Income statement for 2022
Net profit amounted to €198 million in 2022, which was €44 million less than in 2021 (€242 million). This drop in the profit is due to the costs being over €75 million higher than in 2021. The main reason was higher procurement costs associated with network losses. This increase in costs contrasts with an increase in net revenue of €30 million.
The net profit is affected every year by incidental items, which, in 2022, had a positive impact of €25 million on our profit. Net profit excluding exceptional items was €173 million, €57 million less than the comparable profit in 2021.
The most notable developments in our profit were as follows:
Net revenue in the 2022 financial year rose by €30 million compared with the previous year, from €2,120 million to €2,150 million. This was mainly due to the higher regulated revenue from electricity, which was €32 million more than in 2021. Revenue from low-volume consumers was €14 million higher in 2022, due to both a larger number of connections and higher tariffs. Greater volumes transmitted to high-volume consumers led to an increase in revenue of €15 million in total. The higher amortisation of investment contributions explains €3 million of the increase in revenue.
The greater number of connections also led to higher revenue from metering services (€8 million). In contrast, the regulated revenue from gas was €11 million lower than in 2021 due to both lower tariffs and fewer connections.
Operating expenses rose from €1,827 million in 2021 to €1,903 million in 2022. This €76 million increase was primarily caused by the following factors:
The increase in energy prices led to procurement costs associated with network losses that were €149 million higher compared to 2021.
The increase in investments in recent years in combination with the application of the declining balance method of depreciation to the gas network resulted in a higher depreciation expense of €41 million.
The cost of procuring transmission capacity rose by €24 million as a result of the higher tariffs set by TenneT.
The cost of hiring agency workers rose by €28 million. This rise was caused by the temporary deployment of staff because job vacancies could not be filled and by hiring specific expertise for projects.
In addition to the abovementioned cost increases, there was a reduction in costs in 2022 due to the discontinuation of the municipal sufferance tax. As of 2022, municipalities may no longer charge this levy, which reduced costs by almost €155 million.
The most significant trends in expenses are discussed below in greater detail.
Employee benefit expenses (permanent and temporary)
1 As of 2022, there are no more sufferance tax charges.
Employee benefit expenses
The total employee benefit expenses for both internal and external employees were €32 million higher than in 2021. Despite the sale of Stam, including 130 FTEs, the workforce grew by 223 FTEs in 2022 compared to 2021. The average costs per FTE also increased in 2022 due to a wage increase in the collective labour agreement (2%) and a one-off payment of €1,250 per FTE. In contrast, the costs of provisions for employee benefits fell by €7 million. On balance, this led to an increase of €9 million in costs for our own staff compared to 2021.
The number of agency FTEs increased by over 100. These agency workers were hired to ensure sufficient staffing for the work package and specific expertise for ongoing projects, such as digitalisation projects.
Our own-company capitalised production was on balance €11 million lower than in 2021. Production by our own staff was higher than in 2021, partly due to the larger workforce. In contrast, the sale of Stam led to more activities being carried out by external contractors, which is not recognised in own-company capitalised production.
A few years ago, the legislative powers agreed to abolish the sufferance tax charges on electricity and gas infrastructure. This means that as of 2022 municipalities can no longer charge sufferance taxes to Liander. The income item of €1 million in 2022 is due to the settlement of positions from previous years. Consequently, costs were down by €155 million compared to 2021 (€154 million).
Costs of network losses - electricity and gas
Transmission capacity costs
Costs of grid losses - electricity and gas
The costs of grid losses, at €252 million, were up by €149 million compared with 2021. The main reason for these higher costs is the price effect: the increase in energy prices led to much higher market cost of procurements associated with grid losses. Besides the price effect, we had to procure higher volumes. An increase is visible in both the cost of procurements associated with electricity network losses (increase of €102 million) and procurement costs associated with gas network losses (increase of €47 million). Since 1 January 2020, the network operators have had a statutory obligation to purchase gas to compensate for grid losses.
Transmission capacity costs
Transmission capacity costs in 2022 amounted to €291 million, an increase of €24 million compared to the previous year (2021: €267 million). These costs mainly consist of the costs for transmission capacity charged by TenneT. The increase is mainly due to the higher tariffs charged by TenneT. These tariffs have risen due in part to the investments TenneT has to make, inflation and rising energy prices.
Depreciation and impairment
The depreciation and amortisation charges and impairment losses on non-current assets amounted to €539 million, which is an increase of €41 million compared with the preceding year (2021: €498 million). The increase in depreciation charges is due on the one hand to the higher level of investments, and on the other hand to the application of the declining balance method to the gas network as of 2022. This change is largely to reflect an expected decreased utilisation of our gas assets as alternative energy sources become more predominant. The declining balance method has been chosen as this method is better suited to the expected future decrease in the number of users of the gas network. Alliander also estimates that the decrease in the number of users of the gas network will not lead to large-scale decommissioning of the gas assets. Despite a decrease in the number of users of the gas network, the gas mains infrastructure will remain largely operational. In addition, it is expected that natural gas will continue to be of relevance, along with sustainable alternatives such as green gas and hydrogen. Therefore, this does not imply a reduction in the useful life of the gas assets.
Depreciation and impairment
The graph on the right shows the operating profit for the last five years. The large profit in 2018 stands out: this was a direct consequence of the sale of Allego. The low profit in 2022 also stands out: this was mainly caused by the rise in the cost of network losses.
Network investments and maintenance costs
The graph shows the changes in maintenance costs and investments in the network over the last five years. Total expenditure on network investments and maintenance costs in 2022 was €1,561 million, an increase of €200 million compared with 2021 (€1,351 million). The increase was caused by higher investments (€213 million), whereas the costs of maintenance and outages remained relatively stable.