Notes to the condensed consolidated financial statements

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 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.

Seasonal influence
The core activity of Gasunie Transport Services B.V., Gasunie Deutschland Transport Services GmbH and BBL Company V.O.F. is the transport of natural gas through their gas transport network. Revenues consist of the sale of the available transport capacity and transport-related services. Our customers can enter into contracts that allow them to reserve capacity at certain entry or exit points in the gas transport network for a certain period (year, quarter, month or day). There is a seasonal pattern in the regional transport capacity contracted by our customers in the Netherlands: in the winter, more capacity is contracted than in the summer. Revenues are realised through the transport capacity sold and are independent of the actual transported volume. In contrast, the costs of network operations in particular do depend on the transported volume.

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 endorsed by the European Union.

The accounting policies applied in preparing the 2018 consolidated semi-annual financial statements are consistent with the accounting policies applied in preparing the 2017 consolidated financial statements, with the exception of IFRS 9 and IFRS 15, which came into force as of 1 January 2018. The incorporation of these standards is shown below.

IFRS 9 Financial Instruments
IFRS 9 pertains to the classification and measurement of financial instruments and replaces IAS 39 (among others). The consolidated semi-annual financial statements include several financial instruments that fall within the scope of IFRS 9. For the assets, this concerns the following items: investments in other equity interests, receivables from joint ventures, loans to third parties and trade and other receivables. These assets are measured at amortised cost with the exception of the investments in other equity interests, which are measured at fair value with changes in value recognised in equity. The introduction of IFRS 9 does not have any impact on the classification or measurement of these financial instruments.

The company measures trade receivables according to the “simplified approach”, as further analysis has established that these arise from the revenues within the scope of IFRS 15, which do not contain any significant financing component.

Under the simplified approach, a provision is formed upon the first measurement of the receivable to cover the expected non-payment. This expectation is based on historical payment data. To determine this effect, Gasunie has analysed the corporate credit policy and scale of bad debt among its trade receivables over the past 5 years. This bad debt is extremely limited in both its incidence and its volume; the latter is between 0.00 and 0.04%. In the next 12 months, the credit risk will continue to be extremely limited.

Given the very limited volume and low incidence of write-offs on trade receivables, an allowance for expected credit losses is financially immaterial. Gasunie continues to monitor the payment behaviour of its debtors. If there are sufficient indications that a receivable has become uncollectible, a provision will be formed.

As concerns liabilities, IFRS 9 only introduces changes with respect to IAS 39 in terms of the classification and measurement of liabilities measured at fair value, whereby the result is taken to the profit and loss account. The consolidated financial statements do not contain any such liabilities. 

Finally, the consolidated semi-annual financial statements include two cash flow hedges. 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. The results of these hedges are taken to equity (“Fair Value through Other Comprehensive Income”) and reclassified to the profit and loss account upon realisation. This manner of recognition is maintained under IFRS 9.

To summarise, it can be said that the application of IFRS 9 does not bring with it any changes to the classification or measurement of the company’s financial instruments.

IFRS 15: revenue from customer contracts
IFRS 15 is in effect as of 1 January 2018, and supersedes IAS 18. The company has implemented the guideline according to the retrospective method, making use of the provision allowing contracts that expired before 1 January 2017 to be disregarded.

In the context of IFRS 15 implementation, the company has analysed its current contracts with customers, devoting attention to the contract terms and conditions, the rate structures, the terms of the contracts and any special stipulations. The purpose of this analysis was to determine whether IFRS 15 has an impact on the measurement of its contracts, and whether any discounts, prepayments or advance deliveries of services might give rise to new contract assets or liabilities.

The implementation of IFRS 15 does not give rise to any adjustment in the measurement or processing of the regular transport and storage contracts. However, three special contractual provisions have been identified that were in effect prior to 1 January 2018, and which give rise to an adjustment of the opening balance on 1 January 2018. Furthermore, we have reassessed an existing contract commitment, and reclassified it from a short-term to a long-term liability. The following table shows the influence of these adjustments on the opening balances as per 1 January 2018.

In millions of euros 31 Dec. 2017 IFRS 15 retrospective application 1 January 2018
       
Tangible fixed assets  8,499.9   18.1   8,518.0 
Deferred tax assets  402.0   2.2   404.2 
Total change in assets    20.3   
       
Equity (Other reserves)  5,782.3   (7.4)  5,774.9 
Long-term contract commitment -  50.7   50.7 
Trade and other payables  276.0   (23.0)  253.0 
Total change in liabilities    20.3   

The impact of the implementation on the result after taxation amounts to € 0.5 million over the first half of 2017 and 2018.

IFRS 15 requires the company to categorise its revenues according to the way in which economic factors influence the nature, amount, timing and uncertainty of the cash flows. This categorisation is explained in note 7 to these financial statements.

IFRS 16 Leases
IFRS 16 Leases will become effective from the 2019 financial year. Gasunie will implement this standard using what is known as the “modified retrospective approach”, whereby the remaining lease commitments will be presented as a liability on the balance sheet and discounted at the incremental interest rate. The asset or right of use associated with the lease will be presented at the same value on the assets side.

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 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 75 and 125 million euros. Moreover, 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.