 2011 Half-year results Liander Endinet Other (1) Eliminations Total € million Operating income External income 696 54 66 - 816 Internal income 5 - 133 -138 - Total operating income 701 54 199 -138 816 Operating expenses Total operating expenses 523 40 201 -138 626 Operating profit 178 14 -2 - 190 Total assets 5,725 534 3,977 -2,854 7,382 Regulated business >90% (1) Comprises other activities within the Alliander Group including the activities of Liandon, Stam, Alliander A.G., Corporate departments and service units (both part of Alliander N.V.) Alliander half-year results 2011 10
Regulatory environment Electricity • Regulation aims for a balance between quality and X-Factor sustainability, whilst providing an incentive for efficiency 2008–2010 2011–2013 Liander N.V. 3.6 (7.0) • Total cost recovery for the industry remains one of the basic Endinet B.V. 4.6 (5.5) principles, which allows individual companies with an average Delta Netwerkbedrijf 5.8 (6.6) performance to cover their full costs (including the WACC as Stedin B.V. 6.3 (7.9) set by the Energiekamer, applied on the standardised asset Enexis B.V. 5.0 (6.2) value) • For the 2011-2013 period the WACC (in pre tax real terms) is set at 6.2% Gas X-Factor 2008–2010 2011–2013 x-factors (1) as determined by the regulator for the 2011-2013 • Liander N.V. 6.1 (2.7) period will allow increases in tariffs Endinet B.V. 7.2 (1.6) Delta Netwerkbedrijf B.V. 6.6 (0.4) • There is a difference between regulatory costs and Enexis B.V. 8.1 (3.4) commercial costs with respect to the asset value. Stedin B.V. 4.2 (2.8) Source: Energiekamer, Alliander Constructive regulatory framework which does not allow for privatisation (1) See page 35 for further explanation Alliander half-year results 2011 11
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