Notes to the consolidated balance sheet

   

1. Impairment tests

General

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

When carrying out an impairment test, 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. These assumptions, estimates and judgements significantly affect the value in use.

There is an impairment if the recoverable amount of an asset or group of assets is less than the carrying amount. The recoverable amount is the higher of its fair value less costs of disposal and its value in use.

The value in use is calculated on the basis of future cash flows estimated by management. These cash flows are based on the business plan for the next three years adopted by the Executive Board as well as on a recent long-range forecast.

In 2016, the Executive Board changed the impairment test model for the regulated gas transport services in order to better align the model with the regulated network operator environment and to gain additional insights into the effects of investments, costs and regulatorily allowed income on the recoverable amount. The change involves the transition from a model with specific cash flows for a total planning period running up to the economic horizon in 2070, with no residual value, to a model with a shorter forecasting period of ten years, with a residual value based on the (corrected) RAB, i.e., the regulatory carrying amount of the assets as determined by the regulatory body. It is generically assumed that the RAB can be fully recovered without making any assumptions about the exact payback period.

There are no indications that the fair value less costs of disposal is higher than the value in use.

In 2016, the Corporate WACC was re-evaluated. The Corporate WACC is relevant for determining the expected capital cost allowance and discount rate of future regulatory periods. Depending on the risk profile of the asset to be valued, Gasunie applies a risk premium for this Corporate WACC.

The re-evaluation of the Corporate WACC has led to a reduction of this WACC from 4.5% nominal post-tax at year-end 2015 to 4.0% nominal post-tax at year-end 2016. The reduction in 2016 is mainly due to developments in the capital market. In 2017, there were no developments that led to an adjustment of the WACC.

Impairment test of the gas transport network in the Netherlands

Test of 31 December 2016
The Netherlands Authority for Consumers and Markets (ACM) is authorised to annually set the maximum rates that GTS is allowed to charge for transport, transport-related activities, the connection, balancing and quality conversion. For this purpose, ACM has determined that the regulatory method applies for a period of at least three and at most five years. This method decision is the basis for determining the allowed revenue, the efficiency deduction and the rates during the regulatory period.

The previous regulatory period ended on 31 December 2016. ACM has decided to set the regulatory method for five years. The new regulatory period will therefore be from 2017 up to and including 2021.

The recoverable amount is determined on the basis of the regulatory framework as laid down in the definitive Method Decision for 2017-2021 and in other regulations.

On the basis of the information currently available, management has concluded that on 31 December 2016, the impairment of the gas transport network in the Netherlands amounted to € 450 million. For further information on the assumptions used in the determination of this basis, please refer to the 2016 consolidated financial statements.

Test of 31 December 2017
In preparing the 2017 financial statements, management did not see any reason to perform an analytical test of possible impairments of the gas transport network in the Netherlands.

Impairment test of the gas transport network in Germany

Triggering event
Under European (EU 715/2009) and German law, the rates Gasunie Deutschland charges for its services are regulated by the German energy industry regulator BundesNetzAgentur (BNetzA) based on permitted revenue as defined every five years based on costs incurred in a reference year and less any efficiency discounts.

The next regulatory period starts in 2018. Over the final months of 2017, BNetzA set the vast majority of the regulatory parameters. This constitutes a triggering event for a test of the value of the assets of Gasunie Deutschland as a Cash Generating Unit.

Test basis
The impairment test was conducted using a DCF measurement of expected cash flows for the coming 10 years. Following this measurement, the regulated asset basis is used as a proxy for the end value. Investment subsidies that Gasunie Deutschland still has to pay back after this forecast period are subtracted from this end value.

The recoverable amount is established based on the regulatory framework as laid down in the decisions by BNetzA for the 2018-2022 regulatory period. The most important of these decisions are the following:

  1. Permitted return on equity
    BNetzA has set the cap on return on equity for the third regulatory period (2018-2022) at 6.91% for new assets (as of 01/01/2006 or later) and 5.12% for old assets (capitalised before 01/01/2006).
     
  2. Cost basis and individual efficiency parameter (X-ind)
    Talks between Gasunie Deutschland and BNetzA about the cost basis have been concluded for 2022. Like in previous periods and as required by German law, the individual efficiency target is based on a benchmark procedure. BNetzA has concluded that, as in previous regulatory periods, Gasunie Deutschland is 100% efficient for the 2018-2022 period. Management assumes that Gasunie Deutschland will continue to be 100% efficient after this period.
     
  3. General efficiency parameter (X-gen)
    BNetzA has published a general efficiency parameter of 0.88%. We assume that the X-gen will be 1.0% from 2023.
     
  4. Regulatory account and investment measures
    Over the course of 2017, BNetzA compared revenues realised over the period 2012-2016 to the permitted revenues for these years. Differences are included in the account prescribed in the regulations, the balance of which will be settled through rates charged over the coming years. As part of its decision on permitted revenues for 2018-2022, BNetzA has assessed the balance of the regulatory account for Gasunie Deutschland.

    The German regulatory system contains an allowance for costs involved in expansion investments, known as investment measures. Part of these investment subsidies are repaid through rates (claw-back) over a period of 20 years after putting assets into operation. As part of its decision on permitted revenues for 2018-2022, BNetzA has assessed the balance of the investment measures for Gasunie Deutschland that will be settled.

General assumptions
Expected cash flows are factored in based on a discount rate that is linked to the regulatory capital cost allowance for the period in question. For the 2018-2022 period, the discount rate is 3.9% nominal post-tax. For the period from 2023, a discount rate of 4.0% nominal post-tax has been applied, in line with Gasunie’s Corporate WACC.

Impairment test of joint ventures and participations
The Gasunie Deutschland CGU also includes the interest in NETRA, which is recognised under financial fixed assets. Given that, like Gasunie Deutschland, NETRA is engaged in TSO activities in Germany, general and regulatory assumptions applied to Gasunie Deutschland are also applied to this entity.

Test result
Based on the available information, management has concluded that gas transport network impairments in Germany on 31 December 2017 amount to € 150 million. Of this amount, € 117.0 million has been allocated to tangible fixed assets and € 33.0 million to financial fixed assets, whereby the latter is Gasunie’s share in NETRA, which is included in the Gasunie Deutschland cash generating unit.

Uncertainties in the test
The table below provides an indication of the effect that changes to an important assumption will have on the recoverable amount.

Change to the assumption To the amount of Change in recoverable amount
     
1.     Lower dividend payment for Joint Ventures € 10 million - € 10 million
2. Revised indexation of regulated asset value 0% - € 12 million
3. Efficiency score below 100% - 5% point - € 14 million

Impairment test of EnergyStock assets

Triggering event
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 constitutes a triggering event for a test of the value of the assets of the EnergyStock cash generating unit.

Test basis
The impairment test was conducted using a DCF measurement of cash flows expected up to 2035. It is assumed that, after 2035, activities will be suspended and that cushion gas in the caverns will be produced and sold. When calculating the recoverable amount, management made assumptions regarding the expected market value of EnergyStock’s services and the expected sold capacities.

Test result
Based on the information that is currently available, management has concluded that EnergyStock’s recoverable amount as at 31 December 2017 is above the carrying amount of EnergyStock’s assets.

Impairment test of BBL assets

In preparing the 2017 financial statements, management did not see any reason to perform an analytical test of possible impairments of the assets of BBL Nederland.

2. Acquisitions

In the second half of 2017, Gasunie Deutschland signed an agreement with German gas transport network operators Gascade Gastransport GmbH, Fluxys Deutschland GmbH and ONTRAS Gastransport GmbH for the acquisition of a 16.5% share in the EUGAL (Europäische Gas-Anbindungsleitung) pipeline project. This pipeline that is yet to be laid in Germany will have a total length of approx. 485 kilometres. The first section of the pipeline is expected to be put into operation in late 2019. For more details on how this acquisition is recognised in the accounts, see note 4.

3. Tangible fixed assets

In millions of euros Carrying amount as at 1 Jan. 2017 Investments Disposals Depreciation Impairments Carrying amount as at 31 Dec. 2017
             
Land and buildings 130.4  3.6  0.6  6.9  ‑0.4  126.1 
Compressor stations 897.3  46.2  0.1  52.6  ‑18.3  872.5 
Installations 1,023.9  57.0  1.0  67.5  ‑15.2  997.2 
Main transmission lines and related plant and equipment 4,932.4  15.1  0.3  103.6  ‑80.4  4,763.2 
Regional transmission lines and related plant and equipment 771.5  80.6  2.5  22.3  - 827.3 
Underground gas storage 508.4  2.4  - 17.4  - 493.4 
Other fixed operating assets 188.1  29.1  - 33.8  ‑2.7  180.7 
Fixed assets under construction 213.3  26.2  - - - 239.5 
             
Total for 2017 financial year 8,665.3  260.2  4.5  304.1  ‑117.0  8,499.9 

In millions of euros Carrying amount as at 1 Jan. 2016 Investments Disposals Depreciation Impairments Carrying amount as at 31 Dec. 2016
             
Land and buildings 96.5  48.3  0.1  5.3  ‑9.0  130.4 
Compressor stations 941.6  51.0  1.0  47.9  ‑46.4  897.3 
Installations 1,055.2  96.5  3.2  70.9  ‑53.7  1,023.9 
Main transmission lines and related plant and equipment 5,301.0  19.2  1.3  107.5  ‑279.0  4,932.4 
Regional transmission lines and related plant and equipment 769.5  82.3  4.1  20.9  ‑55.3  771.5 
Underground gas storage 527.5  1.7  4.8  16.0  - 508.4 
Other fixed operating assets 194.0  36.8  - 36.1  ‑6.6  188.1 
Fixed assets under construction 248.7  ‑35.4  - - - 213.3 
             
Total for 2016 financial year 9,134.0  300.4  14.5  304.6  ‑450.0  8,665.3 

In millions of euros Acquisition value as at 31 Dec. 2017 Accumulated depreciation *) as at 31 Dec. 2017 Acquisition value as at 31 Dec. 2016 Accumulated depreciation *) as at 31 Dec. 2016
         
Land and buildings 219.2  93.2  216.3  85.9 
Compressor stations 1,424.2  551.7  1,388.5  491.2 
Installations 1,824.1  826.8  1,777.2  753.3 
Main transmission lines and related plant and equipment 7,283.8  2,520.6  7,270.9  2,338.5 
Regional transmission lines and related plant and equipment 1,118.9  291.6  1,060.1  288.6 
Underground gas storage 598.3  104.8  595.8  87.4 
Other fixed operating assets 602.9  422.5  574.3  386.2 
Fixed assets under construction 239.5  - 213.3  -
         
Total 13,310.9  4,811.2  13,096.4  4,431.1 

*) Including impairments

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

The depreciation period for compressor stations and installations is 30 years (on average).

The depreciation periods for the other components are as follows:

  • Buildings: 50 years
  • Other fixed operating assets: 5 to 20 years

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 assets in question will therefore go down from 40 to 25 years. For more details on this market study, see 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.

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 depreciation periods of these installations, which will see depreciation for these installations 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 looked into whether circumstances surrounding these specific installations may play a part in 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).

Changing depreciation periods for specific installations that are to be decommissioned is expected to push depreciation costs up by approx. € 8 million in 2017 and subsequently gradually lower depreciation costs until they bottom out at € 0.4 million in 2023.

Land, gas and nitrogen stocks are not depreciated.

4. Investments in joint operations

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

Company Registered office Interest as at 31 December  
    2017 2016
       
BBL Company V.O.F. Groningen 60% 60%
Arbeitsgemeinschaft GOAL/Fluxys NEL-Projektphase Hannover, Germany 51.3% 51.3%
European Gas Pipeline Link (EUGAL) Kassel, Germany 16.5% -

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 qualify as a joint venture or joint operation. 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.

5. Investments in joint ventures

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

Company Registered office Interest as at 31 December  
    2017 2016
       
Gate terminal C.V. Rotterdam 50% 50%
Gate terminal Management B.V. Rotterdam 50% 50%
DEUDAN - Deutsch/Dänische Erdgastransport-GmbH Handewitt, Germany 75% 75%
DEUDAN - Deutsch/Dänische Erdgastransport-GmbH & Co. KG Handewitt, Germany 33.4% 33.4%
JordgasTransport GmbH Emden, Germany 50% 50%
NETRA GmbH Norddeutsche Erdgas Transversale Emstek/Schneiderkrug, Germany 50% 50%
NETRA GmbH Norddeutsche Erdgas Transversale & Co. KG Emstek/Schneiderkrug, Germany 44.1% 44.1%
Biogas Netwerk Twente B.V. Almelo 50% 50%
SCW B.V. (Super Critical Water Gasification) Alkmaar 50% 0%

The movements in investments in joint ventures are as follows:

In millions of euros 2017 2016
     
Balance as at 1 January 233.2  157.4 
     
Investments 2.9  0.2 
Acquisitions - 56.1 
Movements directly in equity 10.3  0.9 
Capital redemption in Joint Ventures ‑18.0  -
Result from joint ventures 3.3  31.2 
Dividend received ‑41.6  ‑12.6 
Disposals - -
Impairments - -
Balance as at 31 December 190.1  233.2 

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 Koninklijke 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 € 19.2 million (2016: € 12.0 million) in dividend from Gate terminal C.V.

Consolidated financial information of Gate terminal C.V.:

In millions of euros 2017 2016
     
Fixed assets 869.5  909.0 
of which deferred tax assets 29.7  36.3 
Current assets 68.9  71.0 
of which tax assets - -
of which cash and cash equivalents 61.8  62.5 
Long-term liabilities 709.1  778.5 
of which interest-bearing loans 571.1  613.2 
of which deferred tax liabilities - -
of which derivative financial instruments 138.0  165.3 
Current liabilities 62.4  60.4 
of which current financing liabilities 44.2  42.7 
of which tax liabilities 1.7  1.0 
     
Net investment 166.9  141.1 
Gasunie’s share 50% 50%
Carrying amount 83.4  70.6 

In millions of euros 2017 2016
     
Revenues 156.0  147.8 
Total expenses ‑62.8  ‑59.6 
of which depreciation ‑34.0  ‑32.7 
Finance expenses ‑34.7  ‑35.1 
Taxes ‑15.1  ‑13.7 
     
Result after taxation 43.4  39.4 
Other comprehensive income 20.6  1.9 
     
Total of comprehensive income 64.0  41.2 
     
Gasunie’s share in comprehensive income 32.0  20.6 

Other joint ventures

In the second half of 2016, N.V. Nederlandse Gasunie took over 50% of JordgasTransport GmbH shares via Gasunie Deutschland Transportservices GmbH. The remaining 50% were taken over by Open Grid Europe. 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 (Norddeutsche Erdgas Transversale) 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.

N.V. Nederlandse Gasunie’s share in the voting rights of NETRA GmbH Norddeutsche Erdgas Transversale and NETRA GmbH Norddeutsche Erdgas Transversale & Co. KG is 44.1%. Based on the agreements, Gasunie has joint control. These equity interests qualify as a joint venture.

In 2017, Norddeutsche Erdgastransport Infrastruktur GmbH merged with JordgasTransport GmbH. This merger included a capital reduction of € 18 million, which has been classified under Capital redemption. Gasunie has a 50% interest in JordgasTransport GmbH. Based on agreements between the shareholders of JordgasTransport GmbH, Gasunie has joint control. 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 share in the voting rights of this participation is 75%. Based on the agreements between the shareholders of DEUDAN - Deutsch/Dänische Erdgastransport - GmbH, the company has no control. This equity interest qualifies as a joint venture.

On 13 July 2016, Biogas Netwerk Twente B.V. was founded. This concerns a joint operation with Cogas B.V. for the construction and management of pipes and associated facilities, and the construction, maintenance and making available 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.

Financial information of other joint ventures:

In millions of euros 2017 2016
     
Carrying amount as at 31 December 106.7  162.6 
Gasunie’s share in the result after taxation ‑18.5  11.4 
Dividend received 22.3  0.6 

6. Investments in associates

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

Company Registered office Interest as at 31 December  
       
    2017 2016
       
GASPOOL Balancing Services GmbH Berlin, Germany 16.7% 16.7%
ICE Endex Holding B.V. Amsterdam - 20.9%

GASPOOL Balancing Services GmbH is a North-German virtual gas trading point. Gasunie’s share in the voting rights of this participation is 20%.

On 28 June 2017, Gasunie sold its 20.9% interest in ICE Endex Holding B.V., a European energy exchange for derivatives and spot gas, to Intercontinental Exchange (NYSE: ICE).

The movements in investments in associates are as follows:

In millions of euros  2017 2016
     
Balance as at 1 January 11.5  12.4 
Share in result after taxation 1.3  2.8 
Disposal of ICE Endex Holding B.V. ‑10.9  -
Dividend received ‑1.2  ‑3.7 
     
Balance as at 31 December 0,7 11.5 

Gasunie’s total share in the comprehensive income of associates in 2017 is € 1.3 million (2016: € 2.8 million).

7. Other equity interests

The movements in other equity interests are as follows:

In millions of euros  2017 2016
     
Balance as at 1 January 470.2  434.9 
     
Movement in fair value taken directly to equity 20.5  35.3 
     
Balance as at 31 December 490.7  470.2 

The other equity interests are 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 interests in PRISMA European Capacity Platform GmbH, EDSN B.V., and Nord Stream AG are stated 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.

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 2017 (2016: € 26 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 2017, the company received dividend from Nord Stream AG totalling € 23.9 million (2016: € 27.2 million).

Given the relatively limited materiality 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.

8. Deferred tax assets

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

In millions of euros 31 Dec. 2017 31 Dec. 2016
     
Purchase price paid by the Dutch State 1,427.6  1,480.4 
Financial instruments ‑0.8  ‑1.0 
Tangible fixed assets ‑1,025.3  ‑1,056.2 
Other deferred tax assets 0.5  6.6 
     
Total deferred tax assets 402.0  430.3 

The amount to be settled more than one year after the balance sheet date amounts to € 374.0 million (2016: € 407.8 million).

Tax treatment of the purchase price 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 in the form of a revaluation of the network for tax purposes. As a result, N.V. Nederlandse Gasunie applies additional depreciation for tax purposes applied with effect from 2005.

The movements in deferred tax assets are as follows:

In millions of euros 2017 2016
     
Balance as at 1 January 430.3  322.5 
     
Movements taken to the profit and loss account ‑28.5  107.4 
Movements taken to equity 0.1  0.4 
     
Balance as at 31 December 402.0  430.3 

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

In millions of euros Profit and loss account Equity
     
Purchase price paid by the Dutch State ‑52.9  -
Financial instruments - 0.2 
Tangible fixed assets 31.0  -
Other deferred tax assets ‑6.6   
     
Total ‑28.5  0.2 

The movements taken to the profit and loss account and to equity for 2016 are as follows:

In millions of euros Profit and loss account Equity
     
Purchase price paid by the Dutch State ‑52.9  -
Financial instruments - 0.4 
Tangible fixed assets 153.6  -
Other deferred tax assets 6.7  -
     
Total 107.4  0.4 

9. Stocks

Stocks, with a value of € 45.8 million as at 31 December 2017 (2016: € 39.5 million), consist almost entirely of maintenance materials and parts that are measured at the lower of average cost and recoverable amount. The amount stated takes into account a provision of € 8.9 million (2016: € 8.1 million). The change in the provision (€ 0.8 million) is recognised in the profit and loss account.                                                                           

10. Trade and other receivables

In millions of euros 31 Dec. 2017 31 Dec. 2016
     
Trade receivables 97.2  148.5 
Receivables from joint ventures 0.3  0.3 
Corporate income tax 18.1  7.8 
Other taxes 21.6  3.3 
Other receivables 24.0  22.9 
     
Total trade and other receivables 161.2  182.8 

Other taxes consist of VAT and dividend tax.

The trade receivables, receivables from joint ventures and other receivables totalled € 121.5 million (2016: € 171.7 million). The ageing analysis of these receivables as at the balance sheet date is as follows:

In millions of euros Total   Not due and not impaired Due and not impaired        
                 
        < 30 30-60 60-90 days 90-120 > 120 days
        days days   days  
                 
2017 121.5    119.5  1.9  - - - 0.1 
2016 171.7    169.5  1.9  - - - 0.3 

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

In millions of euros 2017 2016
     
Balance as at 1 January 1.2  1.1 
     
Additions - 0.1 
     
Balance as at 31 December 1.2  1.2 

The receivables are individually reviewed to determine the amount of the provision, primarily taking into account the age of the receivable and the creditworthiness of the debtor.

11. Cash and cash equivalents

In millions of euros 31 Dec. 2017 31 Dec. 2016
     
Banks 32.0  36.0 
Call funds and deposits receivable 9.2  202.4 
     
Total cash and cash equivalents 41.2  238.4 

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

12. Equity

Issued share capital

The authorised share capital as at 31 December 2017 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, see note 4 to the company financial statements.

Other reserves

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

13. Cash flow hedge reserve

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

In millions of euros   2017 2016
Balance as at 1 January   ‑46.3  ‑46.2 
       
Transferred to the profit and loss account,   ‑0.9  ‑1.3 
of which corporate income tax   0.2  0.3 
Movements concerning joint ventures   10.2  0.9 
       
Balance as at 31 December   ‑36.8  ‑46.3 

The cash flow hedge reserve as at year-end 2017 relates to two cash flow hedges, as was the case in 2016. These are the cash flow hedge of N.V. Nederlandse Gasunie, relating to two long-term bond loans, and the cash flow hedge of Gate terminal B.V., a wholly owned group company of the joint venture Gate terminal C.V.

In millions of euros   31 December 2017   31 Dec. 2016  
           
Cash flow hedge of N.V. Nederlandse Gasunie,   3.2    4.1   
of which corporate income tax   ‑0.9    ‑1.1   
           
      2.3    3.0 
           
           
Cash flow hedge of Gate terminal B.V.     ‑39.1    ‑49.3 
           
Total     ‑36.8    ‑46.3 

The cash flow hedge reserve of N.V. Nederlandse Gasunie relating to two long-term bond loans concerns swaptions settled in 2006, of which the results have been 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 € 2.3 million (2016: € 3.0 million) will be released on a straight-line basis up to and including 2021.

In July 2008, Gate terminal B.V., a wholly owned group company of the joint venture Gate terminal C.V., took out a private loan with a floating interest rate. The floating interest was converted into fixed interest by means of a swap transaction. This transaction aims to largely offset changes in the cash flows (interest-based or otherwise) caused by changes in the market interest rate. The transaction was specifically designated for this purpose by management.

14. Interest-bearing loans

The total amount of € 2,842.9 million (2016: € 3,164.3 million) of long-term loans comprises € 2,250.0 million (2016: € 2,550.0 million) of long-term bonds and € 592.9 million (2016: € 614.3 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 (2016: € 550.0 million) of fixed-interest loans and € 42.9 million (2016: € 64.3 million) of floating interest loans. The interest rate risk relating to the floating interest loan is not hedged. The company has no open positions 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, see note 20 to the consolidated balance sheet. 

The movements in interest-bearing loans are as follows:

In millions of euros 2,017.0  2,016.0 
     
Balance as at 1 January 3,164.3  2,985.7 
     
Private loans contracted and bond loans issued - 950.0 
Repayment obligations in next financial year ‑321.4  ‑771.4 
     
Balance as at 31 December 2,842.9  3,164.3 

The future repayments are as follows:

In millions of euros  2,017.0  2,016.0 
Repayment obligations in    
2017    771.4 
2018  321.4  321.4 
2019  321.5  321.5 
2020  21.4  21.4 
2021  800.0  800.0 
2022  625.0  625.0 
After 2022 1,075.0  1,075.0 
Total repayment obligations 3,164.3  3,935.7 

The table below provides a breakdown of the long-term loans, including repayment obligations.

Balance as at 31 December 2017:

Remaining principal amount outstanding on original loan in euros Term Effective interest rates Interest review date Nominal amount outstanding in millions of euros
300.0 million 2006-2021 4.500% not applicable 300 
125.0 million 2008-2022 4.500% not applicable 125 
125.0 million 2008-2023 4.804% not applicable 125 
125.0 million 2009-2024 4.266% not applicable 125 
125.0 million 2010-2025 3.581% not applicable 125 
500.0 million 2011-2021 3.625% not applicable 500 
500.0 million 2012-2022 2.625% not applicable 500 
64.3 million 2013-2020 0.000% 28 April and 28 October every year 64 
50.0 million 2014-2024 1.329% not applicable 50 
300.0 million 2015-2018 0.000% as of 16/01; quarterly 300 
650.0 million 2016-2026 1.000% not applicable 650 
300.0 million 2016-2019 0.000% not applicable 300 
         
Total       3,164.3 

Balance as at 31 December 2016:

Remaining principal amount outstanding on original loan in euros Term Effective interest rates Interest review date Nominal amount outstanding in millions of euros
300.0 million 2006-2021 4.500% not applicable 300 
125.0 million 2008-2022 4.500% not applicable 125 
125.0 million 2008-2023 4.804% not applicable 125 
750.0 million 2009-2017 5.125% not applicable 750 
125.0 million 2009-2024 4.266% not applicable 125 
125.0 million 2010-2025 3.581% not applicable 125 
500.0 million 2011-2021 3.625% not applicable 500 
500.0 million 2012-2022 2.625% not applicable 500 
85.7 million 2013-2020 0.000% 28 April and 28 October every year 86 
50.0 million 2014-2024 1.329% not applicable 50 
300.0 million 2015-2018 0.321% as of 16/01; quarterly 300 
650.0 million 2016-2026 1.000% not applicable 650 
300.0 million 2016-2019 0.000% not applicable 300 
         
Total       3,935.7 

If 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 2.3% (2016: 2.8%).

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

15. Deferred tax liabilities

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:

In millions of euros 31 Dec. 2017 31 Dec. 2016
     
Tangible fixed assets 156.0  187.3 
Financial fixed assets 6.5  11.7 
Provisions for employee benefits ‑15.5  ‑15.2 
Provision for abandonment costs and redevelopment 19.5  18.3 
Tariff settlement provision 0.4  -
Other deferred tax liabilities 0.1  0.4 
     
Total deferred tax liabilities 166.9  202.5 

The amount to be settled more than one year after the balance sheet dates amounts to € 166.9 million (2016: € 202.2 million).

The movements in deferred tax liabilities are as follows:

Balance as at 1 January 2017 2016
     
Movements taken to the profit and loss account 202.5  210.3 
Movements taken to equity    
  ‑35.9  ‑6.6 
  0.3  ‑1.2 
     
Balance as at 31 December 166.9  202.5 

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

In millions of euros Profit and loss account Equity
     
     
Tangible fixed assets ‑31.4  -
Financial fixed assets ‑5.3  -
Provisions for employee benefits ‑0.7  0.3 
Provision for abandonment costs and redevelopment 1.2  -
Tariff settlement provision 0.3  -
Other deferred tax liabilities ‑0.1  -
     
Total ‑35.9  0.3 

The movements taken to the profit and loss account and to equity for 2016 are as follows:

In millions of euros Profit and loss account Equity
     
     
Tangible fixed assets 3.4  -
Financial fixed assets ‑0.1  -
Provisions for employee benefits ‑0.7  ‑1.2 
Provision for abandonment costs and redevelopment 1.2  -
Tariff settlement provision ‑10.3  -
Other deferred tax liabilities ‑0.1  -
     
Total ‑6.6  ‑1.2 

16. Employee benefits

In millions of euros 31 Dec. 2017 31 Dec. 2016
     
Pension liabilities, Gasunie Deutschland 88,1 85.5 
Jubilee benefits 8,7 8,7
Post-employment fringe benefits for non-active and retired employees 6.0  6.2 
     
Total 102,8 100.4 

Provisions for pension liabilities

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

In millions of euros 2017 2016 2015 2014 2013
           
Present value of pension entitlements 88.1  85.5  78.0  78,1 56.3 
Pension provision 88.1  85.5  78.0  78,1 56.3 
Experience adjustments to plan liabilities ‑1.4  ‑2.4  0.3  ‑2.0  ‑1.8 

On 1 July 2013, a new pension scheme came into force for N.V. Nederlandse Gasunie and its employees in the Netherlands. The new pension scheme qualifies as a ‘defined contribution plan’ in IFRS terms. As a consequence, the provision for pension liabilities related to the old pension scheme was released to the profit and loss account.

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:

In millions of euros 31 Dec. 2017 31 Dec. 2016
     
Present value of pension entitlements 88.1  85.5 
Pension provision 88.1  85.5 

The weighted average duration of the pension liabilities is approximately 20 years.

The assumptions underlying the calculation of the pension liabilities are as follows:

  2017 2016
     
Discount rate 1.9% 1.9%
Expected future salary increases 2.7% 2.7%
Expected future pension increases 1.7% 1.7%

The movements in the pension provision are as follows:

In millions of euros 2017 2016
     
Present value of pension entitlements    
Balance as at 1 January 85.5  78.0 
     
Increase in pension entitlements 3.1  2.5 
Accrued interest 1.6  1.9 
Actuarial result ‑1.3  3.8 
Pension benefits paid ‑0.8  ‑0.7 
     
Balance as at 31 December 88.1  85.5 

The actuarial results are as follows:

In millions of euros 2017 2016
     
Changes in actuarial financial assumptions ‑2.7  ‑6.2 
Experience adjustments 1.4  2.4 
     
Total actuarial result on pension entitlements ‑1.3  ‑3.8 

Actuarial results taken directly to equity totalled negative € 1.3 million in 2017 (2016: negative € 3.8 million).

At year-end 2017, the accumulated actuarial gains and losses taken directly to equity totalled € 26.3 million negative (2016: € 27.5 million negative).

As an indication, all things being equal, if the discount rate changes by 0.1% points, this will result in a change in the fair value amount of € 1.7 million at year-end 2017 (2016: € 1.7 million) and a change in the total of actuarial results taken directly to equity of € 1.7 million at year-end 2017 (2016: € 1.7 million).

As an indication, all things being equal, if the ‘expected future salary increases’ change by 0.1% points, this will result in a change in the ‘present value of pension entitlements’ of € 0.4 million (2016: € 0.4 million) and a change in the total of actuarial results taken directly to equity of € 0.4 million at year-end 2017 (2016: € 0.4 million).

If the ‘expected future pension increases’ change by 0.1%-point, in otherwise unchanged circumstances, this is expected to lead to a change in the ‘present value of pension entitlements’ of € 1.3 million (2016: € 1.3 million) and a change in the total of actuarial results taken directly to equity of € 1.3 million at year-end 2017 (2016: € 1.1 million).

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

In millions of euros 2017 2016
     
Increase in pension entitlements 3.1  2.5 
Accrued interest 1.6  1.9 
     
Total pension expenses 4.7  4.4 

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:

In millions of euros 2017 2016
     
Balance as at 1 January 8.6  8.0 
     
Additions 0.6  1.1 
Charges ‑0.5  ‑0.5 
     
Balance as at 31 December 8.7  8.6 

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:

In millions of euros 2017 2016
     
Balance as at 1 January 6.2  6.6 
     
Additions 0.4  0.8 
Charges ‑0.6  ‑0.8 
Release - ‑0.4 
     
Balance as at 31 December 6.0  6.2 

The provision is primarily a long-term provision and is not fully funded.

17. Provisions

Provision for abandonment costs and redevelopment

The movements in the provision are as follows:

In millions of euros 2017 2016
     
Balance as at 1 January 67,6 67.5 
     
Additions 1.1  20.0 
Charges ‑7.8  -/- 14,8
Release ‑3.0  -/- 5,1
     
Balance as at 31 December 57,9 67,6

The short-term part of the provision for abandonment costs and redevelopment totalled € 14.7 million at year-end 2017 (2016: € 10.6 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 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 2020.

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

A provision for long-term general abandonment costs 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.

18. Current financing liabilities

In millions of euros 31 Dec. 2017 31 Dec. 2016
     
Repayments on long-term loans 321.4  771.4 
Short-term loans 268.0  -
Short-term loans to joint ventures 13.3  23.5 
     
Total current financing liabilities 602.7  794.9 

As at the end of 2017, N.V. Nederlandse Gasunie had drawn € 268 million (2016: € 0.0 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 € 25 million (2016: € 25 million) and a committed credit facility for short-term financing of € 680 million (2016: € 750 million), which expires in 2021. No funds were drawn under these facilities as at year-end 2017 and 2016. The interest payable on the funds drawn under the facilities is based on prevailing market rates. No securities have been provided for the credit facilities by N.V. Nederlandse Gasunie.

19. Trade and other payables

In millions of euros 31 Dec. 2017 31 Dec. 2016
     
Trade payables 39.3  42.8 
Derivative financial instruments - 9.5 
Corporate income tax 48.4  59.3 
Other taxes and social security contributions 12.0  28.1 
Other liabilities, accruals and deferred income 176.3  199.9 
     
Trade and other payables 276.0  339.6 

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 primarily comprise accrued interest, invoices yet to be received and deposits received.

Trade and other payables do not bear interest. For information on ‘derivative financial instruments’, see note 10 to the consolidated balance sheet.

20. Financial risks

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 uses 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 risk aims to limit the effects of interest rate fluctuations on the result, and in the long term to follow the regulatory allowance for cost of debt. 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 2017, the share of the floating interest rate loans including repayment obligations was € 364 million (2016: € 386 million). A 1%-point increase/decrease of the interest rate will respectively increase/decrease these annual interest expenses by € 3.6 million (2016: € 3.9 million).

At year-end 2017 and 2016, 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 € 2.8 million (2016: € 0.2 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 currency risks. To this end, it uses forward exchange contracts and currency swaps. Foreign exchange instruments are only used if underlying positions exist. Currency risks are hedged to the extent that there is sufficient certainty about the amount and timing of the foreign currency cash flows.

At year-end 2017, a total of € 2.7 million in liabilities denominated in foreign currencies was hedged by means of forward transactions (2016: € 2.4 million). Foreign currencies were converted into euros at the year-end exchange rate.

In millions of euros Position Exchange rate Effect on result before taxation Effect on equity
    increase/decrease    
2017        
Euro/GBP 0.7  +/- 30% 0.2  0.2 
         
2016        
Euro/GBP 0.4  +/- 30% -/+ 0,1 -/+ 0,1

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.

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 2017 and 2016, no collateral was placed by counterparties at 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:

In millions of euros 31 Dec. 2017     31 Dec. 2016  
  Number Value   Number Value
           
Security Deposit  72  30.1    56 139.7 
Bank Guarantee  53  132.1    53 34.6 
Parent Company Guarantee  21  123.7    15 46.4 
Letter of Awareness  6  192.4    23 117.6 
Surety Agreement  13  38.1    9 29.2 
           
Total guarantees received  165  516.4    156 367.5 

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.

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.

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 € 25 million (2016: € 25 million), a committed credit facility of € 680 million (2016: € 750 million), a € 750 million (2016: € 750 million) Commercial Paper programme and a € 7.5 billion (2016: € 7.5 billion) Medium Term Note (MTN) programme. Under the MTN programme, € 5.0 billion was available for new issues as at year-end 2017.

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 A2 with a positive outlook, and the short-term rating is P-1.

Dividend policy

N.V. Nederlandse Gasunie aims to achieve a ratio of liabilities to equity 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 long-term and current liabilities outstanding as at the balance sheet date is as follows:

In millions of euros Total Payable immediately < 1 year 1-5 year > 5 year
           
2017          
Long-term liabilities          
- interest-bearing loans 2,842.9  - - 1,767.9  1,075.0 
           
Current liabilities          
- current financing liabilities 602.8  13.3  589.5  - -
- trade payables 39.3  39.3  - - -
- tax liabilities 60.3  7.1  16.5  - 36.7 
           
- other liabilities, accruals and deferred income 176.3  20.8  155.5  - -
           
Interest payable on liabilities 365.5  - 83.0  236.6  45.9 
           
Total 4,087.1  80.5  844.5  2,004.5  1,157.6 

In millions of euros Total Payable immediately < 1 year 1-5 year > 5 year
           
2016          
Long-term liabilities          
- interest-bearing loans 3,935.7      2,235.7  1,700.0 
           
Current liabilities          
- current financing liabilities 794.9  23.5  771.4  - -
- trade payables 45.8  45.3  0.5  - -
- tax liabilities 87.5  12.3  18.3    56.9 
           
- other liabilities, accruals and deferred income 196.9  16.7  156.7  - 23.5 
           
Interest payable on liabilities 440.3  - 83.9  278.1  78.3 
           
Total 5,501.1  97.8  1,030.8  2,513.8  1,858.7 

Guarantees issued

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

In millions of euros 31 Dec. 2017   31 Dec. 2016  
  Number Value Number Value
         
Bank guarantees 4 4.6  4 4.6 
Parent Company Guarantees 8 71.3  6 109.3 
Sureties 4 34.5  2 30.0 
Other 2 61.0  - -
         
Total guarantees issued 18 171.4  12 143.9 

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

The maturity of the bank guarantees is generally short (one to two years).

As part of the acquisition of Jordgas, Gasunie has issued a guarantee related to compliance with the provisions in the transaction agreement.

The company is guarantor for Gate terminal B.V., a 100% group company of the joint venture Gate terminal C.V., for leases payable to the Port of Rotterdam Authority to the value of € 35.0 million at year-end 2017 (2016: € 38.5 million) and for two sureties provided to shippers totalling € 30.0 million (2016: € 30 million). The remaining maturities of the guarantees for the Port of Rotterdam and for the two sureties are 10 years and 18 years respectively.

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 period to the due date 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 own risk profile, including the credit risk, has been taken into account; and
  • The derivative financial instruments that oblige the company to deliver financial assets at a predetermined price are valued at the fair value of the underlying financial assets, determined on the basis of the present value of the expected cash flows, taking into account the contractual provisions agreed between the parties about the valuation technique and other important input data. The counterparty risk is also 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, with all required key data not being derived from publicly available market information.

The assets and liabilities presented at fair value in the balance sheet are determined in accordance with the following hierarchy:

In millions of euros Total Level 1 Level 2 Level 3
         
2017        
- other equity interests 490.7  - - 490.7 
- derivative financial instruments - - - -
         
2016        
- other equity interests 470.2  - - 470.2 
- derivative financial instruments 9.5  - - 9.5 

On 28 June 2017, Gasunie sold its 20.9% interest in ICE Endex Holding B.V., a European energy exchange (NYSE: ICE), after ICE exercised its option to purchase. The release of the negative value of the € 9.5 million option to purchase/sell is recognised under the result of disposals of participations.

The movements in other equity interests are as follows:

In millions of euros 2017 2016
     
Balance as at 1 January 470.2  434.9 
     
Movement in fair value taken directly to equity 20.5  35.3 
     
Balance as at 31 December 490.7  470.2 

At year-end 2017, the long-term loans with a fixed interest rate amounted to € 2,800 million (2016: € 2,800 million). The table below compares the carrying amount and fair value of those financial instruments whose carrying amount does not approximate the fair value:

In millions of euros 2017      2016   
  Carrying amount Fair value   Carrying amount Fair value
           
Interest-bearing loans 2,842.9  3,146.8    3,164.3  3,532.4 
Repayments on long-term loans 321.4  322.2       
        771.4  781.2 

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

In millions of euros Total Level 1 Level 2 Level 3
         
2017        
Interest-bearing loans 3,146.8  2,434.8  712.0  -
Repayments on long-term loans 322.2  300.7  21.5  -
         
2016        
Interest-bearing loans 3,532.4  2,773.9  758.5   
Repayments on long-term loans 781.2  759.8  21.4  -

A 1%-point increase/decrease of the interest rate will respectively increase/decrease the fair value of these financial instruments by € 170.4 million (2016: € 202.2 million).

21. Commitments not included in the balance sheet

Investment commitments

At year-end 2017, N.V. Nederlandse Gasunie had commitments not included in the balance sheet of € 514 million with regard to investment projects, compared to € 60 million in 2016. The increase is mainly related to participation in the EUGAL project. The investment commitments figure for 2017 includes € 73 million (2016: € 54 million) for replacement investments.

Lease commitments (operating lease)

Lease commitments at year-end 2017 totalled € 113 million (2016: € 107 million). A breakdown is shown below:

In millions of euros Commitment Commitment
Term as at 31 Dec. 2017 as at 31 Dec. 2016
     
0 – 1 year 10 9
1 – 5 year 21 18
> 5 year 82 81

These commitments mainly relate to the operating leases for industrial sites and company cars and vehicles. 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 actual operating lease costs with regard to industrial sites, company cars and private vehicles for 2017 amount to € 9.9 million (2016: € 9.3 million).

Other commitments

Other commitments at year-end 2017 totalled € 197 million (2016: € 374 million). A breakdown of these commitments is shown below:

Term Commitment Commitment
  as at 31 Dec. 2017 as at 31 Dec. 2016
     
0 – 1 year € 57 million € 73 million
1 – 5 year € 134 million € 238 million
> 5 years € 6 million € 63 million

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