Note 2 Segment information

Alliander distinguishes the following reporting segments in 2018:

• 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 Qirion, Stam and Alliander AG, new activities, the corporate staff departments and the service units. Qirion 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 Qirion, 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

The profit after tax for 2018, like that for 2017, is almost entirely attributable to the shareholders of Alliander N.V..

Reclassification to reported and incidental items

In 2018 there are some incidental items in the column headed ‘Reclassification to reported items and incidental items’. The incidental item in the other income stems from the book profit on the disposal of Allego (€105 million) in 2018 [Note 22].

Out of the incidental expenses included in operating expenses, €9 million (2017: €4 million) relates to reorganisation costs. Offsetting this is an amount of €5 million in connection with the impact of the labor agreement reached in December.

The tax included in the incidental items is the effects of the exceptional operating expenses and a change in the rate of corporate income tax. The book profit on the sale of Allego qualifies for the substantial-holding privilege.

Segment assets

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

Product segmentation

In compliance with IFRS 15, the following table discloses revenue according to distinct products (product segmentation).

Seasonal influences

Alliander’s results are not materially affected by seasonal influences.

Geographical segmentation

‘Rest of the world’ relates entirely to the activities in Germany.