Note 2 Segment information

Alliander distinguishes the following reporting segments in 2017:

  • Network operator Liander;

  • Other.

This segmentation reflects the internal reporting structure, specifically the internal consolidated and segmented monthly reports, the annual plan and the business plan.

Network operator Liander forms the largest company within the Alliander group and is responsible for providing gas and electricity connections and for distributing gas and electricity in Gelderland and parts of Noord-Holland, Flevoland, Friesland and Zuid-Holland and is with over 85% of the revenue the largest business unit of Alliander.

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 Shared Services and IT, which perform activities on behalf of Liander among others. 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.

Reporting

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.

A statement showing the primary segmentation analysis is presented below, including reconciliation with the reported figures.

Notes

The external revenue of Liander mainly comprises income from energy transport, connection and metering services. In the Other segment, external revenue mainly derives from the services provided by Liandon, new activities 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. These internal supplies are made at cost.

Primary Segmentation

€ million

Network operator Liander

Other

Eliminations

Total

Reclassification to reported, incidental items and IFRS 5

Reported

Income statement

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

Operating income

            

External revenue

1,681

1,582

159

141

-

-

1,840

1,723

-

-

1,840

1,723

Internal revenue

5

3

331

331

-336

-334

-

-

-

-

-

-

             

Total income

1,686

1,585

490

472

-336

-334

1,840

1,723

-

-

1,840

1,723

             

Operating expenses

            

Purchase costs and costs of subcontracted work

444

432

68

67

-110

-97

402

402

-

-

402

402

Operating expenses

713

682

474

452

-226

-237

961

897

4

21

965

918

Depreciation and impairment

317

303

79

79

-

-

396

382

-

13

396

395

Own work capitalised

-161

-140

-67

-59

-

-

-228

-199

-

-

-228

-199

             

Total operating expenses

1,313

1,277

554

539

-336

-334

1,531

1,482

4

34

1,535

1,516

             

Operating profit

373

308

-64

-67

-

-

309

241

-4

-34

305

207

             

Finance income

17

11

149

126

-99

-119

67

18

-

-

67

18

Finance expense

-104

-126

-105

-65

99

119

-110

-72

-

-

-110

-72

Share in results of associates and joint ventures after tax

1

2

8

-7

-

-

9

-5

-

-

9

-5

Tax

-72

-48

3

-2

-

-

-69

-50

1

8

-68

-42

             

Profit after tax from continuing operations

215

147

-9

-15

-

-

206

132

-3

-26

203

106

             

Segmented assets and liabilities

            

Total assets

7,140

6,985

3,147

2,386

-2,218

-1,636

8,069

7,735

-

-

8,069

7,735

Non-consolidated investments in associates

2

-

1

6

-

-

3

6

-

-

3

6

Non-consolidated investments in joint ventures

-

3

-

-

-

-

-

3

-

-

-

3

Liabilities (non-current and current)

4,706

5,216

2,088

1,858

-2,668

-3,203

4,126

3,871

-

-

4,127

3,871

             

Other segment items

            

Investments in property, plant and equipment

565

551

101

129

-

-

666

680

-

-

666

680

Number of permanent staff at end of year

3,014

3,024

2,741

2,659

-

-

5,755

5,682

-

-

5,755

5,682

The profit after tax for 2017, like that for 2016, is almost entirely attributable to the shareholders of Alliander N.V..

Reclassification to reported and incidental items

In 2017 there are some incidental items in the column headed ‘Reclassification to reported, incidental items and IFRS 5’. Out of the incidental expenses included in operating expenses, €4 million (2016: €21 million) relates to reorganisation costs.

The incidental expense depreciation and impairment is nil (2016: €13 million). In 2016, this incidental expense stemmed from the annual impairment triggering event analysis process and associated impairment calculations and concerns accelerated depreciation of transformers, part of the network in Germany, unoccupied buildings and part of the CDMA network.

Segmented assets

The amounts in the eliminations column against total assets mainly concern the eliminations of the investments in subsidiaries Liander. 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.

Geographical segmentation

 

External revenue

Property, plant and equipment

Intangible assets

Non-consolidated associates and joint ventures

€ million

2017

2016

2017

2016

2017

2016

2017

2016

Netherlands

1,796

1,686

6,729

6,473

290

291

3

10

Rest of the world

44

37

64

56

27

28

-

-

         

Total

1,840

1,723

6,793

6,529

317

319

3

10

‘Rest of the world’ relates entirely to the activities in Germany, the UK and Belgium.