Presentation Half-year results 2013 26 July 2013
Disclaimer ‘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., Verlian B.V., Stam Heerhugowaard Holding B.V., CDMA Utilities B.V. en 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 2012 financial statements of Alliander N.V., which can be found on www.alliander.com. All financial information shown in this presentation has not been audited and is made available for the purpose of discussing the current and future financial position of Alliander. No party can rely upon this presentation unless explicitly confirmed otherwise in writing by the company. Alliander half-year results 2013 2
Content 1. Highlights 2. Alliander at a glance 3. Half-year results 2013 4. Appendices Alliander half-year results 2013 3
Highlights 2013 YTD • Reported results 2013H1: € 129 million (2012H1: € 82 million). Comparable results 2013H1: € 131 million (2012H1: € 100 million) • Higher revenue due to increase in regulated tariffs Financial results • Stable CAPEX and position • Stable OPEX • Early Termination of 3 cross-border lease transactions • RCF: € 600 million extended until July 2018 • 12-month average electricity outage falls from 24.5 (Dec-12) to 21.9 minutes (Jun-13). • Customer satisfaction remains at high level Strategic and • Second year of roll-out smart meters operational • Start of efficiency program in Operations developments • Acquisition of CDMA data communication network for € 18 million • Start of new business activities in the field of sustainable area development, mobility services and sustainable living • Draft method decisions new regulatory period 2014-2016 have been published indicating tariff decreases due to lower WACC, decrease in average sector cost and regulation of metering. Final method decisions is expected by Oct-2013 Regulatory • The Advocate General to the European Court of Justice has presented legal opinion that considers developments Unbundling not contradictory to Treaty on the Functioning of the European Union • Cost investigation by ACM (former NMa) • Final phase of introduction of new market model planned on 1 August, 2013 Alliander half-year results 2013 4
Content 1. Highlights 2. Alliander at a glance 3. Half-year results 2013 4. Appendices Alliander half-year results 2013 5
Stable public shareholder base Alliander’s grid coverage regions largely coincide with Alliander Shareholders: Provinces & Municipalities the shareholders base (1) Friesland Other 24% Gelderland 45% Noord-Holland Amsterdam Amsterdam 9% Gelderland Noord-Holland 9% Friesland Endinet (2) 13% 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 shares acquired by Alliander as per 1 July 2010 Alliander half-year results 2013 6
Market position Number of connections (x1,000) • Alliander has 3.1 million electricity connections and 2.6 million gas 6.000 (1) 5.687 connections in the Netherlands (2) 5.000 4.687 • Electricity connections Alliander has a market position of 37% Gas connections 4.000 3.057 4.000 2.631 3.000 2.054 2.000 2.630 2.056 1.000 1.946 394 191 134 107 207 32 53 52 138 102 55 187 0 Alliander Enexis Stedin Delta Cogas Rendo Westland Source: ECN/EnergieNed/Netbeheer Nederland “Energy Trends” 2012 publication Notes: (1) Alliander includes Endinet (2) Enexis includes Intergas Alliander half-year results 2013 7
Overview Dutch energy networks Gas networks Electricity networks 2 12 2 1 5 5 6 2 1 6 1 3 3 1 7 7 6 7 5 3 2 2 1 4 8 1 1 4 1 2 Liander and Endinet (1) RENDO Netbeheer BV (5) ENEXIS and Intergas (2) COGAS (6) Westland Energie Infrastructuur BV (7) Stedin (3) Delta Netwerkbedrijf BV (4) Source: EnergieNed “Energy in the Netherlands” 2011 publication, adjusted for Endinet acquisition by Alliander and Intergas acquisition by Enexis Alliander half-year results 2013 8
Position in the Dutch energy value chain Production and trade Transmission Distribution Supply Liberalised Regulated Regulated Liberalised Vattenfall/Nuon Vattenfall/Nuon Tennet Alliander RWE/Essent RWE/Essent Gasunie Enexis Eneco Eneco Stedin The Dutch energy value chain has been partially liberalised over the years. Regional distribution and transmission are regulated Alliander half-year results 2013 9
Alliander’s businesses: stable cash flow profile • • Regional Grid Manager: Management of regional electricity and gas grids Service, maintenance and • automation of complex energy Electricity & gas metering business infrastructures, including for • Regulated assets TenneT • Low risk profile due to regulatory environment • Clients are in the stable and regulated network sector • Stable and predictable cash flow Network Network Other 1 2013 Half-year results operator company Eliminations Total Liander Endinet € million Operating income External income 812 57 41 - 910 Internal income - - 3 154 -157 Total operating income 815 57 195 -157 910 Operating expenses Total operating expenses 599 44 207 -157 693 Operating profit 216 13 -12 - 217 Total assets 6,228 525 2,825 -2,162 7,409 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 2013 10
Regulatory environment Regulation model Electricity • Based on output steering • Regulation aims for a balance between efficiency, quality and X-Factor sustainability 2008 – 2010 2011 – 2013 • Total cost recovery for the industry is one of the basic regulatory Liander N.V. 3.6 (6.4) principles. The efficient cost level is calculated as the average cost level in the network sector. This allows individual Endinet B.V. 4.6 (6.2) companies with an average performance to cover their full costs Delta Netwerkbedrijf B.V. 5.8 (5.2) (including the WACC as set by the ACM, applied on the Enexis B.V. 6.3 (7.7) standardized asset value) Stedin B.V. 5.0 (6.1) Regulatory period • Current : 1 Jan 2011 - 31 Dec 2013 • Next : 1 Jan 2014 - 31 Dec 2016 Gas X-Factor WACC (in pre tax real terms) • 2008 – 2010 2011 – 2013 Current 6.2% • Next 3.6% (based on draft method decision) Liander N.V. 6.1 (2.7) Endinet B.V. 7.2 (1.6) • Decrease is due to lower equity beta, risk free rates and risk Delta Netwerkbedrijf B.V. 6.6 (0.5) premiums (WACC is CAPM based) Enexis B.V. 8.1 (3.4) X-factors Stedin B.V. 4.2 (2.8) • Current: allow for an increase of allowed revenue Source: Energiekamer, Alliander up to a maximum level (= negative x-factors) • Next: Draft Method decision indicates a minimum decrease in allowed revenue (=positive x-factors) Constructive regulatory framework which does not allow for privatisation Alliander half-year results 2013 11
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