Enexis realised a net profit of € 72 million in 2023, a decrease of € 1,228 million compared to 2022. This decrease is mainly attributable to the non-recurring result of € 1,113 million on the sale of Fudura in 2022. The net profit excluding the result on the sale amounted to € 187 million in 2022. Excluding the result, the decrease in net profit amounted to € 115 million.
Looking at the net profit of € 72 million, compared to 2022, we mainly see an increase in revenue of € 309 million which is offset by a considerable increase in the cost of transmission services and distribution losses of € 429 million. In addition, the balance of operating expenses and other income increased by € 47 million. The negative balance of financial income and expenses decreased by € 7 million. Finally, the taxes on the result were € 45 million lower.
Mainly due to the further increase in investments in the electricity grid, gross capital expenditure rose by € 242 million to € 1,143 million. Enexis receives a delayed compensation for these investments via the tariffs. As a result of this timing effect, the cash flow from operating activities and investing in (in)tangible fixed assets in the coming years are expected to be negative. The cash flow from operating activities and investing in (in)tangible fixed assets was € 516 million negative in 2023. This is a decrease of € 288 million compared to 2022.
Dilemma: Who is going to pay for the costs of the energy transition and at which moment?
Due to the further growth in investments and the delay of the compensation of these investments in the regulation, we expect that the cash flow from operating activities and investing in (in)tangible fixed assets will continue to be negative in the coming years. We expect a strong increase of the operational cash flow due to higher interest rates and post-calculations with regard to previous years. The interest rate is the main factor determining the return paid to shareholders for the capital that they have made available. Current interest rates are relatively high, which leads to higher than expected revenue and higher operational cash flow. However, the increase of the operational cash flow is not sufficient to finance the strong increase in investments. This is resulting in a dilemma for society as the question arises who is going to pay for the cost of the energy transition and when is this going to take place. We are discussing this with the ACM and we aim for a good balance between a controlled development of the tariffs for our customers and a reasonable return for our shareholders. We are also critical of our own expenses and we advocate optimal choices for society. Despite the huge task that we are facing, we constantly pay attention to carrying out our work efficiently and effectively.
|
€ Million |
2023 |
2022 |
2021 |
2020 |
2019 |
|
|
Result |
||||||
|
Revenue |
2,014 |
1,705 |
1,634 |
1,516 |
1,491 |
|
|
Costs of transmission services and distribution losses |
809 |
380 |
324 |
316 |
232 |
|
|
Other operating income |
1 |
3 |
2 |
1 |
12 |
|
|
Balance available for operating activities |
1,206 |
1,328 |
1,312 |
1,201 |
1,271 |
|
|
Operating expenses excluding depreciation, impairments and decommissioning |
629 |
583 |
561 |
554 |
539 |
|
|
Depreciation, impairments and decommissioning |
468 |
469 |
429 |
405 |
379 |
|
|
Operating profit |
109 |
276 |
322 |
242 |
353 |
|
|
Share of result of associates and joint ventures |
0 |
1,113 |
0 |
0 |
-1 |
|
|
EBIT1 |
109 |
276 |
322 |
242 |
353 |
|
|
Financial income and expenses |
-21 |
-28 |
-43 |
-41 |
-52 |
|
|
Profit before tax |
88 |
1,361 |
279 |
201 |
300 |
|
|
Profit for the year |
72 |
1,300 |
199 |
108 |
210 |
|
|
Financial position (before profit appropriation) |
||||||
|
Net working capital1 |
11 |
-37 |
-99 |
-106 |
-43 |
|
|
Non-current assets |
9,916 |
9,214 |
8,765 |
8,496 |
7,980 |
|
|
Capital employed1 |
8,677 |
8,019 |
7,802 |
7,418 |
7,056 |
|
|
Equity |
5,320 |
5,441 |
4,241 |
4,116 |
4,112 |
|
|
Net interest-bearing liabilities1 |
2,948 |
2,211 |
2,211 |
2,929 |
2,634 |
|
|
Total assets |
10,460 |
10,348 |
9,395 |
8,751 |
8,258 |
|
|
Ratios |
||||||
|
Solvency1 |
50.9 |
52.6 |
45.1 |
47.0 |
49.8 |
|
|
ROIC1 |
1.3 |
17.3 |
4.1 |
3.3 |
5.0 |
|
|
Return on equity1 |
1.4 |
23.9 |
4.7 |
2.6 |
5.1 |
|
|
Cash flow |
||||||
|
Cash flow from operating activities |
627 |
673 |
732 |
726 |
647 |
|
|
Cash flow from operating activities and investing in (in)tangible fixed assets |
-516 |
-228 |
-154 |
-128 |
-99 |
|
|
Cash flow from investing activities |
-488 |
-129 |
-984 |
-872 |
-753 |
|
|
Cash flow from financing activities |
-229 |
-434 |
312 |
131 |
137 |
|
|
Cash flow |
-90 |
110 |
60 |
-15 |
31 |
- 1For definitions, please refer to the glossary.
Balance available for operating activities
The balance available for operating activities decreased in 2023 by € 122 million. This concerns the balance of an increase in revenue (€ 309 million), an increase in the cost of transmission services and distribution losses (€ 429 million), and lower other operating income (€ 2 million). For years, Enexis has been purchasing electricity and gas to compensate distribution losses during a longer period in advance to spread the price risk. Energy prices have risen explosively, in particular due to the war in Ukraine. Thanks to our purchase policy, a large share of the necessary energy to compensate distribution losses for the calendar year 2023 was purchased before the explosive price increases occurred. The costs were relatively low in 2022 as all the energy had already been purchased before the war in Ukraine broke out. As Enexis purchases energy spread over a longer period, the continuing high price level has also effected Enexis for the year 2023. Purchasing costs for distribution losses increased fourfold compared to 2022.
Total revenue amounted to € 2,014 million in 2023. The higher revenue is due to higher tariffs for our customers. The average tariff increase for low-volume customers for electricity and gas (including meter rent) amounted to 22% and 9% respectively.
The increase in revenue can be broken down as follows:
Electricity: revenue rose by € 325 million compared to 2022. This increase is mainly attributable to the fact that the higher costs of transmission services (TenneT) are compensated directly in the 2023 revenue and ACM has included an advance in the revenue for the strongly risen cost of distribution losses.
Gas: revenue rose by € 57 million compared to 2022, mainly due to a tariff increase.
Other regulated revenue decreased by € 22 million mainly due to a decrease in the metering service tariffs. The ACM is expected to take margin decisions for metering services as from 2011 based on which regional grid operators will have to settle part of the margin on metering services in the past with future tariffs. Due to the higher energy costs for consumers, Enexis decided to lower the metering service charges already in 2023 in advance of the ACM's decision.
Non-regulated and other revenue decreased by € 51 million, mainly due to the sale of Fudura in the third quarter 2022.
Costs of transmission services and distribution losses rose by € 429 million to € 809 million in 2023. € 151 million of this increase is attributable to higher costs for TenneT transmission services. TenneT increased the tariffs in connection with the investments that TenneT is making to expand and upgrade the high-voltage grid. The regional grid operators are customers of TenneT and subsequently charge these costs to end users via the tariffs.
The costs for distribution losses increased by no less than € 278 million, a more than fourfold increase compared to the € 85 million in 2022. This huge price increase was due to the war in Ukraine and the economic upswing after the Covid-19 period. As Enexis purchases the electricity for the compensation of distribution losses for a longer period in advance, part of the necessary electricity was already purchased before the prices exploded.
Electricity purchasing costs rose by € 244 million. Of this increase, € 206 million is attributable to price differences, € 28 million to higher volumes and € 10 million due to adjustments.
The grid losses arising from the transmission of gas rose by € 34 million; mainly due to higher energy prices in combination with lower volumes.
Operating expenses
Total operating expenses rose by € 45 million to € 1,097 million in 2023. The energy transition is resulting in a further growth of our work package. To be able to carry out this work package, we are making a huge effort to recruit and train new technical employees. We have increased the salaries of technical employees so that we can retain sufficient technicians now and in the future. In addition, we are also carrying out more improvement projects to make our own processes and the sector processes future-proof.
The main developments were:
€ 61 million higher employee benefit expenses: this increase is the balance of € 40 million higher expenses for own personnel and € 21 million higher expenses for hiring external personnel. At year-end 2023, Enexis employed 474 FTEs more own personnel and 138 FTEs other personnel compared to 2022.
The increase in the cost of own personnel can be attributed for € 32 million to higher wage costs due to the increase in FTEs, a Collective Labour Agreement wage increase as of 1 January 2023, and additional wage increases for technical personnel.
Social security contributions rose by € 5 million and pension premiums decreased by € 1 million.
Other employee benefit expenses rose by € 4 million also due to higher mobility expenses.
The costs of external hires rose by € 21 million. This concerned the combination of a tariff increase and an increase in the number of external hires in FTE.
Capitalised production rose by € 33 million as more personnel was employed in 2023 in investments for the energy grid and ICT improvement projects.
Depreciation and amortisation charges decreased slightly by € 1 million compared to 2022. This decrease can be attributed to non-recurring items in 2022. Without these items, we see an increase in depreciation and amortisation charges due to the higher investment level because of the larger work package.
The cost of subcontracted work, materials, other external expenses, and other operating expenses rose by € 18 million in 2023 compared to 2022. This increase is partially attributable to the higher indexations which also have an effect on the costs that suppliers charge to us. Furthermore, we carried out more work for the energy grid and we had higher costs for housing and sector projects.
Financial income and expenses
The negative balance of financial income and expenses in 2023 amounted to € 21 million and is thus € 7 million lower than in 2022. The decrease is mainly attributable to higher interest income on cash in money market funds, deposits, and bank accounts and due to the repayment of a € 500 million bond with an interest rate of € 1.5% in October 2023. The decrease was partially offset due to a higher interest rate expense as a result of the issue of a € 500 million green bond with an interest rate of 3.625% in June 2023.
Taxes
The income tax expense amounted to € 16 million in 2023, € 45 million lower than in 2022. The decrease was mainly attributable to the lower result before tax in 2023.
Gross capital expenditure
In 2023, we see a further acceleration of the growth in investments. This growth is mainly due to investments is our electricity grid to facilitate the energy transition. Inflation was higher in 2023 than in previous years. In particular, the 32% increase in investments in the workflows connections, grid expansions, and grid improvements contributed to the realisation of more transmission capacity in the electricity grid.
Gross investments in property, plant, and equipment and intangible fixed assets increased in 2023 by € 242 million to € 1,143 million. The largest share of this increase is attributable to the € 188 million increase in investments in the electricity and gas grids (including smart meters). For instance, grid expansion and improvement investments rose by € 119 million. In addition, we realised an amount of € 43 million in more new connections and € 10 million in more safety-driven investments such as replacing old switch installations. The increase in the investments in other workflows amounted to € 16 million.
Other investments rose by € 54 million due to more investments in ICT improvement projects, Enexis’s office buildings, and district heating projects.
Customers pay a contribution for some of our customer-driven activities. This increased by € 3 million to € 126 million mainly due to inflation. After the deduction of customer contributions, the net capital expenditure amounted to € 1,017 million in 2023. This is an increase of € 239 million compared to 2022.
The table below shows the gross capital expenditure (excluding customer contributions) in our electricity and gas grids and smart meters.
|
Gross investments |
|||||
|
€ Million |
2023 |
2022 |
2021 |
2020 |
2019 |
|
Electricity |
|||||
|
Standard connections |
60 |
48 |
37 |
33 |
30 |
|
Customised connections |
120 |
89 |
90 |
94 |
73 |
|
Grid expansions and grid improvements |
464 |
350 |
298 |
254 |
194 |
|
Reconstructions |
30 |
23 |
26 |
25 |
21 |
|
Replacements |
88 |
73 |
62 |
48 |
38 |
|
Other |
37 |
32 |
31 |
23 |
22 |
|
Total Electricity |
799 |
615 |
544 |
477 |
378 |
|
Gas |
|||||
|
Standard connections |
3 |
3 |
4 |
6 |
9 |
|
Customised connections |
3 |
3 |
2 |
2 |
2 |
|
Grid expansions and grid improvements |
20 |
15 |
12 |
13 |
16 |
|
Reconstructions |
20 |
17 |
17 |
19 |
18 |
|
Replacements |
157 |
162 |
161 |
153 |
139 |
|
Other |
3 |
3 |
3 |
2 |
2 |
|
Total Gas |
206 |
203 |
199 |
195 |
186 |
|
Smart meters |
|||||
|
Low-volume electricity |
23 |
20 |
24 |
34 |
57 |
|
Low-volume gas |
11 |
13 |
20 |
29 |
36 |
|
Total smart meters |
34 |
33 |
44 |
63 |
93 |
|
Total |
1,039 |
851 |
787 |
734 |
657 |
Cash flows
The cash flow before financing activities amounted to € 139 million, a decrease of € 405 million compared to 2022 due to a lower net profit and a higher investment level.
Our cash flow from operating activities amounted to € 627 million, a decrease of € 46 million compared to 2022. This is mainly attributable to the decrease of both the net profit and the working capital. Working capital decreased due to building up our inventories to be able to carry out our work package and increase delivery reliability.
The outgoing cash flow in connection with investments amounted to € 488 million negative, an increase in expenditures of € 359 million due to the growth in investments. When we look at the cash flow from operating activities and investing in (in)tangible fixed assets, this cash flow amounted to € 516 million negative (2022: € 228 million negative).
Finally, the financing cash flow amounted to € 229 million negative. This was a € 205 million lower outflow than in 2022. The lower outflow is attributable to the fact that, on balance, fewer repayments on bonds were made in 2023. Furthermore, a higher dividend payment took place in 2023.
The balance of cash flows is € 90 million negative, a decrease of € 200 million compared to 2022.
