|In millions of euros||First half of 2018||First half of 2017|
|Financial income and expenses||(34)||(45)|
|Share in result of joint ventures and associates, and dividends from other equity interests||48||31|
|Result from sale of associates||-||19|
|Result before taxation|
|Result after taxation||234||291|
Revenues achieved in the first half of the year were approximately € 69 million less than in the same period last year. This is mainly due to the implementation of the new method decision for the 2017-2021 regulatory period for Gasunie Transport Services B.V. (GTS) in 2017.
The rates at which GTS and Gasunie Deutschland are permitted to charge their customers are regulated and are determined by the regulatory authorities in the Netherlands and Germany respectively, based on the expected permitted revenues and the expected capacity bookings. In the first half of 2017, pending the new method decision for GTS, the 2016 rates continued to apply to the regulated activities in the Netherlands. The rates for the current method decision came into force on 1 July 2017, but apply retroactively from 1 January 2017. As of 1 January 2018, the rates have been reduced by the annual efficiency target (x-factor) from the method decision.
A new method decision for the 2018-2022 period came into force for GUD in 2018. BNetzA has determined the efficiency of each individual network operator based on a benchmark. Given GUD’s 100% efficiency score, the new method decision has only a limited effect on the permitted revenu.
The method of regulation in both the Netherlands and Germany includes various regular ‘post-calculations’. Where the actual revenues deviate from the permitted revenues, the difference is settled in the rates for subsequent years. A post-calculation mechanism also applies to part of the energy costs for gas transport. In the 2018 revenue rates, GTS will make a repayment of € 25 million, and Gasunie Deutschland will receive a repayment of € 9 million. Based on the current financial outlook for the entire year 2018, Gasunie will, on balance, receive a repayment of approximately € 8 million in future rates (2019 and beyond) under the regulatory system.
Although the revenue from regulated activities in the Netherlands has decreased, the revenue from non-regulated activities is € 8 million more than in 2017. The greatest contribution to this increase was provided by BBL, which profited from favourable market conditions in the first quarter.
The operating result for the first half of 2018 fell by € 85 million compared to the same period in 2017. In addition to the € 69 million decline in revenues referred to earlier, the energy costs for gas transport in the first half of the year have risen in comparison to 2017. This rise is due to an increase in imports of H-gas plus the use of nitrogen, which is necessary for conversion to low-calorific gas. This makes it possible to further reduce production from the Groningen gas field. The cold winter period and higher energy prices are also important factors behind this increase. Depreciation costs have also increased due to amongst others the accelerated depreciation of two compressors that have been (temporarily) decommissioned.
Result after taxation
The financial income and expenses were € 11 million less than in the first half of 2017, due to repayment of a bond loan at the end of the first quarter of 2017, resulting in a lower interest-bearing loan position. The share in the result of joint ventures and associates, and dividends from other equity interests increased by € 17 million due to a higher dividend payment by Nord Stream. In 2017, Gasunie sold its share in ICE Endex, which produced a one-off result from disposals of associates of € 19 million.
The developments above lead to a result after taxation of € 234 million, which is € 57 million less than in the same period last year.
Although the operating results in the first half of 2017 were higher than in 2018, the application of the method decision for GTS (mentioned earlier) and our € 150 million write-off on GUD assets in the second half of 2017 give us reason to expect a better result in the second half of 2018. The results for the full year 2018 will exceed those of 2017.
The result after taxation from regular operations is expected to be approximately € 325 to € 350 million.
Expenses for replacement and expansion investments for all of 2018 are expected to total approximately € 350 to € 400 million, which is considerably higher than in 2017. The main reasons for this increase are the long-term investments in the EUGAL pipeline project and the planned construction of the new nitrogen plant.
Gasunie issued no bonds in the first half of 2018. However, Gasunie has raised short-term loans on the money market in the form of private loans and Euro Commercial Paper (ECP). No use was made of the € 680 million stand-by facility. A bond loan of € 300 million must be repaid in October 2018.
In June 2018, Moody’s Investors Service reconfirmed our long-term credit rating, which remains A2 with a positive outlook. Our short-term rating at Moody’s remains P-1. Gasunie also has a credit rating at Standard & Poor’s Global Ratings. Our long-term credit rating at S&P Global is AA- with a stable outlook, while the short-term rating is A-1+.