Segment reporting

General

Alliander has applied IFRS 8 (Operating Segments) with effect from the 2010 financial year. The segments were revised following the sale of Endinet on 1 January 2016. Starting from the 2016 financial year, Alliander has been using the following segments:

• Network operator Liander

• Other

The figures for each reporting segment, excluding incidental items and fair value movements, are shown in the following table. These figures are a direct reflection of the regular internal reporting. Detailed information on segment reporting can be found in note [2] of the financial statements.

Primary Segmentation

Network operator Liander

The network operator Liander segment consists of the legal entity Liander N.V. which, as designated network operator within network company Alliander, has a statutory duty to manage the electricity and gas networks and related assets in the provinces of Gelderland, Flevoland and parts of Friesland, Noord-Holland and Zuid-Holland. Liander connects customers to the electricity and gas networks through which it distributes electricity and gas. External income in 2017 was up by €99 million compared with 2016, at €1,681 million. This increase includes compensation for prior-year sufferance tax charges. Operating expenses were up by €36 million, chiefly owing to an increase in employee benefits, higher transmission capacity costs and restrictions, higher other costs and higher depreciation. Operating profit at €373 million was €65 million higher than in 2016.

Other

The Other segment covers the entirety of the other operating segments within the Alliander group, such as the activities of Liandon, Stam, Alliander AG, Allego, Duurzame Gebiedsontwikkeling, new activities, the service units and the corporate staff departments. Alliander incurs ‘stewardship costs’ in the staff departments for the shareholdings in its participating interests. These are not generally recharged to business units. Finally, capital expenditure in the context of the energy transition is recognised in this segment. External operating income in 2017 was up by €18 million compared with 2016, at €159 million. Operating profit for 2017 amounted to €64 million negative (2016: €67 million negative). The improvement was partly a result of lower vacancy and stewardship costs, offset in part by higher costs for new activities. As in 2016, Alliander invested some 3% of revenues in asset innovation, facilitating energy transition and new activities.