Note 2 Segment information
Alliander distinguishes the following reporting segments:
- Network operator Liander;
- Network company Endinet;
This segmentation reflects the internal reporting structure, specifically the internal consolidated and segmented monthly reports, the annual plan and the business plan. Although Endinet had been sold off, with the transfer taking place on 1 January 2016 (see note  among other disclosures), the company continued to be included in Alliander’s internal reporting structure up to 31 December 2015.
Network operator Liander, accounting for more than 80% of the revenue, forms the largest company within the Alliander group and is responsible for providing gas and electricity connections and for transporting gas and electricity in Gelderland and parts of Noord-Holland, Flevoland, Friesland and Zuid-Holland.
Network company Endinet Groep B.V., including network operator Endinet B.V., has largely similar activities to those of Liander, but serving the Eindhoven and Oost-Brabant distribution area. Although, on the basis of quantitative criteria, Endinet does not qualify as a separate reporting segment, the Management Board has decided that Endinet should nevertheless report as a separate segment for the following reasons:
- agreement has been made with the former shareholders of Endinet determining that Endinet B.V. should continue to exist as a separate network operator within Alliander in any case until mid-2015;
- Endinet B.V. will continue to report separately as an independent network operator to such authorities as the Authority for Consumers & Markets (ACM);
- a different geographical location.
The Other segment covers the entirety of the other operating segments within the Alliander group, such as the activities of Liandon, Stam and Alliander AG, new activities, the corporate staff departments and the service units. Liandon provides services relating to the construction and maintenance of complex energy infrastructures, on behalf of Liander as well as third parties. Alliander AG carries on network operation and public lighting activities in Germany. Stam is a medium-sized firm of contractors based in Noord- Holland, engaging in network construction and maintenance work. These activities are undertaken on behalf of third parties as well as on contract to Liander. Established as well as new activities include targeted investments in the infrastructure for electric vehicles, sustainable area development and sustainable housing. The corporate staff departments and service units include the Shared Services and IT, which perform activities on behalf of Liander and Endinet among other units. All these activities can be combined into a single segment inasmuch as they do not satisfy the quantitative criteria in order to qualify separately as reporting segments.
Except for the corporate staff and service units, the business of the other operating segments exhibits similar characteristics, depending on the nature of the products and services and the nature of the production processes, viz.: supply, construction, management and maintenance of energy-related products and services. Given the scale of these other operating segments, other characteristics in the sense of customers and distribution channels are not relevant segment reporting distinctions. Furthermore, these operating segments have been aggregated in the Other segment since none of them satisfies the quantitative criteria that would qualify them as separate reporting segments.
Alliander produces monthly management reports for the Management Board, with quarterly reports for the Supervisory Board as well. As regards both balance sheet and income statement, these reports use the same accounting policies and classification as the financial information contained in the financial statements. The Management Board assesses the performance of the business on the basis of these reports. The financial reports focus on the consolidated and segment information concerning operating expenses. The operating result is also included on a comparable basis, i.e. excluding incidental items and fair value movements. The operating result is total income less total expenses.
The primary segmentation analysis is as follows, including reconciliation with the reported figures.
The external revenue of Liander and Endinet mainly comprises income from energy transport, connection and metering services. In the Other segment, external revenue mainly derives from the services provided by Liandon and Stam and the income from network operation activities in Germany. The eliminations result from the internal services provided by corporate staff departments, service units (such as IT and Shared Services) and Stam to Liander and Endinet. These internal supplies are made at cost.
The profit after tax for 2015, like that for 2014, is almost entirely attributable to the shareholders of Alliander N.V.
Reclassification to reported and incidental items
The reclassification affecting reported and incidental items concerns the reconciliation of the periodical management reports with the published financial reports. For external reporting, the amount of capitalised own production of €303 million (2014: €277 million) included in purchase costs and costs of raw materials and consumables is eliminated. In the reported figures, Endinet has been classified as profit from discontinued operations. As a consequence, an adjustment has been applied for Endinet in the reclassification to reported and incidental items.
The incidental items are not included in the periodical management reports either but are reported separately. For the purposes of reconciliation with the external reporting (column headed ‘Reported'), the incidental items should be included. Disclosures relating to the incidental items can be found in ‘Shareholders and investors’ section of the annual report.
Also, as required by IFRS 5, only the consolidated net profit of Endinet has been presented separately in Alliander’s income statement, as profit from discontinued operations. In the internal reporting, however, the separate income statement items for the full-year have been included, without cessation of depreciation from 24 March 2015 onwards. The difference between this and Alliander’s reported income statement, in which Endinet is not recognised, has been accounted for in the column headed ‘Reclassification to reported and incidental items and IFRS 5’.
Segment assets and liabilities
The amounts in the eliminations column against total assets mainly concern the eliminations of the investments in subsidiaries Liander and Endinet. The eliminations against the liabilities relate to the current-account positions between the subsidiaries and Alliander. Within the Alliander group, there are group financing arrangements, involving central administration of external accounts. All the subsidiaries maintain a current account with Alliander. There are no assets or equity and liabilities that are not allocated.
‘Rest of the world’ relates entirely to the activities in Germany and Belgium.