5 Segment information

The Management Board sets performance targets, approves and monitors the budgets prepared by the front office servicing units. These shall therefore perform in accordance with the strategy and targets. Since the Management Board steers the performance based on front office servicing unit, the presentation of operating segments has been changed as of 2018. The operating segments are presented per front office servicing unit instead of strategic sector. The strategic sectors are the sectors in which FMO is active according to its strategic objectives. These have not changed and will be presented as such in FMO's Annual Report. The comparative figures have been adjusted accordingly. In the first half year of 2018 there were no transactions between the operating segments.

FMO presents the results of its operating segments using a financial performance measure called underlying profit. Underlying profit excludes the currency effects of the results from equity investments, since all fair value changes including currency effects are now recorded in the profit and loss account due to the adoption of IFRS 9. FMO therefore believes that the underlying profit is more relevant for understanding FMO's financial performance.

Underlying profit as presented below is an alternative performance measure and not a measure of financial performance under IFRS. A reconciliation of the underlying net profit to the net profit as reported under IFRS is made. For the first half year of 2017 the currency results and the fair value movements of the equity investments were not recorded in the profit and loss account but in the available for sale reserve. Therefore the underlying profit of the first half of 2017 is equal to the profit as recorded under IFRS.

At June 30, 2018	Financial Institutions	Energy	Agribusiness, Food & Water	Private Equity	Partnership for impact	Other	Total

Interest income	66,452	55,880	31,002	2,573	301	7,149	163,357
Interst expenses	-22,049	-15,797	-6,091	-12,675	-176	-7,409	-64,197
Net fee and commission income	378	793	1,223	-522	-	-123	1,749
Dividend income	-	-	-	13,404	-	-	13,404
Results from equity investments	-	-	-	14,959	-		14,959
Results from financial transactions	-1,096	-2,642	-859	2,598	-	2,558	559
Remuneration for services rendered	2,498	3,759	1,412	4,127	2,437	46	14,279
Other operating income	-	-	-	-	-	726	726
Total underlying income	46,183	41,993	26,687	24,464	2,562	2,947	144,836

Operating expenses	-12,864	-11,291	-9,312	-12,120	-3,634	-2,793	-52,014
Total operating expenses	-12,864	-11,291	-9,312	-12,120	-3,634	-2,793	-52,014

Impairments on loans and guarantees	1,819	10,047	4,256	-957	39	-63	15,141
Impairment on equity investments and associates	-	-	-	-	-	-	-
Total impairments	1,819	10,047	4,256	-957	39	-63	15,141

Profit before results from subsidiaries & associates and taxation	35,138	40,749	21,631	11,387	-1,033	91	107,963
Results from subsidiaries & associates	-	-	-	3,403	-	-	3,403
Taxation	-7,058	-8,185	-4,345	2,840	207	892	-15,649
Underlying net profit	28,080	32,564	17,286	17,630	-826	983	95,717

Net currency effect equity investments	-	-	-	28,221	-	-	28,221
Net profit under IFRS	28,080	32,564	17,286	45,851	-826	983	123,938

Segment assets at June 30, 2018	Financial Institutions	Energy	Agribusiness, Food & Water	Private Equity	Partnership for impact	Other	Total

Loans to the private sector	1,803,815	1,538,664	816,922	42,269	16,923	49,261	4,267,854
Equity investments and investments in associates	-	-	-	1,758,706	-	-	1,758,706
Other assets	678,409	578,686	307,242	677,340	6,364	18,527	2,266,568
Total assets	2,482,224	2,117,350	1,124,164	2,478,315	23,287	67,788	8,293,128
Contingent liabilities – Effective guarantees issued	97,300	2,088	-	-	-	1,712	101,100
Assets under management (loans and equity investments) managed for the risk of the state	168,537	234,865	104,566	370,472	-	335	878,775

At June 30, 2017	Financial Institutions	Energy	Agribusiness, Food & Water	Private Equity	Partnership for impact	Other	Total

Interest income	67,258	53,210	24,306	1,483	399	8,021	154,677
Interst expenses	-19,242	-12,410	-4,916	-9,630	-131	-5,877	-52,206
Net fee and commission income	770	760	530	103	-	-327	1,836
Dividend income	-	-	-	20,408	-	-	20,408
Results from equity investments	-	-	-	91,909	-	-39	91,870
Results from financial transactions	24	192	2	1,023	-	-344	897
Remuneration for services rendered	2,476	3,586	1,063	4,148	1,648	-528	12,393
Other operating income	317	856	61	-	-	-5	1,229
Total underlying income	51,603	46,194	21,046	109,444	1,916	901	231,104

Operating expenses	-12,219	-12,409	-9,690	-10,635	-2,709	-2,286	-49,948
Total operating expenses	-12,219	-12,409	-9,690	-10,635	-2,709	-2,286	-49,948

Impairments on loans and guarantees	15,895	-1,562	-96	-4,739	-87	-20	9,391
Impairment on equity investments and associates	-	-	-	-12,141	-	-149	-12,290
Total impairments	15,895	-1,562	-96	-16,880	-87	-169	-2,899

Profit before results from subsidiaries & associates and taxation	55,279	32,223	11,260	81,929	-880	-1,554	178,257
Results from subsidiaries & associates	-	-	-	-2,922	-	-40	-2,962
Taxation	-11,112	-6,477	-2,263	-360	177	282	-19,753
Underlying net profit	44,167	25,746	8,997	78,647	-703	-1,312	155,542

Currency effect equity investments	-	-	-	-	-	-	-
Net profit under IFRS	44,167	25,746	8,997	78,647	-703	-1,312	155,542

Segment assets at June 30, 2017	Financial Institutions	Energy	Agribusiness, Food & Water	Private Equity	Partnership for impact	Other	Total

Loans to the private sector	1,879,445	1,482,639	773,328	56,059	16,674	-	4,208,145
Equity investments and investments in associates	-	-	-	1,787,478	-	-	1,787,478
Other assets	766,076	604,335	315,215	751,441	6,797	-	2,443,864
Total assets	2,645,521	2,086,974	1,088,543	2,594,978	23,471	-	8,439,487
Contingent liabilities – Effective guarantees issued	46,626	3,560	-	-	-	4,381	54,567
Assets under management (loans and equity investments) managed for the risk of the state	147,243	265,280	101,204	411,004	-	-	924,731

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