Notes to the consolidated financial statements

Reporting entity
N.V. Nederlandse Gasunie (hereinafter also called ‘Gasunie’, ‘the company’ and ‘we’) is a European energy infrastructure company. The company is domiciled in Groningen, the Netherlands. 

The company’s primary activity is to provide regulated transmission services in the Netherlands and Germany. Alongside this, Gasunie is making extensive use of its infrastructure and knowledge for the further development and integration of alternative energy sources and carriers, such as hydrogen, heat and green gas, as well as the development of CCS. Gasunie is moreover involved in joint arrangements for pipelines that connect the Gasunie transport network with markets outside the Netherlands. Gasunie also provides other energy infrastructure services, including LNG and gas storage and the certification of green gas and hydrogen.

The company is a public limited company and has its registered and actual office at Concourslaan 17, Groningen, the Netherlands, and is registered with the Chamber of Commerce under number 02029700. N.V. Nederlandse Gasunie is the ultimate parent of the group. All shares in N.V. Nederlandse Gasunie issued as at the balance sheet date are held by the Dutch State.

Reporting period
These financial statements relate to the 2022 financial year, which ended on the balance sheet date of 31 December 2022.

Presentation and functional currency
The financial statements are presented in euros, which is also the functional currency of the company. Unless otherwise specified, all amounts are in millions of euros.

Going concern
These financial statements have been prepared on the basis of the going-concern assumption. Management believes that there is no uncertainty about using the going-concern assumption.

Elements of the directors’ report and the financial statements
The directors’ report, as defined in Article 2:391 of the Dutch Civil Code, consists of the following sections of the annual report and the financial statements: 

• Value creation at Gasunie
• Foreword by the Executive Board, and key figures
• Strategy
• External economic value creation
• External social value creation
• Internal economic value creation
• Internal social value creation
• Governance (except the ‘Report of the Supervisory Board’)
• Declaration by the Executive Board
• Information on financial instruments (note 25 ‘Financial instruments’ to the consolidated financial statements)
• Annexes (except the ‘Report of the Works Council’)

The consolidated financial statements comprise the consolidated statement of financial position, the consolidated statement of profit and loss, the consolidated statement of other comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement. These statements include references to the notes to the financial statements. The notes to the financial statements in the consolidated financial statements are an integral part of the consolidated financial statements. The consolidated financial statements and the company financial statements jointly form the company’s statutory financial statements. 

IFRS comprises both the International Financial Reporting Standards (IFRS) and the International Accounting Standards (IAS) published by the International Accounting Standards Board and the interpretations of IFRS and IAS standards published by the IFRS Interpretations Committee (IFRIC) and Standing Interpretations Committee (SIC) respectively.

New and amended standards for financial reporting
Unless stated otherwise, the following amendments to standards became effective at the start of the 2022 financial year: 

• Amendments to IFRS 3 Business Combinations
• Amendments to IAS 16 Property, Plant and Equipment
• Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets
• Annual Improvements 2018-2020.

The following amendments to standards will become effective at the start of the 2023 financial year: 

• Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies
• Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates
• IFRS 17 Insurance Contracts; including Amendments to IFRS 17
• Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
• Amendments to IFRS 17 Insurance Contracts: Initial Application of IFRS 17 and IFRS 9 – Comparative Information.

Furthermore, the standards or amendments to them listed below are expected to become effective in the future. EU endorsement has not yet been given for these standards: 

• Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Classification of Liabilities as Current or Non-current – Deferral of Effective Date
• Amendments to IAS 1 Presentation of Financial Statements: Non-current Liabilities with Covenants
• Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback.

Our analysis revealed that the already adopted standards and those still to be endorsed have or will have no material impact on the company’s equity, cash flow and result and that there are no significant additional disclosures required. For that reason, the consequences of these amendments for the company have not been described in detail in these financial statements.

Management judgements and estimates
In preparing the financial statements, management has used estimates and assessments that could affect the assets and liabilities presented as at the balance sheet date and the result for the financial year. The actual results may differ from these estimates. The estimates and underlying assumptions are reviewed at regular intervals. Revisions to estimates are recognised in the period in which the estimate is revised and in future periods that are affected by the review.

The nature of the judgements and estimates, including the assumptions that accompany the uncertainties, are included in the note to the relevant items in the financial statements if they are deemed necessary for providing the required disclosure.

The effect of management’s judgements and estimates is significant for the:

• measurement and determination of the useful life of the fixed assets (as included in note 4 ‘Impairment tests’ and note 5 ‘Tangible fixed assets’);
• measurement of other participating interests (as included in note 9 ‘Other participating interests’);
• measurement and determination of the provision for abandonment costs and redevelopment (as included in note 21 ‘Other provisions’);
• measurement of deferred tax assets (as included in note 10 ‘Deferred tax assets’).
• measurement of pension obligations (as included in note 20 ‘Employee benefits’);
• classification of the equity interests (as included in note 6 ‘Investments in joint operations’ and note 7 ‘Investments in joint ventures’); measurement of the derivative financial instruments (as included in note 22 ‘Derivative financial instruments’).

In certain cases, the aforementioned judgements and estimates are also affected by developments in the area of the energy transition and tightened environmental and climate targets. We take these developments into account in our judgements and estimates.

Determination of fair value
The determination of fair value is required for a number of accounting policies and disclosures. The fair value of a financial instrument is the amount for which an asset could be traded or a liability settled between parties knowledgeable about the matter who are willing to enter into a transaction and are independent of each other.

• The fair value of listed financial instruments is determined on the basis of the exit price.
• We determine the fair value of non-listed financial instruments by calculating the present value of the expected cash flows at a discount rate equal to the applicable risk-free market rate for the remaining term, plus credit and liquidity surcharges.
• We determine the fair value of derivatives for which no collateral is exchanged by calculating the present value of the cash flows by means of the relevant swap curve plus credit and liquidity surcharges.

When determining the fair value of an asset or a liability, we make as much use as possible of market-observable data. We use a fair value hierarchy of disclosures, classifying fair values according to the quality of inputs used in our fair value estimates (‘fair value levelling’). The various levels are defined as follows: 

• Level 1: Based on quoted prices on active markets for the same instrument.
• Level 2: Based on prices on active markets for comparable instruments, or based on other valuation methods, with all required key data being derived directly or indirectly from publicly available market information.
• Level 3: Based on valuation methods, with all the required key data not being derived from publicly available market information.

If the information we use for determining the fair value of an asset or liability can be classified at different levels of the fair value hierarchy, we classify the fair value determined in its entirety at the lowest applicable level.

We recognise reclassifications between levels of the fair value hierarchy at the end of the reporting period in which the change has taken place. We continually assess changes to significant information we use and, where necessary, adjust the fair value determination accordingly.

The company exercises control if, directly or indirectly: 

• it has power over the relevant activities of the group company in question, is exposed to or entitled to variable returns from its involvement with the company; and
• has the ability to use its power over the group company to influence the amount of the investor’s returns.

Generally, it is presumed that if the company has more than 50% of voting rights, it exercises control. However, we consider all facts and circumstances when assessing each participating interest. When circumstances change, we reassess whether or not we exercise control.

We fully consolidate group companies from the date on which dominant control of the group company is obtained until the date that dominant control no longer exists. We measure the items in the consolidated financial statements in accordance with the company’s accounting policies.

Intra-group balances and transactions are eliminated, as are any unrealised profit and losses from intra-group transactions.

Consolidation scope

In note 56 ‘List of group companies and participating interests’ we have included a list of all the group companies in the consolidation.

Business combinations and goodwill
We recognise business combinations, such as mergers or acquisitions, in accordance with the acquisition method as described in IFRS 3 ‘Business Combinations’. The acquisition price is calculated as the sum of the assets transferred, liabilities entered into or acquired, and, where relevant, equity instruments issued by the acquiring party. We take costs relating to the business combination directly to profit and loss. The identifiable assets, liabilities and contingent liabilities acquired as part of the business combinations are recognised by company, as the acquiring party, at fair value on the date of acquisition. Conditional payments are initially measured at fair value on the date of acquisition. We measure a conditional payment that qualifies as a financial instrument at fair value and recognise changes in fair value in profit and loss at the time these changes occur.

We designate any surplus of the acquisition price above the share in the fair value of the net identifiable assets, liabilities and contingent liabilities as goodwill and recognise this under intangible fixed assets. After initial recognition, we measure goodwill at cost less any accumulated impairments.

Principles for the translation of foreign currencies
We measure transactions denominated in foreign currencies in the functional currency on initial recognition by translating them at the foreign exchange rate between the functional currency and foreign currency applicable on the date of the transaction.

We translate monetary assets and liabilities denominated in foreign currencies at the balance sheet date into the functional currency at the exchange rate applicable on that date. We recognise exchange differences arising from the translation of monetary items into foreign currency in profit and loss in the period in which they arise, unless hedge accounting is applied to these transactions.

We translate non-monetary assets and liabilities denominated in foreign currencies measured at historical cost into the functional currency at the exchange rate applicable on the transaction date.

We recognise exchange rate differences that occur when translating eligible cash flow hedges, to the extent that the hedge is effective, in other comprehensive income.

Fixed assets
Tangible fixed assets
We measure tangible fixed assets at cost, less any accumulated depreciation and accumulated impairments. When initially measured, the costs of periodic major repairs are recognised in the carrying amount of the asset on the basis of the component approach. This also applies, where appropriate, to the costs of abandonment, redevelopment and/or demobilisation. We capitalise interest expenses if they relate to the purchase, construction or production of qualifying assets, provided the assets need a substantial period (more than one year) before being ready for their intended use.

We determine depreciation by writing off the costs of the tangible fixed assets, less their estimated residual value, on a straight-line basis over their estimated useful life. We do not calculate depreciation on land, sites or the volumes of line pack in the pipelines and cushion gas in the caverns.

A substantial part of the assets is intended for regulated business operations. Regulation of future cash flows by the regulatory authority will determine the recoverable amount of the regulated assets. Management is required to make significant estimates and judgements, in particular with regard to the useful life, residual value and future cash flows from gas transportation. The residual value of the asset, the useful life and the depreciation methods are reviewed annually and adjusted if necessary. Note 5 ‘Tangible fixed assets’ contains a more detailed explanation of the expected useful life of the assets.

Tangible fixed assets are divided into categories. The useful life and associated depreciation period is determined for each category. In note 5 ‘Tangible fixed assets’ we describe the categories and give the depreciation period for each category.

We deduct third-party contributions to the cost of construction of the energy infrastructure from the investments, insofar as such contributions are either government-sourced (including grants) or not related to transport capacity. We recognise customer contributions to investments that are related to transport capacity in the balance sheet as contract liabilities in line with the provisions of IFRS 15; we credit these to profit and loss at regular intervals in accordance with the term of the contract with the customer. If there is a significant financing component in the customer contributions, the finance expenses are recognised under financial expenses. We describe this recognition in more detail under ‘Net revenue’ in these principles.

We recognise tangible fixed assets not yet in operation as at the balance sheet date as ‘Fixed operating assets under construction’. On commissioning, we classify the relevant assets according to their type in one of the main categories. We include the volumes of line pack in the pipelines and cushion gas in the caverns (needed for gas transmission and storage and related services) under ‘Other fixed operating assets’. If any changes occur in the volume of line pack and/or cushion gas, the average gas price for the period in which the change took place is used as the cost price.

We recognise any profit or loss on disposal of a tangible fixed asset under depreciation costs in profit and loss at the time of decommissioning.

Tangible fixed assets for which the company has the right of use under the terms of a lease agreement are also included in the balance sheet. See also the accounting principles under the heading ‘Leasing’.

Investments in joint operations
Investments in joint operations are participating interests in which the company exercises joint control and in which the company has the rights to assets and liabilities with respect to the participating interest’s debts.

The rights to the assets and liabilities with respect to the participating interest’s debts, and the associated rights relating to the joint operations’ revenues and expenses are included in the financial statements.

Investments in joint ventures
Investments in joint ventures are participating interests in which the company exercises joint control with other parties and has rights to the participating interests’ net assets.

We measure these participating interests using the equity method. In accordance with this method, the participating interests are measured at cost (including goodwill) plus the share in the result and the share in other comprehensive income from the moment of acquisition less the share in dividend payments. The company’s share in the result of joint ventures is recognised in the statement of profit and loss and in the consolidated statement of other comprehensive income.

Investments in associates
Investments in associates are participating interests in which the company exercises significant influence on operating and financial principles, but has no control.

We measure these participating interests using the equity method. In accordance with this method, the participating interests are measured at cost (including goodwill) plus the share in the result and the share in other comprehensive income from the moment of acquisition less the share in dividend payments. We recognise the company’s share in the result of associates in the statement of profit and loss.

Elimination of transactions with participating interests
We eliminate unrealised profit from transactions with participating interests measured using the equity method in proportion to the company’s share in the participating interest.

Other participating interests
On the basis of IFRS 9, we measure other participating interests at fair value after initial recognition, taking unrealised gains or losses to other comprehensive income. No recycling takes place through the profit and loss account.

When determining the fair value of the other participating interests, management makes assumptions and estimates, including relating to expected dividends, cash flows and discount rates. In note 9 ‘Other participating interests’ and note 25 ‘Financial instruments’ we describe the most important assumptions.

If the fair value cannot be reliably determined based on these assumptions, we use the cost or net asset value as the basis for fair value and state such in the notes to the financial statements.

We take the share in the result of other participating interests to profit and loss as soon as the formal decision has been made that these participating interests will pay dividends or as soon as the dividend has been made available for payment.

Impairment of fixed assets
At the end of every reporting period, the company investigates whether there is any impairment of fixed assets, including tangible and financial fixed assets. Management determines the recoverable amount of the assets. The recoverable amount is the higher of the fair value less costs to sell (e.g. based on a sales contract less the costs to be incurred for the sale) and the value in use (based on the results of a value-in-use calculation for example). If the recoverable amount is less than the carrying amount, the difference is taken to profit and loss. Due to the nature of the tangible fixed assets, it is often not possible to determine the recoverable amount of an individual asset. In such cases, we determine the recoverable amount of the cash-generating unit to which the asset belongs.

The company also investigates whether an impairment recognised in previous periods no longer exists or has decreased. If an impairment loss recognised in the past is found to no longer exist or to have decreased, the increased carrying amount of the relevant asset or cash-generating unit will not be set higher than the carrying amount which would have been determined if no impairment for the asset or cash-generating unit had been recognised. Any reversal of an impairment recognised in the past is recognised in the profit and loss account.

Current assets
Inventories
We recognise inventories at cost based on the lower of average cost, applying the FIFO principle, or recoverable amount. Cost comprises the acquisition price or the cost of manufacture plus any other costs involved in taking inventories to their current place and keeping them in their current condition. The recoverable amount is based on the most reliable estimate of the amount that the inventories will generate less any costs to be incurred. 

Trade and other receivables
At initial recognition, we measure trade and other receivables at fair value. After initial recognition, we recognise trade and other receivables at amortised cost because the company’s business model concerns the collection of contractual cash flows under the aforementioned receivables and the cash flows relate solely to the payment of principal and interest. 

Owing to the short term of the trade and other receivables, the company uses the simplified IFRS 9 method to measure trade and other receivables (based on the lifetime expected losses). In this context, a provision is created to cover the expected credit losses, based on amounts yet to be received and the probability of non-payment. Any securities provided that may mitigate the credit loss are also taken into account. 

Trade receivables also include the amounts that have not yet been invoiced as at the balance sheet date for services rendered during the financial year.

Cash and cash equivalents
Cash and cash equivalents include the available financial resources in the form of balances at banks and other third parties, such as bank accounts, deposits or call funds. We only recognise a deposit as a cash equivalent if we can readily convert that deposit into a known cash amount within 90 days and the deposit is not subject to a significant risk of changes in value.

We hold cash equivalents for the purpose of meeting current liabilities and do not normally use these for investments or other purposes.

Derivative financial instruments
Derivative financial instruments – with application of hedge accounting
As required, the company makes use of derivative financial instruments in certain cases to manage financial risks arising from future transactions (cash flows). We initially recognise these instruments at fair value on the date on which the contract is concluded (the value is generally zero at the outset). We subsequently remeasure the fair value at the end of every reporting period. We recognise gains or losses on the effective part of the hedging instrument in the cash flow hedge reserve in equity, net of deferred taxation. We take any ineffective parts directly to profit and loss.

When a hedging instrument is wound up, gains or losses on the effective part continue to be recognised in equity for as long as the underlying cash flow is expected to occur. If we no longer expect underlying cash flow, we take the gains or losses on the effective part, which has been deferred in equity, directly to profit and loss.

We recognise effective derivative financial instruments designated for hedge accounting in the same way as the hedged position. Depending on the nature and the term of the underlying contract, we classify the instruments as either non-current or current.

Derivative financial instruments – without application of hedge accounting
We immediately recognise changes in the fair value of other derivative financial instruments for which no cash flow hedge accounting is used in profit and loss from initial recognition onwards.

Commodity contracts
In accordance with IFRS 9.2.4, we do not include contracts entered into for the procurement of commodities, such as energy for the company’s operating activities, in the balance sheet.

Non-current liabilities
Non-current liabilities are liabilities with a remaining nominal term of more than one year. We include repayment obligations that are due within a year under current liabilities.

Interest-bearing loans are initially recognised at fair value less transaction costs. After initial recognition, we measure interest-bearing loans at amortised cost on the basis of the effective interest method, recognising the transaction costs and the discount in profit and loss in the period to which they relate. We recognise discount and transaction costs not yet taken to profit and loss as a reduction in the non-current liabilities to which they relate.

For certain loans, the coupon interest payable is based partly on whether future sustainability targets are met. If these sustainability targets are not met, the coupon interest rate is increased. At the end of every reporting period, the company evaluates whether it expects to meet the sustainability targets. If the company expects that the sustainability targets will not be met, the effective interest rate will be adjusted accordingly from that moment, and the additional interest expenses will be taken to profit and loss based on the effective interest method.

When the contractual obligation has lapsed or expired, loans are no longer recognised in the balance sheet.

Employee benefits
Employee benefits are recognised as an expense in profit and loss in the period in which the work is performed and, until paid out, as a liability in the balance sheet. Personnel expenses include all costs related to employee benefits during and after employment. In addition to the liabilities that are legally enforceable, the company’s liabilities with respect to employee benefits also include any liabilities involving a situation where the company has no realistic alternative other than to comply with the obligation (‘constructive obligations’).

Liabilities for employee benefits concern pension obligations, long-service awards and the costs of post-employment fringe benefits for non-active and retired employees.

Personnel-related provisions
Personnel-related provisions comprise the provision for pension obligations and other personnel-related provisions.

Pension plans
The company has entered into pension plans entitling its employees to a number of benefits, including a retirement pension and a dependants’ pension.

The pension plan for employees of Gasunie in the Netherlands is a defined contribution pension plan. This plan will remain in effect until the transition to the new Dutch pension system and will end in any case no later than 31 December 2026. This means that the company has committed itself to paying a fixed, predetermined contribution while this plan is in effect. This contribution is based on a conditional average-salary pension plan in line with prevailing tax and pension legislation. Pension accrual in a conditional average-salary pension plan has been capped at 1.875% per annum of average pensionable earnings up to the statutory maximum pensionable salary. Pension entitlements are not guaranteed. The premiums payable in respect of employees’ pension entitlements are paid to Stichting Pensioenfonds Gasunie, which administers the pension plan.

Employees of Gasunie Deutschland who joined the company in or after 2012 are enrolled in a pension plan reinsured with a pension fund. This pension plan also qualifies as a defined contribution plan. Set on an annual basis, the employer’s contribution for 2022 is 3% of the pensionable salary up to the threshold and 15% of the pensionable salary above the threshold.

The basic principle for recognition of the aforementioned plans is that the pension expense to be recognised in the reporting period equals the pension premiums payable to the pension provider for that same period. To the extent that the payable premiums have not yet been paid by the balance sheet date, a liability is recognised for these premiums. If premiums prepaid by the balance sheet date exceed the total premiums payable, we will include an accrued income item to the extent that the funds will refund the excess premiums paid or offset this amount against future premiums.

The present value of the provision for pension obligations for employees of Gasunie Deutschland who joined before 2012 is calculated as per the projected unit credit method. Significant assumptions have been made in the calculation about the market interest rate on high-quality corporate bonds for the purpose of determining the discount rate, expected future increases in salary, expected future increases in pensions and average life expectancy. For more information on these variables, please see note 20 ‘Employee benefits’ to the consolidated financial statements.

We recognise actuarial gains and losses and experience adjustments in the statement of other comprehensive income and subsequently take these to equity in the period in which they occur, net of deferred taxation. The relevant actuarial calculations are drawn up and assessed by external actuaries every year.

Other personnel-related provisions are described below.

Provision for long-service awards
This provision relates to long-service awards paid by the company to its employees. Account is taken of the likelihood that the award will be made and of a pre-tax discount rate that incorporates the prevailing market assessments of the time value of money and the risks inherent in the obligation.

Provision for costs of post-employment fringe benefits for non-active and retired employees
This provision relates to the allowance that the company pays to its employees after they retire. It represents the present value of the benefits already committed to non-active and retired employees. Account is taken of life expectancy and a pre-tax discount rate that incorporates the prevailing market assessments of the time value of money and the risks inherent in the obligation.

At the end of every reporting period, we assess the assumptions on which the personnel-related provisions are based and adjust these based on mortality tables, interest and cost developments and other relevant information.

Other provisions
A provision is included in the balance sheet if: 

• there is a legally enforceable or factual liability resulting from a past event;
• a reliable estimate of the above can be made; and
• it is probable that an outflow of resources is required to settle that liability.

The amount recognised as a provision is the best possible estimate as at the balance sheet date of the expenditure required to meet the existing liability, taking into account the probability of the event.

Other provisions comprise the provision for certain abandonment costs and redevelopment and the provision for demobilisation and other obligations relating to site clearing and new construction.

Provision for abandonment costs and redevelopment
This provision is recognised due to the company’s decisions to decommission, remove or redevelop specific identifiable assets within the foreseeable future as required under legislation where applicable. The size of the provision is partially determined on the basis of experience figures derived from previous abandonments and redevelopment.

The provision is measured based on the present value of the expenditure deemed necessary to settle the liability. The discount rate is determined before taxation and takes into account the prevailing market assessments of the time value of money and the risks inherent in the liability.

Provision for demobilisation and other obligations relating to site clearing and new construction
This provision is made to meet the costs relating to contractual obligations that arise during and at the end of the term of various leases and other contracts. The size of the provision has been determined based on the contractually agreed maximum amounts or, where these were not available, detailed calculations based on which the expected costs have been estimated.

The provision is measured based on the present value of the expenditure deemed necessary to settle the liability. The discount rate is determined before taxation and takes into account the prevailing market assessments of the time value of money and the risks inherent in the liability.

Leases
Initial recognition and measurement of leases is as follows:

• The company breaks down lease liabilities into lease and non-lease components. The non-lease components are not considered to fall within the scope of IFRS 16. We recognise the costs resulting from these non-lease components in profit and loss in the period to which they refer.
• We determine the expected term of the lease liability on the basis of the contractual term of the agreement, taking into account any potential optional extensions, in the event that the company may reasonably be expected to use them.
• If applicable, we take residual value guarantees, significant variable lease payments and penalty clauses into account when measuring the lease liabilities.
• In principle, the present value of the lease liabilities is calculated at the implicit interest rate. Where the implicit interest rate cannot be directly derived from the leases, we use the company’s incremental borrowing rate. We use a borrowing rate representative of the portfolio as a whole for portfolios of leases with similar conditions.
• We initially include the right-of-use asset connected with the lease in the balance sheet at the present value of the lease liability, plus any directly attributable costs and costs of abandonment, redevelopment and/or demobilisation.
• Leases with a term of less than one year or with a contract value of less than € 5,000 are not included in the balance sheet, in accordance with the provisions of IFRS 16.

The assets associated with the lease liability are recognised under tangible fixed assets in the main category right-of-use assets.

The subsequent measurement of the leases as follows:

• We measure right-of-use assets at cost, less straight-line depreciation calculated over the expected term of the lease agreement and with possible impairment losses. An explanation of how the cost price is determined is given above under ‘initial recognition and measurement of leases’.
• After initial recognition, we measure the lease liabilities at amortised cost based on the effective interest method.If the principles in the lease change (e.g. due to indexation or other modifications), we remeasure and recognise the carrying amount of the lease liability and the right-of-use asset in the balance sheet.

Current liabilities and other financial obligations
After initial recognition, we measure current liabilities and other financial obligations at amortised cost based on the effective interest method. The effective interest is recognised directly in profit and loss.

Determination of the result
The result is calculated as the difference between the net realisable value of services rendered and the costs and other expenses incurred over the year. The revenues from transactions are recognised in the year in which they are realised.

Net revenue
Net revenue is the sum of revenues from gas transport, gas storage and related services provided to third parties, after deduction of discounts (for non-regulated services) and taxation on these revenues, such as VAT. Revenues are subject to the company’s estimates of the risk of loss of credit due to non-payment and, in the case of contract liabilities by virtue of customer contributions, the relevant interest rate.

If we can reliably estimate the result of a transaction involving the rendering of a service, we recognise the revenues relating to the service in proportion to the services rendered in the financial year. The company provides services in the field of gas transport, storage and related activities. These services are offered as capacity services. This gives customers the right to use pre-agreed capacities for a pre-contracted period (hour, day, month, etc.). The company regards the service as delivered over the period concerned and recognises the revenue accordingly. The realisation of net revenues can be reliably determined. The company’s only compensation from customers are the amounts determined in accordance with the contractually agreed remuneration methods.

The tariffs for regulated activities are determined by independent regulatory authorities in the Netherlands and Germany. No discounts are applied to regulated revenues. Customer contributions to the cost of construction or improvement of the transport infrastructure or discounts/prepayments in the non-regulated sector are a possibility, however. These are considered to be contract liabilities under IFRS 15 and are recognised in the balance sheet. They are periodically credited or charged to profit and loss over the expected useful life of the asset. In the event that a contract liability or contract receivable contains a significant financing component, the value of this component is determined based on an estimate of the relevant interest rate. We recognise the financing component in the financial income and expenses in the period to which it relates.

Capitalised expenses
Capitalised expenses include operating expenses incurred by the company in connection with the construction of tangible fixed assets. These costs mainly comprise the cost of the company’s own employees and hired workers, plus part of the overhead expenses of support departments.

Government grants
We credit operating grants to profit and loss in the year to which the subsidised spending is allocated. We include any pre-payments under current liabilities.

Pre-paid investment grants are initially presented under the other liabilities. As soon as investment spending starts and meets the conditions for capitalisation, we then deduct the investment grants from the tangible fixed assets for which the grant is intended.

Other costs
These costs are determined on a historical basis, taking into account the accounting policies set out above. We recognise the costs in the reporting period to which they relate.

Financial income and expenses
Included in this item are income and expenses relating to financing and similar income and expenses. We recognise interest income and similar income in the period to which it relates, taking into account the effective interest rate for the asset concerned, provided the income can be measured and is likely to be received. We recognise interest expenses and similar expenses in the period to which they relate. Financial expenses also include the amortisation of discount and transaction costs.

The recognition of capitalised interest expenses is described under the heading ‘Tangible fixed assets’ in these principles.

Income taxes
Taxes on the result include income tax and deferred taxation due over the reporting period and previous periods. These taxes are taken to profit and loss, except when they relate to items recognised directly in equity, in which case the tax effect is also recognised directly in equity.

The tax owed for the financial year is the tax expected to be payable on the taxable profit for that financial year, calculated on the basis of tax rates determined on the reporting date or materially decided upon on the reporting date, plus any corrections to the tax owed for previous years. We calculate the tax owed taking into account tax-exempt items and costs that are either non-deductible or only partly deductible.

If the carrying amount of assets and liabilities for financial reporting purposes differs from their carrying amounts for tax purposes, these are classed as temporary differences. We recognise a deferred tax liability for all taxable temporary differences. A deferred tax asset is recognised for all deductible temporary differences, to the extent that it is likely that sufficient taxable profit will be available for future set-off. For this purpose, the company makes assumptions about the future taxable profits and the point at which the temporary differences are realised.

We measure deferred tax liabilities and assets at the nominal value. The tax rates used for the measurement are those that are expected to apply in the period in which the deferred tax items will be realised based on the tax rates and tax legislation in force or materially decided upon as at the balance sheet date. We recognise the movements in corporate income tax arising from possible rate changes in profit and loss, with the exception of the movements that were originally taken directly to equity. We take these movements directly to equity.

Tax assets and liabilities, whether deferred or not, are presented as a net amount if: 

• there is a legally enforceable right to set off tax assets and liabilities, and the assets and liabilities relate to income tax imposed by the same tax authority on the same taxable entity; and/or;
• taxable entities intend to set off the tax assets and liabilities, or the tax assets and liabilities are realised simultaneously on different types of tax.

N.V. Nederlandse Gasunie and its wholly-owned Dutch group companies constitute a fiscal unity for Dutch corporate income tax purposes. Gasunie Deutschland GmbH & Co. KG (Gasunie Deutschland) and its wholly-owned German group companies constitute a fiscal unity for German corporate income tax.

Financial information by operating segment
Information on operations about which separate financial information is available and whose operating results are regularly assessed by management should be described per segment. The company has defined the following operational segments: 

• Gasunie Transport Services
• Gasunie Deutschland
• Participations

For more detailed financial information by operating segment, please see note 3 ‘Financial information by operating segment’ of the additional notes to the consolidated financial statements.

Cash flow statement
We determine the cash flow from operating activities using the indirect method, based on the net revenue presented in the consolidated statement of profit and loss. The cash in the cash flow statement consists of cash and cash equivalents that can be converted into a known cash amount without restrictions and without significant risk of impairments as a consequence of the transaction.

The company recognises interest received and paid, dividends received from joint ventures, associates and other participating interests and corporate income tax paid under ‘cash flow from operating activities’.

The acquisition price of acquisitions is included under ‘cash flow from investment activities’ insofar as payment was made in cash. The cash available in the acquired participating interest or operations is deducted from the purchase price.

We allocate cash flows from derivative financial instruments recognised as cash flow hedges to the same category as the cash flows from the hedged positions.

Events after the balance sheet date
We recognise events that provide further information about the actual situation at the balance sheet date and that appear before the date on which the financial statements are prepared in the financial statements.

We do not recognise events that do not provide further information about the actual situation on the balance sheet date in the financial statements. If such events are important for users to form an opinion of the financial statements, we explain the nature and estimated financial effects in the financial statements.