Notes to the consolidated financial statements

The financial statements in English are a translation of the official Dutch version prepared by the Executive Board on 28 March 2018. In the event of differences and/or inconsistencies between the English version of the financial statements 2017 and the original Dutch financial statements 2017, the latter will take precedence.


Preparation and adoption of the financial statements

The 2017 financial statements were prepared by the Executive Board on 28 March 2018. The financial statements as prepared were submitted for adoption to the General Meeting of Shareholders to be held on 24 April 2018.

Nature of business operations

N.V. Nederlandse Gasunie (Gasunie) is a European gas infrastructure company. Gasunie’s network ranks among Europe’s largest high-pressure gas transport networks and consists of some 15,500 kilometres of pipelines in the Netherlands and northern Germany, dozens of installations and approximately 1,300 gas-receiving stations. The annual gas throughput totals approximately 1,250 TWh (125 billion m3). Gasunie serves the public interest in the markets in which it operates and seeks to maximise value creation for its stakeholders. Gasunie provides gas transport services through its subsidiaries, Gasunie Transport Services B.V. in the Netherlands and Gasunie Deutschland Transport Services GmbH in Germany. Gasunie also provides other gas infrastructure services, including gas storage, LNG storage and the certification of green gas through its subsidiary Vertogas. Gasunie seeks to deploy its infrastructure and knowledge for the ongoing development and integration of renewable energy sources, particularly green gas.

The company has its registered and actual office at Concourslaan 17, Groningen, the Netherlands, and is registered with the Chamber of Commerce under number 02029700.

All shares outstanding as at the balance sheet date are held by the Dutch State.

Basis of preparation

Under Regulation (EC) no. 1606/2002 of the European Parliament, the company’s consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union.

The accounting policies applied in preparing the 2017 consolidated financial statements are consistent with the accounting policies applied in preparing the 2016 consolidated financial statements. No new standards and interpretations have become effective in the European Union as of the financial year 2017. 

As of the financial year 2017, the following new standards and interpretations will become effective, but have not yet been endorsed in the European Union:

  • IAS 12: Recognition of Deferred Tax Assets for Unrealized losses (Amendments)
  • IAS 7: Statement of Cash Flows. Disclosure initiative: Amendments to IAS 7

The company expects that adoption of IAS 12 and interpretations will have no material effect on the company’s equity and result and will not require additional disclosures. Disclosures required following amendments to IAS 7 are included in these financial statements under notes 14, 18 and 20.

As of the financial year 2018, the following new standards will become effective, which have been endorsed in the European Union:

  • IFRS 9 Financial Instruments
  • IFRS 15 Revenue from Contracts with Customers

The company has examined to what extent IFRS 9 will have a material effect on the equity or result of the company in the period of first-time adoption and to what extent this will require any further disclosures. There is no material effect on the company’s equity and result. Adoption of the standard requires additional disclosures with respect to cash flow hedge accounting and the credit policy and risk.

The company has examined to what extent IFRS 15 will have a material effect on the equity or result of the company in the period of first-time adoption and to what extent this will require any further disclosures. There is no material effect on the company’s equity and result. However, the adoption of IFRS 15 is likely to require additional disclosures, particularly with regard to contracts and separate delivery obligations, and the management estimates in adopting this standard.

As of the financial year 2018, the following new standards will become effective, but have not yet been endorsed in the European Union:

  • Clarifications to IFRS 15: Revenue from Contracts with Customers
  • Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions (issued on 20 June 2016)
  • Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (issued on 12 September 2016)
  • Annual Improvements to IFRS Standards 2014-2016 Cycle
  • IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration (issued on 8 December 2016)
  • Amendments to IAS 40: Transfers of Investment Property (issued on 8 December 2016)

Other standards taking effect as of 2018 but not yet endorsed by the European Union do not have a material effect on the company’s equity and result and do not require additional disclosures.

IFRS 16 Leases will become effective as of the financial year 2019. This standard has been endorsed by the European Union. The company has examined to what extent this standard will have a material effect on the equity or result of the company in the period of first-time adoption and to what extent this will require any further disclosures. No material effect on the company’s equity and result is expected. However, a non-material shift will take place from operating expenses to interest and depreciation expenses. In addition, the tangible fixed assets, as well as the current and long-term liabilities, will increase. The company expects this increase in the balance sheet total to amount to between 50 and 100 million euros. In addition, in the cash flow statement, a shift will also take place from operational cash flows to financing cash flows. Finally, the company expects to make additional disclosures with regard to the lease liabilities concerning the depreciation and financing expenses.

As of the financial year 2019, the following new standards will become effective, but have not yet been endorsed in the European Union:

  • IFRIC 23: Uncertainty over Income Tax Treatments (issued on 7 June 2017)
  • Amendments to IFRS 9: Prepayment features with negative Compensation (issued on 12 October 2017)
  • Amendments to IAS 28: Long-term interests in Associates and Joint Ventures (issued on 12 October 2017)

These standards are not expected to have any material effect on the company’s equity and result and do not require additional disclosures.

Management judgements and estimates
In preparing the financial statements, management makes estimates and assessments which affect the assets and liabilities presented as at the balance sheet date and the result for the financial year.

The judgements and estimates are mainly relevant for the valuation of fixed assets, the provision for abandonment costs and redevelopment, deferred taxation, pensions and other equity interests, especially the company's 9% interest in Nord Stream AG. The judgements also play an important part in the classification of equity interests in the context of IFRS 10 Consolidated Financial Statements and IFRS 11 Joint Arrangements as detailed in notes 4, 5 and 6 to the consolidated financial statements.

Fixed assets
Fixed assets include the gas transport network.

Tangible fixed assets are valued at cost less straight-line depreciation based on the expected useful life, taking into account the residual value and impairments. To this end, assumptions were made about the useful life, the residual value and the future cash flows of the transport pipelines in particular.

A significant part of the operating activities are ‘regulated’. The future cash flows and related recoverable amount of the regulated assets are partly based on judgements and estimates about the cash flows that can be earned within the regulatory framework. For more information, see note 1 to the consolidated balance sheet.

Provision for abandonment costs and redevelopment
A provision for abandonment costs and redevelopment is recognised in response to management decisions to decommission, remove or redevelop specific assets within the foreseeable future, for instance due to new legislation. The size of the provision is determined on the basis of experience figures derived from completed projects. For more information, see note 17 to the consolidated balance sheet.

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.

Deferred tax assets
A deferred tax asset is recognised for all deductible temporary differences and available carry-forward losses, to the extent that it is likely that taxable profit will be available for set-off. To this end, assumptions have been made about future taxable profits.

Pensions
The costs relating to the defined benefit pension plans and the valuation of defined benefit pension liabilities are determined using actuarial calculations. To this end, significant assumptions have been made about the market interest rate on high-quality corporate bonds for the purpose of determining the discount rate, the expected future increases in salary, the expected future increases in pensions and the average life expectancy. For more information, see note 17 to the consolidated balance sheet.

Other equity interests
The interest in Nord Stream AG is stated at fair value, taking into account a post-tax discount rate on the expected cash flows. The projected cash flows are based on contractual agreements. In determining the post-tax discount rate, the assumptions made by management are significant. For more information, see note 6 to the consolidated balance sheet.

Consolidation and accounting principles

The consolidated financial statements include the financial data of N.V. Nederlandse Gasunie and its group companies. Group companies are legal entities and companies over which the company exercises control.

The Group exercises control if the Group has:

  • power over the investee;
  • exposure or rights to variable returns from its involvement with the investee; and
  • the ability to use its power over the investee to influence the amount of the investor’s returns.

Generally, it is presumed that a majority of voting rights results in control, but the Group considers all facts and circumstances when assessing whether it exercises control over an investee.

The Group reassesses whether or not it exercises control over an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Group companies are fully consolidated from the date on which control of the group company is obtained until the date that control no longer exists. The items in the consolidated financial statements are calculated in accordance with consistent accounting policies.

Intercompany account balances and unrealised results relating to group companies are eliminated.

The group companies included in the consolidation are:

Company Registered office Interest as at 31 December  
    2017 2016
EnergyStock B.V. Groningen 100% 100%
Gastransport Noord-West Europa B.V. Groningen 100% 100%
Gastransport Noord-West Europa Holding B.V. Groningen 100% 100%
Gastransport Noord-West Europa Services 1 B.V. Groningen 100% 100%
Gastransport Noord-West Europa Services 2 B.V. Groningen 100% 100%
Gastransport Noord-West Europa Services 3 B.V. Groningen 100% 100%
Gastransport Noord-West Europa Services 4 B.V. Groningen 100% 100%
Gasunie BBL B.V. Groningen 100% 100%
Gasunie Engineering B.V. Groningen 100% 100%
Gasunie New Energy B.V. Groningen 100% 100%
Gasunie LNG Holding B.V. Groningen 100% 100%
Gasunie Peakshaver B.V. Groningen - 100%
Gasunie Transport Services B.V. Groningen 100% 100%
Gasunie Grid Services B.V. Groningen 100% 100%
Gasunie Underground Storage (GUUS) B.V. Groningen - 100%
Vertogas B.V. Groningen 100% 100%
Gasunie Waterstof Services B.V. Groningen 100% 100%
Gasunie Deutschland GmbH & Co. KG Hanover, Germany 100% 100%
Gasunie Deutschland Services GmbH Hanover, Germany 100% 100%
Gasunie Deutschland Technical Services GmbH Hanover, Germany 100% 100%
Gasunie Deutschland Transport Services GmbH Hanover, Germany 100% 100%
Gasunie Deutschland Transport Services Holding GmbH Hanover, Germany 100% 100%
Gasunie Deutschland Verwaltungs GmbH Hanover, Germany 100% 100%
Gasunie Infrastruktur AG Zug, Switserland 100% 100%

Gasunie Peakshaver B.V. was founded in 2014. As of 1 January 2017, this company has merged with Gasunie Transport Services B.V.

Gasunie Underground Storage (GUUS) B.V. was liquidated in 2017. This was a financially neutral transaction.

Gasunie Transport Services B.V. is the network operator of the national gas transport network in accordance with the Dutch Gas Act. The Minister has issued rules with regard to proper financial management by a network operator (Besluit Financieel Beheer Netbeheerder). These rules consist of a number of financial ratios, including a minimum for equity. This can lead to restrictions with regard to the distribution of, amongst other things, dividends.

On 2 January 2018, Gasunie Grid Services B.V. merged with Gasunie Transport Services B.V.

Gasunie Waterstof Services B.V. was founded in August 2017 to perform development and other activities in relation to hydrogen as an energy carrier.