[PPT] - Results 2013 21 February 2014 Disclaimer We, Alliander, the PowerPoint Presentation

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21 February 2014

Presentation Results 2013

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Disclaimer

‘We’, ‘Alliander’, ‘the company’, ‘the Alliander group’ or similar expressions are used in this presentation as synonyms for Alliander N.V. and its subsidiaries, Liander refers to the grid manager Liander N.V. and its subsidiaries. The name Endinet refers to the Endinet group, including grid manager Endinet B.V. Stam refers to Stam Heerhugowaard Holding B.V. and its subsidiaries and Liandon refers to Liandon B.V. Alliander N.V. is the sole shareholder of Liander N.V., Endinet Groep B.V., Liandon B.V., Alliander Telecom N.V., Alliander Participaties B.V., Verlian B.V., Stam Heerhugowaard Holding B.V., CDMA Utilities B.V. en Alliander AG. Parts of this presentation contain forward-looking information. These parts may –without limitation– include statements on government measures, including regulatory measures, on Alliander’s share and the share of its subsidiaries and joint ventures in existing and new markets, on industrial and macroeconomic trends and on the impact of these expectations on Alliander’s

perating results. Such statements are preceded by, followed by or contain words such as ‘believes’, ‘expects’, ‘thinks’,

‘anticipates’ or similar expressions. These prospective statements are based on the current assumptions and are subject to known and unknown factors and other uncertainties, many of which are beyond Alliander’s control, so that future actual results may differ materially from these statements. This presentation has been prepared with due regard to the accounting policies applied in the 2013 financial statements of Alliander N.V., which can be found on www.alliander.com. All financial information shown in this presentation has not been audited and is made available for the purpose of discussing the current and future financial position of Alliander. No party can rely upon this presentation unless explicitly confirmed otherwise in writing by the company. This presentation has not been audited

Alliander results 2013 2

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Content

1. Highlights
2. Alliander at a glance
3. Results 2013
4. Appendices

Alliander results 2013 3

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Highlights 2013 YTD

Reported results 2013: € 288 million (2012: € 224 million). Comparable results 2013: € 287 million (2012: €

228 million)

Higher revenue due to increase in regulated tariffs
Stable CAPEX and OPEX
Credit ratings
S&P rating upgrade to AA-/A-1+ from A+/A-1 with stable outlook (Aug-13)
Moody’s rating unchanged at Aa3/P-1 with stable outlook
Early redemption of € 500 million perpetual subordinated bond loan
New issue of € 500 million perpetual subordinated bond loan
Early Termination of three cross-border lease transactions
RCF: € 600 million extended until July 2018

Financial results and position

Method decisions new regulatory period 2014-2016 have been published indicating tariff decreases due to

lower WACC, decrease in average sector cost and regulation of metering.

The EU Court of Justice ruled that Netherlands’ activities to unbundle the distribution of electricity and gas are

compatible with EU treaties if overriding reasons exist that are in the public interest. The Dutch Supreme Court has now to decide on unbundling

Dutch Government abandoned partial privatization plans of Gasunie and TenneT
Cost investigation by ACM
Successful introduction of new market model.

Regulatory developments

12-month average electricity outage falls from 24.5 (Dec-12) to 24.0 minutes (Dec-13).
Customer satisfaction decreases slightly
Start of efficiency program in operation
Acquisition of CDMA data communication network for €18 million
New business activities: sustainable area development, mobility services and sustainable living
Management Board extended to 3 members with appointment of Mrs Thijssen
Reorientation of strategic direction Alliander in relation to 1) the pace of network digitisation and 2) the

assessment of the value and necessity of increasing scale in combination with geographic orientation

Strategic and

perational

developments

Alliander results 2013 4

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Content

1. Highlights
2. Alliander at a glance
3. Results 2013
4. Appendices

Alliander results 2013 5

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Other 24% Gelderland 45% Friesland 13% Noord-Holland 9% Amsterdam 9%

Stable public shareholder base

Alliander Shareholders: Provinces & Municipalities

100% owned by Dutch provinces and municipalities and privatisation is not allowed by law

Alliander’s grid coverage regions largely coincide with the shareholders base

(1) Includes province of Flevoland, and various municipalities located in the provinces of Gelderland, Friesland, Flevoland, Zuid-Holland and Noord-Holland (2) Endinet shares acquired by Alliander as per 1 July 2010 (1)

Alliander results 2013 6

Amsterdam Noord-Holland Gelderland Endinet (2) Friesland

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Number of connections (x1,000)

2.056 1.946 3.057 2.631 2.054 2.630 52 187 138 102 207 32 53 55 4.000 4.687 5.687 394 191 134 107 1.000 2.000 3.000 4.000 5.000 6.000 Alliander Enexis Stedin Delta Cogas Rendo Westland

Electricity connections Gas connections

Market position

Alliander has 3.1 million

electricity connections and 2.6 million gas connections in the Netherlands

Alliander has a market

position of 37%

Source: ECN/EnergieNed/Netbeheer Nederland “Energy Trends” 2012 publication Notes: (1) Alliander includes Endinet (2) Enexis includes Intergas

(2) (1)

Alliander results 2013 7

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Overview Dutch energy networks

Electricity networks Gas networks

Alliander results 2013 8

Source: EnergieNed “Energy in the Netherlands” 2011 publication, adjusted for Endinet acquisition by Alliander and Intergas acquisition by Enexis

12 1 2 6 7 3 5 8 7 3 4 1 5 6 2 1 1 2 2 5 6 1 7 3 1 4 1 1 2 2

COGAS (6) Westland Energie Infrastructuur BV (7) RENDO Netbeheer BV (5) Liander and Endinet (1) Stedin (3) Delta Netwerkbedrijf BV (4) ENEXIS and Intergas (2)

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9 Alliander results 2013

Position in the Dutch energy value chain

Supply Production and trade Distribution Transmission Regulated Regulated

The Dutch energy value chain has been partially liberalised over the years. Regional distribution and transmission are regulated

Liberalised Liberalised Vattenfall/Nuon RWE/Essent Eneco Tennet Gasunie Alliander Enexis Stedin Vattenfall/Nuon RWE/Essent Eneco

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Regional Grid Manager: Management of regional electricity and gas grids
Electricity & gas metering business
Regulated assets
Low risk profile due to regulatory environment
Service, maintenance and

automation of complex energy infrastructures, including for TenneT

Clients are in the stable and

regulated network sector

Stable and predictable cash flow

Alliander’s businesses: stable cash flow profile

Regulated business >90%

Alliander results 2013 10

Results 2013 Network operator Liander Network company Endinet Other¹ Eliminations Total € million Operating income External income 1,642 117 87

1,846

Internal income 3

315
318
Total income

1,645 117 402

318

1,846 Operating expenses Total operating expenses 1,185 90 421

318

1,378 Operating profit reported 460 27

19
468

Total current assets 6,260 518 2,645

1,876

7,548

(1) Comprises other activities within the Alliander-group including the activities of Liandon, Stam, Alliander AG, Corporate departments and service units (both part of Alliander N.V.)

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Regulation - Regulatory framework

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Basic Philosophy

Incentive based regulation
Output steering

Regulation model

Stimulating competition by benchmark regulation
Creating incentives for operators to operate as efficiently as

possible

Level playing field (equal performance leads to equal

allowed revenue)

Rate of return in accordance with risk (WACC). Part of the

regulated cost base

Small regulator (at a distance from operations)

Regulatory scope Transport and connection service of electricity and gas. The metering market is currently regulated on a cost-plus basis. Benchmark competition Benchmark is the average total cost of the network sector, including a normalised rate of return (WACC), as well as the extrapolation of the development of the frontier shift. Network operators are encouraged to beat the benchmark (or efficient cost level). By beating the benchmark it is justifiable to lower the benchmark for the next regulation period. At first the profits remain at the network operators. When the new lowered benchmark becomes effective consumers will also benefit. Tariff levels are set in advance for at least 3 years. To estimate these levels the regulator uses the recent historical performance of the benchmark. As a result the tariffs follow the realised cost with a time-lag. In the long run the sector as a whole is able to cover its total cost including capital cost.

Constructive regulatory framework which does not allow for privatization

Alliander results 2013

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Regulation – Calculation of allowed revenue

Calculation

Output steering implemented in the energy Acts by the

formula:

ARt = (1 + (cpi ± x + q)/100 ) * ARt-1 , by which:

− ARt = allowed revenue in year t based on

utput volume V and an average sector cost

level C − cpi = consumer price index − x = efficiency reduction (x factor) − q = quality performance − V = output in a determined historical year − C= average sector cost level in a determined historical year

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Notes

Average sector cost level consists of three components
1. Average sector OPEX per year
2. Average sector Depreciation per year
3. Average sector Regulated Asset Value per year x

Regulated WACC

Sector averages are calculated by dividing total sector cost by

the total number of standardized units of output in the sector

WACC is the normalised rate of return on capital based on
CAPM. Risk free rate is based on 3yr average of 10y bunds

and 10y Dutch state. Risk premium based on 3y average risk premium on European utilities. A transaction fee premium is also included. Equity beta based on long run average for selected stock market listed TSOs and DSOs.

x factors are set to adjust allowed revenues over time
Method to determine x, q, V and C is presented in a Method

Decision and is legally binding

Duration of a Method Decision can be between 3 and 5 years

though is in practice set at 3 years

Regulator has certain degrees of freedom at developing the

method Decision, however: − Obligation to consult network operators and representative organizations in advance − Method should be based on benchmark competition − Applying benchmark competition after reaching a level playing field (comparable tariffs except for differences due to objectifiable regional differences)

Alliander results 2013

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Regulation – x factors

Current regulatory period

Period: 1 Jan 2014 - 31 Dec 2016
Positive x factors have been set that require a decrease of

allowed revenue

Regulator has decided to use an x factor reduction and a one-off

reduction in allowed revenue in 2014 and x factor reductions in 2015 and 2016.

x factors are partly based on WACC of 3.6% (real, after tax)
Decrease in WACC is due to lower equity beta, risk free rates and

risk premiums (WACC is CAPM based)

Revenue impact in 2014 is less than sum of one-off and x factor

due to positive recalculations effect of previous years

Revenue impact for regulatory period is on average €50 million

per year accumulating (excluding any recalculation effects for 2015 and 2016)

Tariff levels in 2017 are expected to increase again

Previous regulatory period

Period: 1 Jan 2011 - 31 Dec 2013
Negative x factors allowed for an increase of maximum allowed

revenue

x factors were partly based on WACC of 6.2% (real, after tax)

Source: ACM, Alliander

Alliander results 2013 13 Gas

2014–2016 2011–2013 2008–2010 Liander N.V. 6.4 (2.7) 6.1 Endinet B.V. 7.0 (1.6) 7.2 Delta Netwerkbedrijf B.V. 6.9 (0.5) 6.6 Enexis B.V. 6.9 (3.4) 8.1 Stedin B.V. 6.6 (2.8) 4.2 x factor (%)

Electricity

2011–2013 2008–2010 x factor (%)

ne-off

(in € mln) Liander N.V. 4.6 73 (6.4) 3.6 Endinet B.V. 5.3 5 (6.2) 4.6 Delta Netwerkbedrijf 4.7 6 (5.2) 5.8 Stedin B.V. 4.6 72 (7.7) 6.3 Enexis B.V. 4.9 102 (6.1) 5.0 2014–2016 x factor (%)

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Regulation – Recent developments

Metering Tariffs The setting of allowed revenue for metering service consumer market is in a transitory phase:

Up to 2014 actual metering costs are included in allowed revenue
From 2014 to 2020 this level set at the 2012 cost level and indexed to CPI
From 2020 onward the cost will be included in the benchmark

Smart Meter

Alliander needs to have 80% of the conventional meters replaced by smart meters by 2020
Small-scale rollout (pilot) in period 2012-2014

Project ‘Stroom’

Preparation of new Bills based on evaluation of the existing Electricity and Gas Acts

− Streamlining the Electricity and Gas Acts − Aimed at reducing the regulatory burden and administrative cost − Based on EU regulation − Based on sector input Market model

In August the introduction of new market model was completed. It consists of a number of

measures devised to simplify administrative processes between energy suppliers and customers and between energy suppliers themselves

Of importance is the reallocation of responsibilities: supplier is the single point of contact for
consumers. Operational management of meter is done by the network operator and metering

data are managed by the energy supplier

Alliander results 2013

Method Decisions

Method decisions new regulatory period 2014-2016 have been published indicating tariff

decreases due to lower WACC from 6.2% to 3.6% and a decrease in overall sector cost and regulation of metering services Unbundling

The EU Court of Justice ruled that Netherlands’ activities to unbundle the distribution of

electricity and gas are compatible with EU treaties if overriding reasons exist that are in the public interest. It is now up to the Dutch Supreme Court to decide on unbundling

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Content

1. Highlights
2. Alliander at a glance
3. Results 2013
4. Appendices

Alliander results 2013 15

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Key figures

16 Alliander results 2013

1) With effect from 2013 the interest bearing receivables are excluded in the net debt position. The 2012 figures have been restated accordingly for comparison purposes. Net debt is defined as interest-bearing debt less interest bearing receivables, cash and cash equivalents and investments that are not restricted. 2) Ratios according to the principles of Alliander’s financial policy.

Key figures € million 2013 2012 Movement compared to 2012 Financial key figures Revenue reported 1,744 1,674 4% Operating profit reported 457 394 16% Operating profit comparable 468 409 14% Profit after tax reported 288 224 29% Profit after tax comparable 287 228 26% Investments in property, plant and equipment 570 578

1%

Ratios Net debt position¹ 1,718 1,785 Solvency² 51.1% 49.5% FFO / Net Debt² 38.7% 30.1% Outage Electricity (in minutes) 24.0 24.5

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Incidental items and fair value movements

Alliander results 2013 17 € million 2013 2012 Total purchase costs, costs of subcontracted work

11
15

Impact on operating profit

11
15

Finance income/(expense) 13

50

Result from associates and joint ventures

12

Total impact on profit before tax 2

77

Tax

1

73 Total impact on profit after tax 1

4

Incidental items and fair value movements

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Financial highlights

1

Alliander results 2013 18

1) Excluding incidental items and fair value movements

18

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Revenue

1

Alliander results 2013 19

1) Excluding incidental items and fair value movements

19

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Purchasing costs, costs of sub-contracted work and operating expenses

1

Alliander results 2013 20

1) Excluding incidental items and fair value movements

20

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Cash flows and Capex

Alliander results 2013 21

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1) Free cash flow = Cash flow from operating activities – Gross investment in non-current assets + Contributions received from third parties

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Financial position

As of 31 Dec 2013

Capitalisation (€ million) Gross and Net debt (€ million) Maturity profile (€ million) 1 Location of debt (€ million)

Credit Facility (€ 600 million) 2 3) including € 127 million finance lease obligations Liander 1) excluding € 127 million finance lease obligations Liander 2) including € 200 million L/C back-up facility First call option of subordinated perpetual bond

Gross Debt (including CBL related financial

lease obligations)

2,022 Cash 155 Other Investments 236 CBL Investment 161 Total Cash and Cash Equivalents 552 Net debt according to IFRS 1,470 50% of subordinated perpetual bond 248 Net debt according to financial policy 1,718

Alliander N.V € 1,886 Liander €

133

3

Endinet Liandon

Alliander results 2013 22

Capital Market Programs EMTN 3,000 million ECP 1,500 million Backup credit facility RCF 600 million

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Net debt

23 Alliander results 2013

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Alliander results 2013 24

Stable dividend
Pay-out: 45% of after-tax profit, adjusted for incidental items, unless CAPEX from regulatory obligations or financial criteria require

higher retained earnings

Minimum solvency of 30%

Alliander’s Financial Policy

Part of overall policy and strategy
Balance between protection of debt providers’ and

shareholder returns

Financial strength and discipline
Maintain cushion relative to regulatory criteria
Flexibility to grow and invest
Transparent reporting
No structural subordination

Dividend Policy

FFO/Net debt: Minimum 20%
FFO Interest cover: Minimum 3.5
Net debt/capitalization: Maximum 60%
Solid A rating profile (on stand alone basis)
Comply with regulatory criteria for the network operators 1

Financial Framework General Principles

1) See page 39

Strong financial profile with clear and well defined financial policy, supported by regulated financial ratios and proven commitment to stay within financial policy framework Financial Policy

Liquidity Credit Rating/ Debt providers Shareholders’ equity

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Ratios financial policy 1

25

1) According to the principles of Alliander’s financial policy the subordinated perpetual bond loan is treated as 50% equity 2) Interest cover: profit after taxation adjusted for deferred tax asset movements and incidental items and fair value movements plus depreciation and net finance income and expenses, divided by net finance income and expenses adjusted for incidental items and fair value movements 3) Funds From Operations: 12-months profit after taxation adjusted for deferred tax asset movements and incidental items and fair value movements plus depreciation

f PP&E and intangible assets

4) Solvency: equity including result period divided by total assets less the expected dividend distribution for the current year less deferred income 5) Net debt/capitalisation: net debt divided by the sum of net debt and equity 6) With effect from 2013 the interest bearing receivables are excluded in the net debt position. The 2012 figures have been restated accordingly for comparison purposes.

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Strong credit ratings

Rationale

Counts as a Government Related Issuers (GRI) under

Moody's methodology

Fully owned by Dutch provinces and municipalities –

Moody’s assigns two notches of uplift to reflect their expectation of the likelihood of extraordinary support, if necessary

Low business risk, with operations primarily in distribution

networks that are price regulated under a stable and transparent system of regulation

Low financial risk relative to European peers evident in

stable and modest leverage

Reducing regulatory revenues, reflecting lower cost of

capital set by the regulator over the period 2014-2016, which we consider challenging but achievable given the lower market cost of debt

The stable outlook reflects Moody’s expectation that

Alliander will remain an electricity and gas distribution network operator that derives its revenues and cash flow from regulated activities. Furthermore, Moody’s expects Alliander to continue to follow its conservative financial policy

Moody’s has assigned a A3 issue rating to Alliander’s

subordinated perpetual bond and 50% equity weight (20- Nov-2013) Rationale

Ratings have not changed after application of new criteria
Rating was last upgraded on August 15th, 2013 to AA-/A-

1+ from A+/A-1

Rating action reflects S&P’s view that the adjusted FFO to

debt will remain at around 25% on a sustainable basis

Strategic importance to the provinces and municipality
wners as the monopoly provider of gas and electricity

distribution services in its licence areas

Rating reflects S&P’s view on Alliander’s low-risk

regulated electricity and gas distribution network businesses, stable and predictable operating cash flow, high quality network assets and stable operating performance

Stable outlook reflects the view that Alliander will be able

to sustain adjusted FFO to debt of about 25% and is based on the assumption that the business profile will continue to be assessed as excellent and that the final determination for the 2014-2016 tariffs will not be materially different from the draft determination that ACM published on May 1, 2013

S&P’s has assigned an A issue rating to Alliander’s

subordinated perpetual bond and 50% equity weight (19- Nov-13)

AA-/Stable A-1+ Aa3/Stable P-1

Source: Moody’s Investors Service as of November 20th, 2013 and February 7th,2014. Standard and Poor’s as of August 15th , November 19th and 20th, 2013.

Alliander results 2013 26

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Outlook

Results 2014 Given that the majority of Alliander's operations are regulated and in the light of the current regulation methodology and the changes in the regulated tariffs in 2014, we expect, barring unforeseen and non-recurring developments, a lower operating profit in 2014 than in 2013. Investment Gross capital expenditure, mainly on replacement and expansion of the networks but also including energy- transition investments in SASensors and telecommunications networks, will amount to a total of approximately €500 million. The pace of development of decentralised power generation and feed-in to the network is taken into account in determining the level of our medium-term investment. Also planned in 2014 are investments for activities in Germany and for activities connected with charging points for electric vehicles and with sustainable area development projects as well as investments in alterations to premises in Duiven and Arnhem. The combined capital expenditure involved is estimated at more than €100 million. One specific, and major, investment project that will increase our regular network investment programme is the phased roll-out of smart meters. Based on current projections, Alliander will be investing around €60 million, rising to more than €100 million, a year in smart meters over the period 2014–2020. Financing Alliander's financial policy aims to preserve financial strength and flexibility and secure good access to the capital market at all times by maintaining a solid A rating profile and by such means as ensuring a balanced repayment schedule, having a balanced investment plan, controlling operating costs, having access to committed credit facilities and maintaining adequate reserves of cash and cash equivalents. .

Alliander Resultaten 2013 27

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1. Highlights
2. Alliander at a glance

3 Results 2013

4. Appendices

– Detailed results 2013 – Other

Content

Alliander results 2013 28

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Results

Alliander results 2013 29

Consolidated income statement € million Revenue reported 1,744 1,674 Other Income 102 98 Total income 1,846 1,772 Operating expenses Purchase costs and costs of subcontracted work

416
449

Employee benefit expenses

453
433

External personnel expenses

107
121

Other operating expenses

247
219

Total purchase costs, costs of subcontracted work and operating expenses

1,223
1,222

Depreciation and impairment of property, plant and equipment

357
337

Less: Own work capitalised 191 181 Total operating expenses

1,389
1,378

Operating profit reported 457 394 Finance income 43 64 Finance expense

112
209

Result from associates and joint ventures after tax 2

15

Profit before tax 390 234 Tax

102
10

Profit after tax reported 288 224 2013 2012

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Consolidated balance sheet

30 Alliander results 2013

Consolidated balance sheet € million Assets Property, plant and equipment 6,012 5,821 Intangible assets 323 320 Investments in associates and joint ventures 32 28 Available-for-sale financial assets 297 314 Derivatives

11

Other financial assets 25 46 Deferred tax assets 244 335 Total fixed assets 6,933 6,875 Inventories 37 36 Trade and other receivables 282 316 Derivatives 19 5 Tax assets

7

Other financial assets 100 75 Cash and cash equivalents 155 100 Total current assets 593 539 Assets held for sale 22

Total current assets

7,548 7,414 Equity & liabilities Equity Share capital 684 684 Share premium 671 671 Subordinated perpetual bond 496 494 Hedge reserve

2

Revaluation reserve 24 28 Other reserves 1,212 1,104 Profit after tax 288 224 Total equity 3,375 3,203 Liabilities Non-current liabilities Interest-bearing debt 1,611 1,891 Derivatives 6 73 Finance lease liabilities 127 131 Deferred income 1,555 1,530 Provisions for employee benefits 53 59 Other provisions 124 74 Total non-current liabilities 3,476 3,758 Short-term liabilities Trade and other payables 76 88 Tax liabilities 85 78 Interest-bearing debt 284 5 Provisions for employee benefits 65 63 Accruals 187 219 Total short-term liabilities 697 453 Total liabilities 4,173 4,211 Total equity and liabilities 7,548 7,414 2013 2012

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Cash flow statement

31 Alliander results 2013

Consolidated cash flow statement € million Cash flow from operations Profit after tax reported 288 224 Adjustments for:

Finance income and expense

69 145

Tax

102 10

Profit after tax from associates and joint ventures
2

15

Depreciation and impairment less amortisation

296 278 Changes in working capital:

Inventories
1
8
Trade and other receivables

40

46
Trade and other payables and accruals
35

31 Total changes in working capital 4

23

Changes in deferred tax, provisions, derivatives and other

10
14

Cash flow from operations 747 635 Net interest paid

77
100

Net interest received 5 2 Dividends received from associates and joint ventures

15

Corporate income tax paid (received) 8

7

Total

64
90

Cash flow from operations 683 545 Cash flow from investing activities Investments in property, plant and equipment

5
Investments in property, plant and equipment
570
578

Construction contributions received 82 85 Investments in financial assets (associates and joint ventures)

5

Cash flow from investing activities

493
498

Cash flow from financing activities Redemption current interest-bearing liabilities and current part of long-term debt

6
504

Long-term debt issued

798

Early redemption long-term debt

329

Redemption loans granted 21

Premium paid in connection with the early redemption of bonds
44

Settlement interest rate swaps

57

Change in current deposits

25

220 Redemption subordinated perpetual bond

494
Subordinated perpetual bond issued

496

Reimbursement subordinated perpetual bond
53
24

Dividend paid

74
113

Cash flow from financing activities

135
53

Net cash flow 55

6

Cash and cash equivalents as at 1 January 100 106 Net cash flow 55

6

Cash and cash equivalents as at 31 December 155 100 2013 2012

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Content

Alliander results 2013 32

1. Highlights
2. Alliander at a glance
3. Results 2013
4. Appendices

– Detailed results 2013 – Other

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Grid reliability

Alliander results 2013 33

Our 12-month average electricity

utage duration as per 31 Dec

2013 is 24 minutes. This is 2 minutes above our objective of max 22 minutes

20,0 24,5 24,0 27,4 24,0 31,2

10 20 30 40

2008 2009 2010 2011 2012 2013

Average outage electricity per customer (min)

Target 24 min 22 min

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Alliander results 2013

Customer Satisfaction

34

Slightly lower customer satisfaction in consumer and business market

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Cross border leases

Risks

Obligation to pay contractual termination value in case of:
Event of default
Event of loss
Credit risk on investments
General and tax indemnities
Posting additional L/C’s in case of Alliander downgrade

CBL related risks Contractual termination values CBL’s Alliander (USD billion)

Debt investments

Contractual termination value represents the amount

needed to safeguard the intended transaction return in case of early contractual termination

Equity strip risk varies over time depending on the mark-

to-market value of investments relative to contractual termination value.

During 2013 rising USD interest rate levels resulted in a

decrease of the mark-to-market value of investments and a rise in equity strip risk which was partly compensated by the decrease in strip risk due to the termination of the three leases

Contractual termination value

(1) (1)

Risk summary

(1) (1)

35

Contractual termination value Equity strip risk Equity investments Debt investments

Early termination

In the first half of 2013, 3 cross-border lease transactions were

early terminated

4 leases 7 leases US leases (USD million) 31 dec 2013 31 dec 2012 Equity strip risk 278 268 MtM risk

58

278 326 Overview Letters of Credit (USD million) 31 dec 2013 31 dec 2012 Issued 6 74 Additional L/C's at A3/A- 203 127 Additional L/C's at Baa1/BBB+ 23 23 Back-up faciliteit (EUR million) 31 dec 2013 31 dec 2012 Back-up L/C facility 200 200

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Cross border leases

Basic structure and rationale

Net Present Value of tax deferral for US investor
Increase in solvency for Alliander by sharing NPV

with US investor Rationale At transaction closing: 1. Alliander leases grids to US Trust (headlease) 2. US Trust leases grids back to Alliander (sublease) 3. US Trust prepays all finance obligations under headlease to Alliander 4. US Trust finances these prepayments via equity provided by US Investor and bank debt 5. Alliander invests prepayment proceeds in a defeased structure (off balance):

Deposits
Bonds

During transaction: 6. Use of investment returns to fulfil financial lease

bligations (off balance) and to fund purchase price

at end of sublease At end of sublease: 7. Alliander option to buy grids back against predetermined purchase price Basic structure in steps Basic structure scheme

1 3

US Trust Alliander Financial institutions US Investor Banks

Equity Debt Head lease Sub lease Prepayment Deposits and bonds Annual payment

f financial lease
bligations

4 4 5 6 2 Partly pledged Buy back 7

36 Alliander results 2013

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CSR transparency

Alliander has based its Corporate Social Responsibility report on the Global Reporting

Initiative (GRI) guidelines − Reports since 2008 − Reporting over 2013 was at A+ level / GRI G3 − Target level for 2014 is at comprehensive / GRI G4

ISO 26000 Alliander adopts this global guideline for its corporate social responsibility

policy − Since 2010

Alliander participates in the Transparency Benchmark for large Dutch corporates

performed by KPMG under aegis of the Dutch Ministery of Economic Affairs, Agriculture and Innovation − Ranked 24th in 2013 (out of 460 companies), 14th (2012),12th (2011) and 42nd (2010) − Participates since 2008 − Target level is at the forefront position

In 2013 Alliander’s Prime rating by Oekom Research remained unchanged (overall

grade B) − Rating since 2011 − Target level is a Prime rating

Alliander has been rated by Vigeo (since 2011) and EIRIS (2012). These ratings are not

publicly available

Alliander has been selected for the investment universe of Triodos Bank and included in

the Ethibel EXCELLENCE Investment Registers since 20/12/2012.

37 Alliander results 2013

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Alliander activities in Germany

Strategy

Exploit Alliander network operating skills
Extend network activities by a) winning concessions and b) participation in existing

networks

Extending public lighting activities by winning tenders

Regulatory regime E and G

Revenue cap regulation
Regulatory period: 5 years

Existing activities (2013)

Revenue of € 32 million and total assets of € 40 million
Activities:

− Public Lighting activities in various cities (67% of revenue) − Network operations in various cities (33% of revenue)

151 employees
Number of electricity connections: 15,600 (Heinsberg)
Number of light points: 62,000

New activities per 2014

Gas network

− Heinsberg (4,100 connections)

Public lighting

− Coesfeld (5.000 light points) − Strausberg (3.000 light points) − Wunstorf (6.000 light points) Concessions won (not active yet)

Negotiations with former concession holder on purchase price of network assets for

newly granted operating concessions: − Hennigsdorf (e+g) − Osthavelland (e+g) − Mühlenbecker Land (e+g) − Eberswalde (g)

Together the new networks represent 25,900 gas connections and 18,600 electricity

connections.

Total investment ~ € 76 million in 2013 and 2014

Alliander activities in Germany Alliander results 2013 38 Berlin Cottbus Rüsselsheim Heinsberg* Hagen Electricity and gas (e+g) Public lighting Hennigsdorf Osthavelland Mühlenbecker Land Eberswalde Traffic lights Gas (g) Düren* Wickede * Industrial electricity and gas Coesfeld Siegen Strausberg Wunstorf

Existing Starting 2014

r later

SLIDE 39

Financial definitions

Alliander financial policy

Net debt is defined as interest-bearing debt less cash and cash equivalents and investments that are not restricted
FFO: 12-months profit after taxation adjusted for deferred tax asset movements and incidental items and fair-value movements

plus depreciation of PP&E and intangible assets

Interest cover: FFO and net financial income and expenses, divided by net financial income and expenses adjusted for incidental

items and fair value movements

Net debt/capitalisation: net debt divided by the sum of net debt and equity

Other

Solvency: Equity including result period divided by total assets less the expected dividend distribution less deferred income
Deferred income (Equalisation accounts): These are the contributions and payments received from customers, property

developers and local and regional governmental bodies for the costs incurred for electricity or gas infrastructure of new housing projects and industrial estates. The contributions and payments are recognised as deferred income on the balance sheet. Deferred income is amortised over the expected useful lives of the assets involved. There is no legal obligation to refund any amount after initial connection of the customer. The amounts of deferred income to be charged are laid down in the regulatory legislation.

Financial requirements for regional network managers (by Decree of Ministry of Economic Affairs)

− investment grade rating (Min. BBB/Baa2)

r

− EBIT interest cover ≥ 1.7x − FFO interest cover ≥ 2.5x − FFO to total debt ≥ 11% − Debt to total Cap ≤ 60%

Alliander results 2013 39