Consolidated statement of changes in equity

• The Group made use of the practical expedients, i.e. a single discount rate per group of contracts, summarised per their duration. Those leases were assumed to have similar characteristics. No hindsight was used. The discount rate used is the

Group's best estimate for the weighted average incremental borrowing rate and ranges from 0.26% to 2.94%. • The Group assessed the non-cancellable period of each of the contracts falling into the scope of IFRS 16. This includes the period covered by an option to extend the lease, if the lessee is reasonably certain of exercising that option. With regard to office rental contracts, in particular, the Group applied its best estimate of the non-cancellable period based on all the information at its disposal..

Impact on financial statements

On 1 January 2019, upon its transition to IFRS 16, the Group recognised the following right-of-use assets and lease liabilities:

(in million EUR)

Property, plant and equipment (right-of-use assets) Lease liability

1 January 2019

95.8 95.8

As the Group’s assets are equal to its liabilities at the date of transition, there is no impact on retained earnings at the adoption date. Deferred tax assets and liabilities are offset. The Group presents right-of-use assets within “property, plant and equipment” and lease liabilities within “loans and borrowings” in the statement of financial position.

The Group´s operating lease commitments under IAS 17 and the Group´s lease liabilities under IFRS 16 can be reconciled as follows:

(in million EUR) Reconciliation IAS 17 to IFRS 16

Minimum lease payments under operating leases IAS 17 as of 31 December 2018

Contracts considered not in scope for IFRS 16 Effect from discounting Effect from lease term assumptions

Liabilities recognized under IFRS 16 as of 1 January 2019

53.7 (5.6) (21.8) 69.5 95.8

Contracts considered out of scope for IFRS 16 are most often contracts where (i) no asset could be identified, or where, (ii) an asset is to be identified in the contract, but over which no control can be exercised by the Group.

The effect from lease term assumptions comes from the estimation of the most probable end date of the contract under IFRS 16 which can differ from the end date stipulated in the contract. This is often the case for contracts where it is probable that the contract will be prolonged.

The recognised right-of-use assets fall into the following categories:

(in million EUR)

Use of land Use of overhead line Rent of buildings/offices Cars IT equipment / facilities Optical fibers Strategic reserves

Total 1 January 2019

4.5 32.7 32.1 12.7 0.1 10.1 3.6

95.8

The use (portions) of land and overhead lines constitutes a right for the Group to use a well identified piece of land to construct on someone’s property. Only the contracts where the Group has the full right to control the use of the identified asset are in scope. Strategic reserves are contracts where the Group has the right to control the use of a power plant to keep the balance in the electricity network.

Accounting policies

See note 3.3.16 for a detailed description of the accounting policies. Besides IFRS 16, a number of other standards, amendments and interpretations came in effect in 2019 with only limited or no impact for the Group: • Uncertainty over Income Tax Treatment (IFRIC Interpretation 23 – effective from 1 January 2019). In June 2017, the IASB issued IFRIC Interpretation 23 which clarifies application of the recognition and measurement requirements in IAS 12 Income Taxes when there is uncertainty over income tax treatments. This amendment had no impact on the Group. • Prepayment features with Negative Compensation (amendments to IFRS 9 – effective from 1 January 2019). The amendments to IFRS 9 clarify that a financial asset passes the SPPI criterion regardless of the event or circumstance that causes the early termination of the contract and irrespective of which party pays or receives reasonable compensation for the early termination of the contract. These amendments had no impact on the Group. • Plan Amendment, Curtailment or Settlement (amendments to IAS 19 – effective from 1 January 2019). The amendments to IAS 19 Employee Benefits address the accounting when a plan amendment, curtailment or settlement occurs during a reporting period. These amendments had no impact on the Group. • Long-term interests in associates and joint ventures (amendments to IAS 28 – effective from 1 January 2019). The amendments clarify that an entity applies IFRS 9 to long-term interests in an associate or joint venture to which the equity method is not applied but that, in substance, form part of the net investment in the associate or joint venture (long-term interests). These amendements had no impact on the Group. • Annual improvements to IFRS Standards 2015-2017 Cycle (specific focus on IFRS 3, IFRS 11, IAS 12 and IAS 23 –effective from 1 January 2019). These amendments do not have any impact on the Group’s consolidated financial statements. The following standards, amendments and interpretations had not yet taken effect in 2019. The changes in the below standards, amendments and interpretations are not expected to have a material impact on the annual accounts and are therefore not set out in more detail: • Amendments to IFRS 3:Definition of a Business; • IFRS 17: Insurance Contracts; • Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture; • Amendments to IAS 1 and IAS 8, regarding the definition of materiality; • Amendments to References to the Conceptual Framework in IFRS Standards: Amendments to conceptual framework.

2.2. Functional and presentation currency

The consolidated financial statements are presented in million euro (the functional currency of the Company), rounded to the nearest hundred thousand, unless stated otherwise.

2.3. Basis of measurement

The consolidated financial statements have been prepared on a historical-cost basis, except for the derivative financial instruments, which are measured at fair value. Non-current assets are valued at the lowest of the carrying amount and the recoverable amount . Employee benefits are valued at the present value of the defined benefit obligations, less the fair value of the plan assets (see also note 6.14). Changes in fair value of other shareholdings are recorded through OCI.Financial assets not classified as measured at amortised cost or fair value through OCI are measured at fair value through profit and loss.

2.4. Use of estimates and judgements

The preparation of the consolidated financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that could affect the reported amounts of assets and liabilities and revenue and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgements regarding the carrying amounts of assets and liabilities. Actual results could differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects this period, or in the period in which the estimate is revised and future periods if the revision affects both current and future periods.

The following notes include information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements:

• The total allowed remuneration for its role as TSO in the Belgian segment and in the German segment is mainly determined by calculation methods set by, respectively, the Belgian federal regulator, the Commission for Electricity and Gas Regulation ('CREG') and the German federal regulator, the Federal Network Agency ('BNetzA'). In this context the recognition of deferral regulatory accounts is also based on the different regulatory schemes. For certain calculations, a level of judgement is needed.

More disclosures are to be found in Notes 6.20, 9.1.4 and 9.2.3. • Entities in which the Group holds less than 20% of the voting rights but has significant influence are accounted for under the equity method. Following the guidance in IAS 28, the Group assesses whether it has significant influence over its associates and therefore needs to account for them under the equity method (rather than applying IFRS 9) and reassesses this in each reporting period (see also Note 6.5). • Deferred tax assets are recognised for the carry-forward of unused tax losses and unused tax credits in so far as it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised. In making its judgement, management takes into account elements such as long-term business strategy and tax planning opportunities (see Note 6.7).