1.1 General information

Stedin Holding N.V. (hereinafter ‘Stedin Group’) is a public limited liability company under Dutch law, with its registered office at Blaak 8, 3011 TA in Rotterdam, the Netherlands, a holding company of subsidiaries, and is registered at the Chamber of Commerce under number 24306393.

Stedin Group’s main activity is to ensure safe, reliable and affordable energy supply. The grid manager of Stedin Group, Stedin Netbeheer, achieves this by constructing and managing the electricity and gas networks and preparing them for the future, and by facilitating the energy market. Stedin operates in the provinces of South Holland and Utrecht and in parts of the Noordoost-Friesland, Kennemerland and Zeeland regions. The subsidiary DNWG Infra provides energy infrastructure services to business customers. Utility Connect is a joint operation with Alliander that focuses on data communication for smart meters. TensZ is a joint venture between Stedin Netbeheer and TenneT for the maintenance, service and building of high-voltage electricity grids.

Stedin Netbeheer operates alongside five other Dutch regional grid managers in a regulated market. Each regional grid manager is a monopolist within its own service area. Regulation means that the work performed by the grid manager is set out in law and that the rates are set by the Netherlands Authority for Consumers and Markets (ACM). The regulatory model encourages grid managers to perform as well as possible (in terms of efficiency and quality) by using a benchmark model.

For more information on the composition of the Group, see note 3 Operating segments and 36 Overview of subsidiaries and associates.

The consolidated financial statements have been prepared by the Board of Management of Stedin Group.

Adoption of financial statements for preceding financial year

The 2021 financial statements have been signed by both the Board of Management and the Supervisory Board of the company during the meeting on 17 February 2022 and were adopted by the General Meeting of Shareholders on 22 April 2022.

Unless otherwise stated, all amounts in this annual report are in millions of euros. The historical cost principle is applied. Certain assets and liabilities, including property, plant and equipment and derivatives, deviate from this as they are measured at fair value. Unless stated otherwise, these accounting policies have been consistently applied for all financial years included in these financial statements. The accounting policies applied in the financial statements are based on the assumption of the company’s continuity.

1.2 Key events in 2022

No events occurred in 2022 that represent a significant uncertainty for the equity and results as at the end of the financial year on 31 December 2022. For more details, see our annual report.

Stronger together

Since the acquisition of DNWG Group by Stedin in 2017, we have worked towards combining the various entities within the group. Several transfers of entities took place within the Group in 2021. The Enduris shares were also transferred to Stedin Netbeheer in 2021. As per 1 January 2022, Enduris has merged with Stedin Netbeheer, making it the sole network operator within Stedin Group. The other entities with overlapping activities within the Group (DNWG Staff with Stedin Groep Personeels B.V., and TensZ with TeslaN) also merged as of 1 January 2022.

Financing

In May 2022, Stedin Group issued its third green bond of €500 million. This capital will be invested in the expansion and reinforcement of the electricity grid to facilitate the energy transition and will also be used to repay a €300 million bond issued in 2017. The loan of €500 million has a term of 8 years, an issue price of 99.318% and a coupon interest of 2.375% (effective interest rate of 2.47%).

In September 2022, the government announced that it would reserve an amount of €500 million to strengthen Stedin Group’s equity. The timing of this strengthening is still being elaborated upon.

Network losses in 2022

The costs for network losses rose substantially in 2022, by €110 million compared with 2021. The lower gas production in the Netherlands led to higher imports and hence to greater dependency on the international gas market. A strong increase in gas prices and therefore higher costs for network losses were due to a combination of lower gas inventories within Europe, strong dependency on electricity prices and partly due to short-term purchasing of gas and electricity by Stedin. Partly due to a sharp increase in energy prices, Stedin decided to adopt a different purchasing strategy for energy. This involves longer term purchasing compared to what was done previously. As a result, Stedin’s costs are now less exposed to short-term fluctuations in energy prices, which improves the quality of financial forecasts. In addition to this change in purchasing strategy, Stedin has also considered other measures to minimise network losses. For example, it is implementing process optimisations with several of its internal departments.

1.3 International Financial Reporting Standards (IFRS)

The consolidated financial statements of Stedin Group have been prepared in conformity with IFRS as applicable at 31 December 2022 and as adopted by the European Union (EU) and the definitions of Part 9, Book 2 of the Dutch Civil Code. IFRS comprises both the IFRS standards and the International Accounting Standards issued by the International Accounting Standards Board (IASB) and the interpretations of IFRS and IAS standards by the IFRS Interpretations Committee (IFRIC) and the Standing Interpretations Committee (SIC) respectively. Where necessary, the accounting policies of joint operations and associates have been aligned with those of Stedin Holding N.V. The consolidated financial statements have been prepared using the going concern and accruals concepts.

New or amended IFRS standards and interpretations relating to the current financial year

The following amendments to IFRS standards have been adopted by the EU with effect from the financial year 2022:

• amendments to IAS 16 - Property, Plant and Equipment - Proceeds before Intended Use;

• amendments to IAS 37 - Onerous Contracts - Cost of Fulfilling a Contract;

• annual improvements to IFRS Standards 2018-2020 (IFRS 1, IFRS 9, IFRS 16 and IAS 41);

• amendments to IFRS 3 - Reference to the Conceptual Framework;

• amendments to IFRS 16 - COVID-19-related rent concession for leases.

These amendments have no material impact on Stedin’s 2022 financial statements.

New or amended IFRS standards and interpretations relating to subsequent financial years

The following IFRS standards that have been adopted by the EU but are not mandatory for 2022 can be applied, where relevant, in the future:

• amendments to IAS 1 - Classification of Liabilities as Current or Non-current;

• amendments to IAS 8 - Definition of Accounting Estimates;

• amendments to IAS 12 - Income Taxes;

• amendments to IFRS Practice Statement 2 - Making Materiality Judgements;

• amendments to IFRS 16 - Sale and Leaseback Transactions on Leases;

• IFRS 17 (including amendments) - Insurance Contracts.

These amendments to existing standards and the new IFRS standard have no material impact on Stedin’s 2022 financial statements.