4.3.2 Cashflow

Compensation of imbalances

International revenues

Revenue is recognised over time as these services are performed continuously throughout the contractual term.

As defined in the BRP contract, the BRP (Balance Responsible Party) has a commitment to ensure a perfect balance between offtake and injection in the grid. In the event of an imbalance by the BRP, Elia has to activate the ancillary services which are to be invoiced to the BRP.

Revenue is recognised at the point in time when an imbalance occurs. Contract and tariff/mechanism approved by Regulator.

Based on market prices,EUR per kW imbalance at access point

The use of the grid on individual borders is organised through, half-yearly, quarterly, monthly, weekly, weekend, daily and intra-day auctions. Elia and Regulators decide which auctions are conducted on individual borders. Auctions are organised via an auction office, which acts as an agent. The auction office collects the revenues paid by the European energy traders, which are finally shared between neighbouring TSOs based on the volumes imported/exported on the border.

The revenue is recognised at the point in time when an import/export activity occurs. Framework agreement with parties and auction office.

Price setting is based on price difference in cross border market prices.

Other revenues

Revenue stream Nature and timing of satisfaction of performance obligations Other revenues

Others

Principally includes other services ( than described here above) Revenue is recognised at the point in time the service is complete.

Contract – Price setting -

Consequently, all revenue components contain revenue from contracts with customers, i.e. parties that have contracted with Elia to obtain services resulting from Elia’s ordinary activities in exchange for a consideration.

Other income

Other income is recognised when the related service is performed and no further performance obligations will arise.

Net regulatory income (expense)

Since the tariffs are based on estimates, there is always a difference between the tariffs that are actually charged and the tariffs that should have been charged (tariff setting agreed with regulator) to cover all reasonable costs of the system operator including a reasonable profit margin for the shareholders.

If the applied tariffs result in a surplus or a deficit at the end of the year, this means that the tariffs charged to consumers/the general public could have been respectively lower or higher (and vice versa). This surplus or deficit is therefore reported in the deferral account from settlement mechanism.

The release of this deferral account will impact future tariffs, incurred regulatory liabilities will decrease future tariffs, incurred regulatory assets, will increase future tariffs. The net movement in the regulatory deferral accounts for the period is presented separately in the statement of profit or loss within the line “net income (expense) from settlement mechanism”. We also refer to note 3.3.17.

3.4.2. Expenses Other expenses

Property taxes are directly recognised in full as soon as ownership is certain (generally as of 1 January of the year in question). However, these costs, qualified as non-controllable costs in the regulatory framework, are recorded as revenue through the settlement mechanism for the same amount, resulting in zero impact in terms of profit or loss.

Finance income and expenses

Finance expenses comprise interest payable on borrowings (calculated using the effective interest rate method), interest on lease liabilities, foreign-exchange losses, gains on currency hedging instruments offsetting currency losses, results on interest-rate hedging instruments, losses on hedging instruments that are not part of a hedge accounting relationship, losses on financial assets classified as for trading purposes and impairment losses on financial assets as well as any losses from hedge ineffectiveness.

Finance income includes interest receivables on bank deposits, which are recognised in profit or loss using the effective interest rate method as they accrue.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Income taxes

Income taxes comprise current and deferred tax. Income-tax expense is recognised in profit or loss, except where it relates to items recognised directly in equity. Taxes on hybrid coupon is recognized in the statement of profit or loss as it is a tax on profits whereas the