Financial results

Stedin Group achieved net profit of 325million in 2019. The earnings are in line with our expectations.

Financial results over 2019

After deducting taxes, Stedin Group's net profit before profit appropriation was 325 million (2018: 118 million). Earnings therefore increased by 207 million compared with 2018 and included 251 million related to the sale of Joulz Diensten in the first half of 2019.

As part of our strategic spearhead 'Sustainable business operations', it is important to retain our financial health, thus ensuring that Stedin remains a reliable and flexible partner in the energy transition. We continue to make substantial progress towards this goal.

  • Stedin is engaged in a constructive dialogue with its shareholders on the long-term financing. That dialogue will continue in 2020.
  • Agreements have been made about the ambition to retain the A- credit rating, with the corresponding financial ratios such as solvency and FFO/Net debt.
  • We are continuing and accelerating efficient as well as excellent business operations, with operating cash flows being used for smart investments as much as possible.

Sale of Joulz Diensten 

On 30 April 2019, Stedin sold its infrastructure and metering business Joulz to the British investment company 3i Infrastructure for 310 million. Both departments of Joulz targeted the business market and were therefore no longer aligned with Stedin's strategy, which is focused on regulated grid management. The sales proceeds is used to strengthen Stedin's balance sheet.

Net revenue and other income

Net revenue and other income for 2019 amounted to 1,234 million, which is 52 million (4%) lower than in 2018 and which is almost fully attributable to non-regulated revenue. For example, Joulz Energy Solutions contributed 29 million to net revenue and other income in 2018, while Joulz Diensten contributed 30 million. Regulated revenue was virtually unchanged from the preceding year.

In the metering domain, the rates are set by the decision on rates (tariefbesluit) of the Netherlands Authority for Consumers and Markets (ACM). In addition, the rates include a reduction to compensate for the excess returns achieved in previous years.

Operating expenses

Our operating expenses decreased by 12 million (1%) to 1,062 million in 2019 due to lower employee benefit expenses and a net decrease of the other expenses.

Employee benefit expenses amounted to 405 million in 2019 (2018: 409 million).

Employee benefit expenses decreased by 10 million due to the sale of the commercial operations of Joulz Energy Solutions and Joulz Diensten. This decrease was partly offset by an increase of 6 million in employee benefit expenses, which was in turn partly offset by a lower provision for employee benefit expenses and accrual for leave days. The increase was driven by higher average costs per FTE due to the new company collective labour agreement that came into force as of 1 May 2019 and to higher costs per FTE due to a greater share of FTEs temporarily hired externally.

Purchase costs, costs of contracted work and other operating expenses decreased by 14 million (3%) in 2019 to 520 million.

The purchase costs decreased by 5 million compared with 2018, mainly to due falling electricity prices.

Costs of contracted work and other operating expenses decreased by 9 million. The sale of Joulz Energy Solutions and Joulz Diensten resulted in a decrease of 46 million for these items, while the implementation of IFRS 16 Lease Accounting resulted in a decrease of 16 million (with a simultaneous increase in depreciation and amortisation as well as financial expenses). This decrease was partly offset by an increase in costs by a total of 53 million, particularly due to costs for the addition to the provision for removing old gas connections, higher legal and consultancy costs, increased customer-related activities and an increase in ICT costs.

In 2019, we saved 8 million in business operations, partly owing to more intelligent maintenance methods. In addition, further optimisation drives were implemented in work flow planning for smart meter installation.


Investments in property, plant and equipment and intangible assets in 2019 amounted to 646 million, an increase of 6.4% (2018: 607 million).

Investments in regulated networks increased from 589 million in 2018 to 590 million in 2019. This increase related mainly to our customer- and grid-driven activities.

The nature of the investments is described in more detail within the section on Improved grid management.

Hours worked by own and externally hired staff which are allocated directly to own investment projects are deducted from the operating expenses as capitalised production. Compared with the preceding financial year, the costs of capitalised hours increased by 14 million (8.4%) to 180 million owing to increased levels of investment.

Depreciation and amortisation

Depreciation charges and impairments of non-current assets amounted to 317 million, an increase of 20 million (6.7%) compared with the previous year.

This increase was mainly attributable to the implementation of IFRS 16 (17 million) referred to earlier, as well as higher depreciation and amortisation due to an increase in non-current assets (20 million), partly offset by lower accelerated depreciation (€15 million) and the effect of the sale of Joulz Diensten (4 million).

Financing, financial income and expenses, and liquidity

Our net financial expenses amounted to 67 million in 2019 (2018: 72 million) and related mainly to the interest expense on long-term external loans.

Stedin used the sales proceeds from Joulz Diensten to repay part of its interest-bearing loans and to finance part of its investments. The remaining negative cash flow led to an increased financing requirement, which was met by a green bond issue of 500 million in November 2019. A portion of this loan served to refinance existing loans that were repaid in the fourth quarter of 2019. In addition, early repayments of 327 million were made in November and December 2019 to optimise returns on freely available funds compared with interest expense. On balance, interest-bearing debt decreased by 40 million to 3,004 million as at 31 December 2019 (2018: 3,044 million).

Our cash and cash equivalents amounted to 72 million as at 31 December 2019 (2018: 169 million).

Income tax

Profit before tax was 352 million for 2019 (2018: 140 million).

The tax expense rose by 5 million in 2019 to 27 million. The effective tax rate (as a percentage of profit before tax from continuing operations) in 2019 was 7.7% (2018: 15.7%).

In December 2019, the Upper House of Dutch Parliament approved the bill to increase the corporate income tax rate to 25% in 2020 and to 21.7% in 2021. This fact means that the deferred tax assets and liabilities will be settled with the Dutch Tax and Customs Administration at higher rates in the future. The measurement of the deferred tax assets and liabilities as at 31 December 2019 reflects those higher rates with a negative effect of 2 million on corporate income tax.

Solvency and credit rating

Solvency at year-end 2019 was 44.9% (year-end 2018: 43.3%).

Stedin Group's policy is aimed at maintaining minimum long-term solvency of 40%. Stedin Group's goal is to retain its long-term A- credit rating with a stable outlook according to Standard & Poor’s (S&P). Consequently, there is an adequate buffer for complying with the minimum credit rating requirement pursuant to the Network Operators Financial Management Decree (Besluit Financieel Beheer Netbeheerders) (a minimum rating of BBB/Baa2). S&P reconfirmed the A- credit rating with a stable outlook as of 31 July 2019.

Financing of the energy transition

Stedin Group is faced with substantial investments in the energy grid within its service area due to the energy transition. Stedin Group's Supervisory Board, Board of Management and shareholders are in agreement on the need for action to safeguard affordable as well as reliable energy supply in the future as well. The investments that Stedin needs to undertake due to the energy transition are in addition to the ongoing investments that are required in order to ensure the proper operation of the electricity and gas grids. Stedin's permitted income is growing less rapidly than required for continuing to finance all these investments in the future.

In tandem with a delegation of shareholders, Stedin is examining which approaches to solutions can be utilised in order to finance the energy transition. The huge investments in the energy transition will place great demands on our financial position in the years ahead.

‘ Ensuring the continued reliability of our energy grid, both in the present and in the future, is our duty to society. Together with various stakeholders, we are therefore considering the possibilities for financing the energy transition.’