The financial statements have been prepared on the historical cost basis. If not stated otherwise below, this general policy has been applied.
The euro is the functional and reporting currency of the company. The consolidated financial statements have been prepared in euros.
Transactions in foreign currencies are recognised at the rate of exchange of the functional currency on the transaction date.
Monetary assets and liabilities denominated in foreign currencies are converted at the exchange rate as at the balance sheet date. Any translation differences and differences arising on settlement are recognised in the profit and loss account.
Business combinations (acquisitions)
Business combinations are recognised in accordance with the ‘acquisition method’ as described in IFRS 3, Business Combinations. The consideration transferred in acquisition is calculated as the sum of the assets transferred by the acquiree, liabilities entered into or acquired, and equity instruments issued by the acquirer. Costs relating to the acquisition are taken directly to the profit and loss account. The identifiable assets, liabilities and contingent liabilities acquired as part of the business combinations are recognised by the acquiring party at fair value on the date of acquisition.
Goodwill is the surplus of the consideration transferred in acquisition above the Gasunie share in the fair value of the net identifiable assets, liabilities and contingent liabilities. Goodwill is recognised as intangible fixed assets. After initial recognition, goodwill is stated at cost less any accumulated impairments.
Tangible fixed assets
Tangible fixed assets are valued at cost less straight-line depreciation based on their expected useful life, taking into account the residual value, and impairments. The residual value of the asset, the useful life and the depreciation methods are reviewed annually and adjusted if necessary at the end of the financial year.
Third-party contributions to the cost of construction of the gas transport network are deducted from the investments, insofar as such contributions are either government-sourced or non-capacity-related. Customer contributions to investments related to transport capacity are presented on the balance sheet as contract liabilities, and are released to revenue over the useful life of the related asset.
Tangible fixed assets not yet completed as at the balance sheet date are recognised as ‘fixed assets under construction’. On commissioning, the relevant assets are classified according to their nature in one of the main categories. The volumes of gas and nitrogen permanently present in the pipelines and caverns needed for gas transportation and related services are included under ‘other fixed operating assets’.
Tangible fixed assets are classified in the following categories, whereby the corresponding depreciation periods are used:
- Land and buildings
- Compressor stations
- Main transmission lines and related plant and equipment
- Regional transmission lines and related plant and equipment
- Underground gas storage
- Other fixed operating assets
- Fixed assets under construction
Grants and subsidies for investment projects are deducted from the carrying amount of the underlying asset. The grant or subsidy is recognised in the profit and loss account as a reduction of depreciation costs over the term of the asset.
Investments in joint operations
Investments in joint operations are equity interests over which the company exercises joint control and has the rights to the assets and obligations with respect to the liabilities of the equity interests.
The rights to the assets and obligations with respect to the liabilities and the associated rights to the revenues and expenses of the joint operations are included in the financial statements.
Investments in joint ventures
Investments in joint ventures are equity interests over which the company exercises joint control and has the rights to the net assets of the equity interests.
These equity interests are valued using the equity method. In accordance with this method, the equity interests are valued at cost (including goodwill) plus the share in result and other comprehensive income from the moment of acquisition minus the share in dividends. The company's share in the result of joint ventures is recognised in the statement of profit and loss and in the consolidated statement of comprehensive income.
Investments in associates
Investments in associates are equity interests over which the company exercises significant influence on operating and financial policies.
These equity interests are valued using the equity method. In accordance with this method, the equity interests are valued at cost (including goodwill) plus the share in result and other comprehensive income from the moment of acquisition minus the share in dividends. The company's share in the result of associates is recognised in the profit and loss account.
Other equity interests
On the basis of IFRS 9, after initial recognition, other equity interests are recognised at fair value, with unrealised gains or losses taken to equity. No recycling takes place through the result.
When determining the fair value of the other equity interests, the management makes assumptions, including assumptions regarding short and long-term developments in the relevant regulatory framework, makes estimates of aspects such as future cash flows, and determines the discount rate. If the fair value cannot be determined reliably based on these assumptions, the historical cost is used as the basis for the fair value. For 2018, the latter method was used for two other equity interests with a total carrying amount of € 67 Thousand.
Dividend received on investments in other equity interests is recognised in the profit and loss account.
Impairments of fixed assets
The company analyses at regular intervals, and whenever there is reason to do so, whether there is any impairment of fixed assets, including tangible, intangible and financial fixed assets. This involves determining the recoverable amount of the assets. The recoverable amount is the higher of its fair value less costs of disposal and its value in use. If the recoverable amount is less than the current carrying amount, the difference is taken to the profit and loss account. Due to the nature of the assets, it is often not possible to determine the recoverable amount of each individual asset. In such cases, the recoverable amount of the cash-generating unit to which the asset belongs is determined.
If there is reason to do so, the company investigates whether the impairment recognised in previous periods no longer exists or has decreased. Any reversal is taken to the profit and loss account. Impairments of goodwill are not reversed in future periods.
Maintenance materials and parts are stated at the lower of average cost and recoverable amount.
At initial recognition, receivables are stated at fair value. The company measures its trade receivables according to the ‘simplified approach’.
This means that a provision is formed upon the first measurement of the receivable to cover the expected non-payment. This expectation is based on historical payment data. After initial recognition, receivables are stated at amortised cost based on the effective interest method less a provision for bad debts. A provision for bad debts is recognised if there is an objective reason to do so. Receivables also include the amounts that have not yet been invoiced for services rendered during the financial year.
Cash and cash equivalents
Cash includes available cash in hand and credit balances at banks. Cash equivalents are held with the aim of setting current liabilities in cash, and are not normally used for investments or other purposes. An investment is only recognised as cash equivalent if it can be immediately converted into a known cash amount and is not subject to a material risk of fluctuation in value.
These include liabilities with a remaining maturity of more than one year. Repayment obligations on non-currentliabilities falling due within one year are presented under current liabilities.
Interest-bearing loans are initially recognised at the fair value of the proceeds less transaction costs. After initial recognition, interest-bearing loans are subsequently carried at amortised cost based on the effective interest method. When the contractual obligation has lapsed or expired, loans are no longer recognised.
Long-term liabilities for employee benefits concern pension liabilities, jubilee benefits and the costs of post-employment fringe benefits for non-active and retired employees.
N.V. Nederlandse Gasunie and the subsidiaries included in the consolidation have several pension schemes in place entitling their employees to a number of benefits, including a retirement pension and a dependants’ pension.
As of 1 July 2013, the pension scheme of employees of N.V. Nederlandse Gasunie was changed. In the new pension scheme, the company is committed to paying a fixed, predetermined contribution. This contribution is based on a so called conditional average-salary scheme, which aims to achieve an annual increase of 2% of the pension base. The Pension Savings Agreement for the Executive Board (based on a conditional average-salary scheme) has also been replaced by the new pension scheme.
On 1 January 2015, new legislation came into force concerning the fiscally allowable pension contribution. The pension contributionin a conditional average-salary scheme has been capped at 1.875% per annum of the average pension base, and the maximum pensionable salary has been set at € 100,000. On 1 January 2015, the pension scheme was changed in accordance with this legislation. The pension agreement with regard to paying a fixed, predetermined contribution has not changed.
Under IFRS, the pension scheme qualifies as a ‘defined contribution plan’.
The contribution payable in respect of the pension entitlements of the employees of N.V. Nederlandse Gasunie are paid to Stichting Pensioenfonds Gasunie, which administers the pension scheme. The fund manages the assets for all pension schemes administered by Stichting Pensioenfonds Gasunie.
For employees of Gasunie Deutschland who joined the company in or after 2012, a new pension scheme was implemented, which came into force on 1 January 2013. This pension scheme, which has been reinsured one-on-one with a pension fund, is treated as a defined contribution plan. The employer’s contribution is determined every year on the basis of the gross pension income and can be as high as 4% of the contribution base.
The pension scheme of employees of Gasunie Deutschland who joined the company before 2012 qualifies as a defined benefit pension plan based on a final salary scheme. The entitlements of these employees have not been funded.
The provision for pension liabilities is calculated in accordance with the ‘projected unit credit method of actuarial cost allocation’. Following this method, the present value of the pension entitlements is calculated on the basis of the number of active service years until the balance sheet date, the estimated salary as at the expected retirement date, and the discount rate.
Actuarial gains and losses and adjustments in actuarial tables are recognised in the statement of comprehensive income and subsequently taken to equity in the period in which they occur, net of deferred taxation.
Actuarial calculations are drawn up by external actuaries every year.
Provision for jubilee benefits
This provision relates to jubilee benefits paid by N.V. Nederlandse Gasunie to its employees. Account is taken of the likelihood that the allowance will be paid and of a pre-tax discount rate, which incorporates the prevailing market assessments of the time value of money and the risks inherent in the liability.
Provision for costs of post-employment fringe benefits for non-active and retired employees
This provision relates to the allowance which N.V. Nederlandse Gasunie pays to its employees after their retirement. It represents the present value of the committed fringe benefits to non-active and retired employees. Account is taken of the mortality rate and a pre-tax discount rate, which incorporates the prevailing market assessments of the time value of money and the risks inherent in the commitment.
The assumptions on which this provision is based are tested periodically against mortality, interest and cost developments, and adjusted if necessary.
The amount recognised as a provision is the best possible estimate as at the balance sheet date of the expenditure required to meet the existing obligation, taking into account the probability of the possible outcome of the event.
If the time value of money is material, a provision is recognised based on the present value of the expenditure deemed necessary to settle the obligation.
The discount rate is determined before taxation and takes into account the prevailing market assessments of the time value of money and the risks inherent in the obligation.
Provision for abandonment costs and redevelopment
This provision is recognised upon management's decisions to decommission, remove or redevelop specific assets within the foreseeable future, for instance due to new legislation.
These are liabilities with a term of one year or less.
‘Net revenue’ is defined as the revenues from gas transport and related services to third parties, net of discounts and taxes, such as VAT. Revenues are subject to management estimates of the risk of non-payment and, in the case of contract liabilities, the relevant interest rate.
If the result of a transaction involving the rendering of a service can be estimated reliably, the revenues relating to the service are recognised in proportion to the services performed in the financial year.
Gasunie and its subsidiaries provide services in the field of gas transport, storage and related services. These services are offered as capacity services. This gives customers the right to use pre-agreed capacities for a pre-agreed period (day, month or year).
Gasunie considers the service as delivered and recognises the revenue over the period concerned. Invoicing and payment take place on a monthly basis. Gasunie collects compensation from customers solely on the basis of the pre-agreed tariffs and capacities. In view of the revenue recognition over time, the company applies the requirements of IFRS 15.121 to disclosure regarding services still to be rendered.
The tariffs for the services of the regulated network operators are determined by the independent regulatory authority. No discounts are applied for the regulated network operators. Customer contributions to the transport infrastructure are, however, regarded as prepayment.
Granted discounts or prepayments over part of the term of a contract are offset against the revenues recognised over the entire term of the contract. This relates to investment contributions by shippers in the regulated network, and prepayments by customers in the non-regulated segment.
In the event that a prepayment or discount contains a significant financing component, the value of this component is determined based on an estimate of the relevant interest rate.
Capitalised costs includes operating costs incurred by the company in connection with the construction of tangible fixed assets. These costs mainly comprise the costs of own and hired employees plus a part of the overhead of support departments.
Other operating expenses
These costs are determined on a historical basis, taking into account the accounting policies set out above, and are allocated to the reporting period to which they relate. Losses are recognised in the reporting period in which they are foreseen.
The staff costs include all employee benefits during and after termination of employment. In addition to the liabilities that are legally enforceable, the company’s liabilities with respect to employee benefits also include those liabilities involving a situation where the company has no realistic alternative other than to comply with the obligation (‘constructive obligation’).
A lease is classified as a financial lease if it transfers virtually all ownership-related risks and rewards to N.V. Nederlandse Gasunie and the subsidiaries included in the consolidation. Financial leases are capitalised as investment as part of tangible fixed assets, for which a non-current lease liability is recognised. An operating lease is a lease other than a finance lease. Operating lease payments are recognised as an operating expense in the profit and loss account on a straight-line basis over the lease term.
Finance income and expenses
Included in this item are income and expenses relating to financing.
Interest income is recognised on a pro rata time basis in the profit and loss account, taking into account the effective interest rate for the underlying asset, provided the income can be measured and is likely to be received.
Interest expenses are capitalised if they relate to the purchase, construction or production of qualifying assets, provided the assets need a substantial period before being ready for their intended use.
Other interest expenses are recognised on a pro rata time basis in the profit and loss account, taking into account the effective interest rate for the liability concerned.
Corporate income tax
A deferred tax liability is recognised for all taxable temporary differences. A deferred tax asset is recognised for all deductible temporary differences and available carry-forward losses, to the extent that it is likely that taxable profit will be available for set-off.
Deferred tax liabilities and assets are stated at the undiscounted value. The tax rates used for the valuation are those that are expected to apply in the period in which the deferred tax items will be realised based on the tax rates and tax legislation in force as at the balance sheet date. The movements arising from tax rate changes are taken to the profit and loss account, except for movements relating to the revaluation of the tangible fixed assets as at 1 January 2004, the tax treatment of the purchase price paid by the Dutch State, actuarial gains and losses and the cash flow hedge reserve. These movements are recognised directly in equity.
(Deferred) tax assets and (deferred) tax liabilities are offset if a legally enforceable right exists to set off tax assets against tax liabilities and the taxes relate to the same tax authority on either the same taxable entity or different taxable entities which intend either to settle tax liabilities and tax assets or realise the assets and settle the liabilities simultaneously.
N.V. Nederlandse Gasunie and its wholly-owned Dutch subsidiaries form a fiscal unity. No corporate income tax is allocated to these group companies, with the exception of Gasunie Transport Services B.V. The tax expense included in the company profit and loss account relates to all the companies in the fiscal unity, with the exception of Gasunie Transport Services B.V.
Gasunie Deutschland GmbH & Co. KG and its wholly owned German subsidiaries form a fiscal unity in Germany for the purposes of trade tax and corporate income tax, including the reunification surcharge.
Tax is calculated based on the recognised result, taking into account tax-exempt items and costs that are either non-deductible or only partly deductible.
Cash flow statement
This statement shows the cash flows generated by N.V. Nederlandse Gasunie. The cash flow from operating activities is determined using the indirect method, based on the net revenues presented in the consolidated profit and loss account. The company recognises corporate income tax paid and income and expenses relating to interest and dividends received from joint ventures, associates and other equity interests under ‘cash flow from operating activities’.
Financial information by segment
The information relating to the operating activities for which separate financial information is available, and of which the operating results are regularly reviewed by the chief operating decision-maker, covers gas transport activities in the Netherlands and Germany as well as new business activities.
The operating segments identified within Gasunie based on IFRS 8 Operating Segments are:
- Gasunie Transport Services
- Gasunie Deutschland
Derivative financial instruments
Cash flow hedge accounting
Cash flow hedge accounting is applied to derivative financial instruments that have been specifically designated for this purpose by management, and are used to hedge a highly probable cash flow, while satisfying all other conditions.
They are initially recognised at fair value on the date on which the contract is entered into, and the fair value is subsequently periodically reassessed. The fair value is determined by discounting future cash flows to the current yield curve.
Gains or losses on the effective part of the hedging instrument are recognised in the cash flow hedge reserve in equity, net of taxation. Any ineffective parts are recognised directly in the profit and loss account.
When a hedging instrument is terminated, gains or losses on the effective part continue to be recognised in equity for as long as the underlying cash flow is expected to occur. If it is not expected to occur, the gains or losses on the effective part, which are recognised in equity, are taken directly to the profit and loss account.
Effective derivative financial instruments designated for hedge accounting are recognised in the same way as the underlying contract. Depending on the nature and the term of the underlying contract, the instruments are classified as either long-term or short-term instruments.
Other derivative financial instruments
Other derivative financial instruments used for hedging existing risks, such as interest-rate swaps and forward foreign exchange contracts, are initially recognised at fair value. Changes in value are recognised in the profit and loss account.
If the fair value is positive, the instrument is included under ‘other receivables’; if the fair value is negative, the instrument is included under ‘other liabilities’. Depending on the nature and the term of the underlying contract, the instruments are classified as either long-term or short-term instruments.