Notes to the consolidated profit and loss account

22. Staff costs

In millions of euros 2017 2016
     
Salaries 159.1  154.3 
Social security expenses 17.3  16.9 
Pension costs 29.7  28.7 
     
Total staff costs 206.1  199.9 

The ‘pension costs’ of defined contribution pension plans total € 25.0 million (2016: € 24.2 million).

Remuneration for members of the Executive Board and Supervisory Board

I. Members of the Executive Board

In euros Salary Variable remune-ration Fixed & Deferred remune-ration Social security expenses Other benefits Total
      variable remune-ration        
               
2017              
Executive Board              
               
J.J. Fennema, voorzitter 303,018  42,423  345,441  64,288  9,059  22,404  441,192 
I.M. Oudejans 279,621  39,147  318,768  59,492  9,059  20,900  408,219 
A.J. Krist 1) 60,601  10,017  70,618  12,966  2,265  8,179  94,028 
U. Vermeulen 242,405  33,937  276,342  51,863  9,059  16,426  353,690 
B.J. Hoevers 2) 66,667  9,333  76,000  14,390  3,020  1,550  94,960 
Total 952,312  134,857  1,087,169  202,999  32,462  69,459  1,392,089 

1) Stepped down on 1 April 2017, 2) Took office on 1 September 2017

The variable remuneration shown in the table above is based on the realisation of agreed targets during the financial year. The agreed targets comprise both collective Gasunie targets and long-term strategic targets, as described in the section entitled ‘Remuneration policy for the Executive Board’. The collective Gasunie targets relate to achieving agreed financial and operational results over 2017.
As of 1 July 2013, the pension scheme of employees of N.V. Nederlandse Gasunie was changed. The new pension scheme is a defined contribution plan, which means that the company has committed itself to paying a fixed, predetermined premium. This premium is based on a conditional average-salary scheme. As of 1 July 2013, this new pension scheme also applies to members of the Executive Board.

The other reimbursements in the column ‘Other benefits’ relating to Mr Fennema refer to the compensation in August 2017 for untaken leave days relating to the year 2017 to the amount of € 19,480 and the employer’s contribution to the life-course savings scheme to the amount of € 9,091.

In August 2017, a payment was made to Mr Oudejans as compensation for untaken leave days relating to the year 2017 to the amount of € 17,976. In addition, the employer’s contribution to the life-course savings scheme of € 8,389 was paid out. These reimbursements are recognised in ‘Other benefits’.

The reimbursements in the column ‘Other benefits’ relating to Ms Krist refer to the payment of her flexible allowance of € 3,130, the mortgage-related payment of € 634 and compensation for untaken leave days to the amount of € 4,415.

The reimbursement in the column ‘Other benefits’ relating to Mr Vermeulen is the payment of his flexible allowance of € 16,426.

The reimbursement in the column ‘Other benefits’ relating to Mr Hoevers is the payment of his flexible allowance of € 1,550.

The members of the Executive Board have a lease car at their disposal that is appropriate to their position.

In euros Salary Variable remuneration Fixed & Deferred remuneration Social security expenses Other benefits Total
      variable remuneration        
               
2016              
Executive Board              
               
J.J. Fennema, chairman 301,212  48,386  349,598  63,880  8,822  22,344  444,644 
I.M. Oudejans 277,954  44,650  322,604  59,112  8,822  20,843  411,381 
A.J. Krist 1) 160,961  25,805  186,766  34,418  5,881  17,739  244,804 
U. Vermeulen 1) 160,961  25,805  186,766  34,418  5,881  17,392  244,457 
               
Totaal 901,088  144,646  1,045,734  191,828  29,406  78,318  1,345,286 

1) As of 1 May 2016

The variable remuneration shown in the table above is based on the realisation of agreed targets during the financial year. The agreed targets comprise both collective Gasunie targets and individual targets, as described in the section entitled ‘Remuneration policy for the Executive Board’. The collective Gasunie targets relate to achieving agreed financial and operational results over 2016.

II. Members of the Supervisory Board
The remuneration for members of the Supervisory Board (SB) is determined by, amongst other things, their participation in the various committees: the Audit Committee (AC) and the Remuneration, Selection & Appointments Committee (RAC). In addition, the premium paid with regard to the Health Insurance Act (HIA) is included in the remuneration.

In euros SB AC RAC HIA premium Total
           
2017          
R. de Jong, chairman 30,908    2,064    32,972 
D.J. van den Berg 22,668    2,064  1,645  26,377 
M.M. Jonk 20,608    2,064    22,672 
M.J. Poots-Bijl 20,608  5,152    1,713  27,473 
W.J.A.H. Schoeber 20,608  5,152    1,713  27,473 
J.P.H.J. Vermeire 20,608  5,152    1,713  27,473 
           
Total 136,008  15,456  6,192  6,784  164,440 
           
2016          
R. de Jong, chairman 30,722    2,048    32,770 
D.J. van den Berg 22,530    2,048  1,659  26,237 
M.M. Jonk 20,482    2,048    22,530 
M.J. Poots-Bijl 20,482  5,120    1,728  27,330 
W.J.A.H. Schoeber 20,482  5,120      25,602 
J.P.H.J. Vermeire 20,482  5,120      25,602 
           
Total 135,180  15,360  6,144  3,387  160,071 

23. Other operating expenses

In millions of euros 2017 2016
     
Costs of subcontracted work and other external costs 218.3  227.7 
Cost of network management 110.3  109.8 
Other operating expenses 45.6  71.3 
     
Total other operating expenses 374.2  408.8 

The decrease in other operating expenses is mainly related to non-recurring expenses in 2016.

The additions to and release of the provision for abandonment costs and redevelopment totalling € 1.1 million (2016: € 14.8 million) and the additions to the provision for obsolescent stocks amounting to € 2.7 million (2016: € 0.5 million) are included in ‘Other operating expenses’.

24. Finance income

In millions of euros 2017 2016
     
Interest income 7.8  2.0 
Foreign exchange results 0.1  0.2 
     
Total finance income 7,9 2.2 

Interest income relates to loans granted and receivables.

25. Finance expenses

In millions of euros 2017 2016
     
Interest expenses 82.7  123.4 
Foreign exchange results 0.5  0.6 
Other finance expenses 2.3  3.2 
     
Total finance expenses 85.5  127.2 

The decrease in interest expenses relates to the repayment of long-term loans in 2017.

The interest expenses on financing liabilities stated at amortised cost amount to € 82.3 million (2016: € 122.6 million). Interest income relating to current financing liabilities amounts to € 1.0 million (2016: € 2.0 million negative). Of the interest expenses, a total of € 3.1 million (2016: € 2.7 million) was capitalised in 2017, based on a weighted average interest rate of 2.6% (2016: 3.2%).

26. Taxes

The taxes on the result in the consolidated profit and loss account comprise the following components:

In millions of euros 2017 2016
     
Corporate income tax payable for the financial year 56.8  159.0 
Corporate income tax payable for the previous financial years ‑7.9  ‑9.0 
Movement in deferred taxation ‑7.4  ‑114.1 
     
Total tax charge 41.5  35.9 

The reconciliation between the effective tax rate and the applicable tax rate for the consolidated financial statements is as follows:

In percentages 2017 2016
     
Profit and loss account    
Applicable tax rate, the Netherlands 25.0  25.0 
Effect of tax rates in other countries ‑1.9  -
Prior-year adjustments ‑5.1  ‑4.8 
Effect of tax rate change on deferred taxation 0.5  0.8 
Effect of innovation box ‑1.1  ‑1.1 
Other differences ‑3.6  ‑3.5 
     
Effective rate 13.8  16.4 
     
Deferred taxation    
Applicable rate (for subsequent financial years) 25.0  25.0 
Effective rate (for subsequent financial years) 25.0  25.0 

The prior-year adjustments relate mainly to the final outcome of the audit of the 2007-2012 period by the German tax administration. The other differences relate to non-taxable amounts as a result of the application of the participation exemption.

27. Workforce

The average number of employees in full-time equivalents in 2017 totalled 1,772 (2016: 1,759). At year-end 2017, the company employed 1,763 (2016: 1,771) full-time equivalents.

28. Dividend paid and proposed

The Executive Board proposes that € 0.7 million of the profit for 2017 be added to the general reserve and € 258.8 million be distributed to the shareholder. This dividend proposal has not been taken into account in the balance sheet as at 31 December 2017 or in the notes. The profit for 2016 amounted to € 183.5 million, of which € 110.1 million was paid out as dividend in 2017.

29. Financial information by segment

The information is segmented in line with the Group’s activities. The operating segments reflect the management structure of the Group. The following segments are distinguished:

  • Gasunie Transport Services
    This segment covers network management in the Netherlands and is responsible for managing transport, developing the pipeline network and related plants, as well as promoting market forces. This segment comprises the entities Gasunie Transport Services B.V. and Gasunie Grid Services B.V.
  • Gasunie Deutschland
    This segment covers network management in Germany and is responsible for managing transport, developing the pipeline network and related plants, as well as promoting market forces.
  • Participations & Business Development
    This segment focuses on facilitating access to the new gas flows for north-western Europe using an LNG connection and long-distance pipelines, and on utilising the geological infrastructure for the purpose of storing natural gas. Participation in national and international projects relating to the natural gas infrastructure in the Netherlands and Germany is another activity of this segment. This segment also includes joint ventures relating to pipelines that connect the Gasunie transport network with foreign markets, such as the BBL pipeline to the United Kingdom.

The accounting policies used for these segments are the same as those applied to the consolidated and company financial statements.

The assets, liabilities, revenues and results of a segment comprise both items directly related to the segments and items that can reasonably be attributed to them. Transaction prices for inter-segment transactions are determined at arm’s length.

I. Information on assets

In millions of euros Assets  
  31 dec. 2017 31 dec. 2016
Segments    
- Gasunie Transport Services 6,554.2  6,489.2 
- Gasunie Deutschland 1,292.4  1,459.8 
- Participations 1,334.7  1,431.1 
     
Segments total 9,181.3  9,380.1 
     
Unallocated assets 650.3  891.1 
     
Total consolidated assets 9,831.6  10,271.2 

Allocated assets relate to tangible fixed assets, intangible fixed assets, investments in joint ventures, investments in associates and other equity interests. Unallocated assets relate to deferred tax assets and current assets.

II. Information on revenues and result

In millions of euros Revenues     Segment result  
  2017 2016   2017 2016
Segments          
- Gasunie Transport Services 927.9  1,208.5    296.1  80.5 
- Gasunie Deutschland 224.2  235.2    ‑20.4  102.3 
- Participations 123.7  213.0    55.8  100.4 
Inter-segment ‑34.4  ‑108.9       
           
Segments total 1,241.4  1,547.8    331,5 283.2 
           
Unallocated financial income and expenses       ‑30.5  ‑63.8 
           
Result before taxation       301,0 219.4 
           
Taxes       ‑41.5  ‑35.9 
           
Revenues and result after taxation for the year 1,241.4  1,547.8    259,5 183.5 

During 2017, the Gasunie Transport Services segment provided inter-segment services to the value of € 7.3 million (2016: € 27.1 million), the Gasunie Deutschland segment provided € 0.5 million (2016: € 0.5 million) and the Participations segment provided € 26.5 million (2016: € 81.3 million). The shift between Gasunie Transport Services and Participation comes largely on the back of the merger of Peakshaver B.V. with Gasunie Transport Services B.V.

III. Other segment information

The above fixed assets comprise tangible fixed assets, intangible fixed assets, investments in joint ventures, investments in associates and other equity interests.

In millions of euros Investments in fixed assets  
  2017 2016
Segments    
- Gasunie Transport Services 207.3  266.2 
- Gasunie Deutschland 42.8  80.2 
- Participations 8.0  10.0 
     
Segments total 258.1  356.4 

In millions of euros Depreciation     Tangible non-monetary items other than depreciation  
  2017 2016   2017 2016
Segments          
- Gasunie Transport Services ‑243.7  235.6    ‑9.0  467.0 
- Gasunie Deutschland ‑34.4  34.8    ‑112.2  4.4 
- Participations ‑26.0  34.2    0.0  0.2 
           
Segments total ‑304.1  304.6    ‑121.2  471.6 

The ‘tangible non-monetary items other than depreciation’ relate to € 117 million in impairments in the Gasunie Deutschland segment and additions to and releases of provisions. For details of these impairments, see note 1.

In millions of euros Investments in joint ventures and associates     Share in equity of joint ventures and associates  
  2017 2016   31 dec. 2017 31 dec. 2016
Segments          
- Gasunie Transport Services - -   - -
- Gasunie Deutschland - -   104.3  163.1 
- Participations 2.9  0.2    86.5  81,6
           
Segments total 2.9  0.2    190.8  244.7 

In millions of euros Acquisitions in joint ventures and associates     Share in result of joint ventures and associates  
  2017 2016   2017 2016
Segments          
- Gasunie Transport Services - -   - -
- Gasunie Deutschland - 56.1    ‑18.5  11.4 
- Participations - -   23.1  22.5 
           
Segments total - 56.1    4,6 33.9 

The negative result in Joint Ventures in the Gasunie Deutschland segment relates primarily to impairments totalling € 33 million. For details, see note 1.

30. Information on products and services

In millions of euros Revenues from third parties  
  2017 2016
     
Gas transport 1,157.6  1,440.8 
Other activities 83.8  107.0 
     
Totaal 1,241.4  1,547.8 

31. Geographical information

Revenues from third parties and fixed assets by geographical area are determined primarily on the basis of the area where the activities take place. N.V. Nederlandse Gasunie operates in two geographical areas: the Netherlands and outside the Netherlands.

In millions of euros Revenues from third parties     Fixed assets  
  2017 2016   31 dec. 2017 31 dec. 2016
           
The Netherlands 980.8  1,237.3    7,184.9  7,190.1 
Outside the Netherlands 260.6  310.5    1,996.4  2,190.0 
           
Total 1,241.4  1,547.8    9,181.3  9,380.1 

The above fixed assets comprise tangible fixed assets, intangible fixed assets, investments in joint ventures, investments in associates and other equity interests.

32. Major customers

In 2017 and 2016, the company generated at least 10% of its external revenues from gas transport from one single external customer.

33. Related parties

Services between N.V. Nederlandse Gasunie and its related parties are provided at arm’s length.

GasTerra B.V. is a related party because the Dutch State has significant influence, both directly and indirectly. The Gasunie Transport Services B.V. group company provides gas transport services to GasTerra B.V. These services are performed in compliance with the Dutch Gas Act, which stipulates that Gasunie Transport Services B.V. is obliged to act in a non-discriminatory manner and to conduct business as requested. The tariffs charged have been established by the Dutch regulator ACM, an independent body with no involvement from the Dutch State. GasTerra B.V. qualifies as a major customer.

Services between N.V. Nederlandse Gasunie and its joint ventures and associates are not material.

The Executive Board also qualifies as a related party.  For the remuneration of the members of the Executive Board, see note 22 to the consolidated financial statements.

34. External auditor’s fees

The following fees relating to the work carried out by the audit firm responsible for auditing these financial statements were charged to the legal entity in the year under review. They include the corresponding fees charged to the consolidated subsidiaries.

In millions of euros Total PricewaterhouseCoopers     Of which PricewaterhouseCoopers Accountants N.V.  
  2017 2016   2017 2016
           
Audit of the financial statements 0.7  0.7    0.5  0.6 
Other audit engagements 0.2  0.2    0.2  0.2 
Tax consultancy - -   - -
Other non-audit services - -   - -
           
Total external auditor’s fees 0.9  0.9    0.7  0.8 

Summary of the services provided by the auditor in addition to the audit of the financial statements

Our auditor, PwC NL, for the period to which the statutory audit relates, provided the following services to the company and its audited entities in addition to the audit of the statutory annual accounts:

Other audit engagements due to legal or regulatory requiremenst  
Audit of financial statements on behalf of a Regulatory Authority 0.1 
  0.1 
Other audit engagements  
Audit of recognition of Government grants < 0,1
Assurance-assignment on CSR-report < 0,1
Assurance-assignment on Board renumeration < 0,1
Audit on the statutaroy financial statements of a subsidiary < 0,1
  0.1 
   
Total other audit engagements 0.2 
   
Advisory services related to taxes  
Not applicable -
  -
Other non-audit services  
Verification of financial information on behalf of a Regulatory Authority < 0,1
  < 0,1

Audit of the financial statements

The fee for the statutory annual accounts audits of subsidiaries amounts to € 0.1 million and is included in the total of € 0.7 million.

Gasunie's annual accounts have been drawn up in millions of euros, if an amount rounded to zero is outstanding, this is indicated by <€ 0.1 million.

35. Events after the balance sheet date

There are no events after the balance sheet date with significant financial consequences.