Independent auditor's report and assurance report

Independent auditor's report

To the shareholders and the supervisory board of Alliander N.V.

Report on the audit of the financial statements 2022 included in the annual report

Our opinion

We have audited the financial statements 2022 of Alliander N.V., based in Arnhem. The financial statements comprise the consolidated financial statements and the company financial statements.

In our opinion:

• The accompanying consolidated financial statements give a true and fair view of the financial position of Alliander N.V. as at 31 December 2022, and of its result and its cash flows for 2022 in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.

• The accompanying company financial statements give a true and fair view of the financial position of Alliander N.V. as at 31 December 2022, and of its result for 2022 in accordance with Part 9 of Book 2 of the Dutch Civil Code.

The consolidated financial statements comprise:

1. The consolidated statement of financial position as at 31 December 2022.

2. The following statements for 2022: the consolidated income statement, the consolidated statements of comprehensive income, changes in equity and cash flows.

3. The notes comprising material policy information.

The company financial statements comprise:

1. The company balance sheet as at 31 December 2022.

2. The company profit and loss account for 2022.

3. The notes comprising a summary of the accounting policies and other explanatory information.

Basis for our opnion

We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the "Our responsibilities for the audit of the financial statements" section of our report.

We are independent of Alliander N.V. in accordance with the EU Regulation on specific requirements regarding statutory audit of public-interest entities, the Wet toezicht accountantsorganisaties (Wta, Audit firms supervision act), the Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics).

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Information in support of our opinion

We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming our opinion thereon. The following information in support of our opinion was addressed in this context, and we do not provide a separate opinion or conclusion on these matters.

Materiality

Based on our professional judgement we determined the materiality for the financial statements as a whole at € 24 million. The materiality is based on 4% of the cash flow from operating activities. We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the financial statements for qualitative reasons.

We agreed with the supervisory board that misstatements in excess of € 1,2 million, which are identified during the audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.

Scope of the group audit

Alliander N.V. is at the head of a group of entities. The financial information of this group is included in the consolidated financial statements of Alliander N.V.

Our group audit mainly focused on significant group entities Alliander N.V. and Liander N.V. We have performed audit procedures ourselves at group entities Alliander N.V. and Liander N.V. and performed review procedures or specific audit procedures at other group entities.

By performing the procedures mentioned above at group entities, together with additional procedures at group level, we have been able to obtain sufficient and appropriate audit evidence about the group's financial information to provide an opinion about the consolidated financial statements.

Audit approach fraud risks

We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an understanding of the entity and its environment and the components of the system of internal control, including the risk assessment process and management’s process for responding to the risks of fraud and monitoring the system of internal control and how the supervisory board exercises oversight, as well as the outcomes.

We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk assessment, as well as among others the code of conduct, whistle blower procedures and incident registration. We evaluated the design and the implementation and, where considered appropriate, tested the operating effectiveness, of internal controls designed to mitigate fraud risks.

As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and bribery and corruption in close co-operation with our forensic specialists. We evaluated whether these factors indicate that a risk of material misstatement due to fraud is present.

We identified the following fraud risks and performed the following specific procedures:

Based on the auditing standards, we considered the assumed fraud risk related to management's breach of internal controls, including whether there are indications of tendency in the group's management that may pose a risk of a material misstatement resulting from fraud.

We also performed additional substantive work, including testing journal entries, assessing estimates for trends (including a retrospective review of significant estimates from previous financial year), and testing the substantiation for adjustments made during the preparation of the financial statements.

We build into our audit an element of unpredictability. We also considered the outcome of other audit procedures and evaluated whether any findings were indicative of fraud or non-compliance with laws and regulations.

We considered the available information and made inquiries from members of the Executive Board, management (including the Legal departmentand Internal Audit) and the Supervisory Board. This did not reveal any indications of fraud that could lead to a material misstatement due to fraud.

Audit approach fraud risks compliance with laws and regulations

We assessed the laws and regulations relevant to the Company through discussion with the Legal department, reading minutes and reports of internal audit.

Where material to the related financial statements, based on our risk assessment procedures and while realizing that the effect of non-compliance could considerably vary, we considered the following laws and regulations: adherence to (corporate) tax law and financial reporting regulations, the requirements under the International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and Part 9 of Book 2 of the Dutch Civil Code, as being laws and regulations with a direct impact on the financial statements.

We obtained sufficient appropriate audit evidence regarding provisions of those laws and regulations generally recognized to have a direct effect on the financial statements.

Apart from these, Alliander N.V. is subject to other laws and regulations where the consequences of non-compliance could have a material effect on amounts and/or disclosures in the financial statements, for instance, through imposing fines or litigation.

Given the nature of Alliander N.V.’s business and the complexity of European public procurement regulations, the Act on Independent Network Management, the Electricity Act 1998 and the Gas Act, there is a risk of non-compliance with the requirements of such laws and regulations.

Our procedures are more limited with respect to these laws and regulations that do not have a direct effect on the determination of the amounts and disclosures in the financial statements. Compliance with these laws and regulations may be fundamental to the operating aspects of the business, to the Group's ability to continue its business, or to avoid material penalties (e.g., compliance with the terms of operating licenses and permits or compliance with environmental regulations) and therefore non-compliance with such laws and regulations may have a material effect on the financial statements. Our responsibility is limited to undertaking specified audit procedures to help identify non-compliance with those laws and regulations that may have a material effect on the financial statements. Our procedures are limited to (i) inquiry of management, the Supervisory Board, the Executive Board and others within the company as to whether the company is in compliance with such laws and regulations and (ii) inspecting correspondence, if any, with the relevant licensing or regulatory authorities to help identify non-compliance with those laws and regulations that may have a material effect on the financial statements.

Naturally, we remained alert to indications of (suspected) non-compliance throughout the audit.

Finally, we obtained written representations that all known instances of (suspected) fraud or non-compliance with laws and regulations have been disclosed to us.

Audit approach going concern

We are responsible for obtaining reasonable assurance about the group's ability to continue as a going concern. It is management's responsibility to assess the group's ability to continue as a going concern and to disclose in the financial statements any events or circumstances that may cast reasonable doubt upon the group's ability to continue as a going concern.

As explained on page 134, the accounting policies used in the financial statements are based on the assumption of going concern of the company.

We have reviewed management's assessment of the going concern assumption of Alliander N.V., including the related disclosures in the Alliander N.V. 2022 financial statements. This includes an evaluation of the liquidity and financing elements in Alliander’s business plan 2023-2027, and the underlying developments and assumptions for both the short term and long term.

Based on our work, we have no findings to report.

Paragraph emphasising the impact of the energy transition

As a network company, Alliander faces major required investments and associated financing needs. We draw attention to pages 38-40 and 112 of the Management Report, in which the Management Board described the impact of the energy transition. This energy transition will require substantial investments in the coming years in connection with expansions and reinforcements of the electricity network and the related financing requirements. Alliander is investigating the various options for securing its long-term financing. Our opinion has not changed as a result of this matter.

Our key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements. We have communicated the key audit matters to the supervisory board. The key audit matters are not a comprehensive reflection of all matters discussed.

These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Report on the other information included in the annual report

The annual report contains other information, in addition to the financial statements and our auditor's report thereon.

The other information consists of:

• The Management board’s report (page 4-126).

• Other information.

Based on the following procedures performed, we conclude that the other information:

• Is consistent with the financial statements and does not contain material misstatements.

• Contains the information regarding the management report and the other information as required by Part 9 of Book 2 of the Dutch Civil Code.

We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements.

By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of those performed in our audit of the financial statements.

Management is responsible for the preparation of the other information, including the Management Board's Report in accordance with Part 9 of Book 2 of the Dutch Civil Code, and the other information as required by Part 9 of Book 2 of the Dutch Civil Code.

Report on other legal and regulatory requirements

Engagement

We were engaged by the supervisory board as auditor of Alliander N.V. on July 29, 2015, as of the audit for the year 2016 and have operated as statutory auditor ever since that financial year. In December 2019 we were reappointed for the audit of the financial years 2020 and 2021 and in December 2021 we were reappointed for the audit of the financial years 2022 and 2023. The Supervisory Board is mandated to this end by the shareholders.

No prohibited non-audit services

We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific requirements regarding statutory audit of public-interest entities.

Description of responsibilities regarding the financial statements

Responsibilities of management and the supervisory board for the financial statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

As part of the preparation of the financial statements, management is responsible for assessing the company’s ability to continue as a going concern. Based on the financial reporting frameworks mentioned, management should prepare the financial statements using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

Management should disclose events and circumstances that may cast significant doubt on the company's ability to continue as a going concern in the financial statements.

The supervisory board is responsible for overseeing the company's financial reporting process.

Our responsibilities for the audit of the financial statements

Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion.

Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.

We have exercised professional judgement and have maintained professional skepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included among others:

• Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control.

• Evaluating the appropriateness of accounting policies used and the reasonableness of accountinestimates and related disclosures made by management.

• Concluding on the appropriateness of management's use of the going concern basis of accounting, and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause a company to cease to continue as a going concern.

• Evaluating the overall presentation, structure and content of the financial statements, including the disclosures.

• Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive were the size and/or the risk profile of the group entities or operations. On this basis, we selected group entities for which an audit or review had to be carried out on the complete set of financial information or specific items.

We communicate with the supervisory board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant findings in internal control that we identified during our audit. In this respect we also submit an additional report to the audit committee in accordance with Article 11 of the EU Regulation on specific requirements regarding statutory audit of public-interest entities. The information included in this additional report is consistent with our audit opinion in this auditor's report.     

We provide the supervisory board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the supervisory board, we determine the key audit matters: those matters that were of most significance in the audit of the financial statements. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the public interest.

Amsterdam, March 6, 2023

B.C.J. Dielissen

Assurance report of the independent auditor on Alliander's sustainability information

To the shareholders and the supervisory board of Alliander N.V.

The management board of Alliander N.V. (‘the Company’) engaged us to provide assurance on a selection of non-financial information in the Annual Report 2022 (‘the Report’). Our engagement consisted of a combination of limited assurance (leading to a ‘conclusion’) and reasonable assurance (leading to an ‘opinion’).

Our conclusion

Based on our review nothing has come to our attention that causes us to believe that the Report does not present, in all material respects, a reliable and adequate view of:

• The policy and business operations with regard to non-financial information.

• The thereto related events and achievements for the year 2022.

In accordance with the reporting criteria as included in the section ‘reporting criteria’.

We were engaged to provide limited assurance on the following chapters (‘the reviewed information’):

• Our story about 2022 (page 4-7).

• About this report (page 8-10).

• Profile of Alliander (page 11-24).

• How we create value, presented in the chapters:

• • Our network: high supply reliability at a low cost (page 26-37);

  • Making the energy supply and our organisation sustainable (page 38-50);

  • Ensuring a safe energy network, a safe working environment and a safe data environment (page 51-55);

  • Being an attractive, inclusive employer with equal opportunities for all (page 56-65);

  • A creditworthy company with solid returns (page 66-87);

  • Our impacy on society (page 88-97), including impactcases;

  • Dillemas and lessons learned (page 98-99).

We did not perform review procedures on the information about the EU Taxonomy as disclosed in the chapter ‘EU Taxonomy’ on page 83-86.

Our opinion

In our opinion, the Report presents, in all material respects, a reliable and adequate view of:

• The policy and business operations with regard to non-financial information.

• The thereto related events and achievements for the year 2022.

In accordance with the reporting criteria as included in the section ‘reporting criteria’.

We were engaged to provide reasonable assurance on the following information (‘the audited information’):

• The summarized materiality assessment presented in the chapter ‘About this report’ (page 8-9) and the extensive materiality assessment presented in the chapter ‘Other Information, Materiality test’ (page 204-205).

• The table "Objectives and results" in the chapter "Profile of Alliander" (page 22-24).

Basis for our opinion and our conclusion

We have conducted our review and audit work on the aforementioned information in accordance with Dutch law, including Dutch Standard 3810N ‘Assurance-opdrachten inzake maatschappelijke verslagen’ (Assurance engagements relating to sustainability reports). A review is focused on obtaining limited assurance, while an audit engagement is focused on obtaining reasonable assurance. Our responsibilities under this standard are further described in the section ‘Our responsibilities for the review and audit of the Report’.

We are independent of Alliander N.V. in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten’ (ViO, Code of ethics for professional accountants, a regulation with respect to independence) and other relevant independence requirements in The Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch code of ethics).

We believe that the audit evidence and assurance evidence we have obtained is sufficient and appropriate to provide a basis for our opinion and conclusion.

Reporting criteria

The reporting criteria used for the preparation of the sustainability information are the Sustainability Reporting Standards of the Global Reporting Initiative (GRI) and the applied supplemental reporting criteria as disclosed in the chapter ‘Other information’ of the annual report.

The sustainability information is prepared in accordance with the GRI Standards. The GRI Standards used are listed in the GRI Content Index as published on the company’s website.

The absence of an established practice on which to draw, to evaluate and measure non-financial information allows for different, but acceptable, measurement techniques and can affect comparability between entities and over time.

Consequently, the sustainability information needs to be read and understood together with the reporting criteria used.

Materiality

Based on our professional judgement we determined materiality levels for each relevant part of the sustainability information and for the sustainability information as a whole. When evaluating our materiality levels, we have taken into account quantitative and qualitative considerations as well as the relevance of information for both stakeholders and the company.

We agreed with the supervisory board that misstatements which are identified during the audit and which in our view must be reported on quantitative or qualitative grounds, would be reported to them.

Limitations to the scope of our audit

The sustainability information includes prospective information such as ambitions, strategy, plans, expectations and estimates and risk assessments. The sustainability information includes information based on climate-related scenarios that is subject to inherent uncertainty because of incomplete scientific and economic knowledge about the likelihood, timing or effect of possible future climate-related impacts. Inherent to prospective information, the actual future results are uncertain. We do not provide any assurance on the assumptions and achievability of prospective information in the sustainability information.

The references to external sources or websites in the sustainability information are not part of the sustainability information as audited by us. We therefore do not provide assurance on this information.

Our opinion is not modified in respect of these matters.

Responsibilities of the management board and the supervisory board

The management board is responsible for the preparation of reliable and sustainability information in accordance with the reporting criteria as included in the ‘Reporting criteria’ section, including the identification of stakeholders and the definition of material matters. The management board is also responsible for selecting and applying the reporting criteria and for determining that these reporting criteria are suitable for the legitimate information needs of stakeholders, taking into account applicable law and regulations related to reporting. The choices made by the management board regarding the scope of the sustainability information and the reporting policy are summarised in chapter ‘Other non-financial information’ of the annual report.

Furthermore, the management board is responsible for such internal control as the management board determines is necessary to enable the preparation of the sustainability information that is free from material misstatement, whether due to fraud or error.

The supervisory board is responsible for overseeing the sustainability reporting process of Alliander.

Our responsibilities for the review and audit of the Report

Our responsibility is to plan and perform the audit in a manner that allows us to obtain sufficient and appropriate audit evidence to provide a basis for our opinion.

Our audit has been performed with a high, but not absolute, level of assurance, which means we may not have detected all material errors and fraud during our audit.

We apply the ‘Nadere voorschriften kwaliteitssystemen’ (NVKS, regulations for quality management systems) and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and other relevant legal and regulatory requirements.

Limited assurance procedures

Our review included among others:

• Performing an analysis of the external environment and obtaining an understanding of relevant social themes and issues, and the characteristics of the company.

• Evaluating the appropriateness of the reporting criteria used, their consistent application and related disclosures in the sustainability information. This includes the evaluation of the results of the stakeholders’ dialogue and the reasonableness of estimates made by the management board.

• Obtaining an understanding of the reporting processes for the sustainability information, including obtaining a general understanding of internal control relevant to our review.

• Het kennis nemen van de werkzaamheden uitgevoerd door de interne audit-afdeling van Alliander.

• Identifying areas of the sustainability information with a higher risk of misleading or unbalanced information or material misstatements, whether due to fraud or error. Designing and performing further assurance procedures aimed at determining the plausibility of the sustainability information responsive to this risk analysis. These procedures consisted amongst others of:

• • interviewing relevant staff responsible for the sustainability strategy, policy and results;

  • interviewing relevant staff responsible for providing the information for, carrying out internal control procedures on, and consolidating the data in the sustainability information;

  • obtaining assurance information that the sustainability information reconciles with underlying records of the company;

  • reviewing, on a limited test basis, relevant internal and external documentation;

  • performing an analytical review of the data and trends.

• Evaluating the presentation, structure and content of the Report.

• Considering whether the Report as a whole, including the disclosures, reflects the purpose of the reporting criteria used.

Reasonable assurance procedures

Complementary to the aforementioned procedures, our audit included the following:

• Identifying and assessing the risks of material misstatement of the Report, whether due to errors or fraud, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from errors, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Evaluating the design and implementation and testing the operating effectiveness of the reporting systems and processes related to the information in the Report.

• Evaluating internal and external documentation, on a test basis, to determine the reliability of the information in the Report.

We communicate with the supervisory board regarding, among other matters, the planned scope and timing of the audit and significant findings, including any significant findings in internal control that we identify during our audit.

Amsterdam, March 6 2023

Deloitte Accountants B.V.

B.C.J. Dielissen