Eneco Group s performance in line with expectations

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1 Press release Date: Number of pages: 8 Eneco Group s performance in line with expectations Record investments in networks and more sustainable energy supply Net profit growth of 3% to 241 million EBITDA increase to 101 million Investments again substantial at 854 million Electricity grid interruption duration down by 40% Safety performance improved again ROTTERDAM At the presentation of the results over the first half of 2013, we expressed the expectation that, under normal circumstances, the full year results would be at the same level as the 2012 results or higher. We have fulfilled this expectation; revenue was almost unchanged and net profit was up (+3%). This result enables us to continue with the realisation of our mission sustainable energy for everyone. In the past year, we invested the unsurpassed amount of 854 million in enhancing the sustainability of the energy supply and the quality of our networks. Jeroen de Haas, chairman of the Board of Management: "The energy sector is going through a large-scale transition, from fossil to renewable and from central to local generation of energy. Being an integrated energy company, Eneco started to focus on sustainability at an early stage. This puts us in a good position to reap the fruits of the developments in this sector. This is not only reflected in our positive results, but also in our ability to continue to make substantial investments in improving sustainability." "The result of our investments in 2013 and previous years is that we are able to generate more and more energy in a manner that is entirely sustainable. In the past year, the volume of wind energy in our sustainable energy portfolio increased from 1039MW to 1276MW, solar energy increased from 18 to 52MW and bio-energy from 67MW to 134MW. This means that we can offer our customers an increasing number of sustainable propositions." "Other issues in 2013 included the negotiations for the Dutch National Energy Agreement. The final agreement offers us the security that we need to continue our sustainability strategy. In October 2013, the European Court of Justice ruled that the Act relating to forced unbundling of energy companies (Independent Network Management Act, WON) is in breach with European regulations on free movement of capital and can only be justified under certain conditions. A Dutch court must now assess if this Act was the only possible alternative and if forced unbundling is the only way in which the Government can achieve its objectives pursued. Although the ruling of the Court of Justice was not a final decision, we regard subsequent procedures with confidence." Eneco Holding N.V. Persbericht of 8

2 Financial results We recorded a net profit of 241 million in 2013, an increase of 8 million (3%) compared with Revenue was almost unchanged from the previous year at 5,251 million (2012: 5,256 million). Gross margin on the supply and transmission of gas, electricity and heating and revenues from related services rose by 180 million (10%) to 1,974 million, due mainly to an increase in regulated transmission tariffs, an expansion of our sustainable production capacity and higher sales of gas and heating during the cold first six months of the year. Operating profit before depreciation and amortisation (EBITDA) was 877 million, up 101 million (13%) on the previous year (2012: 776 million). Depreciation and amortisation was 41 million higher, mainly because of expansion of our solar, wind, biomass and network activities. In respect of market prices, it is expected that the current poor relationship between gas and electricity prices ( spark spread ) at gas-fired power stations and the low prices for CO 2 rights will continue for some time. Consequently, we have recognised impairment of 68 million to electricity-related assets in the Netherlands and Belgium. Net profit rose by 3% from 233 million to 241 million. Our operating expenses were 8% up on the previous year at 1,579 million (2012: 1,459 million) as a result of further growth in our solar, wind, biomass and network activities, the development of new products such as our smart thermostat Toon, marketing to gain customers in the Netherlands and Belgium and higher maintenance charges for our networks. We continue to focus on structural cost control so that we can continue to invest in new sustainable energy production and networks in the future. One example of this is a project started in 2012 which focuses on structuring joint procurement and streamlining ICT costs. One element of this is outsourcing certain indirect activities, such as some internal ICT services. This led to non-recurring additional expenses in Investments Everything we do focuses on making the energy supply more sustainable and so we continue to invest substantial sums in our own renewables generation, energy saving and a reliable, modern network. In 2013 we invested 854 million (2012: 712 million) and were able to use the tax incentives available in the second half of the year. We invested in the development of solar and wind farms ( 266 million) in the Netherlands, Belgium and the United Kingdom and in the Golden Raand biomass power station in Delfzijl ( 33 million in 2013, total 175 million). We invested a further 83 million in district heating networks, half of which was in the Leiding over de Noord pipeline, which will transport heat from Botlek to 45,000 customers in Rotterdam and where construction has now commenced. We also invested considerably more in improving and expanding the gas and electricity networks ( 422 million compared with 357 million in 2012). Production, trading and supply Although the final quarter was mild, the temperature was below normal in every month of the first half of the year, and so our customers consumption of gas and heating was higher across the year. The force of the wind remained below the long-term average in In addition, trends in market prices for electricity, gas and CO2 are still unfavourable for generating electricity in gas-fired power stations and competition in the market is fierce. In France, we purchased a number of solar parks at the end of 2012 (12MW) and in 2013 we started with the construction of Sevor Farm Solar (10MW) in the United Kingdom. The energy generated by this park is intended for the neighbouring Honda factory. In Belgium, we installed a solar panel roof at car manufacturer Audi in Brussels with a size that is equal to six football fields. In the Netherlands, the wind farms De Hoevensche Beemden (15MW), Kreekraksluizen (17,5MW) and Houten (6MW) were put into operation and in November production started at bioenergy plant Bio Golden Raand (49,9MW) in Delfzijl. The amount of sustainable electricity produced by Bio Golden Raand corresponds to the electricity consumption of 120,000 households also marked the start of the offshore Eneco Luchterduinen Wind Farm, which will be located at a distance of 23 kilometres off the coast at the municipality of Noordwijk. After its completion in 2015, this wind farm will produce sufficient electricity for nearly 150,000 households. Eneco Holding N.V. Persbericht of 8

3 In addition to 'generating energy together' and 'purchasing', 'energy efficiency' is also one of Eneco s strategic pillars. We enable customers to save energy by providing them with insight into their energy consumption by means of the smart Toon thermostat, of which a total of 29,000 units were sold during The second cavern of the underground gas storage facility Gasspeicher was completed at the end of 2013, resulting in more than 100 million m³ of storage space for natural gas and twice as much outflow capacity. This is important in connection with having better control in the event of fluctuations resulting from additional customer demand during cold weather. Expansion of our production, trading and supply activities created an increased margin but also higher expenses. The net effect was positive: profit (EBITDA) rose by 3% to 290 million (2012: 282 million). Networks and engineering Revenue from network activities rose this year but there was an increase in costs, in particular for maintenance and investment in the networks. The length of interruptions in energy supply was markedly lower than in 2012 with the average power cut resulting from breakdowns in our electricity network falling by 40% from 35.6 minutes per customer in 2012 to 21.3 minutes this year. We implemented various efficiency measures in our engineering activities in 2012 and they led to positive results in In difficult market conditions, revenue rose and the utilisation rate improved. We entered into major contracts with TenneT for the construction of a new high-voltage connection to Goeree-Overflakkee ( 40 million) and with Total Antwerp for the construction of two switching stations ( 25 million). Work on both projects started in EBITDA on network and engineering activities rose by 18% to 617 million (2012: 521 million). Safety We pay a lot of attention to a safe working environment for our employees and our contractors and subcontractors. During the past year, we succeeded in improving our safety performance expressed in terms of the LTIR score, yet again. Customers The number of retail customers of Eneco Group was stable at 2.2 million throughout the year. In January 2014, after the closing of the financial year, we acquired 150,000 electricity and gas contracts at 90,000 customers from DONG Energy. The large number of contracts that we concluded with corporate clients include agreements with Mitsubishi Corporation (Eneco Luchterduinen), Intrakoop (gas), AVR (district heating), Woonbron (ESCO) and Interface (renewable gas). With Akzo Nobel Industrial Chemicals we concluded a contract for the purchase of around 50% of the electricity production of our new bio-energy plant Bio Golden Raand. With Havenbedrijf Rotterdam, E.ON, Evides and Vopak we entered into a colloboration agreement for the preparation of a site in the Maasvlakte 2 area that will be made available to companies with activities in the field of biomass. In the financial year, our subsidiary Ecofys conducted research in areas such as energy efficiency, the environment and energy innovation for a large number of customers. Partnerships were started with a number of energy cooperatives, such as Lochem Energie, Eerbeek-Brummense Energie Maatschappij (EBEM) and Veenstroom. We also put a lot of effort into the involvement of local residents with our wind farms. Examples of this include the successful introduction of a bond programme for citizens of Houten, aimed at enabling them and other interested parties to participate financially in the wind farm in this municipality. Eneco Holding N.V. Persbericht of 8

4 Outlook We have confidence in the further development of Eneco Group. External factors such as lower regulated transmission tariffs and the continuing negative spark spread will affect the financial results for Although we will persevere with our sustainability strategy and strict cost controls, we do not believe it will be easy to maintain the net profit for 2014 at the same level as in Note to the editor For further information, please contact: Toby Ellson, manager media contacts T: +31 (0) E: Appendices: Key figures Consolidated income statement Consolidated balance sheet Consolidated cash flow statement Eneco Holding N.V. Persbericht of 8

5 Key figures (amounts in millions of euros) Results Total revenues 1 5,251 5,256 5,007 4,922 5,245 Revenues from energy and energy related 5,026 5,082 4,839 4,722 5,018 Gross margin energy and energy related 1,749 1,620 1,442 1,294 1,325 Operating income before depreciation (EBITDA) Operating profit (EBIT) Net profit Cash flow from operating activities , Capital Equity 4,593 4,447 4,353 3,890 3,900 Interest-bearing debt 1,911 1,800 1,859 1,947 2,087 Balance sheet total 9,203 8,804 8,645 7,577 7,691 Investments in property, plant and equipment Ratios Equity/total assets 49.9% 50.5% 50.4% 51.3% 50.7% Interest coverage rate Employees LTIR Number of FTEs average 7,018 6,839 6,596 6,622 6,137 Absence due to illness 3.9% 4.3% 4.5% 4.6% 4.7% Sales volumes Electricity (GWh) 3 21,925 25,201 27,457 24,435 24,295 Gas (million m 3 ) 5,723 5,748 5,914 6,704 5,900 District heat (TJ) 12,302 11,704 11,350 13,157 11,436 1 Total revenues: Revenues from energy and energy related as well as other revenue. 2 Interest coverage ratio: Operating profit divided by financial income and expenses. 3 Including trading volumes Eneco Trade. Eneco Holding N.V. Persbericht of 8

6 Consolidated income statement x 1 million Revenues from energy sales and transmission and energy related activities 5,026 5,082 Purchases of energy and transmission and energy related activities 3,277 3,462 Gross margin 1,749 1,620 Other revenues Gross margin and other operating revenues 1,974 1,794 Employee benefits expenses Cost of contracted work and other external costs Depreciation and impairment of property, plant and equipment Amortisation and impairment of intangible assets Other operating expenses Operating expenses 1,579 1,459 Operating profit Share of profit of associates Financial income Financial expenses Profit before income tax Income tax Profit after income tax from continued operations Profit after income tax from discontinued operations 4 26 Profit after income tax Of which: Profit (loss) after income tax attributable to non-controlling interests 1 1 Profit after income tax attributable to shareholders of Eneco Holding N.V Eneco Holding N.V. Persbericht of 8

7 Consolidated balance sheet x 1 million At 31 December 2013 At 31 December 2012 Non-current assets Property, plant and equipment 6,978 6,670 Intangible assets Associates Deferred income tax assets 5 6 Financial assets - Derivative financial instruments Other financial assets Total non-current assets 7,583 7,280 Current assets Assets held for sale 91 7 Intangibe assets Inventories Trade receivables Current income tax assets 2 2 Other receivables Derivative financial instruments Cash and cash equivalents Total current assets 1,620 1,524 Total assets 9,203 8,804 Equity Equity attributable to Eneco Holding N.V. shareholders 4,588 4,444 Non-controlling interests 5 3 Total equity 4,593 4,447 Non-current liabilities Provisions for employee benefits Other provisions Deferred income tax liabilities Derivative financial instruments Interest-bearing debt 1,736 1,726 Other liabilities Total non-current liabilities 2,779 2,587 Current liabilities Liabilities held for sale 1 3 Provisions for employee benefits 2 3 Other provisions Derivative financial instruments Interest-bearing debt Trade and other liabilities 1,495 1,552 Total current liabilities 1,831 1,770 Total equity and liabilities 9,203 8,804 Eneco Holding N.V. Persbericht of 8

8 Consolidated cash flow statement x 1 million Profit after income tax Adjusted for: - Financial income and expense recognised in profit or loss Income tax recognised in profit or loss Share of profit of associates Profit (loss) after income tax from discontinued operations Depreciation, amortisation and impairment Result from sale of tangible and intangible assets Impairment of assets held for sale 1 - Movements in working capital Movements in provisions, deferred taxes, derivatives and other Cash flow from business operations Dividend received from associates 19 Interest paid Interest received 9 4 Other financial income received 2 Income tax paid / received 1 5 Cash flow from operating activities Issued loans granted 32 5 Repayments of loans granted 40 3 Acquisition of subsidiaries Disposal of subsidiaries 1 Acquisition of associates 1 Disposal of associates 3 79 Acquisition of other capital interests 4 Investments in property, plant and equipment Disposal of property, plant and equipment Investments in intangible assets 3 2 Disposal of intangible assets 1 Cash flow from investing activities Dividend payments Repayment of non-current interest-bearing debt Repayment of current interest-bearing debt 1, Non-current interest-bearing debt issued Current interest-bearing debt issued 1, Cash flow from financing activities Movements in cash and cash equivalents Balance of cash and cash equivalents at 1 January Balance of cash and cash equivalents at 31 December Eneco Holding N.V. Persbericht of 8