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Crucial craftsmanship Annual Report 2020 Contents Crucial craftsmanship About us Strategy Results Governance Report of the Supervisory Board Financial statements Report of the Supervisory Board 134 Report of the Supervisory Board Content 140 Remuneration report for 2020 2020 Financial Statements 143 Financial statements 144 Consolidated statement of income Report of the Board of Management 145 Consolidated statement of comprehensive income 146 Consolidated balance sheet 4 Crucial craftsmanship 147 Consolidated cash flow statement 4 Translation Dutch annual report 148 Consolidated statement of changes in group equity 4 Annual summary for 2020 149 Notes to the consolidated financial statements 7 Foreword 208 Company income statement 209 Company balance sheet 8 About us 210 Notes to the company financial statements 8 Profile 9 Stedin Group's activities 14 Key figures and ratios for 2020 18 Strategy 18 Mission, vision and strategy 24 Developments within society and the energy market 27 Value creation and measuring impact 30 Sustainable Development Goals 31 Stakeholders and materiality 210 32 Connectivity, KPIs and targets Other information 40 Results 214 Profit appropriation pursuant to the articles of 40 Improved grid management association Reliability of our grids 215 Independent Auditor's Report Affordable and efficient services High-quality products and services 56 Facilitating the energy transition General information Built Environment 226 Reporting policy Making industry more sustainable 228 GRI Index Mobility 236 Interaction with our environment Agriculture and land use 239 Three-year overview Electricity 241 Glossary 74 Sustainable business operations 245 Disclaimer Safety and security Vital employees in a changing environment One Planet Thinking 100 Financial results 104 Non-regulated activities 106 What have we learnt 107 Focus areas in 2021 109 Governance 109 Corporate Governance 245 Supply chainresponsibility 120 Risk management 131 In-control statement Annual Report 2020 | Stedin Group 3 Contents Crucial craftsmanship About us Strategy Results Governance Report of the Supervisory Board Financial statements Crucial craftsmanship Translation Dutch annual report This report is a translation of the Dutch annual report 2020 of Stedin Groep. In the event of any discrepancy, the Dutch version will prevail. Annual summary for 2020 1st quarter 9 January – Stedin's renovated regional office in Delft is reopened. Following a renovation that lasted two years, the building is future-ready, with a modern climate control 2nd quarter system, full wall insulation, HR++ double-glazing, LED April – Stedin will purchase thousands of items of SF6-free lighting, charging points for electric cars and a solar roof. The switchgear in the coming years. SF6 is an insulation medium office now has an Energy Label 'A' rating. that is harmful if released into the atmosphere. Stedin needs a lot of new switchgear for expanding its electricity grids and 31 January – Grid managers Stedin, Enexis, Liander and KPN is committed to doing so in the most sustainable way NetwerkNL sign an agreement to work together in order to possible. avoid excavation damage while laying the fibre-optic network. Excavation damage is the cause of 13.5% of outages in Stedin's service area. 14 February – Stedin and Enduris present the Heat Transition Opening Bid to municipalities in their service area. The information provided by this service supports municipalities in choosing a future-proof heat supply for each individual district. 9 March – Stedin and Oasen begin with the first combined rerouting of water and gas pipelines as well as data and electricity cables for the widening of the A27 motorway between Houten and Hooipolder. This simultaneous approach minimises disruption to the environment and saves costs. 13 May – The Climate Agreement on Industry Infrastructure Task Force presents its report on the energy infrastructure 15 March – The Netherlands enters its first full lockdown. As for making industry more sustainable. This challenging task a company in a critically important sector, we have an will require substantial investments and clear commitments. important responsibility: maintaining the energy supply. The development of Energy Strategies Clusters (CES) is one Since energy is fundamental to society and the economy, our of the recommendations adopted by the Minister of work continues as far as possible. Naturally, we ensure Economic Affairs and Climate Policy. compliance at all times with government measures and guidelines of the National Institute for Public Health and the May – Grid manager Stedin is faced with substantial Environment (RIVM). investments in the energy grid due to the energy transition. Stedin consequently expects that it will need an additional €750 million to €1 billion in equity over the coming years for 4 Annual Report 2020 | Stedin Group Contents Crucial craftsmanship About us Strategy Results Governance Report of the Supervisory Board Financial statements these investments. Stedin relies on its shareholders to 4th quarter provide most of the necessary funding. 10 October – Reinforcing the electricity grid in the Port of Rotterdam can be done more cheaply and efficiently. This 3rd quarter outcome emerged from a study by the Port of Rotterdam 1 July – Stedin is audited by Lloyd's Register for certification Authority, Stedin and TenneT into the implications of the for level 4 of the Safety Culture Ladder. This means that energy transition. Demand for energy, including green energy, Stedin has a proactive safety culture. from the industry in Rotterdam is set to increase significantly in the coming decades. 10 July – Despite the challenges accompanying the COVID-19 outbreak, Stedin's in-house training school awarded 162 7 December – Evides Waterbedrijf and DNWG Infra have senior secondary vocational education diplomas. The undertaken joint activities below ground in Zeeland for more diplomas were handed out during a 'drive-in presentation than 10 years. This successful cooperation is further reflected ceremony'. and deepened with the signing of an open-ended cooperation agreement, providing a formal framework for effective cooperation below ground and minimising inconvenience to customers and the environment. 11 December – In Uithoorn, hydrogen is carried through the current gas grid to provide temporary heating to 14 specially prepared houses that are due for demolition. This technology is still in its infancy worldwide and is being applied for the first time in the Netherlands by Stedin. 18 August – Short-circuiting occurs during maintenance work in a 25kV station at De Constant Rebecqueplein in The Hague. This results in 33,000 customers in the centre and the west of the city being left without power for more than 8 hours. Stedin does everything possible to prevent failures in the grid. 7 September – Enduris gives advance notification of December – Grid managers TenneT, Stedin and Liander jointly structural congestion. Solar roofs and wind farms on expand the electricity grid in Zuidplaspolder in the province Schouwen-Duiveland and Tholen jointly produce more of South Holland. Demand for electricity in this area has electricity than is taken up in the area. As a result, Enduris is increased significantly in recent years. The electricity grid is unable to provide any capacity guarantee for large new solar slowly reaching the limit of its capacity as a result. To solve and wind farms on Tholen and Schouwen-Duiveland until an the current electricity grid capacity shortage in this region additional connection to TenneT's national high-voltage grid and meet the growing demand for electricity, the grid is available. managers are building a new high-voltage station alongside the A12 motorway – N219 expressway near Zevenhuizen in 28 September – The province of Zeeland becomes the first the municipality of Zuidplas. The station is scheduled for RES region in the Netherlands to adopt the Regional Energy completion by the end of 2024. Strategy 1.0. Enduris and several other stakeholders contributed to this. Annual Report 2020 | Stedin Group 5 Contents Crucial craftsmanship About us Strategy Results Governance Report of the Supervisory Board Financial statements Crucial craftsmanship In 2020, the term 'vital professions' was more topical than ever. It refers to the work that is key to keeping society in motion, to the essential jobs in critical sectors. Every day, we work on the critical infrastructure. This is infrastructure that is crucial for the functioning of our country. We perform crucial craftsmanship that is decisive for the well-being of others. This craftsmanship is highlighted in this Annual Report. The Board of Management of Stedin Group. From left to right: Marc van der Linden, Danny Benima and David Peters. 6 Annual Report 2020 | Stedin Group Contents Crucial craftsmanship About us Strategy Results Governance Report of the Supervisory Board Financial statements Foreword platform of all grid managers to provide for the uniform delivery of measurement data to market parties. We also There can be no denying that 2020 was the year of COVID-19. vastly improved safety performance in 2020 – something we From the outset in March, we had a crisis management aim to continue in the coming year. organisation lined up. In no time, we arranged for thousands of people to work from home, we adjusted to the 1.5-metre Crucial craftsmanship social distancing rule and we adopted a new protocol titled The theme of this Annual Report is 'crucial craftsmanship'.