Report of the Supervisory Board

Last year, Enexis achieved important goals, expanded its grid capacity and recruited many new technical staff. The company can be proud of these achievements. At the same time, pressure on the organisation is growing.

The main drivers of this pressure are the dynamics of the energy transition and the national policy involving many stakeholders, the increasing demand for electricity and Enexis’ determination to go the extra mile.
As the desired expansion of the electricity grid will take years, access to electricity is becoming increasingly scarce. This affects businesses and, in some cases, households as well. Large companies, in particular, face challenges in sourcing and expanding production capacity. This scarcity has confronted Enexis with a new reality in recent years. Businesses, as well as the government and the regulator ACM, expect Enexis to accelerate capacity expansion and offer a clear path forward.

Enexis is in regular contact with large consumers, consults stakeholders and contributes ideas for solutions. Although Enexis is doing everything it can to maximise grid expansion, part of the solution will have to come from users themselves. The energy transition requires both creativity and more mindful energy consumption. Encouraging businesses – and households – to change the way they use energy will relieve pressure on the grid. Large companies are already aware that grid scarcity can impact their behaviour. This awareness has not yet reached SMEs and consumers, which is why Enexis has launched the ‘Full of energy’ campaign.

Dealing with grid congestion remains the organisation’s biggest dilemma. No matter how efficiently Enexis manages production, demand continues to grow, and the organisation cannot turn lead into gold. How can Enexis best invest, accelerate and keep costs under control? That remains the key question. In areas facing scarcity, waiting lists will persist for the time being. However, the ACM’s decision to prioritise customers with a social impact, giving them a higher place on the waiting list, provides some relief.

In addition, the dilemmas surrounding the availability of electricity and the duration of outages are a regular topic of discussion between the Supervisory Board and the Executive Board.

Enexis is responding well to the changing circumstances. In today’s dynamic environment, the Executive Board is taking a firm stance, engaging in meaningful discussions and focusing on the conversations that matter to ensure the energy transition can deliver what the entire sector will need in the future. The new reality in which Enexis operates has a significant impact on the management of the company, and this is a regular topic of discussion between the EB and the SB.

Safety

Physical, social and cyber safety are fundamental to our organisation, and we want everyone to go home safe and sound every day. The SB devotes significant attention to this, reviewing the various safety reports (such as LTIF and reports of inappropriate behaviour) every quarter and holding sessions on all three safety themes. For example, we visited the Security Operations Centre to learn more about cyber security. We assess the results and challenge the EB to make the right decisions. In the summer of 2024, the LTIF (Lost Time Injury Frequency, measured by the number of accidents resulting in absenteeism per million hours worked) decreased. However, it has risen again in the last two quarters. It is essential to remain vigilant on this. The rise to step 4 on the Safety Ladder is an important and encouraging milestone, but it is no reason to become complacent.

Strategy

Enexis’ strategy shapes the SB’s agenda. We meet with the EB to discuss objectives and results. The expertise of the members of the SB increasingly adds value to this process.

The SB fully supports the revised implementation of last year’s strategy. We have also provided input. We considered the broad involvement of management to be an important factor, as it helps to create a well-supported plan, which is crucial for implementation. To further accelerate the realisation and implementation of the strategy, close cooperation between departments is essential. The EB and the SB are discussing this in depth. We see that the integrated neighbourhood approach is gaining momentum. It is also important for Enexis to remain in close contact with TenneT to ensure that our customers can use the newly available capacity quickly.

A key part of Enexis’ strategy is to contribute to a future-proof energy system. Given its wealth of knowledge and experience, it is understandable that the company is taking a more active role in shaping the future, for example in the heating sector. For example, the idea of repurposing gas pipelines for hydrogen came from grid operators. Now, Enexis has to make important system-related decisions in response to the new Collective Heat Supply Act and the abolition of the netting system. The SB monitors how the EB, possibly in cooperation with other grid operators, takes on its role as system architect in its interactions with stakeholders. Policy decisions can be influenced by sharing Enexis' vision – in The Hague with shareholders and across the sector.

The affordability of the energy transition and a fair distribution of costs and investments remain crucial – not only for the competitiveness of Dutch companies but also for the overall investment climate in the Netherlands. However, system choices and investment plans are not always aligned. In fact, many of energy system costs are determined by system choices. For example, decisions on where and how to build nuclear power plants and wind farms significantly impact costs.

The SB was also informed about the Interdepartmental Policy Survey on Financing the Electricity Infrastructure, the potential of alternative tariff structures and the dilemmas that may arise from future policy choices.

Employees

Despite the tight labor market, Enexis is fortunately still managing to attract new technical employees and other colleagues. Unfortunately, the firm target was not achieved, partly due to too much outflow. However, finding enough people to implement the energy transition remains a challenge, especially as the number of technical students entering secondary vocational education (mbo) is declining. We are also discussing this issue with our shareholders.

Enexis recognises the need to revitalise its workforce and is taking promising initiatives to do so. For example, Enexis' vocational training centres provide an accessible and engaging way to lower the barriers to education in our sector. Nevertheless, demand remains high, and recruitment remains a top priority.

Finances

Enexis is financially healthy, but the growing investment challenge has led to a structurally negative cash flow. To finance the expansion of the electricity grid, Enexis will have to borrow heavily on the capital markets in the coming years. Last year, for example, the SB approved the issuance of a fourth green bond, enabling Enexis to attract new investors. Maintaining financial health is essential to secure sufficient borrowing on the most favourable terms – a challenge given the scale of these investments. The company is on track to achieve the targeted savings of €220 million in 2022-2026. Keeping a close eye on internal costs remains a priority. However, the current measures will not be sufficient to finance the energy transition in the long term while maintaining Enexis' independence. More equity will be needed in the long term, and it is prudent to act now. Accordingly, Enexis started discussions with the Shareholders' Committee in mid-2024 to explore options for strengthening its equity position.

Governance

Changes in the SB

The General Meeting of Shareholders appointed Els de Groot as a new member of the Supervisory Board with effect from 25 April 2024. She replaces Carmen Velthuis. Velthuis retired at the end of her eight-year term. We would like to thank Carmen for the pleasant cooperation over the past years. Her expertise and commitment have been of great value to the company and the SB.

Changes in the EB

For the appointment of the COO, the SB conducted an intensive external search for female candidates with an executive search agency. Given the composition of the EB and the diversity policy, that was our focus. But due to the limited supply of suitable candidates at that time, and Han's great expertise, crucial experience and capabilities supplemented with strong motivation, the supervisory board - in close consultation with the CEO - opted for appointing Han Slootweg.

Liesbeth Kaashoek served in this role on an interim basis until 1 April and we thank her for her dedication and contribution to Enexis’ performance. CFO Mariëlle Vogt has announced her retirement from Enexis in the summer of 2025. Her strong commitment and dedication to the organisation will be greatly missed. She will be succeeded by Marjanne van Ittersum on 1 June 2025.

Functioning of the SB

In recent years, the SB has experienced a relatively high level of turnover due to planned retirements and consciously and satisfactorily consists of members with diverse backgrounds. We carried out a self-evaluation under external guidance, with the result that we paid a lot of attention to mutual cooperation last year.

All members of the SB meet the independence requirements of the Dutch Corporate Governance Code 2022. The members of the SB continuously improve their performance by actively participating in relevant meetings and knowledge sessions, such as those organised by Netbeheer Nederland and the major professional service organisations.

With a view to the future composition of the SB, it is important that the new Energy Act contains a restrictive provision for directors and supervisors. A supervisor may not simultaneously hold another position within the sector. This strict exclusion is undesirable. We advocate for alignment with the Corporate Governance Code, in order to prevent specific cases of possible conflicts of interest. The generic provision leads to an unnecessary restriction of potential supervisors and makes it more difficult to attract commissioners with expertise in the energy sector.

Functioning of the EB

This year, we also evaluated the performance of the EB. The EB performed well and showed leadership. The cooperation between the EB members and us is good, which strengthens our confidence in the EB. We are involved in strategic and far-reaching decisions in a timely and effective manner, and both boards engage in constructive and open debate where necessary. Our role as a sounding board has grown over the past year, and the EB has become more open about the dilemmas it faces.

Remuneration policy EB

The remuneration policy for the directors of Enexis (Board of Directors) was designed more than twelve years ago. The world has changed. The size of the company has increased. The implementation must be much faster and we see the role of Enexis changing: from manager to manager and architect and builder and director. In society, the organisation is increasingly in the spotlight. The directors must make themselves heard, be accountable, and participate in discussions about social issues. The major change challenge is not only technical in nature, but also requires a change in mindset and leadership, in order to implement new ways of working and to increase productivity as a company enormously. These developments require different capacities from the Executive Board members, including strategic thinking and influencing.

The remuneration must be in line with these responsibilities and also (in the future) be focused on attractive employment, also for the succession of the current board. EB members of Enexis operate at the intersection of the public and commercial domain, whereby insight into and experience with the interests of both sides is expected of the board of Enexis.

The remuneration level of functions with comparable complexity and social impact is well above the absolute maximum standard of the WNT. In addition, Enexis has a particularly low remuneration ratio (3.2), also in the sector, by pursuing a very conservative remuneration policy. This remuneration ratio is the ratio between the salary of the highest paid person and the median of all employees. Quality and continuity of management remain crucial for Enexis. We therefore monitor the availability of good candidates for the management roles. We also ask ourselves whether and for how long the current remuneration policy is still sustainable. In doing so, we are aware of the fact that we are in the public sector.

Supervisory Board member attendance

We met with the EB a total of eight times. A closed session of the SB always preceded these meetings. The table below shows the attendance percentages for each SB member from the date of their appointment to the SB and the relevant committee.

The SB has two standing committees: the Audit Committee and the HR Committee

Audit Committee

The Audit Committee is chaired by Els de Groot and consists of Wilma Mansveld and Joost van Dijk. The committee met seven times during the year. In line with the governance arrangements, all meetings were attended by the external auditor EY, the Director of Finance & Control, the Head of Internal Audit & Risk and the Chief Financial Officer (CFO).

The committee discussed the long-term financial outlook in detail, including the structurally increasing investments (and financing requirements) required to implement the energy transition. The dilemma of interest rate risk was also discussed. On the topic of data and digitalisation, the Audit Committee was updated about the structure, purpose, results and next steps of the portfolio management as well as developments in Identity & Access Management. In the presence of the Chief Information Security Officer (CISO), the Committee also discussed cybersecurity, such as the NIS2 directive, Business Continuity Management (BCM) and good governance. The committee assesses the performance of the external auditor, EY, annually and reports its findings to the SB. It also regularly reviews the performance of the internal audit function.

HR Committee

The HR Committee (HRC) is chaired by Anita Arts and includes Jos Nijhuis as a member. The committee met five times during the year. The HRCs agenda includes the terms of employment of the board members, succession management, integrity, diversity and inclusion. The HRC also prepared the annual evaluation process for the EB. The HRC advised the SB on the evaluation process. A delegation from the SB held individual performance interviews with each member of the EB, based in part on a self-assessment by the SB member and feedback solicited from the relevant direct reports. Prior to the performance interviews and based on the above input, the full SB prepared the evaluation of the EB members.

The HR Committee was informed about how Enexis is recruiting new colleagues for the energy transition, such as South African engineers, along with the dilemmas involved. The committee also discussed the need to modernise leadership styles and behaviours, as well as the results of the Enexis employee survey from late 2023. It is worth noting that one of the aspects employees are most proud of is their colleagues at Enexis. This sense of connection is a valuable asset, particularly in today’s increasingly polarised society.

Shareholders

The SB regularly consults with the Shareholders Committee (SHC), which represents the shareholders. In 2024, the SB met with this committee six times. One of the topics discussed with the shareholders in the autumn was long-term financing, and the SB appreciates the constructive attitude of the SHC in these discussions. There was also a strategic dialogue between the SHC, the SB and the EB on future-proofing the energy system. It was a good meeting and demonstrated our shareholders' high level of engagement.

Employee participation

In two formal Article 24 meetings, the ‘golden triangle’ – consisting of the EB, the SB and the Central Works Council (CWC) – discussed key topics such as the tightness of the labour market, the progress of the strategy, digitalisation and AI, and organisational developments. We also addressed the growing pressure on Enexis and its employees. Throughout the year, there was regular and constructive contact regarding appointments to the EB and SB, including the presentation of profiles for the COO and CFO positions. These formal and informal interactions made cooperation within the golden triangle smooth. This was also reflected in our engagement with the various works councils, some of whose meetings we attended. These interactions provided valuable insight into the concerns and opportunities for employee involvement, and we observed a strong, positive relationship with the EB. We are pleased with our working relationship with the CWC and see opportunities to strengthen this further in 2025.

About this report

Starting with the 2024 annual report, Enexis has adopted the CSRD guidelines for its reporting. This shift is not just a compliance requirement but also an opportunity for the organisation to provide deeper insights into the material impacts, risks and opportunities affecting its operations and the broader value chain. The SB has been closely involved in preparing and implementing the sustainability statement.

We discussed the financial statements, including the audit opinion and assurance report prepared by the EB, extensively. The external auditor, EY, was present. They audited the 2024 financial statements and the annual report in detail with the CFO, her team and the auditor, and issued an unqualified audit opinion for both documents. We conclude that the report meets the standards of good governance, transparent reporting and accountability. We therefore propose that the AGM approves the financial statements and the proposed appropriation of profits for 2024. We also propose that the AGM grants discharge to the EB for its management and to us, the SB, for our supervision of the EB in the 2024 reporting year.

Word of appreciation

In 2024, Enexis once again faced significant challenges. All employees, whether in the field or the office, managers, directors, works councils and the CWC, and finally, the Executive Board, have shown remarkable commitment and dedication to deliver strong results. The SB would like to express its gratitude and appreciation. We would also like to thank our shareholders and other stakeholders for their valuable contributions, continued commitment, and trust in Enexis.

’s-Hertogenbosch, 5 March 2025

Supervisory Board

Jos Nijhuis (Chairman)

Joost van Dijk (Vice-Chairman)

Els de Groot

Anita Arts

Wilma Mansveld