Additional notes to the consolidated financial statements

The Russian invasion of Ukraine had a direct impact on Gasunie’s operational activities, and it could be seen that this then also affected our financial results and financial position. This has affected several items in the financial statements. Below we summarise the most important consequences.

Increased revenue and energy costs
Net revenue rose by approximately € 870 million compared to the previous financial year. The increase in revenue comes partly on the back of higher revenues from regulated-capacity auctions and the sale of ‘interruptible transmission capacity’. Where our gas flows previously had an east-to-west orientation, in 2022 we saw a reversal in this tendency. As a result, the Netherlands received significantly larger gas volumes from Norway, the UK and Belgium and through the import of LNG. Germany saw its supplies from Norway and the Netherlands increase sharply.

In accordance with the regulatory systems that apply in the Netherlands and in Germany, we will return the regulated revenue that exceeds the permitted revenue to the market in the coming years. If the actual revenue deviates from the revenue permitted by the regulatory authority, the difference is settled in the tariffs for subsequent years. Under the current IFRS standards, we are not allowed to recognise future settlements in the balance sheet nor deduct them from revenue or result. We only recognise these settlements in the year in which the settlement takes place. Our revenue in 2022 was substantially higher than the revenue permitted by the regulatory authority. However, this also means that in subsequent financial years we will settle the excess in the tariffs that market parties pay for regulated natural gas transmission; this will then have a dampening effect on the permitted revenue during that period.

Gasunie has also been directly affected by the higher energy prices. Energy and network operation costs increased by around € 290 million. We use gas and electricity for gas transmission and gas storage and to produce the nitrogen used in gas quality conversion. The increase in costs compared to 2021 is due mainly to significantly higher energy prices and a slight increase in the use of compression capacity. Given that, under the current regulatory methodology, the regulatory authority has, for the time being, allocated the price risk to the network operator, we are not able to fully pass on the increased energy costs to our customers in the regulated domain in the Netherlands.

Further information on revenue is included in note 3 ‘Financial information by operating segment’ and note 27 ‘Net revenue’. Note 30 ‘Other costs’provides further information on energy costs.

Nord Stream developments
Gasunie has a 9% financial interest in the Nord Stream pipeline, which has been operational since 2012. The risk profile of Gasunie’s shareholding in Nord Stream had already increased substantially as a result of Russia’s invasion of Ukraine on 24 February 2022 and the gradual reduction of gas flows in the months following this. We had already made a fair value adjustment of our interest in Nord Stream in response to this higher risk profile – from approx. € 500 million to approx. € 240 million – when we drew up the interim financial statements as at 30 June 2022.

On 26 September 2022, both Nord Stream transport pipelines were seriously damaged by a number of explosions, with the result that they could no longer be used to transport gas. At the end of 2022, we considered several scenarios regarding the future of the Nord Stream pipeline and assessed the financial implications of each. Based on our updated risk assessment, including our expectations regarding future dividends, we have decided to set the value of our interest in Nord Stream at year-end 2022 at zero.

More detailed information about the valuation of our interest in Nord Stream can be found in note 9 ‘Other participating interests’.

Investments in reducing dependence on Russian gas and guaranteeing security of supply
In 2022, we invested heavily in reducing dependence on Russian gas. One of the key measures being taken to reduce dependence on Russian gas and guarantee security of supply is facilitating the supply of natural gas to the Netherlands and the rest of Europe from an alternative source. Gasunie has been contributing to this through its newly established group company EemsEnergyTerminal B.V. (EemsEnergyTerminal). Two floating storage and regasification units (FSRUs), berthed at the terminal at the port of Eemshaven since September 2022, are being used to store and regasify LNG shipped in by LNG tanker ships. After having been returned to a gaseous state, the natural gas is fed into GTS’ gas transmission network.

The activities of EemsEnergyTerminal have a significant impact on a number of elements of the financial statements. This mainly concerns investments in property, plant and equipment and right-of-use assets (as specified in note 5 ‘Tangible fixed assets’) and the associated lease liabilities (as specified in note 17 ‘Lease liabilities’).

In addition, GTS has taken measures to secure peak capacity for suppliers of small scale consumers in the Netherlands. Although this function is not new, in 2022 it will be fulfilled differently than it has been previously. Where this was previously outsourced in part to market parties, given the volatile gas market, GTS procured the gas required to meet its obligation to provide peak capacity itself. At the end of 2022, this led to us recognising approximately € 100 million for physical gas inventories on the balance sheet. These gas inventories are exclusively intended and held to cover peak capacity requirements and not for trading purposes, this in accordance with GTS’ statutory duty in this regard. Note 11 ‘Inventories’ provides more information on these gas inventories.

Credit risk and controls
For market parties, the increase in energy prices is accompanied  by greater financial risks in the energy markets, and to cover this increased credit risk parties active in the energy markets are demanding higher financial security and/or demanding this sooner. This concerns collateral in the form of bank guarantees, security deposits or shareholder guarantees. Where appropriate, Gasunie also asks for guarantees from customers who want to reserve transmission and/or storage capacity. We determine the nature and scope of the guarantees based on the risk we face for the specific customer. At year-end 2022, we obtained guarantees totalling around € 850 million to cover the credit risk on capacity reservations, approximately € 300 million of which had been paid to us in the form of cash collateral at year-end 2022. This is an increase of around € 250 million compared to 2022.

Gasunie continuously monitors the credit risk. In 2022, for one of our customers in Germany who could otherwise be considered creditworthy, we had to write down approximately € 9 million in outstanding receivables due to non-compliance with contractual payment obligations. Gasunie strives to collect this receivable anyway. Should collection of the receivable turn out not to be possible then the write-down of this receivable will be compensated under the applicable regulatory methodology. The customer concerned does not have any transportation agreement with Gasunie Deutschland anymore at year-end 2022. 

Partly due to the increase in collateral funds, at year-end 2022 we had a surplus in our short-term liquidity position compared to the normal situation where we maintain a modest liquidity balance. As a result, at year-end 2022, unlike in previous years, we did not need to make use of short-term deposit loans or Euro Commercial Paper (ECP). 

Note 25 ‘Financial instruments’ provides more information about the credit risk. Information about our liquidity position is included in the cash flow statement, in note 14 ‘Cash and cash equivalents’ and note 23 ‘Current financing liabilities’.

Gas transport network in the Netherlands
The reason for the value-in-use calculation GTS made at year-end 2022 was the significant increase in energy prices in 2022 in combination with the fact that the regulatory conditions offer no possibility to settle this in full in the future. Alongside this the relevant market interest rates also increased at the end of 2022. These market interest rates form the basis for the IFRS discount rate, which is used in the value-in-use calculation. 

From the calculation of value in use at year-end 2022, it was determined that the recoverable amount of the gas transport network in the Netherlands is roughly equal to its carrying amount.

Gas transport network in Germany
The reason for the value-in-use calculation made at year-end 2022 by Gasunie Deutschland and a number of its joint ventures was the publication of the new guidance that forms the basis for the regulation of transmission activities in Germany for the 2023-2027 period. 

From the calculation of value in use at year-end 2022, it was determined that the recoverable amount of the gas transport network in Germany is approximately € 117 million lower than the carrying amount of the assets. This amount has been recognised in profit and loss for an amount of € 109 million as an impairment of tangible fixed assets, and an amount of € 8 million has been included in the result from joint ventures.

BBL interconnector
The reason for the value-in-use calculation for our 60% interest in the BBL interconnector was a change in long-term assumptions with regard to natural gas demand in the UK and, as a result, the need for transport capacity between the UK and Europe (including through the BBL interconnector). mainly due to recent developments in the European energy markets. Adjusting these expectations affects the level of the cash flows and, by extension, the valuation of our interest in the BBL interconnector.

From the calculation of the value in use at year-end 2022, it was determined that the recoverable amount of the BBL interconnector for the share held by Gasunie is approximately € 50 million lower than the carrying amount of the assets. This amount has been recognised in profit and loss as an impairment on tangible fixed assets.

As in 2021, no business combinations were formed in 2022, though several new entities were established in the reporting year. The focus of these new entities is on developing activities around CCS, heat, hydrogen and such. We also set up EemsEnergyTerminal in 2022, with the aim of reducing dependence on Russian gas and guaranteeing security of supply. The establishment of this entity had a significant impact on several items in the financial statements, as explained in note 1 ‘Significant matters and events in 2022’.

The establishment of the other entities had no significant effect on the consolidated result and the consolidated cash flows for 2022 nor on the consolidated equity at year-end 2022 and, accordingly, we have not explained these in detail in these financial statements. The newly established entities have been included in note 56 ‘List of group companies and participating interests’.

The financial information is segmented in line with the company’s activities. The operating segments reflect the management structure. The company differentiates between the following segments: 

• Gasunie Transport Services
  This segment covers network operations in the Netherlands and is responsible for managing natural gas transmission, developing the natural gas network and related plants, and helping to facilitate a well functioning market.
  
  
• Gasunie Deutschland
  This segment covers network operations in Germany and is responsible for managing natural gas transmission, developing the natural gas network and related plants, and helping to facilitate a well functioning market.
  
  
• Participations
  This segment focuses on developing energy transition projects, utilising existing participating interests to the full and facilitating new gas flows to north-western Europe using an LNG connection and long-distance pipelines. This segment also includes a number of joint arrangements for pipelines that connect the Gasunie transport network with markets outside the Netherlands.

The accounting policies for measurement of assets and liabilities and the determination of the results used for the operating segments are the same as the accounting policies used when drawing up these consolidated financial statements. The assets, revenues and results of a segment comprise items directly related to the segments and items that can reasonably be attributed to them. Because the financing of the company mainly takes place at group level, liabilities are not segmented and are therefore not reported on separately. Transactions between companies which belong to the segments are carried out at arm’s length. As regards intersegment eliminations, we have removed transactions between the segments in the financial information by operating segment. 

During 2022, the Gasunie Transport Services operating segment provided inter-segment services worth € 59.6 million (2021: € 16.9 million), the Gasunie Deutschland operating segment provided such services to the value of € 0.6 million (2021: € 0.4 million) and the Participations operating segment provided such services to the value of € 68.5 million (2021: € 28.7 million).

Allocated assets include tangible fixed assets, investments in joint ventures and associates, and investments in other participating interests. Unallocated assets comprise deferred tax assets and current assets.

Investments in and depreciation of tangible fixed assets (including right-of-use assets) and other material non-cash items are as follows:

Other material non-cash items consist of, among other things, movements in personnel-related and other provisions, results of disposals and certain costs of the defined benefit pension plan. In 2022, the other material non-cash items were significantly impacted by the impairments, as explained in note 4 ‘Impairment tests’.

The geographical distribution of the assets is as follows:

Fixed assets included in the table cover tangible fixed assets and the share in the joint ventures, associates and other participating interests. The lower asset value outside the Netherlands is mainly due to the fair value changes in the interest in Nord Stream and the impairment of the tangible fixed assets of BBL Company and Gasunie Deutschland. The higher asset value in the Netherlands is mainly due to the investments in EemsEnergyTerminal.

Investments in joint ventures in 2022 mainly refer to our interest in the German LNG Terminal and Porthos.

More details about the movements in joint ventures and associates can be found in note 7 ‘Investments in joint ventures’ and note 8 ‘Investments in associates’.

At the end of each reporting period, we determine whether there are any events or indications for impairment of fixed assets and we investigate whether there are reasons to reverse previously recognised impairments.

The outcomes of this analysis for the most significant cash-generating units are shown below.

A second, more indirect effect of developments in the energy markets and general economic developments and uncertainties is the high inflation and, in response to this, the rise in market interest rates. The discount rate used under IFRS is based on the relevant market interest rates on the balance sheet date and, accordingly, is different to the way in which ACM determines the capital cost allowance for GTS’ permitted revenue. Under IFRS, abrupt increases in market interest rates/spot market interest rates (like we saw in 2022) would possibly have had an effect on the valuation of the gas transport network at the end of 2022.

Prior to the impairment test at year-end 2022, the carrying amount of the gas transport network – which is considered to be a single interrelated cash-generating unit – was approximately € 5.9 billion.

Impairment test method
Management uses an impairment test based on value in use (a ‘value-in-use calculation’) to determine the recoverable amount of the gas transport network. The value in use is determined using a discounted cash flow (DCF) model. A fair value less costs to sell figure was not available at year-end 2022; there is no indication that the fair value less costs to sell is higher than the value in use.

Key assumptions in determining the recoverable amount and the key assumptions and estimates
The recoverable amount is, in principle, determined on the basis of the regulatory framework as laid down in the 2022-2026 methodology decision for GTS and in other regulations and decisions.

The starting point for the forecast revenue in the period 2023-2026 is the expected permitted revenue based on the 2022-2026 methodology decision for GTS and the cash flows derived from this. For the period after 2026, the value of the network is derived from the standardised asset value expected at that time (terminal value approach). The standardised asset value is the value of the investments which the network operator may charge through the tariffs allowing for a reasonable return.

The company’s management determines the starting point for the forecast expenditure and other variables, such as the expected development of operating costs (including energy cost developments), the investment level and the IFRS discount rate. The most important operating and investment cash flows (relevant for the capital cost allowance and its subsequent costing) are based on the business plan for the next three years adopted by the Executive Board and on a recent medium term forecast.

The total fixed assets of GTS are considered as a single cash-generating unit, with the exception of the assets relating to land and the line pack (gas present in the pipeline at all times). These assets are assumed not to be subject to impairment.

The key principles in the value-in-use calculation are explained below.

Efficiency after the 2022-2026 regulatory period
For the 2022-2026 regulatory period, ACM has, based on a benchmark study, set GTS’ average weighted static efficiency at 96.1% (previous methodology decision: 88.6%). Over the past years, GTS has demonstrably worked to improve its efficiency, partly through workforce restructuring, long-term cost savings and maintenance optimisation. Management will continue to work on the further optimisation of efficiency in the coming years too.

In GTS’ view, the robustness of ACM’s benchmark study is limited and it does not provide a basis for the imposed efficiency discount. GTS has lodged an appeal against the methodology used to determine the static efficiency and the resulting static efficiency score with the Dutch Trade and Industry Appeals Tribunal (College van Beroep voor het bedrijfsleven [CBb]). In GTS’ opinion, a static efficiency score of 100% should be assigned. In addition to the intrinsic shortcomings of the benchmark model used, in our view the study is, for us, also insufficiently transparent and insufficiently verifiable. The results of the appeal are expected partway through 2023.

For the calculation of value in use at year-end 2022, we worked with the provisional assumption that the average weighted static efficiency for the regulatory period 2022-2026 will be maintained at 96.1%. For the period after 2026, we assume static efficiency of 100%.

Energy costs
In the context of the price risk associated with the energy cost trend, the 2022-2026 methodology decision does not allow GTS to fully offset higher costs in its future tariffs. GTS has lodged an appeal against this with the Trade and Industry Appeals Tribunal (CBb). GTS wants to see full settlement of the total costs of energy in future tariffs. The results of the appeal are expected partway through 2023. In anticipation of the results, and given the unique situation on the energy markets in 2022, ACM intends to apply a one-off correction to the energy costs incurred by GTS in 2022. The correction will be settled in the tariffs for 2024. In the calculation of value in use at year-end 2022, it was assumed that this correction will be continued in future years.

Capital cost allowance - ACM WACC
The methodology decision for the 2022-2026 regulatory period includes a capital cost allowance which is, among other things, dependent on a WACC determined by ACM. The nominal WACC for investments from 2022 onwards is set at 3.0% before tax. The nominal WACC before tax for existing capital from 2023 onwards is also 3.0%. Every year, ACM determines the actual applicable WACC, which is then subsequently costed and settled in GTS’ permitted revenues in the following years. When setting up the impairment test, account is taken of the possible effects of subsequent costing on this part of the capital cost allowance.

IFRS discount rate
A nominal pre-tax discount rate of 5.6% was applied when making the value-in-use calculation; this discount rate was 2.9% in 2020. A peak in the relevant market interest rates became visible around the balance sheet date of 31 December 2022. Although market interest rates have fallen slightly since then, the decline after the balance sheet date may not be taken into account when making the value-in-use calculation under IFRS.

Sensitivity analysis
The recoverable amount is based on significant assumptions. Changes may have a considerable effect on these assumptions. The table below provides an indication of the effect that changes to an important assumption will have on the recoverable amount. All other things being equal, the change is assumed to have taken place at the beginning of the regulatory period.

Outcome of the impairment test
From the value-in-use calculation, management determined that the recoverable amount of the gas transport network in the Netherlands is virtually the same as its carrying amount. This means that there is no impairment loss or a need to reverse a previously recognised impairment loss.

Prior to the impairment test for value in use at year-end 2022, the carrying amount of the gas transport network was approximately € 1.5 billion. Our interests in the joint ventures NETRA and DEUDAN are also part of the cash-generating unit Gasunie Deutschland. Given that, like Gasunie Deutschland, NETRA and DEUDAN are engaged in TSO activities in Germany, general and regulatory assumptions applied to Gasunie Deutschland are also applied in the valuation of these entities. Prior to the impairment test for value in use at year-end 2022, the carrying amount of these joint ventures together was approximately € 0.1 billion.

Impairment test method
Management uses an impairment test based on value in use (a ‘value-in-use calculation’) to determine the recoverable amount of the gas transport network. The value in use is determined using a discounted cash flow (DCF) model. A fair value less costs to sell figure was not available at year-end 2022; there is no indication that the fair value less costs to sell is higher than the value in use.

Key assumptions in determining the recoverable amount and the key assumptions and estimates
In principle, the recoverable amount is determined based on the variables included in the German regulations and decrees in effect at the end of 2022.

The starting point for the forecast revenue in the regulatory period 2023-2027 is the expected permitted revenue according to BNetzA’s determination methodology and the cash flows derived from this. For the period after 2027, the value of the network is derived from the standardised asset value expected at that time (terminal value approach). The standardised asset value is the value of the investments which the network operator may charge through the tariffs allowing for a reasonable return.

The company’s management determines the starting point for the forecast expenditure and other variables, such as the expected development of operating costs, the investment level and the IFRS discount rate. The most important cash flows are based on the business plan for the next three years (updated with the most recent information on the permitted tariffs for 2023) adopted by the Executive Board, on Gasunie Deutschland’s investment plan adopted by BNetzA and on a recent medium term forecast. The increase in energy costs has not been designated as a key assumption: based on the current regulatory framework, these costs can be passed on to customers.

The key principles in the value-in-use calculation are explained below.

Permitted return on equity
BNetzA has set the return on equity for the new regulatory period at 5.07% pre-tax for new assets and 3.51% pre-tax for old assets; the permitted pre-tax return was previously 6.91% and 5.12%, respectively. Like many other network operators, Gasunie Deutschland has filed an objection with the court regarding BNetzA’s determination of equity. The results of the court case are expected partway through 2023. The value-in-use calculation is based on the percentages determined by BNetzA.

Cost base
In 2022, BNetzA determined the permitted revenues for the 2023-2027 regulatory period. Gasunie Deutschland’s cost base is one of the reasons for this. In June 2021, Gasunie Deutschland submitted its cost request to the BNetzA based on the costs incurred in the 2020 ‘photo year’. The consultation on the cost application was completed in 2022 and we received the final results at the end of April 2022. Gasunie Deutschland can agree with these results; there are no ongoing objection proceedings.

Cost base and individual efficiency parameter (X-ind)
In 2017, BNetzA determined the individual efficiency parameter (‘X-ind’) of Gasunie Deutschland for the regulatory 2018-2022 period. As prescribed by German laws and regulations, the individual efficiency target is determined based on a benchmark study. This benchmark study was completed early in 2023 and BNetzA has published the results. As in the 2018-2022 regulatory period, Gasunie Deutschland has again been designated as 100% efficient. The value-in-use calculation at year-end 2022 also assumed 100% individual efficiency.

General efficiency parameter (X-gen)
Early in 2022, BNetzA started on the evaluation of a new general efficiency factor ('X-gen') that will apply to all TSOs and DSOs in the 2023-2027 regulatory period. BNetzA started by requesting all the requisite information from the network operators to determine the parameters for the efficiency model. The consultation phase started in September 2022. BNetzA has presented different models for determining the X-gen, each of which has a different outcome for Gasunie Deutschland. The final decision on the X-gen is expected partway through 2023. For the calculation of value in use at year-end 2022 we assumed an X-gen of 0.49%, i.e. the same as the X-gen for the current regulatory period (2018-2022).

IFRS discount rate
A nominal pre-tax discount rate of 5.8% was applied when making the value-in-use calculation; A peak in the relevant market interest rates became visible around the balance sheet date of 31 December 2022. Although market interest rates have fallen slightly since then, the decline after the balance sheet date may not be taken into account when making the value-in-use calculation under IFRS.

Sensitivity analysis
The recoverable amount is based on significant assumptions. Changes may have a considerable effect on these assumptions. The table below provides an indication of the effect that changes to an important assumption will have on the recoverable amount. All other things being equal, the change is assumed to have taken place at the beginning of the regulatory period.

Outcome of the impairment test
Based on the available information, management has concluded that gas transport network impairments in Germany on 31 December 2022 amount to approximately € 117 million. Of this amount, € 109 million has been allocated to tangible fixed assets and € 8 million to lower valuation of the interests in the joint ventures NETRA and DEUDAN.

Prior to the year-end 2022 impairment test, the carrying amount of our interest in the BBL interconnector was approximately € 0.2 billion.

Impairment test method
Gasunie makes an impairment test based on value in use (a ‘value-in-use calculation’) to establish the recoverable amount of the BBL interconnector. The value in use is determined using a discounted cash flow (DCF) model. As a result of the mandatory exit from BBL Company of a co-owner with a 20% financial interest in the company (Uniper) at the end of 2022, around the balance sheet date the fair value less costs to sell could be derived based on third party offers for Uniper’s interest. Based on the relevant IFRS provisions, our interest in the BBL interconnector is valued at the higher value-in-use figure. Below is a more detailed description of the key assumptions in determining the recoverable amount based on value in use.

Key assumptions in determining the recoverable amount and the key assumptions and estimates
When calculating the recoverable amount, management made assumptions, the most important of which concerned the expected revenues and the pre-tax discount rate. The figures for the main cash flows are based on the business plan for the next three years drawn up by the management of BBL Company and approved by the Executive Board Gasunie (as shareholder) and on a recent medium-term forecast. The increase in energy costs has not been designated as a key assumption: based on contractual agreements, these costs can largely be passed on to customers.

The total fixed assets of BBL Company are considered as a single cash-generating unit, with the exception of the assets relating to land. These assets are typically assumed not to be subject to impairment.

The key principles in the value-in-use calculation are explained below.

Future revenue and the cash flows derived from this
When determining expected future revenue, a distinction was made between revenue from existing fixed transport contracts and revenue from auctioning future transport capacity. The assumptions regarding the expected future transport volumes are partly based on transport capacity that has already been reserved (auctioned capacity) and on scenario studies and National Grid’s 10-year network development plan. National Grid’s studies include several scenarios regarding natural gas imports and exports. In contrast to our assessment based on the previous value-in-use calculation made in 2019, management no longer considers a stable scenario with moderate growth in natural gas imports by the UK and physical natural gas transport up to 2070 to be likely. As at end-year 2022, management expects that the natural gas flows between the Netherlands and the UK will decrease to zero more quickly. Furthermore, the period over which it will remain economically viable to transport natural gas – assuming continuance of the current cost base and tariffs – has been reviewed. The tariffs for capacity sales are determined on the basis of the current tariffs, which are adjusted annually for expected inflation.

H2
The relatively shallow North Sea is suitable as a location for the generation of large volumes of wind energy. This wind power can be used to make hydrogen. In 2022, four countries bordering the North Sea jointly announced that they plan to develop the North Sea as a ‘green energy plant’, with a focus on the production of green hydrogen. The BBL interconnector can play an important role in bringing this offshore green hydrogen ashore. Further research into the offshore hydrogen network will eventually provide a better understanding of the system requirements and the routes from the offshore hydrogen production sites and landfall points where the hydrogen will be transferred to the national (onshore) hydrogen network. The calculation of value in use at year-end 2022 assumes that the BBL interconnector will be used in the future for the offshore hydrogen network and that this will therefore generate a future cash flow once it is transferred to a hydrogen transmission operator.

Discount rate
A nominal pre-tax discount rate of 8.7% was applied when making the value-in-use calculation; this discount rate was 7.3% in 2019. A peak in the relevant market interest rates became visible around the balance sheet date of 31 December 2022. Although market interest rates have fallen slightly since then, the decline after the balance sheet date may not be taken into account when making the value-in-use calculation under IFRS.

Sensitivity analysis
The recoverable amount is based on significant assumptions. Changes may have a considerable effect on these assumptions. The table below provides an indication of the effect that changes to an important assumption will have on the recoverable amount.

Outcome of the impairment test
From the calculation of the value in use at year-end 2022, it was determined that the recoverable amount of the BBL interconnector for the share held by Gasunie is approximately € 50 million lower than the carrying amount of the assets. This amount has been recognised in profit and loss as an impairment.

Movements in tangible fixed assets in 2022 were as follows:

In the Netherlands, investments related mainly to the construction of the new nitrogen plant, switching certain customers from high-calorific to low-calorific gas, the FSRUs and appurtenances at the port of Eemshaven (as explained in note 1 ‘Significant matters and events in 2022’) and the WarmtelinQ heat transport network. In Germany we also invested in assets required for the import of LNG. The investments column also contains transfers from fixed operating assets under construction to the other asset categories for assets that were taken into use in 2022.

The change in the reclassifications column relates to a changed use of a small portion of the line pack/cushion gas and part of the nitrogen inventories. From 2022, we present this portion of the gas inventories under the balance sheet item ‘inventories’. Given the insignificant scope of this reclassification, the comparative figures for 2021 have not been adjusted. More information about this reclassification can be found in note 11 ‘Inventories’.

The conditional investment commitments at year-end 2022 are detailed in note 26 ‘Off-balance sheet obligations’.

Tangible fixed assets includes an amount of € 525.8 million (year-end 2021: € 101.7 million) for right-of-use sassets at year-end 2022. The company has economic but not legal ownership of these right-of-use assets. More detailed information about the associated lease liabilities can be found in note 17 ‘Lease liabilities’. 

Movements in right-of-use assets associated with leases in 2022 are as follows:

Movements in tangible fixed assets in 2021 were as follows:

The amounts stated under investments in 2021 mainly relate to the construction of the new nitrogen plant and switching certain customers from high-calorific to low-calorific gas and to commissioning phase 2 of the EUGAL pipeline.

Movements in right-of-use assets associated with leases in 2021 are as follows:

The cost and accumulated depreciation of tangible fixed assets were as follows:

The company’s assets are largely made up of regulated assets. The regulatory systems in the Netherlands and Germany respectively allow the company to recoup investments in tangible fixed assets. The depreciation periods for such investments are set by the regulatory authorities for the regulated networks in the Netherlands (ACM) and Germany (BNetzA). In the methodology decision for GTS for the 2022-2026 period, ACM still assumes – based partly on their energy transition studies – a long depreciation horizon (up to as long as 55 years for transmission pipelines) for the gas transport network. At year-end 2022, the German gas transport network was in a similar situation in terms of the useful life assumed by the regulatory authority for the gas transport network. The company took the view of the regulatory authorities into account in determining the depreciation periods under IFRS.

Should the regulatory authorities in the Netherlands and Germany decide to amend the regulated depreciation periods in the future, possibly in response to more concrete developments around the phasing out of natural gas transmission, the company will, at that time, again take that development into account in the determination of the depreciation periods under IFRS. This may in certain cases lead to a shortening or extension of the depreciation periods, which would change the depreciation charges under IFRS. However, this will in practice primarily affect the depreciation of mainline and regional transport pipelines, as the other assets generally have a relatively shorter technical life.

Alongside external regulations, other key considerations in determining depreciation periods under IFRS is our own view on the energy transition and environmental and climate targets, as well as on other social and political developments. This goes both for the regulated and for the non-regulated assets. The company shares ACM’s and BNetzA’s view that the existing gas infrastructure will continue to be needed in the medium to long term.

We are also working on the possibility of using the existing gas infrastructure, in due course, for the transmission and storage of alternative energy carriers, such as hydrogen. Given the recent political decisions in the Netherlands with respect to hydrogen, heat and CCS, this long-term vision is becoming increasingly concrete and is expected to be worked out in more detail over the coming years. The German government is also working on plans in the climate domain, in which hydrogen is also expected to feature heavily. The Russian invasion of Ukraine in 2022 further accelerated these developments. We periodically evaluate the impact of social and political developments on the depreciation periods under IFRS. At the end of 2022, this review did not result in a change in the depreciation periods.

Lastly, in our regular assessments of depreciation periods we check whether they relate to individual assets that will in the medium term no longer be used for the transport or storage of gas. In such specific cases, we may possibly amend the depreciation periods for these individual assets. These installations have been temporarily decommissioned, or could be in the near future; in such cases these assets are depreciated at an accelerated rate until the date of decommissioning. In the approach to the technical decommissioning, if an alternative use is foreseen for hydrogen, heat or CCS, the possibility of recommissioning the installations in the future is also taken into consideration. The installations will therefore not be redeveloped, but sustainably preserved.

With respect to the other regulated and non-regulated assets, including the underground gas storage facilities and the assets required for the import of LNG, the company does not have any indication that the expected useful life would be shorter than the current depreciation period.

The depreciation periods for the most important asset categories are as follows:

We depreciate right-of-use assets in accordance with the above categories; we depreciate leased land in accordance with the useful life of the asset with which the land lease is connected. We depreciate the leased FSRUs over five years in accordance with the term of the lease contract. Depreciation is not calculated on land, line pack/cushion gas volumes or assets under construction.

The company has interests in the following joint operations, either directly or indirectly:

The company has interests in the following joint ventures, either directly or indirectly:

The aim of the joint arrangement is to build a demonstration facility to demonstrate that this new technology can work robustly on an industrial scale over the coming years. Gasunie’s financial interest has been 35% since 2021. Based on the contractual arrangements, there is joint control.

The movements in joint ventures have been aggregated as follows: 

The investments in 2022 mainly relate to German LNG Terminal and Porthos. The direct movements in equity refer to the revaluation of the interest in Gate terminal as a consequence of the change in fair value of one of Gate terminal’s cash flow hedges. Gasunie has recognised this change in equity in other comprehensive income. 

In 2022, an impairment test was performed for the interest in DEUDAN and NETRA. For more information on this, see note 4 ‘Impairment tests’.

Of the joint ventures, Gate terminal has a material effect on the company’s equity and result.
Information about the carrying amount, the share in other comprehensive income, the result for the financial year and the dividend received on investments broken down into Gate terminal and other joint ventures is as follows:

Due to the material effect on Gasunie’s equity and result, more detailed information is included below with regard to Gate terminal. 

At year-end 2022, investments in associates related solely to the interest in Trading Hub Europe GmbH and Beheer Afspraken Stelsel B.V. 

THE has no material effect on the company’s equity and result. There were no outstanding current loans to THE at year-end 2022 (year-end 2021: € 10 million). The value of Gasunie’s interest in THE was € 0.6 million at year-end 2022 (€ 0.5 million at year-end 2021). 

Gasunie’s total share in the other comprehensive income of associates in 2022 is less than € 0.1 million (2021: € zero). 

The other participating interests are as follows:

Nord Stream operates the two gas pipelines that form the Nord Stream connection through the Baltic Sea from Russia to Germany. Gasunie became a shareholder in Nord Stream in 2008. Based on agreements with shareholders, Gasunie has no significant influence in Nord Stream.

The fair value of other participating interests at year-end 2022 was € 7 million (€ 515.2 million at year-end 2021). For all participating interests this is a level 3 valuation (year-end 2021: level 3). The decrease in fair value is fully attributable to the write-off of our interest in Nord Stream. The other participating interests paid no dividend in 2022 (dividend from other participating interests in 2021: € 32.5 million). 

The assumption for the interests in PRISMA, EDSN and SCW Systems is that, partly on account of their relatively small size, the carrying amount is an estimate of the fair value. A fair value calculation and sensitivity analysis have not been included in the financial statements for these interests. 

Deferred tax assets arise from temporary differences between the measurement of assets and liabilities for financial reporting purposes and their measurement for tax purposes. There are no capitalised losses carried forward.

The temporary differences concern the tax treatment of the purchase price paid by the Dutch State, the differences in respect of the measurement of tangible fixed assets and other temporary differences. The first difference arose when Gasunie was split into a transport and a trading company in 2005. At the time, the Dutch State made a deemed capital contribution to the company for tax purposes. Gasunie did not capitalise this purchase price for tax purposes under IFRS. This recognition of the purchase price has given Gasunie an additional tax depreciation potential, for which a deferred tax asset has been recognised. 

The temporary difference resulting from the measurement of tangible fixed assets is mainly due to the one-time revaluation of tangible fixed assets when Gasunie was split in 2005 and the subsequent transition to IFRS. In addition, the depreciation method for tax purposes deviates from time to time from the depreciation principles under IFRS (including the recognition of impairments and their reversals). Such temporary differences are recognised in the balance sheet. On balance, temporary differences in tangible fixed assets result in a deferred tax liability. 

The other differences relate mainly to temporary differences resulting from employee benefits and derivative financial instruments. 

The aforementioned deferred tax assets and liabilities relate to the fiscal unity for Dutch corporate income tax and satisfy the conditions for setting off tax debts. We have therefore presented deferred taxation as a net amount.

The movements in deferred tax assets in 2022 are as follows:

The deferred tax assets at year-end 2022 to be settled within one year after the balance sheet date amount to € 34.3 million (year-end 2021: € 29.8 million). This amount is not shown separately under current assets.

The movements in deferred tax assets in 2021 are as follows: 

Movements in deferred tax assets in 2021 related to regular movements as well as movements due to the change in corporate income tax rates at the end of 2021.

Inventories can be broken down as follows:

Part of the reason for the increase in the inventories item is because our group company GTS started maintaining higher physical gas inventories from 2022 to fulfil its statutory duty to provide peak capacity in the Netherlands. Furthermore, GTS is obliged to take measures to secure peak capacity for suppliers of small-scale consumers. Peak capacity concerns the supply of gas in case of extremely cold weather conditions, i.e. when temperatures over a 24-hour period at the Royal Netherlands Meteorological Institute's base in the town of De Bilt drop to below -9°C. When that happens, GTS will supply gas to licence holders (i.e. the suppliers to the small users’ market). 

GTS put its obligation to provide peak capacity out to tender in 2022; however, given the volatile gas market in 2022, this tender was unsuccessful and so GTS procured the gas required to fulfil this obligation itself. For the storage of this gas, GTS uses Gasunie’s Peakshaver installation as well as third-party gas storage facilities. To mitigate the price risk on the gas volumes held, GTS has already sold a substantial part of the gas volumes it holds to meet its obligation to provide peak capacity through forward supply contracts for supply in 2023. Should the gas volumes be required for GTS to fulfil its statutory duty to provide peak capacity, GTS will fulfil the forward supply contracts by purchasing the required volumes on the spot market. 

The other inventories concern items kept for regular daily maintenance, for the company’s own present and future investments, and for projects carried out for third parties and joint ventures. The increase in other inventories in 2022 is mainly related to the increase in energy transition projects we are carrying out for our joint ventures.

In calculating the value of inventories at year-end 2022, we already took into account a write-down based on the lower recoverable amount. In 2022, an amount of € 2 million (2021: -/- € 0.5 million) has been recognised in other costs as a result of the adjustment of the inventory valuation to the lower recoverable amount. This addition strictly concerns other inventories and not the gas inventories.  

Trade and other receivables are as follows:

Receivables from joint ventures and associates relate mainly to costs incurred and investments made by the joint ventures in which Gasunie is a partner that are yet to be settled. Other taxes mainly concerns current VAT receivables. 

Trade and other receivables are measured less a provision to cover expected credit losses. Movements in the provision for expected credit losses are as follows:

Trade and other receivables have a nominal term of less than one year. Note 25 ‘Financial instruments’ provides more information on the securities provided. 

The total of trade receivables and other receivables, excluding receivables under other taxes, totalled € 316.7 million at year-end 2022 (year-end 2021: € 197.5 million). The ageing of these receivables as at the balance sheet date is as follows:

The due and not impaired items are, in certain cases, covered by bank guarantees or other securities obtained. 

N.V. Nederlandse Gasunie and its wholly-owned Dutch group companies constitute a fiscal unity for corporate income tax. Gasunie Deutschland GmbH & Co. KG and its wholly-owned German group companies also constitute a fiscal unity for German corporate income tax purposes. We do not present receivables and liabilities relating to corporate income tax on different fiscal unities as a net amount.

The corporate income tax payable/receivable is as follows:

Current receivables and liabilities relating to corporate income tax constitute the corporate income tax due for the current and previous financial years less any sums paid on receipt of provisional or final tax returns for the fiscal unities in question.

Movements in the corporate income tax payable/receivable are as follows:

Cash and cash equivalents are as follows:

Bank balances carry an interest rate based on daily interest and are payable immediately. The call funds and deposits are also interest bearing and have a short term (varying between 1 and 90 days). 

At year-end 2022, the balance of cash and cash equivalents increased, mainly due to security deposits received from customers in connection with the higher prices and the uncertainties in the European energy markets. For further details, please see note 1 ‘Significant matters and events in 2022’ and note 24 ‘Trade and other payables’.

The company aims to have a financial profile which will enable it to implement its strategy and, at the same time, will lead to a satisfactory credit rating which matches the company’s profile and the shareholder’s policy.

We have included further information about the company’s financial position, the instruments used, and the size of these instruments in note 16 ‘Interest-bearing loans’ and note 25 ‘Financial instruments’.

Please also refer to the notes to equity in the company financial statements (note 41 ‘Issued share capital’, note 42 ‘Revaluation reserve’, note 43 ‘Legal reserve’, note 44 ‘Other reserves’ and note 45 ‘Unappropriated result’).

All shares issued are held by the Dutch State.

At year-end 2022, the nominal amount of € 3,015 million (year-end 2021: € 3,009.2 million) in non-current loans comprised € 2,250 million (year-end 2021: € 2,119.1 million) in bond loans and € 765 million (year-end 2021: € 890 million) in private loans. The transaction costs and discount still to be amortised amounted to € 14.5 million (year-end 2021: € 9 million). These are loans drawn at group level, but which also serve as financing of group company investments. 

Movements in interest-bearing loans are as follows:

In July 2022, we issued a ‘sustainability-linked bond’ (SLB) with a value of € 500 million. With an agreed term of 12 years, this bond will be repaid in one lump-sum payment at the end of the term. The sustainability targets linked to this SLB, which are identical to those of the SLB issued in 2021, are detailed below. The sustainability targets could result in an annual coupon increase of 0.125% if we have not achieved one target by 31 December 2030 and of 0.25% if we have failed to achieve either target.

In October 2021 we issued our first SLB, with a value of € 300 million. The loan was issued in compliance with the SLB Framework. This framework is in line with the 2020 version of the Sustainability-Linked Bond Principles (SLBPs) of the International Capital Markets Association (ICMA). The company has set two targets that have to be achieved by 31 December 2030. The first target is for the company to reduce its methane emission levels by approximately 50% compared to the 2020 level. The second target relates to the CO₂-equivalent emissions that the company can influence, which are to be reduced by 30% by 2030, compared to the 2020 level. The sustainability targets could result in an annual coupon increase of 0.10% from 2030 onwards if the company has not achieved one target by 31 December 2030 and of 0.20% if it has failed to achieve either target. 

These potential coupon increases on our sustainability-linked bonds were not recognised in the effective interest at year-end 2022 because there is currently no reason to assume that the company will not hit the targets.  

In 2022, two long-term bond loans were repaid in full on the maturity date. 

The maturity schedule for interest-bearing loans (nominal value) is as follows: 

Non-current loans, including current repayment obligations are as follows: 

The weighted average effective interest rate on the non-current loans at year-end 2022 was 1.6% (year-end 2021: 1.6%). 

The company has not provided any securities to credit providers with regard to the interest-bearing loans. Neither were there any significant financial covenants or ratios with which the company had to comply. 

The company’s loans with the European Investment Bank (EIB) with a remaining value of € 665 million at year-end 2022 are subject to a number of change-of-control conditions regarding the Dutch State holding shares in N.V. Nederlandse Gasunie and regarding N.V. Nederlandse Gasunie holding shares in GTS B.V. The company deems it unlikely that these change-of-control events will take place within the foreseeable future. 

For more information on the financial risks associated with the interest-bearing loans and how the company manages the financial risk with the aim of limiting these risks, please see note 25 ‘Financial instruments’.

The company has entered into lease contracts covering such matters as land and buildings, regional transmission pipelines, the FSRUs and the company vehicles. These right-of-use assets are for the company’s own use; there are no sub-leases involved. More detailed information about the associated right-of-use assets can be found in note 5 ‘Tangible fixed assets’. 

Movements in lease liabilities are as follows: 

In certain cases, lease terms are based on estimates. This is specifically the case for leases payable on leased land. While these properties are generally leased for an indefinite period, the company has the option to terminate the lease at short notice. We measured the most likely lease period by looking at the useful life of the asset, such as a pipeline or a plant, for which the land is leased.  

The weighted average incremental borrowing rate in 2022 was 2.20% (2021: 1.48%). Lease contracts 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. They represented less than € 0.1 million per year at year-end 2022 (2021: the same).

Modifications are interim adjustments of variables in the existing lease contracts that result in a change in the measurement of the agreements, such as expected or agreed lease terms and the amount of lease payments. The new lease liabilities mainly relate to the lease of sites and two FSRUs at the port of Eemshaven in connection with the LNG terminal constructed there, as detailed in note 1 ‘Significant matters and events in 2022’.

The remaining term of the lease liabilities is as follows: 

The current part of the lease liabilities is presented separately under current liabilities. 

Contract liabilities relate to the company’s revenue from contracts with customers. The payment schedule for certain contracts is not synchronous with the way in which the company is required to allocate revenues to the financial years. This happens in the case of contracts in which customers have made a financial contribution to an investment in specific transport capacity. In principle, these contributions are attributed to the contract with the customer and not to the asset to which the contribution relates. We have included a contract liability for such customer contributions, taking account of the financing element in these contracts. 

At year-end 2022, the contract liabilities totalled € 70.8 million (year-end 2021: € 49.8 million). The following table shows the movements in these contract liabilities. 

The increase in contract liabilities mainly relates to the sales contracts that our new group company EemsEnergyTerminal B.V. concluded with its customers in 2022. 

The remaining term of the contract liabilities is as follows:

We have presented the current part of the contract liabilities separately under current liabilities. 

Deferred tax liabilities arise from temporary differences between the measurement of assets and liabilities for financial reporting purposes and the measurement for tax purposes. In particular, deferred tax liabilities mainly refer to temporary differences in the measurement of tangible fixed assets in Germany. In addition, there are a few other differences that lead to deferred tax liabilities and assets.

The deferred tax liabilities and assets relate to the fiscal unity for German corporate income tax and satisfy the conditions for setting off tax debts. We have therefore presented deferred taxation as a net amount.

The movements in deferred tax liabilities in 2022 were as follows: 

The amount of deferred tax liabilities to be settled more than one year after the balance sheet date was € 170.2 million at year-end 2022 (year-end 2021: € 193.9 million). 

The movements in deferred tax liabilities in 2021 were as follows:

The liabilities recognised in the balance sheet relating to deferred employee benefits can be broken down as follows:

For the most part, this is a non-current provision. The drop in the pension obligation in 2022 can be mainly explained by the increase in the discount rate at year-end 2022.

The pension obligation as at the end of the financial year is set out in the historical summary below:

The weighted average duration of the pension obligations was approximately 17 years at year-end 2022 (year-end 2021: approximately 20 years). The assumptions underlying the calculation of the pension obligations are as follows:

Movements in the present value of pension obligations are as follows:

The actuarial results are as follows:

The actuarial results for 2022 were affected mainly by an increase in the discount rate.  

Actuarial results taken directly to other comprehensive income totalled € 31.7 million in 2022 (2021: € 10.9 million). At year-end 2022, the accumulated actuarial result, net of deferred taxation, showed a loss of € 4.5 million (2021: a loss of € 36.3 million). The actuarial results are accounted for in other comprehensive income.

The sensitivity of the calculation of the provision for pension obligations is as follows:

• If the discount rate changes by 0.1% point in otherwise unchanged circumstances, this is expected to lead to a change in the present value of pension entitlements and a change in other comprehensive income of € 1.2 million (2021: € 2.1 million).
• If the expected future salary increase changes by 0.1% point in otherwise unchanged circumstances, this is expected to lead to a change in the present value of pension entitlements and a change in other comprehensive income of € 0.2 million (2021: € 0.4 million).
• If the expected future pension increase changes by 0.1% point in otherwise unchanged circumstances, this is expected to lead to a change in the present value of pension entitlements and a change in other comprehensive income of € 0.9 million (2021: € 1.6 million).

The total pension expenses for the defined benefit pension plan as presented in the statement of profit and loss comprise:

For the most part, this is a non-current provision. 

For the most part, this is a non-current provision. 

The other provisions are as follows: 

At year-end 2022, the company considered it unlikely that all transmission pipelines and appurtenances will have to be completely removed. In its judgement, the company has taken into consideration that natural gas transmission will continue to be important over the coming years. Moreover, the company sees sufficient opportunities for various alternative uses, including the transmission of alternative energy carriers, such as hydrogen. We expect that the existing natural gas transmission network will be repurposed in stages for the transmission of alternative energy carriers in both the near and more distant future. Aside from that, the revenues from alternative use (in the longer term) less the costs of conservation are anticipated to offset the costs of removal, including societal costs. Based on the above considerations, a provision for abandonment costs for the gas transport network as a whole in the longer term has not been recognised. 

In measuring the provision for abandonment costs and redevelopment, the company takes into account that its judgements and estimates may be affected by developments in the area of the energy transition and tightened environmental and climate targets. Partly given the political decisions with respect to hydrogen, heat and CO₂, the long-term vision is becoming increasingly concrete and is expected to be worked out further over the coming years. On the balance sheet date, the company brings the provision for abandonment costs and redevelopment into line with the most recent developments. The aforementioned developments may also in future years lead to an adjustment to the scope of the provision for redevelopment, such as if certain network components turn out not to be fit for an alternative use that was previously thought feasible. Aside from that, the provision can be adjusted if experience figures prompt a change to the redevelopment method or if the costs of historic redevelopment activities are reason to assume higher or lower costs for future redevelopment activities. 

The movements in other provisions are as follows:

The current part of the provision for abandonment costs and redevelopment is expected to total € 11.5 million at year-end 2022 (year-end 2021: € 5.7 million). This amount is not shown separately under the current liabilities. In 2022, we applied a discount rate of between 3.5% and 3.8% (2021: 0.0%). The increase in the discount rate came about mainly as a result of higher market rates of interest compared to 2021. 

The fair value of the derivative financial instruments is as follows:

The derivative financial instruments are measured at fair value. Although we hold these derivative financial instruments for the purpose of risk hedging, as explained in note 25 ‘Financial instruments’, for practical reasons, and given the relatively short term of the derivative financial instruments, we have not used the option of cash flow hedge or fair value hedge accounting. This means that changes in the value of these derivative financial instruments are recognised directly in profit and loss. 

The remaining term of the derivative financial instruments is as follows:

We have not presented the current part of the derivative financial instruments separately under current liabilities. 

For further details of the derivative financial instruments, please see note 25 ‘Financial instruments’ and note 31 ‘Financial income’. 

Current financing liabilities are as follows:

For more information about non-current interest-bearing loans, please see note 16 ‘Interest-bearing loans’.

At year-end 2022, as explained in note 1 ‘Significant matters and events in 2022’, the company had not taken out any current interest-bearing loans (year-end 2021: € 250 million). In 2021, this concerned deposits taken and commercial paper issued with terms of less than one year (in practice ranging between 1 and 90 days). 

Trade and other payables can be broken down as follows:

Other taxes and social security contributions primarily consist of VAT payable, social security contributions and wage tax payable.

The other liabilities and accruals consist mainly of accrued interest on loans, receivable invoices, security deposits received, and debts to joint ventures. Security deposits received are securities customers have given to the company to cover the credit risk. We calculate a market interest charge for the security deposits. At year-end 2022, deposits received amounted to € 307.8 million (year-end 2021: € 44.7 million). The increased security deposits are related to the uncertainties in the energy markets, as explained in note 1 ‘Significant matters and events in 2022’. Debts to joint ventures amounted to € 26.4 million at year-end 2022 (2021: € 26.3 million) and relate entirely to the cash pools the company manages with respect to several joint ventures. 

Trade and other payables, apart from the security deposits received, bear no interest and have a term of less than one year.

The company may use derivative financial instruments to manage interest rate, currency, and price risks arising from ordinary operational activities. We only use derivative financial instruments to hedge risks and not for trading or any other purpose.

On average, between 5% and 10% of the company’s non-current debts (including the current repayment obligation on non-current loans) are current financing arrangements (e.g. ECP or deposit loans). However, this situation may differ from day to day, including on the balance sheet date, and depends on the exact liquidity situation and the need for liquidity. Although these current loans are concluded with a fixed interest rate for the term, the company does run an interest rate risk on the periodic refinancing. 

Lastly, an amount of € 100 million in non-current loans with a variable rate of interest was outstanding at year-end 2022 (year-end 2021: € 100 million). 

A 1% point change in the interest rate will alter the interest expenses by approximately € 2.5 to € 4 million. We do not hedge the interest rate risk on loans with a variable interest rate given the limited size and term of these loans. 

The currency risk is limited in the context of regulated business operations in the Netherlands and Germany because virtually all transactions take place in euros. For a number of non-regulated business activities, the transactions also take place in currencies other than the euro, mainly in US dollars. The company has limited the currency risk for a number of these transactions by making use of specific risk hedging instruments, such as forward exchange contracts. Currency risks are hedged if there is sufficient certainty about the amount and timing of the foreign currency cash flows. 

At year-end 2022, the company mainly ran currency risk on the lease and the additional non-lease costs of two FSRUs (in US dollars) and the lease of sites in the UK (in pounds sterling). The fair value of the other participating interests was $ 371.1 million at year-end 2022 (year-end 2021: $ zero) and £ 4.7 million (year-end 2021: £ 4.8 million). At year-end 2022, the equivalent of a total of $ 344.5 million in future transactions denominated in US dollars was hedged (year-end 2021: € zero) by means of forward exchange contracts. Note 22 ‘Derivative financial instruments’ provides more details on these derivative financial instruments. The currency risk on the liabilities in pounds sterling is not hedged by currency forward contracts. We do mitigate a part of the currency risk by keeping this foreign currency in a pound sterling bank account. At year-end 2022, the pound sterling balance was £ 4.2 million (year-end 2021: £ 4.3 million). 

At the end of 2022, no other foreign currency positions of significant size were held nor were other currency risk hedging instruments used. 

For the 2022 financial year, we may partially offset the price risk in the Netherlands, and fully in Germany, in future regulated tariffs. To mitigate the price risk in the company’s day-to-day operations, and thus pursue stability in the regulatory tariffs, the company uses a risk hedging policy and associated energy procurement strategy. The basic principle of this policy is that the company does not trade in energy supply contracts and does not take speculative positions. The company has committed to purchasing the contracted volumes itself and using them for its day-to-day operations. 

The energy supply contracts come with the contractual option to partly fix prices for a certain future supply period. Under the current contracts, this can be done a maximum of two years in advance. In these ‘forward purchases’, the company takes into account the anticipated periodic energy requirements to meet the own-use exemption under IFRS 9.2.4. The required level of price risk hedging differs from one group company to the next, determined partly by the predictability of the volume and timing of the energy usage. GTS aims to hedge at least 65% of the anticipated energy usage, whereby the degree of hedging is partly based on current and forward prices. For Gasunie Deutschland, prices are fixed only to a very limited degree or not at all under its current procurement contracts and within the current regulatory framework. For other important group companies, such as EemsEnergyTerminal, EnergyStock and BBL, the degree to which prices are fixed varies because their energy usage and timing is harder to predict in practice and because the price risk is also partly borne by customers of these group companies. Energy usage that has not been contracted under forward supply contracts is purchased on the spot market as and when the need for energy arises and, where agreed, passed on to customers. 

At year-end 2022, the nominal value of the forward supply contracts for the company’s energy usage totalled approximately € 205.2 million (year-end 2021: € 76.1 million). The forward supply of energy under these contracts consists entirely of electricity and gas to be supplied in the 2023 financial year. Under IFRS 9.2.4, liabilities from forward supply contracts are not recognised in the balance sheet.

With regard to the gas inventories held for GTS to fulfil its obligation to provide peak capacity, given the underlying regulated settlement system we do not run a price risk. To reduce the price risk for the market, GTS has already sold a substantial part of the gas volumes it holds to meet its peak capacity obligation through forward supply contracts for supply in 2023. Should the gas volumes be required for GTS to fulfil its statutory duty to provide peak capacity, GTS will fulfil the forward supply contracts by purchasing the required volumes on the spot market.

Lastly, Gasunie has entered into investment obligations in a joint venture, the amount of which may vary depending on gas price developments. To limit the cash flow risk on these expected capital expenditures, we use a gas price swap, this way effectively fixing the future variable investment obligation – in terms of our share in the joint venture – over the term of the investment obligation (until 31 December 2027).

At year-end 2022, the volume of the variable investment obligation was 268,825 MWh (year-end 2021: zero MWh). The price risk on this volume was fully hedged at year-end 2022 (year-end 2021: not applicable). The value of the gas price swap was -/- € 15.3 million at year-end 2022 (2021: not applicable).

In making use of derivative and other financial instruments the company applies strict limits on counterparties to limit the related credit risk. This limits the level of risk the company is exposed to from its counterparties. The company has drawn up criteria for selecting counterparties in financial transactions. These criteria limit the risk associated with possible credit concentrations and market risks. No collateral has been received/provided with regard to the derivative financial instruments held at year-end 2022. 

To limit the credit risk on trade and other receivables, if appropriate, the company asks for guarantees from its customers and other parties with whom transactions take place.

The company has received the following guarantees from third parties:

Securities received are primarily guarantees issued as part of gas transport arrangements, as well as guarantees provided by contractors and suppliers involved in major investment projects. The security deposits are held in cash and are interest-bearing. We calculate a market interest charge for the security deposits. The increased balance of security deposits received is connected with the uncertainties in the energy markets.

The individual terms of the guarantees received are generally short (one to three years), with the terms of a few guarantees exceeding five years. The guarantees are not freely assignable.

The company’s financing policy is partly to reduce its liquidity risk at as low a cost as possible. The options for reducing this risk depend on the solvency of the company. Gasunie is a solvent company and can therefore attract credit facilities relatively easily. According to Standard & Poor’s, Gasunie’s long-term creditworthiness is AA- with a stable outlook; the short-term rating is A-1+. According to Moody’s Investors Service, the long-term credit rating is A1 with a stable outlook, and the short-term rating is P-1.

At year-end 2022, the company had an uncommitted current account facility of € 45 million (year-end 2021: € 45 million), a committed credit facility of € 600 million (year-end 2021: € 600 million), a Euro Commercial Paper (ECP) programme of € 750 million (year-end 2021: € 750 million) and a European Medium Term Note (EMTN) programme of € 7.5 billion (year-end 2021: € 7.5 billion) to hedge its liquidity risk. The committed credit facility was extended by one year in March 2022 and now has a term until April 2027. No funds were drawn on the committed credit facility over the past year. As part of its normal operational activities, the company has regularly raised short-term loans on the money market in the form of deposit loans and debt securities under the ECP. Under the EMTN programme, € 2,250.0 million was issued in loans as at year-end 2022 (year-end 2021: € 2,119.2 million). The EMTN programme was renewed in June 2022 and will run through to 17 June 2023. 

Summary of future cash flows
The maturity profile of future cash flows relating to non-current and current financial liabilities outstanding as at the balance sheet date is as follows: 

The maturity profile of future cash flows relating to non-current and current financial liabilities outstanding in 2021 is as follows:

The way in which fair value is determined is described under ’Determining fair value’ in the accounting policies for the measurement of assets and liabilities and the determination of the results. In 2022 no transfers took place between the various fair value measurement levels (2021: the same). 

Other participating interests

At year-end 2022, the value of other participating interests measured at fair value in the balance sheet was € 7 million (year-end 2021: € 515.2 million). This concerns a level-3 fair value measurement (year-end 2021: level-3). For more information please see note 9 ‘Other participating interests’. 

Derivative financial instruments
The derivative financial instruments are forward exchange contracts and a gas price swap. The fair value of the forward exchange contracts is determined based on the present value of projected future cash flows. For this purpose, we made use of forward exchange rates with a comparable term and a zero-coupon discount rate that matches the currency and the term of the transactions, taking into account Gasunie’s credit risk and that of the relevant counterparties. This is a level-2 fair value measurement. At year-end 2022, the contract liabilities totalled € -/- 0.5 million (year-end 2021: less than € 0.1 million). 

The fair value of the gas price swap is determined based on the present value of quoted commodity prices for gas price swaps. For this purpose, we made use of the closing prices for gas forward products with a comparable term and a zero-coupon discount rate that matches the currency and the term of the transactions, taking into account Gasunie’s credit risk and that of the relevant counterparties. This is a level-2 fair value measurement. At year-end 2022, the fair value of the gas price swap was -/- € 15.4 million (year-end 2021: not applicable).

Interest-bearing loans
The interest-bearing loans are bond loans with a listing on the Amsterdam stock exchange, and private loans. 

The fair value of listed bonds is the same as the year-end exit price. This concerns a level-1 fair value measurement (year-end 2021: level-1). The fair value of the private loans has been determined by calculating the present value of the expected future cash flows at a discount rate equal to the applicable risk-free market interest for the remaining term, plus credit and liquidity surcharges. We also take the company’s risk profile and those of the counterparties into account. This is a level-2 fair value measurement (year-end 2021: level-2). 

The carrying amount and the fair value of the interest-bearing loans as at year-end 2022 were:

Other primary financial instruments
Other primary financial instruments comprise trade and other receivables, cash and cash equivalents, current financing liabilities (excluding current repayment obligations on non-current loans), trade and other payables. 

Given the short term of these instruments, their carrying amount approximates their fair value.

The securities provided comprise securities and guarantees provided to customers of the company and the joint ventures and to certain creditors or other stakeholders. The increase in the guarantees issued in 2022 mainly relates to guarantees issued regarding the newly established LNG terminal at the port of Eemshaven. The guarantees are not freely assignable. The term of the securities provided is generally between 5 and 10 years; a limited number of securities do not have an agreed end date. 

Non-current obligations mainly refer to the procurement of nitrogen production capacity and IT and other services. The non-current obligations do not include amounts relating to the future supply of energy under forward supply contracts entered into by the company. For further details of these contracts, please see the ‘price risk’ section of note 25 ‘Financial instruments’.

The operational imbalance is closely and continuously monitored and continuously settled in kind with the relevant counterparty/counterparties through the physical intake or supply of natural gas. OBAs are only used for operational, not commercial, purposes. 

The use of the OBA is based on the going concern assumption and a continuous settlement in kind. The imbalances will only be settled financially if a party to the agreement ceases to exist and settlement in gas is therefore no longer possible. The OBAs are perpetual in nature. Given the considerations stated above, the balance of gas to be received or to be supplied can be regarded as ‘perpetual’ and has no value on the balance sheet date. For this reason, the imbalances are included in the off-balance sheet receivables and liabilities. 

At year-end 2022, the cumulative operational imbalance volume was 252 GWh, meaning that there was a supply obligation with regard to adjacent networks, storage facilities and/or production sites. Based on the TTF spot price on the balance sheet date, the value of this imbalance amounts to -/- € 19.0 million (year-end 2021: approx. -/- € 2.0 million).  

In addition to imbalances based on the OBAs, imbalances with customers can also occur based on the ‘System Balance Signal’ (SBS), the sum of the Portfolio Imbalance Signals of all shippers active in our transport network. Here, too, we apply a going concern assumption and a continuous settlement in kind. The imbalances will only be settled financially if the shipper’s licence is withdrawn and settlement in gas is therefore no longer possible. At year-end 2022, the shippers had a negative cumulative imbalance volume of 17 GWh; based on the TTF spot price on the balance sheet date, the value of this imbalance amounts to approximately € 1.3 million (year-end 2021: approx. € 0.6 million).

Net revenue rose by 62.9% compared to the previous financial year (2021: increase of 1.0%), as detailed in note 1 ‘Significant matters and events in 2022’.

The second revenue stream is generated through non-regulated services and/or those exempt from regulation. The income for these services is determined by the market on the basis of supply and demand and it is generally subject to greater volatility in revenue compared to the regulated services. Revenue from the non-regulated services and/or those exempt from regulation is almost completely generated by the Participations business unit.

Revenue for each operating activity is as follows: 

The breakdown is as follows:

The personnel expenses are as follows:

The increase in personnel expenses came primarily as a result of an increase in the number of employees. New employees were hired mainly for our energy transition-related activities.

The cost of the defined contribution plans recognised in profit and loss is € 31.8 million (2021: € 26.5 million). For the cost of the defined benefit pension plan and the part of the costs taken directly to other comprehensive income, please see note 20 ‘Employee benefits’.

The variable remuneration is based on the meeting of agreed targets during the financial year, as explained under ‘Remuneration policy for the Executive Board’ in the annual report. 

The pension plan for members of the Executive Board is the same as that for other Gasunie employees in the Netherlands. 

The reimbursements under the ‘Other benefits’ item are payments from the flexible allowance and a one-off payment made in the 2022 financial year under the terms of the collective agreement. 

Remuneration for members of the company’s Executive Board in 2021 was as follows: 

Remuneration for members of the company’s Supervisory Board in 2022 was as follows: 

Remuneration for members of the company’s Supervisory Board in 2021 was as follows: 

Remuneration for members of the Supervisory Board comprises a basic payment and an additional payment for those who participate in the Audit Committee (AC) and/or the Remuneration, Selection and Appointment Committee (RAC). Remuneration also includes premiums to be paid under the Dutch Health Insurance Act.

The depreciation costs are as follows:

The increase in depreciation costs of the right-of-use assets can mainly be explained by the depreciation of the FSRUs at the port of Eemshaven commissioned in 2022. These facilities are recognised as right-of-use assets under tangible fixed assets, as explained in note 5 ‘Tangible fixed assets’'.  

The result from disposals is the balance of the net realisable value of the assets sold or transferred minus the carrying amount of these assets when they were delivered.

The other costs are as follows:

The cost of network operations mainly comprises the procurement of nitrogen production capacity and electricity for the production of nitrogen and the cost of electricity and gas for gas transmission and gas storage operations. The increase in costs compared to 2021 is due mainly to significantly higher energy prices and a slight increase in the use of compression capacity. 

Other costs comprise mainly insurance costs, other material and personnel costs, and non-recurring costs, including the addition to the provision for abandonment costs and redevelopment.

Financial income can be broken down as follows:

Interest income and similar income include the interest on tax assessments, interest (including negative interest) on deposits taken and commercial paper issued with a term of less than one year, as well as interest income on security deposits received (security provided by customers, to which a negative interest rate applies). 

Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into the functional currency at the exchange rate applicable on that date. The aggregate unrealised foreign exchange gains/losses on monetary assets and liabilities at the balance sheet date are recognised in profit and loss, as are the realised foreign exchange results on the lease instalments paid in 2022. The foreign exchange results in 2022 were mainly due to the lease of the FSRUs at the port of Eemshaven, as explained in note 17 ‘Lease liabilities’. The lease for these FSRUs is denominated in US dollars. 

For further details of the derivative financial instruments, please see note 22 ‘Derivative financial instruments’ and note 32 ‘Financial expenses’. 

Financial expenses can be broken down as follows: 

Of the interest expenses, a total amount of € 9.2 million was capitalised in 2022 (2021: € 9.7 million). This capitalisation was based on the weighted average interest rate of N.V. Nederlandse Gasunie’s non-current loan portfolio. The other finance expenses mainly comprise amortised transaction costs and discount on non-current loans as well as other financing costs. 

The expenses relating to the instruments valued at fair value concern the movement of the gas price swap valued at fair value (-/- € 15.4 million) and Euro/Dollar forward exchange contracts (-/- € 0.5 million). No hedge accounting has been applied to these contracts. For further details of the movement on the derivative financial instruments, please see note 22 ‘Derivative financial instruments’ and note 31 ‘Financial income’. 

The tax expense is as follows:

The effective tax rate is as follows:

Other differences principally relate to non-taxable results as a consequence of the application of the participation exemption in the Netherlands and Germany. In 2022, the effect of the tax rate change on deferred taxation related to the change in the German corporate income tax rate (2021: change in the Dutch corporate income tax rate). 

The average number of employees in full-time equivalents was 1,707 in 2022, of whom 250 worked outside the Netherlands (2021: 1,581 full-time equivalents, with 246 stationed outside the Netherlands). At year-end 2022, the number of employees in full-time equivalents was 1,805, of whom 253 worked outside the Netherlands (year-end 2021: 1,616, with 246 stationed outside the Netherlands). 

The number of employees grew throughout the year due to an increase in Gasunie’s activities in the area of the energy transition. 

The services provided by GTS to GasTerra are performed in line with the provisions of the Dutch Gas Act. Under this legislation, GTS must not discriminate in its treatment of all market parties and must conduct business as requested. The tariffs charged to GasTerra are determined by the Dutch regulatory authority, ACM. ACM works independently of GTS, GasTerra and the Dutch State. 

The following fees charged by PricewaterhouseCoopers Accountants N.V. (PwC Accountants N.V.) for auditing the consolidated and company financial statements are charged to the company, its subsidiaries and other companies it consolidates, in accordance with Article 2:382a, paragraph 1 and 2 of the Dutch Civil Code. 

To fulfil conditions set under EU state aid law, Uniper had to divest its 20% interest in BBL Company by the end of 2022. Until the transfer of assets is legally finalised, Uniper transferred its interest to a separate trust at the end of 2022. Based on the contractual arrangement, Gasunie and co-owner Fluxys each have the option of exercising their pre-emptive right in the event that a co-owner is required or wishes to dispose of its interest. Gasunie exercised its pre-emptive right at the start of 2023. On completion of the transfer of ownership, Gasunie will hold a 75% interest in BBL Company (year-end 2022: 60%). 

The impact on the consolidated result, the consolidated cash flows and the consolidated financial position from the 2023 financial year is not expected to be significant.

No other significant events occurred after the balance sheet date that have to be recognised or explained in the financial statements.