Consolidated statement of cash flows

Finance income has increased from €5.5 million in 2017 to €21.9 million in 2018. 50Hertz Transmission (Germany)’s contribution to finance income amounts to €2.2 million for 2018. Interest income includes €6.3 million (2017: €3.6 million) of interest from a loan agreement between Elia System Operator and Nemo Link Ltd. See Note 6.4.1 for more details. Other financial income also includes a €9.2 million remeasurement gain to fair value of the Group’s initial 60% shareholding in Eurogrid. See Note 4.4.

The interest expenses on eurobonds and other bank borrowings increased, due to a number of factors. Elia Transmission (Belgium) incurred a net €67.6 million interest expense on borrowings in the year, which is comparable with the previous year. The slightly increased interest paid on borrowings is mainly due to an increased nominal amount of outstanding debt, which was driven by the €300 million senior bond issued in September 2018, the €100 million EIB loan, and the €210 million dedicated loan taken out in December 2018. This slight increase is, however, offset by the higher level of capitalised borrowing costs in the year, at €9.0 million (2017: €8.3 million) the rise in capitalised borrowing costs being due to the roll-out of a number of larger projects. 50Hertz Transmission (Germany)’s share of interest expenses on borrowings amounted to €28.2 million. The interest expense on derivatives decreased significantly due to a number of interest-rate swaps which ended in financial year 2017 and were partially replaced in 2018 with interest-rate swaps at low market interest rates. Other financial costs have increased due to a number of one-off financial costs that arose in connection with the acquisition of the 20% stake in 50 Hertz Transmission (Germany). For more details of net debt and loans, see Note 6.12.

5.4. Income taxes

GRI 201-1 (Payments to government by country: corporate income taxes)

RECOGNISED IN PROFIT OR LOSS

The consolidated income statement includes the following taxes:

(in million EUR)

Current year Adjustments for prior years

Total current income tax expenses

Origination and reversal of temporary differences

Total deferred taxes Total income taxes recognised in profit and loss

* See Note 2.1 for details regarding restatement as a result of a change in accounting policy.

2018

82.6 23.2

105.9

(3.7)

(3.7) 102.2 2017 (restated *)

28.5 0.7

29.2

10.4

10.4 39.6

Total income tax expenses were higher in 2018 than in 2017. The full consolidation of 50Hertz Transmission (Germany) in the last eight months of 2018 resulted in a €57.8 million increase in total income tax. The remaining increase in tax expenses is driven, among other factors, by a significant limitation of the effects of the Notional Interest Deduction (NID) in 2018. This had a substantial positive tax effect in 2017.

RECONCILIATION OF THE EFFECTIVE TAX RATE

The tax on the Group's profit (loss) before tax differs from the theoretical amount that would arise using the Belgian statutory tax rate applicable to profits (losses) of the consolidated companies:

(in million EUR)

Profit before income tax

Income tax expense

Income tax, using the domestic corporate income tax rate Domestic corporate income tax Effect of the foreign tax rate** Share of profit of equity-accounted investees Non-deductible expenses Adjustments for prior years (net of deferred tax impact) Tax incentives (notional interest deduction) Tax credit for R&D Effect of NID carried forward on regulatory balance Tax reform: deferred income tax adjustments Other

Income tax expense

1 DTA = Deferred tax asset; NID = Notional Interest Deduction * See Note 2.1 for details regarding restatement as a result of a change in accounting policy. ** The nominal tax rate in Germany amounts to 29.59%

2018

409.3

2017 (restated *)

268.2

102.2 39.1

121.0

91.2 29.58% 33.99% (0.1) (19.4) 5.3 (0.2) (37.0) 2.6

0.5 0.0 (0.5) 0.0 (0.4) (4.2) 102.2

0.7 (13.1) (2.3) 7.9 (12.4) 1.3

39.6

The Belgian notional interest deduction (NID) had a considerable effect on the income tax for financial year 2017. Since all remaining stock in notional interest deduction was used in 2017, the positive effects of notional interest deduction were no longer felt in 2018.

5.5. Earnings per share (EPS)

BASIC EPS

Basic earnings per share are calculated by dividing the net profit attributable to the shareholders of the Company (€275.2 million) by the weighted average number of ordinary shares outstanding during the year.

Weighted average number of ordinary shares 2018 2017

Ordinary shares issued on 1 January 60,901,019 60,891,158 Impact of the shares issued in March 2017 7,646 Impact of the shares issued in December 2018 3,437

Weighted average number of shares on 31 December 60,904,456 60,898,804

DILUTED EPS

Diluted earnings per share are determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options and convertible bonds.

Diluted earnings per share are equal to basic earnings per share, since there are no share options or convertible bonds.

Share capital and reserves per share

Share capital and reserves per share totalled €44.9 per share on 31 December 2018, compared with a value of €42.1 per share at the end of 2017.

5.6. Other comprehensive income

Total comprehensive income includes both the result of the period recognised in the statement of profit or loss and other comprehensive income recognised in equity. ‘Other comprehensive income’ includes all changes in equity other than owner-related changes, which are reported in the statement of changes in equity.

Changes in fair value

Cash flow hedges

The negative effect in fair value of cash flow hedges was mainly due to the negative fair value at settlement date of the pre-hedge on the senior bond issued in September 2018 in connection with the acquisition of the 20% stake in 50Hertz. The hedging reserve is described in detail in Note 8.1.

Fair value on investments through OCI

Investments previously measured at amortised cost are measured through OCI with the adoption of IFRS 9 (to the extent that the investment is not categorised under IFRS 12). This had a positive effect of €2.7 million in OCI.

Remeasurements

The OCI on post-employment obligations had a limited impact of €0.8 million (€0.6 million net of tax). See Note 6.13 for more details. The effect in the previous year effect mainly resulted from experience adjustments.