Accounting principles for financial reporting

The company financial statements have been prepared in accordance with the provisions of Part 9, Book 2 of the Dutch Civil Code and the same accounting policies have been applied as in the consolidated financial statements as permitted by Section 362(8), Part 9, Book 2 of the Dutch Civil Code. The descriptions of the activities and structure of the company as stated in the 'Notes to the consolidated financial statements' also apply to the company financial statements.

The company financial statements of Stedin Holding N.V. consist of the company income statement and the company balance sheet. The euro is the functional currency. All amounts are in millions of euros, unless stated otherwise.

Participating interests in group companies

Participating interests in group companies over whose commercial and financial policies significant influence is exercised are stated at net asset value, but not for an amount lower than nil. If the net asset value is negative, the participating interest is stated at nil. In this context, other long-term interests are taken into account which in effect must be qualified as part of the net investment in the participating interest. Where the company provides security for all or part of the debts of the participating interest concerned, or is in effect under an obligation (in proportion to its share) to enable the participating interest to pay its debts, a provision will be created. The amount of this reserve is determined with due regard for any bad debt provisions already deducted from the receivables concerned. A statutory reserve is formed for reserves of participating interests that are subject to restrictions on distributions.

Revaluation reserve

The legal entity maintains a revaluation reserve with respect to:

• increases in the value of assets, other than financial instruments, directly recognised in equity;
• increases in the value of assets where changes in value are taken to profit and loss, and for which no regular market prices exist;
• changes in the value of derivatives stated at fair value and subject to cash flow hedge accounting.

Deferred tax liabilities are deducted from the revaluation reserve in the event of differences between valuation for accounting and for tax reporting purposes. The realised part of the revaluation reserve is taken to the other reserves.

For the other accounting policies relating to equity, see note 2.2.21 Perpetual subordinated bond loan to the consolidated financial statements.