Alliander N.V. Results 2019 18 February 2020
Credit profile Alliander • Largest regional energy network company in the Netherlands Leading • 3.2 million electricity and 2.5 million gas connections network • Natural monopoly status in its license areas company in NL • Strong and stable shareholder base with 100% of the shares held by provinces and local municipalities Stable public • Geographically, network coverage regions largely coincide with shareholders' base shareholders • Privatization not allowed by law • Low risk profile due to stable and proven regulatory environment Mature and • Well defined, mature and constructive regulation with 5 year regulatory period constructive • Total cost recovery for the industry is one of the basic regulatory principles regulatory • Current regulatory period provides high degree of cash flow predictability for next 2 years regime • Over 85% regulated revenue from regional electricity and gas distribution Stable cash • Remaining revenue largely related to services offered to customers with regulated network activities flow profile • Strong financial profile with well-defined and disciplined financial policy Robust capital • Financial ratios well within financial policy framework structure • Proven commitment to stay within financial policy framework • Strong liquidity position with significant volume of undrawn facilities available • Recently affirmed ratings of Aa2/P-1/stable outlook by Moody's and AA-/A-1+/stable outlook by S&P • High quality assets; reliable grid with relative low annual outage duration in European context Operational • Focused capex program will ensure grid quality is maintained expertise • Smart meter offering on schedule • Highest ISS-Oekom rating amongst utility peer group at Prime B (31-dec-19) Sustainability • CO 2 neutral by 2023 leadership
Highlights 2019 ; solid financials, operational challenges • Profit after tax decreased to € 253m ( 2018: €334m) due to book profit on Allego sale in 2018. Profit after tax excluding incidental items and fair value movements rose by € 6m to €267m • Revenue increased to € 1,930m (2018: €1,920m) Financial • Operational expenses slightly higher at € 1,591m (2018: €1,572m) • Gross investment up to € 834m (2018: €731m). Net investment amount to € 710m. (2018: €605m) due to third party contributions. • Net debt increases to € 2,223m, an increase of € 316m, due to negative free cashflow and IFRS 16 effects. • Issuance of a second Green Bond of € 300m, tenor 13 year ( June 2019 ). Outlook 2020 • Lower result expected due to increased transportation charges by Tennet of €60m to be recovered in tariffs at T+2 Strategic • More focus on feasibility of the workload, energy transition portfolio, heat transition and cost savings • Method decision next regulatory period: consultation has started Regulatory • Progress in key legislative processes including integration of existing Electricity and Gas Acts and market order district heating: Consultation expected in first half of 2020 • Increased workload due to economic growth and acceleration of energy transition • Shortage of technically skilled personnel Operational • Transport restrictions and backlog in realizing new connections • Smart meter offering on schedule • Decrease in electricity outage duration to 21.9 minutes in past 12 months (31-Dec-18: 30.6) • Appointment of Walter Bien as of the 7 th of October to the Board of Directors as CFO and successor of Mark van Lieshout Governance • Appointment of Daan Schut as of the 1 st of April to the Board of Directors as CTO ( Chief Transition Officer ) 3 3
Energy gy transitio ition and strategy egy 5 Regulation 13 Results 2019 15 Financial position 19 Other 25
Dutch Climate Law and Climate Agreement Climate Law: secures both the Climate Agreement and long term ambitions Climate Law approved in Parliament. May 2019 June 2019 Presentation Climate Agreement 2030 2030 CO 2 emissions 49% lower compared to 1990 2050 2050 CO 2 emissions 95% lower compared to 1990. All electricity is generated CO 2 neutral Dutch ambitions for 2030 35 Terrawatthour renewable electricity production on land New heating systems for 1.5 million homes 1.8 million charging points 5
Impact Climate Agreement on investment grid operators Impact on Alliander Sector investment in additional electricity grid infrastructure in the Netherlands Impact on investment Other her Regiona onal l grid id Additional investment (excluding replacements and maintenance) in electricity • operat erator ors grid infrastructure is estimated at ~€1.3bn for Liander. For 2020 Alliander expects total investments of : € 880m • Liander €2,2 bn The investment levels in the coming years will remain around this level • €1,3 bn The increased investments lead to a higher financing requirement Alliander • National grid operator €14bn Total sector investment €17.5bn 2030 – 49% scenario 6
Alliander′s mission and strategy Alliander stands for an energy supply that gives everyone equal access to reliable, affordable and renewable energy Helping customers make choices that are right for them Top-class grid Investing in new, Digitisation of grids and the overall management open grids energy system Data driven grid Reliability management Safety Customer 7 convenience
Focus on a number of aspects in the coming years Feasibility of workload Prioritize, increase capacity, more efficiency Realise innovations and smart solutions and applying them in practice + Energy transition portfolio alternative (sustainable) uses of our gas grids Cooperate with municipalities to ensure a successful heat transition + Heat transition install heat grids Cost-conscious and efficient working Cost savings to enable future increasing investments & using knowledge and tools for the benefit of customers and other network operators 8
Energy transition in our service areas Local electricity feed in: capacity growth Installed solar capacity Installed wind capacity 2,5 1,34 GW GW • Gas 5,860 million m3 per year • Electricity 28,548 GWh per year ( = 78.2 GWh per day) Tot otal tran 1,32 2,0 ansported volu 1,30 1,5 1,28 volumes in 1,26 1,0 Ambition 2030: 3.5 GW Ambition 2030: 12.6 GW 1,24 0,5 n our se 1,22 Actual 2019 : 1.3 GW Actual 2019 : 2.2 GW servic 0,0 1,20 2017 2018 2019 2018 2019 ice areas (20 2017 Greengas feed in on our networks Number of public charging poles 7000 2019) 14 mln m 3 6000 12 5000 10 4000 8 3000 6 Ambition 2030: 880 million m 3 Ambition 2030: 67,000 2000 4 1000 2 Actual 2019: 32 million m 3 Actual 2019 : 6,600 0 0 2018 2017 2019 2017 2018 2019 9
Energy transition in our service areas Local electricity feed-in: number of customers and energy source Customers with renewable generation Breakdown of local renewable electricity feed-in 500.000 11,4% 10,0% 9,9% 381.429 .429 400.000 7,4% 7,1% 6,8% 270.646 .646 300.000 189.816 .816 200.000 1,5% 0,7% 2,3% 2,3% 2,2% 0,3% 0,2% 0,2% 0,3% 100.000 Total Wind Biomass Solar Other Renewable - 2017 2018 2019 2017 2018 2019 381,429 customers have a registered connection with an active feed-in About 11% of the total transported electricity volume in our service areas is locally • • installation in our service areas generated renewable energy Number of customers increased by 40% in 2019 Main contributor is wind which accounts for 2/3 of all locally produced electricity. • • The large increase is due to decreasing PV panel prices, a recovering economy Its contribution varies per year depending on the weather conditions • and a favorable subsidy regime Contribution of PV generated electricity shows rapid growth • Numbers include only electricity generated by businesses and not by consumer • households. 10 10
Heat transition: future plans and developments in our regions Futu ture plans ns Devel velop opments ents in the built lt environm onment ent Realized gas removals From a national climate agreement to plans at neighborhood level 4.648 3.481 2018 2019 Share gasless in applications for new connections 67% 47% 2018 2019 11 11
Energy transition and strategy 5 Regulatio lation 13 13 Results 2019 15 Financial position 19 Other 25
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