The derivative financial instruments have been stated at fair value. The derivative financial instruments in question are interest rate swaps and have been included under long-term liabilities or short-term liabilities, depending on the remaining term. The breakdown is as follows:

Interest Rate Swaps (IRSs)

The interest rate swaps concern long-term loans; under an IRS contract, a floating interest rate is swapped for a fixed interest rate, thus protecting TenneT against movements in floating rates. The notional value of these transactions on 31 December 2008 was EUR 200 million. The floating interest rates of the loans in question are based on the EURIBOR rate. The fixed rates of interest vary from 3.7% to 3.9% (2007: 3.7% to 3.9%). The interest rate swaps expire in the next few years, on the redemption dates of the underlying loans. The fair values of the IRS contracts have been calculated using discounted cash flow valuation techniques, on the basis of the market conditions prevailing on the balance sheet date.

Forward exchange transactions

The forward exchange transactions relate to the position in pounds sterling that results from the investment cash flows associated with the construction of the BritNed cable. These transactions are arranged in order to fix the exchange rate. The notional value of these transactions on 31 December 2008 was EUR 15.2 million. In the coming years, the forward exchange transactions will expire on the due dates of the underlying liabilities, which are denominated in pounds sterling.

Exchange transactions

One of TenneT’s goals is to facilitate the energy supply market. To this end, the group operates a number of energy exchanges. Energy exchanges arrange the financial settlement of anonymously negotiated transactions. Hence, the group is a counterparty in all transactions effected on the exchanges concerned. The net value of all concluded purchase and sale transactions is always zero, so the group does not take on an open position. However, because the physical deliveries associated with these transactions occur several days after their conclusion, the contracts awaiting settlement on 31 December have to be treated as derivative financial instruments. The contracts have been stated at fair value, by reference to the market price on

31 December.

On 31 December 2008, the fair value of open trading contracts amounted to EUR 1.1 million (2007:

EUR 0.1 million); this sum is accordingly presented on the balance sheet as ‘Derivative financial instruments’ under both ‘Short-term receivables’ and ‘Short-term liabilities’.

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