Notes to the condensed consolidated financial statements
N.V. Nederlandse Gasunie (hereafter: ‘Gasunie’ or ‘the company’) is a European energy infrastructure company. Gasunie provides regulated transport services in the Netherlands and Germany. Further, Gasunie jointly operates pipelines that connect the Gasunie transport network to foreign markets. Gasunie also provides other gas infrastructure services, including gas storage and the certification of green gas. 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 (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.
Financial reporting period
These semi-annual financial statements cover the first half-year of 2019, which ended on the balance sheet date of 30 June 2019.
Gasunie’s costs and revenue are not recorded evenly over the year due to seasonality (mainly due to temperature effects). The core activity of the company is transport of natural gas through the gas transport network. Revenues are generated from the sale of available transport capacity and transport-related services. During the winter, substantially more capacity is contracted by shippers than during the summer. Revenues are realised over the period the contracted capacity relates to, regardless of the actual transported volume. Meanwhile, the cost of network operations in particular do depend on the actual transported volume. A higher volume of transported gas results in higher costs for Gasunie.
Functional and presentation currency
The semi-annual financial statements are presented in euros, which is also the company’s functional currency. All amounts have been rounded to the nearest million, unless stated otherwise.
Use of estimates and management judgements
In preparing the semi-annual 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 first six months of the financial year. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively in the period to which the revision relates.
The judgements and estimates are significant for the valuation of fixed assets, trade receivables, other equity interests and pension liabilities, for the classification of equity interests and for the calculation of the provision for abandonment costs and redevelopment.
Statement of compliance
The semi-annual financial statements have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’, as endorsed by the European Union. Semi-annual financial statements do not contain full disclosures as normally required in a complete set of annual financial statements. For this reason, the semi-annual financial statements must be read in conjunction with the annual report 2018.
The semi-annual financial statements have been reviewed by an independent auditor. The review report is attached to these semi-annual financial statements.
Accounting policies for consolidation and the measurement of assets and liabilities and the determination of the result
Under Regulation (EC) no. 1606/2002 of the European Parliament, the company’s consolidated financial statements must be prepared in accordance with the International Financial Reporting Standards (IFRS), as endorsed by the European Union.
The accounting policies applied in preparing the consolidated (condensed) 2019 semi-annual financial statements are consistent with the accounting policies applied in preparing the 2018 consolidated financial statements. In addition, IFRS 16 became effective on 1 January 2019. The adoption of this standard is disclosed below.
IFRS 16 Leases
Gasunie has entered into lease agreements relating to, among other things, land, buildings and installations and company cars. IFRS 16 was adopted retrospectively (IFRS 16 C8b ii). Comparative information was not adjusted; the effect of IFRS 16 was recorded in the opening balance as at 1 January 2019.
At initial application and measurement, the following principles have been applied:
- Existing lease contracts based on IAS 17/IFRIC 4 were separated into lease and non-lease components as at 1 January 2019. Non-lease components do not meet the definitions of IFRS 16. The costs incurred relating to these contracts are recorded in the period to which they relate.
- Lease liabilities are discounted using the implicit interest rate. If the implicit interest could not be readily determined, Gasunie’s incremental borrowing rate was applied. The weighted average interest rate as at 1 January 2019 was 1.57%. For portfolios of leases with similar characteristics, an interest rate was applied that is representative of the portfolio as a whole.
- The expected lease term is based on the term of the lease agreement, taking into account contractual extension options, when the company is reasonably certain that these options will be exercised.
- The asset or the right-of-use of an asset was recorded in the balance sheet at the present value of the lease liability plus directly attributable costs, if any.
- Lease agreements with a remaining duration of less than one year or with a contract value of less than € 5,000 are not recorded in the balance sheet, based on the recognition exemptions of IFRS 16.
Based on the principles above, a lease liability was recorded in the balance sheet amounting to € 106.3 million as at 1 January 2019. The nominal value of the liabilities based on previous regulation amounted to € 115.0 million as at 31 December 2018. The difference can be attributed to the effect of discounting (€ 5.0 million negative), removal of non-lease components and updating expected contractual lease terms (net-effect: € 2.7 million negative) and the effect of not recording leases with a remaining term of less than 1 year (1.0 million negative).
The right-of-use assets are recorded under the caption tangible fixed assets. The additions to the tangible fixed assets can be summarised as follows:
|In millions of euros||Book value as at 30 June 2019||Book value as at 1 Jan. 2019|
|Land and buildings||95.4||99.1|
|Regional transmission lines and related assets||0.6||0.8|
|Other fixed operating assets||6.4||6.4|
For subsequent measurement of the lease contracts the following principles apply:
Assets are measured at cost, less accumulated linear depreciation based upon the term of the lease agreement. After initial measurement, lease liabilities are measured at amortised cost on the basis of the effective interest rate method.
If the terms of the lease agreement change (for example, due to price indexation), the book value of the lease liability and the right-of-use asset is remeasured.
Refer to note 1 of the notes to the 2019 semi-annual financial statements for the effect of IFRS 16 on the consolidated statement of financial position and statement of profit and loss.
Other amendments to IFRS
The following standards are also effective as of the 2019 financial year:
- Amendments to IFRS 9: Prepayment features with negative Compensation
- IFRIC 23: Uncertainty over Income Tax Treatments
- Amendments to IAS 28: Long term interests in Associates and Joint Ventures
- Amendments to IAS 19: Plan Amendment, Curtailment or Settlement
- Annual Improvements to IFRS Standards 2015-2017 Cycle
In addition, the following standards are expected to become effective in the near future. For these standards, EU endorsement is still pending.
- Amendments to References to the Conceptual Framework in IFRS Standards
- Amendments to IFRS 3 Business Combinations
- Amendments to IAS 1 and IAS 8: Definition of Material
- IFRS 17 Insurance Contracts
Based upon analysis by the company, both the endorsed and the non-endorsed standards do not have a material effect on the company’s equity and result, and do not require significant additional disclosures.