Financial results in 2020
Financial flows within Alliander
Alliander’s income is made up of approximately 85% income from the regulated activities of network operator Liander and 15% other income, the latter being income from rental of large-user meters and transformers, income related to new activities and income from the activities of other companies outside the regulated energy sector. As a network operator, Liander publishes its own annual report on its performance in 2020. This annual report will appear in the second quarter of 2021.
The main expenditure relates to maintenance work on the electricity and gas networks and the operating expenses connected with all other activities. We invested nearly €900 million in 2020, mainly for the replacement and expansion of our networks, as well as the installation of smart meters. This investment equates to roughly 37% of our total expenditure. Additionally, there is the dividend payable to our shareholders and the interest payments to the holders of the subordinated perpetual bond loan and other financiers. The dividend and interest payments for 2020 together amounted to approximately 5% of our overall expenditure. Finally, we pay sufferance tax charges to municipal authorities and corporate income tax to the Dutch Tax & Customs Administration. This accounts for another 8% of our outgoings approximately.
Cost-effective and efficient operations
Alliander invests increasingly in upgrading and expanding the networks in response to the energy transition. To be able to carry on financing these investments in a responsible manner, a multi-year, organisation-wide cost savings programme was initiated in 2018, aiming to reduce costs and increase productivity.
The foundation of the programme is to pay ongoing attention to increasing cost awareness throughout the organisation and to critically consider which activities are really necessary for performing the job we do – without compromising safety or quality.
Furthermore, the programme focuses on simplifying and improving processes, by standardising and digitising the activities for example. The idea is to work smarter and more efficiently. This will not only lead to savings, it will also increase our ability to get the work done. We also focus on refining procurement agreements and reducing indirect costs, by adjusting internal and external policies and reducing the deployment of contract staff for example.
These measures saved the company more than €100 million at year-end 2020 compared to 2017. This amount reflects both cost reductions and efficiency improvements.