General

Whenever there is a triggering event, the company tests whether there is any impairment of tangible, intangible and financial fixed assets.

Gas transport network in the Netherlands
In preparing the 2018 financial statements, management did not identify events requiring an analytical test of possible impairments of the gas transport network in the Netherlands.

Gas transport network in Germany
In 2017, management concluded that gas transport network impairments in Germany on 31 December 2017 amounted to € 150 million. In preparing the 2018 financial statements, management did not identify events requiring an analytical test of possible impairments of the gas transport network in Germany.

EnergyStock assets
In November 2017, the management of EnergyStock revised its storage strategy as a basis for EnergyStock’s business assumptions for the long term. This update highlighted important developments in the Dutch gas market and the role of storage locations in this market. This constituted a triggering event for a test of the value of the assets of the cash generating unit (EnergyStock as a whole).. Based on this, management concluded that EnergyStock’s recoverable amount as at 31 December 2017 is higher than the carrying amount of EnergyStock’s assets.

In preparing the 2018 financial statements, management did not identify events requiring an analytical test of possible impairments of the assets of EnergyStock.

BBL assets
In preparing the 2018 financial statements, management did not identify events requiring an analytical test of possible impairments of the assets of BBL Nederland.

No impairments were recorded in 2018.

Depreciation periods

In late 2014, the company reassessed the economic horizon, which determines the remaining depreciation period for investments in transmission pipelines, setting it at 2070.

The policy and the future vision of the regulatory authority played an important role in this reassessment. In its Method Decision, ACM has continued the regulatory depreciation period of 55 years. This means that ACM assumes a publicly relevant transport market until at least until 2070. Management has therefore extended the economic horizon, which determines the remaining depreciation period for the pipelines, from 2063 to 2070.

The carrying amount as at 1 January 2015 and the investments in transmission pipelines as of this date will be depreciated until 2070.

The depreciation periods for the most important asset categories are as follows:

Depreciation periods for underground gas storage
Following a market study, management has concluded that the expected useful life of the assets used for underground gas storage needs to be shortened, from 2050 to 2035. The depreciation periods for the relevant assets will therefore decrease from 40 to 25 years. For more details on this market study, refer to note 1.

This revision of depreciation periods results in higher depreciation expenses of € 1.6 million in 2017 and € 10 million per year from 2018 onwards.

Depreciation periods of several specific GTS assets
In late 2017, management decided to decommission a number of specific installations in the long term on account of the changing use of our infrastructure. The share of renewable sources such as wind and solar energy, and of gases such as green gas and hydrogen, is expected to grow considerably, while demand for natural gas is falling. On top of that, gas flows are changing, with less gas extracted from the Groningen gas field and more coming from foreign sources.

These developments prompted management to reassess the assumed remaining useful life and the associated depreciation periods of these specific installations. This has led to amendments to the remaining useful live of these installations. Depreciation for these installations will continue up to the moment they are decommissioned. In the future, several other specific installations may also be decommissioned. When decommissioning installations, the method used will take into account the fact that these installations may need to be put back into operation for transport purposes in the future, such as for the transport of green gas or hydrogen.

Management has also analysed whether circumstances surrounding these specific installations may impact the useful life of other tangible assets. They have concluded that this is not the case, so the depreciation period for the other installations and compressor stations will continue to be 30 years (on average).

Natural Gas Decision and depreciation periods for GTS pipeline network
In March 2018, the Ministry of Economic Affairs announced the intention to cease production from the Groningen gas field. The company has investigated the potential effect of this announcement on the economic horizon of the regulated transport pipelines in the Netherlands and found that the Natural Gas Decision is in line with the expectations stated in 2017. The regulatory depreciation periods remain unchanged, and even after production from the Groningen field has been phased out, there are still alternative opportunities for use of the grid, such as the use of hydrogen or green gas. Based on these considerations, the depreciation periods at year-end 2018 remained unchanged.

Land, gas and nitrogen inventories are not depreciated.

N.V. Nederlandse Gasunie has interests in the following joint operations, either directly or through its subsidiaries:

BBL Company V.O.F. operates a gas pipeline between Balgzand in the Netherlands and Bacton in the United Kingdom. The company has a 60% (indirect) interest in BBL Company V.O.F. Based on the agreements between the partners of BBL Company VOF, significant decisions need to be made with an 80% majority. The company’s 60% interest in BBL Company V.O.F. therefore does not technically qualify as a joint venture or joint operation under IFRS 11, since no unanimous decision is required. However, because the company has a direct interest in the assets and obligations of BBL Company V.O.F., the accounting method of this interest is similar to that of a joint operation.

In 2013, Gasunie Ostseeanbindungsleitung (GOAL) GmbH and Fluxys Deutschland GmbH entered into a collaboration in the form of an Arbeitsgemeinschaft, which is responsible for the completion of the Nordeuropäische Erdgasleitung. N.V. Nederlandse Gasunie has no control over the Arbeitsgemeinschaft GOAL/Fluxys NEL-Projektphase collaboration, which qualifies as a joint operation.

Gasunie has entered into an agreement with German gas transport network operators Gascade, ONTRAS and Fluxys for the acquisition of a 16.5% share in the EUGAL pipeline project. Participation in this project constitutes expansion of Gasunie Deutschland’s transport capacity, bolstering Gasunie’s position in international transit flows. The EUGAL (Europäische Gas-Anbindungsleitung) pipeline will run from the town of Greifswald on the Baltic Sea to the southern part of Saxony and from there on to the Czech border, covering a distance of approx. 485 kilometres. Various branches to the west link will the pipeline to gas markets in Germany, the Netherlands, Belgium and the UK. The project is due to be completed by the end of 2020, with total capacity becoming available in 2021. Gascade will retain a 50.5% share in the project and is responsible for construction and future management of the pipeline. The company has no control over the EUGAL collaboration, which qualifies as a joint operation.

Ambigo VOF was founded at the end of 2017 and aims to demonstrate the viability of generating energy through gasification of waste. N.V. Nederlandse Gasunie and its group companies do not have control. Because the company has a direct interest in the assets and obligations of Ambigo V.O.F., the accounting method of this interest is similar to that of a joint operation.

N.V. Nederlandse Gasunie has interests in the following joint ventures, either directly or through its group companies:

The movements in investments in joint ventures are as follows:

Of the joint ventures, Gate terminal C.V. has a material effect on the company’s equity and result. The value and result of the other joint ventures is shown in aggregate.

Joint venture in Gate terminal

The company has a 50% (indirect) interest in both Gate terminal Management B.V. and Gate terminal C.V. The latter has a 100% interest in Gate terminal B.V. These interests involve a collaboration with Royal Vopak N.V. for the operation of a terminal for liquefied natural gas (LNG) on the Maasvlakte in the Netherlands.

During the financial year, the company received € 17.1 million (2017: € 19.2 million) in dividends from Gate terminal C.V.

Consolidated financial information of Gate terminal C.V.:

Other joint ventures

In the second half of 2016, N.V. Nederlandse Gasunie acquired 50% of JordgasTransport GmbH shares via Gasunie Deutschland Transportservices GmbH. The remaining 50% were acquired by Open Grid Europe GmbH. Based on the agreements, N.V. Nederlandse Gasunie has joint control over JordgasTransport GmbH. This equity interest qualifies as a joint venture.

JordgasTransport GmbH owns 30.8% of the NETRA (NETRA GmbH Norddeutsche Erdgas Transversale & Co. KG) network system, consisting of a pipeline of approx. 350km and two compressor stations. The other shareholders in NETRA are Gasunie Deutschland Transportservices GmbH and Open Grid Europe GmbH.

Gasunie’s financial share in NETRA GmbH Norddeutsche Erdgas Transversale & Co. KG (directly and indirectly, through the Jordgas participation) is 44.1%. Based on the agreements, Gasunie has joint control. This equity interest qualifies as a joint venture.

Gasunie takes part in NETRA GmbH Norddeutsche Erdgas Transversale (NETRA GmbH). The voting rights in NETRA GmbH are 50%. Other shareholders in 2017 were Open Grid Europe GmbH and JordgasTransport GmbH. In 2018 JordgasTransport GmbH transferred its shares to Gasunie Deutschland Transport Services GmbH and Open Grid Europe GmbH. Based on the agreements between the shareholders, Gasunie has shared control for NETRA GmbH Norddeutsche Erdgas Transversale. This equity interest qualifies as a joint venture.

DEUDAN (Deutsch/Dänische Erdgastransport-GmbH & Co. KG) operates a gas pipeline in Germany between the Itzehoe region and the German/Danish border in the Flensburg region. Gasunie’s financial share in this participating interest differs from its voting right. Gasunie’s share in the voting rights of DEUDAN GmbH & Co. KG and DEUDAN GmbH (DEUDAN - Deutsch/Dänische Erdgastransport-Gesellschaft mbH) is 75%. Based on the agreements between the shareholders, the two companies have shared control. This equity interest qualifies as a joint venture.

German LNG GmbH was founded in 2018. It is a collaboration between Gasunie, VOPAK and Oiltanking with the aim of developing an LNG terminal in northern Germany. Gasunie’s share in the voting rights of this participation is 33.3%. Based on the current agreements, Gasunie has joint control.

On 13 July 2016, Biogas Netwerk Twente B.V. was founded. This is a joint operation with Cogas B.V. for the construction and management of pipes and associated facilities, and the construction, maintenance and operation of installations for biogas. Gasunie’s share in the voting rights of this participation is 50%. Based on the current agreements, Gasunie has joint control.

In March 2016, an agreement was entered into with SCW Systems B.V. to partner in extracting biogas from wet biomass through super critical water gasification. A demo facility will be built to demonstrate over the coming years that this new technology can work robustly on an industrial scale. SCW Systems and Gasunie New Energy each own half the shares in the biogas demo facility. Based on the agreements, Gasunie has joint control.

The aggregate value and result of the other joint ventures is shown in the table below.

In 2018 and 2017, Gasunie’s share in the comprehensive income corresponded to the share in the result after taxation.

N.V. Nederlandse Gasunie has a direct or indirect (through its subsidiaries) interest in GASPOOL Balancing Services GmbH. This is a virtual gas trading platform in Northern Germany. Gasunie’s share in the voting rights of this participation is 20%.

The movements in investments in associates are as follows:

Gasunie’s total share in the comprehensive income of associates in 2018 was € 0.1 million (2017: € 1.3 million).

The movements in other equity interests are as follows:

The other equity interests comprise a 9% interest in Nord Stream AG, a 12.7% interest in PRISMA European Capacity Platform GmbH, and a 12.5% interest in Energie Data Services Nederland (EDSN) B.V.

The interest in Nordstream AG is carried at fair value. In calculating the fair value of relevant assets, N.V. Nederlandse Gasunie applies a discount rate based on the risk-free interest rate plus an appropriate risk premium. This discount rate as applied by Gasunie varies between 4% and 7% after taxes, depending on the risk profile of the asset to be valued.

If the fair value cannot be determined reliably based on the above assumptions - also because of the limited significance of these interests - the historical cost base is used as the basis for the fair value. This concerns the interests in PRISMA European Capacity Platform GmbH and EDSN) B.V.

N.V. Nederlandse Gasunie has a 9% interest in Nord Stream AG, which operates two gas pipelines across the Baltic Sea from Russia and Germany. The equity interest in Nord Stream AG is held by Gasunie Infrastruktur AG and is intended as a long-term investment supporting the objectives of N.V. Nederlandse Gasunie.

The projected cash flows are based on contractual agreements. As an indication, all things being equal, if the discount rate changes by 0.5% points, this will result in a change in the fair value amount of € 24 million at year-end 2018 (2017: € 24 million).

The valuation is based on the present value of the cash flows, using a calculation model which is updated by Nord Stream AG every year in the context of the business plan. This model is presented for assessment and approval to the shareholders of Nord Stream AG. The model is subsequently tested by the management of N.V. Nederlandse Gasunie on the basis of Nord Stream AG’s periodic reports.

In 2018, the company received dividend from Nord Stream AG of € 30.1 million (2017: € 23.9 million).

Given the relatively limited significance of the interests in PRISMA European Capacity Platform GmbH and EDSN B.V., a sensitivity analysis of the fair value calculation of these equity interests has not been included.

The deferred tax assets arise from temporary differences between the valuation in the financial statements of N.V. Nederlandse Gasunie and its 100% Dutch subsidiaries for financial reporting purposes and for tax purposes. They can be broken down as follows:

The movement in the deferred tax assets is specifically related to the planned reduction in the corporate income tax rate in the Netherlands from 2020.

The amount to be settled more than one year after the balance sheet date amounts to € 300 million (2017: € 374 million).

Tax treatment of the purchase price paid by the Dutch State

When N.V. Nederlandse Gasunie was restructured, the Dutch State made a deemed capital contribution to the company for tax purposes. As a result, N.V. Nederlandse Gasunie has received additional depreciation potential for tax purposes from 2005 onwards in the form of a fiscal revaluation of the network.

The movements in deferred tax assets are as follows:

The movements taken to the profit and loss account and to equity for 2018 are as follows:

The movements taken to the profit and loss account and to equity for 2017 are as follows:

Inventories, with a value of € 45.0 million as at 31 December 2018 (2017: € 45.8 million), consist almost entirely of maintenance materials and parts and are measured at the lower of average cost and recoverable amount. The amount stated takes into account a provision of € 12.1 million (2017: € 8.9 million). The change in the provision (€ 3.1 million) is recognised in the profit and loss account.

Other taxes consist of VAT and dividend tax.

The trade receivables, receivables from joint ventures and other receivables totalled € 147.6 million (2017: € 121.5 million). The ageing analysis of these receivables as at the balance sheet date is as follows:

The movements in the provision for bad debts are as follows:

The addition is due to a customer of GTS who acted incorrectly when trading gas in the transport system. The customer operated misleadingly in the financial settlement. GTS has taken measures to prevent any recurrence.

The bank balances and call funds carry an interest rate based on daily interest. The deposits receivable carry a market-based interest rate in line with the individual term of the deposit.

Issued share capital

The authorised share capital as at 31 December 2018 amounts to € 756,000 and is divided into 7,560 shares, each having a nominal value of € 100, of which 1,513 have been issued and paid up in full. For more information, refer to note 4 to the company financial statements.

Other reserves

Items included under ‘other reserves’ are classified as retained earnings under IFRS.

The movements in the cash flow hedge reserve are as follows:

The cash flow hedge reserve at the end of 2018 concerns the cash flow hedge of N.V. Nederlandse Gasunie relating to two bond loans. These loans relate to swaptions settled in 2006, the results of which are included in the cash flow hedge reserve, and which will subsequently be transferred to the profit and loss account during the remaining term of the underlying bond loan. The amount of € 1.6 million (2017: € 2.3 million) will be released on a straight-line basis up to and including 2021.

The existing cash flow hedges were also reassessed as part of the IFRS 9 implementation analysis. As the result of this analysis, the cash flow hedge reserve for Gate terminal B.V. was reclassified in the consolidated financial statements from the cash flow hedge reserve to the other reserve to an amount of negative € 37.0 million (2017: negative € 39.0 million). This reclassification has been incorporated in the comparative figures for 2017. There is no effect on the consolidated total equity or result.

The total amount of € 2,821.5 million (2017: € 2,842.9 million) of long-term loans comprises € 2,250.0 million (2017: € 2,250.0 million) of long-term bonds and € 571.5 million (2017: € 592.9 million) of private loans. As at the balance sheet date, the long-term bonds consist of € 2,050.0 of fixed-interest bonds. The private loans as at the balance sheet date consist of € 550.0 million (2017: € 550.0 million) of fixed-interest loans and € 21.4 million (2017: € 42.9 million) of floating interest loans. The interest rate risk relating to the floating interest loan is not hedged. The company has no exposure in foreign currencies concerning interest-bearing loans.

For more information on the financial risks associated with the interest-bearing loans and the financial risk management applied by N.V. Nederlandse Gasunie with the aim of limiting these risks, refer to note 19 to the consolidated balance sheet.

The movements in interest-bearing loans are as follows:

The other movements concern amortised financing costs.

The future repayments are as follows:

The table below provides a breakdown of the long-term loans, including repayment obligations. Balance as at 31 December 2018:

Balance as at 31 December 2017:

In case the Dutch State ceases to hold all shares of N.V. Nederlandse Gasunie, the interest rates of six European Investment Bank loans of in total € 592.9 million will be adjusted to reflect the lender’s credit risk policy.

The weighted average effective interest rate for the long-term loans as at the balance sheet date was 2.5% (2017: 2.3%).

No securities have been provided by N.V. Nederlandse Gasunie for the interest-bearing loans.

The deferred tax liabilities arise from temporary differences between the valuation in the financial statements of Gasunie Deutschland for financial reporting purposes and for tax purposes. They can be broken down as follows:

The amount to be settled more than one year after the balance sheet date amounts to € 169.8 million (2017: € 166.9 million). The movements in deferred tax liabilities are as follows:

The movements taken to the profit and loss account and to equity for 2018 are as follows:

The movements taken to the profit and loss account and to equity for 2017 are as follows:

Provisions for pension liabilities

Five-year summary (balance at year-end):

Provision for pension liabilities, Gasunie Deutschland

The provision for pension liabilities for Gasunie Deutschland relates to the pension scheme of employees who joined Gasunie Deutschland before 2012. The scheme is treated as a defined benefit pension scheme.

A breakdown of the provision is shown below:

The weighted average duration of the pension liabilities is approximately 20 years. The assumptions underlying the calculation of the pension liabilities are as follows:

The movements in the pension provision are as follows:

The actuarial results are as follows:

Actuarial results taken directly to equity totalled € 0.3 million negative in 2018 (2017: € 1.3 million negative).

At year-end 2018, the accumulated actuarial gains and losses taken directly to equity totalled negative € 26.6 million (2017: negative € 26.3 million).

If the discount rate changes by 0.1%-point, all other things being equal, this is expected to lead to a change in the ‘present value of pension entitlements’ of € 1.8 million (2017: € 1.7 million) and a change in the total of actuarial results taken directly to equity of € 1.8 million at year-end 2018 (2017: € 1.7 million).

If the ‘expected future salary increases’ change by 0.1%-point, all other things being equal, this is expected to lead to a change in the ‘present value of pension entitlements’ of € 0.4 million (2017: € 0.4 million) and a change in the total of actuarial results taken directly to equity of € 0.4 million at year-end 2018 (2017: € 0.4 million).

If the ‘expected future pension increases’ change by 0.1%-point, all other things being equal, this is expected to lead to a change in the ‘present value of pension entitlements’ of € 1.3 million (2017: € 1.3 million) and a change in the total of actuarial results taken directly to equity of € 1.3 million at year-end 2018 (2017: € 1.3 million).

The total pension expenses for the defined benefit pension plan as presented in the profit and loss account comprise:

Provision for jubilee benefits

This provision relates to jubilee benefits paid by N.V. Nederlandse Gasunie to its employees.

The movements in the provision are as follows:

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.

The movements in the provision are as follows:

The provision is not fully funded.

Provision for abandonment costs and redevelopment

The movements in the provision are as follows:

The current part of the provision for abandonment costs and redevelopment totalled € 13.9 million at the end of 2018 (2017: € 14.7 million).

This provision was recognised in 2010 due to management decisions to decommission, remove or redevelop specific assets within the foreseeable future, for instance because of new legislation, such as the ‘Decree on the External Safety of Pipelines’, which came into force on 1 January 2011. This decree sets requirements (including new requirements) on the transportation of hazardous substances through pipelines. As a result, the company needs to take measures in order to limit the effects on people’s health and the environment.

The provision relates to the redevelopment of site-related and group-related so called bottlenecks, obligations to disengage decommissioned branches from the grid and the decision to redevelop or replace certain pipeline sections. Pipelines that had already been disengaged were added to the redevelopment programme in 2011, and in 2012 pipelines were added that had been taken over from third parties in the past. Aside from that, the provision also relates to approx. 4% (roughly 80 kilometres) of the regional gas transport network in the northern Netherlands. It cannot be established with certainty that these pipelines in the area of the province of Groningen that is prone to earthquakes will be able to withstand earthquakes with magnitudes of up to 5.0 on the Richter scale. These pipelines will be decommissioned and removed. The last part of the redevelopment programme, including project Magnitude, is expected to be carried out in 2023.

The provision for abandonment costs and redevelopment is determined on the basis of experience figures derived from completed projects.

A provision for long-term abandonment costs in general is not recognised because it is currently considered unlikely that the removal of transport pipelines and appurtenances will be needed. The income from alternative use (in the longer term) less the costs of conservation is anticipated to offset the costs of removal, including societal costs.

Restructuring provision

Gasunie finds itself in a changing environment because of the energy transition. The management expects that the transition will be accompanied by a significant reduction in income and jobs and has therefore launched a programme aimed at ensuring a lower cost level and a flexible organisation that is robust for the future. Among other things, the programme includes a voluntary severance scheme and the buyout of a number of employee benefit schemes. 240 employees will be leaving the company in 2019 under the voluntary severance scheme. The management has determined that the severance scheme satisfies the criteria of IAS 37, which is why the scheme was classified upon inception as a restructuring provision, based on the plans available on 1 October 2018. The provision concerns the costs of buying out the employment contracts and the costs relating to the dismissal of  employees. The provision is of a short-term nature.

As at the end of 2018, N.V. Nederlandse Gasunie had drawn € 343 million (2017: € 268 million) in short-term loans against prevailing market rates, which related to term deposits and commercial paper.

To be able to fulfil the above current financing liabilities, N.V. Nederlandse Gasunie has a current account facility of € 45 million (2017: € 25 million) and a committed credit facility for short-term financing of € 680 million (2017: € 680 million), which expires in 2020. No funds were used from these facilities as at year-end 2018 and 2017. The interest payable on the funds used from the facilities is based on prevailing market rates. N.V. Nederlandse Gasunie has provided no securities for the credit facilities.

Other taxes and social security contributions primarily consist of VAT payable, social security contributions, wage tax payable and interest on underpaid tax. The other liabilities, accruals and deferred income consist mainly of accrued interest, receivable invoices and deposits received. The other liabilities also include a sum of € 28 million for the buyout of employee benefit schemes.

Trade and other payables do not bear interest.

General

The main financial risks to which N.V. Nederlandse Gasunie is exposed are market risk (consisting of interest rate risk and currency risk), credit risk and liquidity risk. N.V. Nederlandse Gasunie applies financial risk management to limit these risks through operational and financial measures. Specific instruments are used for this purpose, depending on the nature and size of the risks.

The Treasury department is responsible for executing financial risk management at group level; the credit default risk of accounts receivable is monitored on a business unit level. The use of specific risk instruments requires the prior approval of the Executive Board, which receives regular reports on the nature and size of the risks as well as the measures taken.

N.V. Nederlandse Gasunie may use derivative financial instruments to manage currency and interest rate risks arising from ordinary operational activities. The risk policy relating to interest rate risks aims to limit the effects of interest rate fluctuations on the result. The risk policy relating to currency risk aims to limit the effects of exchange rate fluctuations on the result.

Financial instruments are only used to hedge risks and not for trading or any other purpose.

For the disclosure of currency and interest rate risks, IFRS 7 requires sensitivity analyses that show the financial effects of reasonable hypothetical changes in relevant risk variables on the profit and loss account and on equity. These effects are determined by relating the hypothetical changes to the risk variables to the balance sheet values of the financial instruments as at the reporting date, assuming that the balance sheet values as at the reporting date are representative of the whole period.

Interest rate risk

The interest rate risk to which the company is exposed relates to the risk that future cash flows will fluctuate due to market interest rate changes of long-term loans with floating interest rates and of current financing liabilities. The interest rate risk related to variable-interest loans is not hedged. The company is also exposed to an interest rate risk in the period between the decision to issue long-term loans with a fixed rate and the realisation of these loans.

At year-end 2018, the share of the floating interest rate loans including repayment obligations was € 43 million (2017: € 364 million). A 1%-point increase/decrease of the interest rate will respectively increase/decrease these annual interest expenses by € 0.4 million (2017: € 3.6 million).

At year-end 2018 and 2017, the short-term loans had a floating interest. A 1%-point increase/decrease of the interest rate will respectively increase/decrease these annual interest expenses by € 0.4 million (2017: € 2.8 million).

Currency risk

Currency risks arise, as defined in IFRS 7, if financial instruments are concluded in a currency that is different from the functional currency, and if the financial instruments are of a monetary nature. The currency risk that the company is exposed to consists of the risk that future cash flows from a financial instrument, including payables and receivables, will fluctuate over time due to changes in exchange rates.

N.V. Nederlandse Gasunie seeks to limit its currency risks. To this end, it uses forward exchange contracts and currency swaps. Foreign exchange instruments are only used if exposure on foreign currency exists. Currency risks are fully hedged to the extent that there is sufficient certainty about the amount and timing of the foreign currency cash flows. At year-end 2018, a total of € 2.7 million in foreign currencies was hedged by means of forward transactions (2017: € 2.7 million).

The sensitivity analysis takes into account the past fluctuation range of currencies. The same ranges are used by the company for its analyses of potential risks. There were no other significant foreign currency positions.

The position in GBP concerns the balance in a bank account in British pounds. The position in CHF concerns the exposure on a forward transaction.

Credit risk

Credit risk relates to the loss that would arise if counterparties were to default entirely as at the balance sheet date and fail to meet their contractual obligations. The company is not exposed to any material credit risk with regard to any individual customer or counterparty.

To reduce counterparty risk, when employing derivative financial instruments, the company uses strict limits concerning the credit risk exposure allowed for each counterparty. The company has drawn up criteria for selecting counterparties of financial instrument transactions. These criteria limit the risks associated with possible credit concentrations and market risks. As at year-end 2018 and 2017, no collateral was received from counterparties by N.V. Nederlandse Gasunie to hedge counterparty risks with respect to financial instruments.

Guarantees received

N.V. Nederlandse Gasunie and its group companies have received the following guarantees from third parties:

The bank guarantees received mainly concern financial securities from contractors for new construction projects. The deposits and sureties received relate to securities from gas transport agreements. The deposits are held in cash. The interest on deposits is credited to the issuer of the guarantee, or in the event of a negative interest rate, received from the issuer.

The individual terms of the guarantees received are generally short (one to three years), with the terms of a few guarantees exceeding five years. The guarantees are not freely assignable.

The increase with respect to 2017 is particularly related to a bank guarantee received for the construction of the nitrogen installation for GTS.

Liquidity risk

The liquidity risk is the risk that the company has insufficient cash to meet its short-term liabilities. N.V. Nederlandse Gasunie’s policy is to reduce this risk at minimal cost. The options for reducing the liquidity risk depend on the solvency of an enterprise. As a solvent company, N.V. Nederlandse Gasunie is in a good position to obtain credit facilities. It quantifies the liquidity risk by using a multi-year forecast of capital expenses and a liquidity forecast with a horizon of at least one year for operational expenses.

The company has a current account facility of € 45 million (2017: € 25 million), a committed credit facility of € 680 million (2017: € 680 million), a Commercial Paper programme of € 750 million (2017: € 750 million) and a Medium Term Note (MTN) programme of € 7.5 billion (2017: € 7.5 billion).
Under the MTN programme, € 5.0 billion was available for new issues as at year-end 2018.

Rating

Gasunie’s long-term credit rating with Standard & Poor’s is AA- with a stable outlook, and the short-term rating is A-1+. With Moody’s Investors Service, the long-term credit rating is A1 with a stable outlook, and the short-term rating is P-1.

Dividend policy

N.V. Nederlandse Gasunie aims to achieve a solvency ratio that will enable the company to realise its strategy and will lead to a credit rating that is as high as possible and is in line with the character of the company and the policy of its shareholder.

Summary of future cash flows

The maturity profile of future cash flows pertaining to non-current and current liabilities outstanding as at the balance sheet date is as follows:

Fair value and carrying amount of financial instruments

The following methods are applied by N.V. Nederlandse Gasunie to determine the approximate fair values of financial instruments:

• For trade receivables, other receivables, cash and cash equivalents, current financing liabilities excluding repayment obligations on long-term loans, trade payables, and other liabilities, accruals and deferred income, the carrying amount approximates the fair value because of the short time to maturity for each of these instruments.
• The other equity interests are stated at fair value, which is based on the present value of the expected cash flows. In determining the discount rate, the risk profile, including the credit risk, of the other equity interests has been taken into account.
• The interest-bearing loans and repayment obligations on long-term loans are bonds with a listing on the Amsterdam stock exchange, and private loans. The fair value of the bonds is the market value at the year-end closing price. The fair value of the private loans has been calculated by discounting the future cash flows against the current yield curve. In determining the discount rate, the company’s own risk profile, including the credit risk, is taken into account.

N.V. Nederlandse Gasunie uses the following hierarchy of methods to determine and measure the fair value of the derivative financial instruments for presentation in the balance sheet:

• Level 1: Based on quoted prices in active markets for the same instrument;
• Level 2: Based on quoted prices in active markets for comparable instruments, or based on other measurement methods, with all required key data being derived from publicly available market information; and
• Level 3: Based on other measurement methods, in which all required key data is not derived from publicly available market information.

Assets measured at fair value
The fair value of assets and liabilities measured at fair value is determined based on level 3. This concerns the other equity interests. For details, refer to note 7.

The movements in other equity interests are as follows:

Fair value of loans measured at amortised cost
At year-end 2018, the long-term loans with a fixed interest rate amounted to € 3,100 million (2017: € 2,800 million).

The fair value of these financial instruments is determined in accordance with the following hierarchy:

The table below compares the carrying amount and fair value of those financial instruments whose carrying amount does not approximate the fair value:

Investment commitments

At year-end 2018, N.V. Nederlandse Gasunie had commitments not included in the balance sheet of € 582 million with regard to investment projects, compared to € 514 million in 2017. The increase was related mainly to commitments entered into for the development of GTS’s nitrogen plant. The investment commitments figure for 2018 includes € 34 million (2017: € 73 million) for replacement investments. The decrease is due to a revision of the long-term maintenance programme.

Lease liabilities (operating lease)

Lease liabilities at year-end 2018 totalled € 115 million (2017: € 113 million). A breakdown is shown below:

The change is mainly due to a reassessment of the lease commitments in the context of the analysis for the implementation of IFRS 16 from the 2019 financial year onwards.

These commitments mainly relate to the operating leases for industrial sites, company cars and private vehicles and for nitrogen production installations. The fixed lease payment for the cars and vehicles is partly based on the value of the leased vehicles and the expected operating costs, which are based on a standard annual number of kilometres driven. A variable allowance is also paid per kilometre over and above the standard number of kilometres. The average remaining term of the lease commitments of the vehicles is approximately 2 years. The lease commitment for the industrial sites will end in 2048. The lease commitments for the nitrogen production will end in 2023.

The actual operating lease costs with regard to industrial sites, the nitrogen installation and company cars and private vehicles for 2018 amount to € 16.7 million (2017: € 9.9 million).

Guarantees issued

N.V. Nederlandse Gasunie and its group companies have issued the following guarantees to third parties:

The sureties are issued for a specific purpose and mainly relate to investment projects. The guarantees are not freely assignable.

The term of the bank guarantees is 5 to 10 years.

For Gate terminal B.V., a 100% group company of the joint venture Gate terminal C.V., the company is guarantor for leases payable to the Port of Rotterdam Authority to the value of € 31.5 million at year-end 2018 (2017: € 38.5 million) and for a guarantee provided to shippers totalling € 22.5 million (2017: € 30 million). The remaining maturity of the guarantee for the Port of Rotterdam is 9 years and of the guarantee given to shippers 17 years.

Other commitments

Other commitments at year-end 2018 totalled € 44 million (2017: € 197 million). The decrease is due to the expiration of contracts and a reclassification to the lease commitments in the context of the analysis for the implementation of IFRS 16 from the 2019 financial year onwards.

The other liabilities relate to commitments entered into with suppliers for the purpose of carrying out operational activities.