Annual Report 2018
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The world we live in Annual report 2018 Contents The world we live in About Stedin Group Stedin Group's Strategy Results Governance Report of the Supervisory Board Financial statements Report of the Supervisory Board 91 Report of the Supervisory Board Content 96 Remuneration report for 2018 Financial statements 99 Financial statements 100 Consolidated income statement Foreword by the Board of Management 101 Consolidated statement of comprehensive income 102 Consolidated balance sheet 4 The world we live in 103 Consolidated cash flow statement 104 Consolidated statement of changes in group equity 105 Notes to the consolidated financial statements Report of the Board of Management 168 Company income statement 169 Company balance sheet 6 About Stedin Group 170 Notes to the company financial statements 6 Profile 7 Stedin Group's activities 10 Key figures and key indicators for 2018 14 Stedin Group's Strategy 14 Mission, vision and strategy 15 Developments within society and the energy market 18 Strategic risks and opportunities of the energy transition 19 Stakeholders and materiality 20 Connectivity, KPIs and targets 26 Value creation model 27 Sustainable Development Goals Other information 174 Profit appropriation pursuant to the articles of association 30 Results 175 Independent Auditor's report 30 Improved grid management Reliability of our grids Affordable and efficient services Attachments High-quality products and services 185 Reporting policy 37 Facilitating the energy transition 187 GRI Index Future-proof grids 199 Three-year overview Making grid information available 201 Glossary Accelerating through cooperation 204 Disclaimer Strategic environmental management 46 Sustainable business operations Safety and security Professionally competent employees now and in the future One Planet Thinking 60 Financial results 62 Non-regulated activities 64 Focus areas in 2019 68 Governance 68 Corporate Governance 77 Risk management 86 In-control statement 2018 Annual Report | Stedin Group 3 Contents The world we live in About Stedin Group Stedin Group's Strategy Results Governance Report of the Supervisory Board Financial statements The world we live in Foreword Natural gas-free new-build housing Phasing out natural gas is one of the pathways towards the In the past year, climate change, the energy transition and energy transition. It was partly due to our efforts that the natural gas-free housing have been widely discussed - in legal obligation to connect newly built homes to the natural politics, in the media, at our customers and of course at gas grid was abolished. Stedin Group advocated this in 2017 Stedin Group. The energy system in the Netherlands will be in the House of Representatives in the form of a research transformed, this much is clear. Our energy management and report with recommendations. The switch-over scheme we hence the world we live in will soon look very different, as we introduced in 2018 has also been a success: even after a are rapidly switching to sustainable energy. Stedin Group, as contract for a construction project with natural gas has been one of the regional operators of energy grids, is a party that signed, developers can still opt for an alternative. Existing is outstandingly well placed to contribute to this change. buildings pose numerous challenges for the next 10 to 30 years, for which Dutch society as a whole needs to devise Climate Tables solutions. What is certain is that the energy mix will change The draft Climate Agreement of the Dutch government and that heat is assuming an increasingly important role, contributes to that transition. By 2030, the Netherlands will alongside electricity and sustainable gases. We believe that be 49% climate-neutral - that is the overarching goal. We we can offer added value in this process and aim to acquire have been closely involved in the negotiations on how that further experience in this area in 2019 in association with a goal can be achieved. It was and remains crucial for Stedin number of municipalities. Group to be involved in such plans as early as possible. In the Climate tables, we were able to provide information on the Connecting customers consequences of the various choices on the reliability and In our drive to make our organisation more efficient and affordability of the energy infrastructure. The outcome was more customer-oriented, we focused especially on sometimes that regulatory changes are required to ensure a streamlining the process of connecting customers to our fair allocation of tasks, risks and costs. energy grid in 2018. We are required by law to connect new customers within eighteen weeks. Some customers want to Better predictions, smarter technology, reinforcement be connected sooner, others later. In order to meet customer The far-reaching changes entail shifts of emphasis in the preferences as much as possible, we redesigned the range of Stedin Group's tasks. We need to get better at connection process and improved our communication on its predicting how much sustainable energy will be supplied to, status and progress. The rising customer satisfaction rates and used, in our grids, and when. that we already witnessed in the course of 2018 confirmed that those measures were necessary. We are on the right To take only one example, the number of electric cars is track - but we must still do better. expected to surge. This will result in increased demand for charging stations and an increased load on the grid, but may Safety also stimulate smart solutions for feeding electricity back While our safety performance was slightly better than in from car batteries. Smarter technology means that we must 2017, we failed to achieve our target for 2018. We facilitate communication between all parties that demand implemented more measures than ever but there were and those that supply energy. Digitalisation is required to nonetheless too many incidents involving falling, stumbling maintain the stability of the grid or to make different use of or traffic accidents. Because many fitters are involved in the existing infrastructure, such as using the gas grids for installing smart meters, this activity proved to attract more hydrogen. This will help to ensure that the transition remains risks. We will maintain our focus on safety and risk reduction affordable. Reinforcing our electricity grids enables them to in 2019. handle larger volumes of electricity. As this is very expensive, we want to carry out those changes as intelligently as Financial results possible. Earnings for 2018 were in line with expectations. Like all grid operators, we will be faced with a substantial challenge in the years ahead. To make the energy transition possible, we 4 2018 Annual Report | Stedin Group Contents The world we live in About Stedin Group Stedin Group's Strategy Results Governance Report of the Supervisory Board Financial statements will have to step up our investments – totalling some grids). We are also carrying out a trial to use hydrogen to € 7 billion up to 2030 – while revenues are under pressure heat in an existing apartment complex in the Rotterdam due to regulation. We therefore need to deploy people and governing committee area of Rozenburg, which involves resources even more intelligently and more efficiently. many different parties. And there are numerous other examples of projects and initiatives in which we partner with Our employees our stakeholders. It is for good reason that the words The far-reaching changes in energy supply are a powerful 'working together' are the first in our mission statement: spur for our employees. Innovative and attractive plans are 'Working together to create an environment filled with new emerging within Stedin Group for solutions that contribute energy'. to the energy transition. This calls for adaptability and always, primarily, for consideration of the customer's Conclusion interests. We are making progress on this. We would like to In this report, we look back on our performance in 2018 and thank all our employees who ensure, each and every day, that also look ahead to the years to come, in which we will focus our energy grid is among the best in the world. our knowledge and expertise of energy infrastructures on our environment in the future. Cooperation In our work, we experience on a daily basis that the energy Board of Management transition requires close cooperation between all parties. This applies, for instance, to the search for solutions to maintain a Marc van der Linden balance between energy supply and demand. We cannot do Danny Benima this on our own; we need the cooperation of the market and Judith Koole of residents. One example is the project in the Hoog Dalem David Peters area in Gorinchem described in this report (see Future-proof From left to right: Marc van der Linden, David Peters, Danny Benima, Judith Koole 2018 Annual Report | Stedin Group 5 Contents The world we live in About Stedin Group Stedin Group's Strategy Results Governance Report of the Supervisory Board Financial statements About Stedin Group Profile More than 2.2 million retail customers, businesses and Stedin Group operates and has its registered office in the industrial customers rely on Stedin Group for their energy Netherlands. We carry out regulated activities as a grid supply. Day and night. Energy is indispensable in the world operator and we also perform a number of non-regulated in which we live. The grid operators within Stedin Group, activities as a group. Our head office is located at Blaak 8, Stedin and Enduris, work with other parties forming part of 3011 TA in Rotterdam, The Netherlands. Our service area is the energy system: the producers of gas and electricity, the characterised by its dynamism and densely built-up areas. suppliers, the other grid operators and the organisations We manage and which monitor the reliability, affordability, safety and maintain the energy grids in a large part of the Randstad sustainability of the grids.