2021 half-year report - N.V. Nederlandse Gasunie 2021 half-year report
Partner
1 2021 half-year report - N.V. Nederlandse Gasunie
Index
Management summary 3
Timeline 3
D I R E C T O R S ’ R E P O R T
01 Gasunie profile 9
02 Mission, vision and strategy 11
03 Recent developments 12
04 Risk management 19
S T A T E M E N T O F T H E E X E C U T I VE B O A R D
05 Statement of the Executive Board 21
H A L F - Y E A R R E P O R T
06 Consolidated half-year report 23
07 Signature 45
R E VI E W R E P O R T
08 Review report 47
09 Disclaimer 48
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Management summary
Timeline
January
In 2021 and early 2022, Gasunie Deutschland will, as part of Germany’s phasing out of coal, build a natural gas pipeline to the Volkswagen plant in Wolfsburg, enabling the car manufacturer to cut its carbon emissions by 1.5 megatonnes per year. The impact on the natural surroundings along the 30km stretch of pipeline will be offset as much as possible. Trees felled will be replaced by new greenery. Bird and bat boxes have already been installed. In partnership with the city of Wolfsburg, new bodies of water have been created for amphibians.
February
In the second week of the month, it was remarkably cold in north-western Europe. Below ground, however, gas transport continued as normal. In both the Netherlands and Germany, Gasunie had additional teams on standby to deal with any service disruptions. The gas storage facilities were sufficiently full for Gasunie to be able to handle the significant spike in demand, once again proving just how important these facilities are.
March
Permits for the laying of the first section of the WarmtelinQ pipeline between Vlaardingen and The Hague were available for public consultation. Together with the Zuid-Holland provincial authority and local authorities through whose territories the pipeline will run, Gasunie organised several information sessions for local residents. We engaged with around 300 people at these sessions.
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April
The 2030-2050 Comprehensive Infrastructure Survey (II3050) presents the results of the Dutch network operators’ in-depth assessment of the investments needed to achieve climate neutrality. The report, which was published in April, identifies the ‘no regret’ investments, i.e. renewable energy projects that will have to be implemented in all the conceivable scenarios. Both hydrogen storage and the hydrogen backbone fall into this category.
May
We launched a project at our Zuidwending natural gas storage facility that will see us fill an existing borehole - without an underlying cavern - with hydrogen. The idea is to demonstrate that the borehole, pipelines and sealings can also accommodate hydrogen. We are keeping local residents posted on our work and findings.
June
According to advice issued by GTS to the Dutch Ministry of Economic Affairs and Climate Policy, the definitive closure of the Groningen gas field can be brought forward to 2023, which is three years earlier than planned. In late June, the state secretary for Economic Affairs and Climate Policy announced that Gasunie has been asked to develop a national infrastructure for hydrogen transport. The aim is for this network to be up and running by 2027 and for 85% of it to be made up of repurposed natural gas pipelines.
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Key figures
First half year 2021 First half year 2020
Revenue € 717 mln € 712 mln EBITDA € 462 mln € 492 mln Result after taxation € 207 mln € 257 mln Transported volume 592 TWh 579 TWh TRFI (as at the end of first half year) 2.5 2.1 Uncontrolled events - - Transport disruptions 4 - Capital invested € 9,872 mln € 9,528 mln
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Foreword by the Executive Board
At the time of publishing this half-year report, the Summer Olympics are about to get started. Host nation Japan is seizing the Games as an opportunity to promote hydrogen, as they intend to become the world’s first hydrogen-based society. In the margins of the event, they will be organising a large range of hydrogen demonstration projects. Even the Olympic flame is powered by hydrogen this year.
Gasunie welcomes these ‘hydrogen games’. With our Missie H2, we are introducing the Netherlands, through our Olympians and Paralympians, to the possibilities of hydrogen in 2021. We are doing that because the conditions in our part of Europe are ideal for the successful use of hydrogen: we have the North Sea as an ideal location for wind power generation and
CO2 storage, various ports that can serve as logistics hubs, clusters of industry that want to switch to green molecules for their energy supply, a suitable transport network, and the right underground storage facilities for hydrogen.
All the ingredients for this new renewable energy supply chain are there, and we can make it a success if we work together, as a team.
Over the coming years, Gasunie intends to invest billions of euros in the energy transition in a challenge of Olympic proportions. As an infrastructure operator in the Netherlands and Germany, we have to get started now to make sure that producers and customers of renewable energy will be able to do business with each other on a large scale over the coming decades. Our focus in this context is on sustainable molecules, which will make up 30% to 50% of the energy mix in a climate-neutral society. Green gas,
heat and captured and stored CO2 play supporting roles in this context.
The lead role is played by hydrogen transport and storage, which is where an important step was made in late June this year. The Dutch state secretary for Economic Affairs and Climate Policy has tasked us with developing a national infrastructure for hydrogen transport. This is a milestone in the energy transition, because it makes the Netherlands Europe’s first country to repurpose its existing natural gas network for hydrogen transport. The creation of a hydrogen network will give developers of hydrogen supply and demand projects the certainty that the required infrastructure will be available.
The lead role is played by hydrogen transport and storage, which is where an important step was made in late June this year. The Dutch state secretary for Economic Affairs and Climate Policy has tasked us with developing a national infrastructure for hydrogen transport. This is a milestone in the energy
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transition, because it makes the Netherlands Europe’s first country to repurpose its existing natural gas network for hydrogen transport. The creation of a hydrogen network will give developers of hydrogen supply and demand projects the certainty that the required infrastructure will be available.
However, there is still a lot to do in the meantime. To stick with the Olympic theme, we are in the middle of a decathlon. On some disciplines, we are still in the starting blocks, while on others the starting shot has just sounded. And on yet other disciplines we are, like a relay runner, ready to hand over the baton to our fellow team members, i.e. the providers and consumers in the new supply chains.
Thanks to our extensive experience with safe and reliable transport, storage and conversion of natural gas, we are able to contribute to the European climate targets for 2030 and 2050. That said, we are fully aware that natural gas will continue to be of vital importance as a transitional fuel over the coming decades. Every day, our people work to ensure undisrupted transport and storage of natural gas, boasting sixty years of knowledge and experience. This is how we pass on the energy.
Han Fennema, Janneke Hermes, Bart Jan Hoevers and Ulco Vermeulen
Han Fennema Janneke Hermes
Bart Jan Hoevers Ulco Vermeulen
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Directors’ report
Partner
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01 Gasunie profile
Gasunie is an energy infrastructure company. In the Netherlands and the northern part of Germany, we operate infrastructure for the large-scale transport, storage and conversion of gas. At the moment, this is mainly natural gas, but the energy transition is increasingly bringing about a shift
towards green gas and hydrogen. We also work on the construction and operation of heat and CO2 grids.
Our task is to provide safe, reliable, affordable and sustainable energy infrastructure services, ensuring that everyone has access to energy, always. This is of crucial importance to the economy and society. Our infrastructure, services and geographical position mean that we are at the heart of the north- western European gas market.
Gasunie has two principal activities:
we provide regulated, open-access transport services through the gas transport network in the Netherlands and Germany, and we offer energy infrastructure services, either independently or in partnership with other parties.
Gasunie is a connecting factor in the value chains for molecule-based energy carriers
Our transport and infrastructure services connect energy producers to energy (end) users. We give third parties non-discriminatory access to our services.
We operate and develop energy infrastructure and energy trading platforms: gas transport networks, international transit pipelines, gas storage, gas conversion, LNG infrastructure and virtual gas trading platforms.
Our infrastructure functions as an international hub for the supply and transit of gas. This enables us to contribute to a liquid, competitive and reliable European energy market.
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Our overall and management focus is increasingly on developing transition energy supply chains and renewable energy supply chains. We do so by striking up new joint arrangements and creating new business models. We invest in projects relating to green gas, hydrogen, heat, CCUS and LNG.
The Dutch state is our sole shareholder. Our employees are spread over more than thirty locations in the Netherlands and northern Germany, with delegations in Brussels and Moscow. Our headquarters are in Groningen (Netherlands), and our main German office is located in Hanover.
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02 Mission, vision and strategy
Gasunie is a leading European energy infrastructure company, whose core activities are gas transport and gas storage. We serve the public interest and facilitate the energy transition by providing integrated infrastructure services. We focus on value creation for our shareholder(s) and other stakeholders and apply the highest safety and business standards used in the sector.
We believe in a sustainable future with a balanced energy mix and a lasting role for diversified gas. We believe that we serve our customers best with innovative gas and related infrastructure solutions.
We have 3 strategic pillars, which rest on the foundations of our organisation:
1. Ensuring a safe, reliable, affordable and sustainable gas infrastructure in our core area. 2. Contributing to an efficient gas infrastructure and services for a properly functioning European natural gas and LNG market. 3. Accelerating the transition to a carbon-neutral energy supply.
For further details of our strategy, please see the annual report that was published in March. In this half-year report, we will go into the latest developments in each strategic pillar.
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03 Recent developments
Financial performance
In the first six months of this year, Gasunie generated net revenue totalling € 717.2 million, up 1% on the first half of 2020. The operating result of € 296.2 million is down 11% on the first half of 2020 due to rising prices for energy procurement and the pre-investment in the energy transition.
Optimising infrastructure
Cold spell posed a stress test
In the second week of February, it was remarkably cold, causing demand for natural gas in our service areas to skyrocket. Our subsidiaries Gasunie Transport Services (GTS, Netherlands) and Gasunie Deutschland (GUD, Germany) handled these volumes without any problems. On Wednesday 10 February 2021, we transported as much as 420 million cubic metres of gas per hour through our Dutch networks. It was, however, not cold enough for a new gas transport record. The current record dates back to 2 January 1997, when the average hourly volume reached 527 million cubic metres.
GTS figures
GTS transported 459 TWh of natural gas in the first half of 2021, which is 4% more than the 441 TWh transported in the first half of 2020. At the exit points, more low-calorific gas was supplied due to the low temperatures, especially during the first quarter. The domestic exit of high-calorific gas was higher following the acquisition of the Zebra pipeline as of 31 December 2020. In the second quarter, the exit for the filling of storage facilities was lower. GTS blended 201 TWh of high-calorific gas with nitrogen to produce low-calorific gas (Groningen-quality gas) in the first half-year of 2021. This is 5% more than in the first half-year of 2020 (193 TWh). The amount of nitrogen used for conversion increased by 7% from 1.68 billion m3 to 1.80 billion m3.
In the period from January to the end of May 2021 inclusive, market parties traded a total of 20,338 TWh of gas on the TTF, which is around 5% less than the 21,507 TWh traded over the same period in 2020. Even so, TTF still increased its lead over other European gas trading hubs. TTF saw its market share grow to 77% (72% in 2020). As production from the Groningen field was further reduced, TTF’s role as a gas trading platform grew once again, confirming the importance of a liquid hub for a properly functioning gas market.
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GUD figures
Over the first six months of the year, GUD transported 133 TWh of natural gas, down 4% on the 138 TWh transported over the first half of 2020. GUD is receiving large numbers of applications for new or larger- scale connections. As Germany is switching to natural gas, there is still great scope for carbon emission reduction ahead of the switch to green molecules before 2050.
GTS regulation
On 1 February 2021, ACM published the 2022-2026 method decision, setting the boundaries within which GTS can charge its tariffs. ACM has opted to change the way in which GTS’ capital costs are spread over time, so as to factor in the future reduction in gas consumption as a result of the energy transition. GTS and several parties from the market have appealed the method decision on certain points. The Dutch Trade and Industry Appeals Tribunal (CBb) has decided not to hear the case before publication of the method decisions for TenneT and the regional transmission system operators in the autumn. In May, ACM published the GTS tariff decision for 2022.
GUD regulation
As a result of the German Federal Ministry for Economic Affairs and Energy’s intention to harmonise regulation of the transmission system operators with that of the regional distribution system operators, simplify the legislation and incentivise acceleration of the development of the German network, an amendment to the regulation regime was approved in late June. This amendment will enter into force in early 2023 and means, among other things, that the current set of investment measures will be replaced by a system of annual capital cost comparisons. A transitional arrangement will be implemented.
Incidents and absence
At the end of June, the Total Reportable Frequency Index (TRFI), our twelve-month moving ratio for the number of reportable incidents compared to the total number of hours worked, stood at 2.5, i.e. below our signal value of 2.7. It is our ambition to keep lowering the TRFI.
Asset performance
Uncontrolled events are incidents involving gas leaks (of natural gas, hydrogen, nitrogen or air) of over 14,000m3 from a Gasunie-operated pressure holder with a rated pressure of 8 bar or higher. So far in 2021, there have been no uncontrolled events, just like in the first half of 2020. We have set the signal value for 2021 at 3. Four transport disruptions occurred during the first six months of the year. Our signal value for transport disruptions is 6 for the whole year.
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Connecting Europe
EUGAL
On 1 April, the Europäische Gas-Anbindungsleitung, EUGAL for short, reached its maximum transport capacity for the first time. This gas pipeline runs from the Baltic Sea down to the southern part of Saxony and from there on to the Czech border, covering a distance of approximately 485 kilometres. Participation in this project bolsters the position of Gasunie’s network in international transit flows. EUGAL is a joint project by GASCADE, ONTRAS, Fluxys and GUD. Various branches to the west link the pipeline to gas markets in Germany, the Netherlands, Belgium and the UK.
Groningen gas field closure
In January, GTS advised that, from the 2022/2023 gas year onwards, the Groningen gas field will only be needed in the event of extremely cold weather or system outages. The Groningen gas field will then only be used as a back-up for other production assets. This back-up role means production volumes can be kept down to a minimum. Aside from that, we have indicated that final closure of the Groningen gas field can take place between mid-2025 and mid-2028, because this field will then no longer be needed as a back-up facility either.
Belgium subsequently announced that it can stop using low-calorific gas ahead of time. A study into the possibility of switching the Grijpskerk gas storage facility from high-calorific gas to low-calorific gas was also completed. Following these developments, we advised the Dutch minister of Economic Affairs and Climate Policy that final closure of the Groningen gas field can be brought forward. If the Grijpskerk gas storage facility is indeed switched to low-calorific gas, the Groningen gas field can be closed in the third quarter of 2023 or the third quarter of 2024. Another key factor in making this possible is the Zuidbroek nitrogen installation, which would have to be ready in time.
With the installation of three distillation columns in March and April, the new Zuidbroek nitrogen installation received its ‘heart’. It is expected to be commissioned in April 2022. Building this facility involves a total investment of € 500 million.
Security of supply
Due to the closure of the Groningen gas field, the Netherlands will become a great deal more dependent on pipeline-based gas imports from Norway and Russia. We already got a taste of that during the past winter. Great demand for liquefied natural gas (LNG) in Asia meant considerably lower supply of LNG to the European market. There were also large volumes of transit gas passing through the Dutch network en route to the UK market, whereas we still received relatively large volumes of gas from the UK last year. Gas storage facility occupancy rates had, therefore, dropped to 18% by the end of winter, even though the winter showed an average temperature profile. Due to the cold spring and high gas prices, gas storage facilities’ occupancy rates continue to be low. The storage facilities in the Netherlands (Bergermeer, Alkmaar, Grijpskerk, Norg and Zuidwending) recorded an occupancy rate of 29% at the
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end of June, compared to 73% on the same date last year. ENTSOG, the European association of gas transmission system operators, is currently conducting a study into the adequacy of Europe’s existing gas storage infrastructure. The results of this study are expected in the second half of the year.
The availability of high-calorific gas plays an essential role in being able to definitively close the Groningen gas field. There needs to be sufficient supply and storage capacity and demand for this type of natural gas. With this in mind, we are pleased that the German 2020-2030 Netzentwicklungsplan (Grid Development Plan) takes security of supply in the Netherlands into account and that key steps have been taken in the Netherlands to preserve the gas storage facilities of the parties in the Gasgebouw joint venture for the Dutch market. Over the coming years, these topics, and especially the ratio of low- calorific gas feed-in to high-calorific gas feed-in (gas quality balancing), will continue to merit our attention.
Our current assessment is that there will be sufficient infrastructure in the future, but the responsibility to ensure sufficient gas for Dutch customers lies with the parties operating in the Dutch gas market. In other words, once this gas can no longer be sourced from the Groningen gas field, it will be even more important that (all) market parties take this responsibility.
In April, the first German natural gas storage facility switched from low-calorific gas to high-calorific gas. The Storengy natural gas storage facility near Lesum (Bremen) has been connected to the GUD grid.
Trading Hub Europe
In April, GUD signed a collaboration agreement with ten other German network operators, under which they will merge the two gas market areas of GASPOOL and NetConnect Germany into a single market area called Trading Hub Europe (THE). This merger will make Germany a more attractive (transit) market for shippers. The merger of the virtual interconnection points for low-calorific gas will take effect on 1 October 2021, and the merger of physical interconnection points for high-calorific gas will follow on 1 April 2022. The THE market area covers a total length of around 40,000 kilometres and is connected to over 700 downstream networks.
German LNG/Stade/NEP 2020
In March, the German regulator BNetzA approved the 2020 Netzentwicklungsplan (NEP, Grid Development plan). This approval is important to GUD mainly because of their network expansion projects, which are related to, on the one hand, the connection of planned LNG terminals in Brunsbüttel and Stade and on the other hand to the need for greater transit capacity to the Netherlands. This will require expansion of the GUD network, which involves a total investment of approximately € 630 million.
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Accelerating the energy transition
Green gas
How do we get 2 billion cubic metres of green gas flowing through the Dutch gas networks by 2030, multiplying the current volume by ten? Working together on a local and regional level will enable us to overcome any obstacles. In June, we partnered with the 2bcm Alliance in organising a webinar for local authorities, presenting a range of successful real-life examples.
Hydrogen
The Netherlands is set to become the first country in Europe to repurpose its existing natural gas network for hydrogen transport, as Gasunie has officially been tasked with developing nationwide hydrogen transport infrastructure. The HyWay 27 report details the economic and technical reasoning behind building this hydrogen backbone.
The hydrogen network, which should be ready in 2027, will consist of 85% repurposed natural gas pipelines, supplemented by newly built pipelines. The costs are four times lower than those involved in building a network made up entirely of new pipelines. The capacity of the network is 10GW, equal to 25% of current energy usage by Dutch industry. This can be expanded further over time by applying compression techniques and because even more pipelines will become available in the future as the consumption of natural gas decreases.
In January, the Council for the Environment and Infrastructure advised the Dutch House of Representatives to invest in the production, storage and transport of hydrogen. This advice represents an important backing for the development of the hydrogen market and for the projects that Gasunie is working on in the Netherlands.
The HyTransPort.RTM hydrogen pipeline in the Port of Rotterdam has come one step closer to becoming a reality. In March, companies based in the Rijnmond area were invited to sign up as future consumers. The open-access hydrogen pipeline that will be laid will become the basis of the hydrogen infrastructure in Europe’s largest port. The plans for this pipeline are now in the final phase ahead of the final investment decision. The aim is for the HyTransPort.RTM to be taken into use in the second quarter of 2024.
Through the Clean Hydrogen Coastline partnership, ArcelorMittal Bremen, EWE, FAUN, Gasunie, SWB and TenneT have set out to integrate up to 400MW of electrolysis capacity with associated hydrogen storage capacity into the existing energy system in northern Germany by 2026. This initiative was announced in March.
In May, the German government nominated GUD’s future hydrogen pipeline HyPerLink as an Important Project of Common European Interest (IPCEI). This decision is an important advance towards the realisation of a north-western European hydrogen backbone. HyPerLink creates a connection in
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northern Germany between hydrogen onshoring and production locations on the one hand and the major industrial hydrogen consumption centres near Bremen, Hamburg and Hanover, as well as to underground storage facilities, on the other.
In April, Energinet and Gasunie published a pre-feasibility study on the transport of hydrogen through a 350 to 450km pipeline from Esbjerg or Holstebro in Denmark to Hamburg in Germany. This pipeline can be built gradually and cost-efficiently by repurposing existing gas pipelines. With this study, Gasunie and Energinet intend to get a market dialogue going and develop the export potential for green hydrogen from Denmark to demand centres in Germany.
Not only the Netherlands and Germany have plans for a hydrogen backbone in the making, ten other countries have previously joined forces to develop a 23,000km European backbone. This joint venture called European Hydrogen Backbone (EHB) announced in April that eleven more countries are set to join the initiative. Together, these countries propose a backbone of nearly 40,000km that should be up and running by 2040.
Heat
In order to transport residual heat from the Port of Rotterdam to consumers’ homes, Gasunie is developing the WarmtelinQ pipeline with help from the Dutch Ministry of Economic Affairs and Climate Policy and the Zuid-Holland provincial authority. The WarmtelinQ will be a heat pipeline that will initially run from Vlaardingen to The Hague. In order to actually get the heat to consumers’ homes, Gasunie, the Zuid-Holland provincial authority, the local authorities of Vlaardingen, Delft, Midden- Delfland, Rijswijk, and the joint housing corporations signed a declaration with collaboration arrangements in March. Gasunie is currently exploring, together with and at the request of stakeholders, ways to extend WarmtelinQ to the Leiden area.
CCS
Preparations for Porthos are nearing the final stage. The environmental impact assessment published in February did not identify any impediments in the project organisation that will delay the decision-
making process. The four companies that intend to have CO2 stored saw their application for SDE++ granted. The construction of the planned compressor station on the Maasvlakte site, which will
transport captured CO2 to the empty P18 gas field on a large scale, has been put out to tender. Gasunie will make a final investment decision on its share in the Porthos project in 2022.
Foundations of our organisation
COVID-19
COVID-19 has significantly changed the way we work. A number of our people had been working from home for some time already, while others continued (sometimes with certain changes) to work from the office, plant or field. We decided to stick with this ‘home working unless’ policy over the past six
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months. In Germany, COVID-19 restrictions dictate that simultaneous use of work areas has to be kept to a minimum until 10 September.
Hybrid working
Where will we go from here, now that we are allowed back at the office? Through a hybrid way of working, we are trying to strike a new balance in both the Netherlands and Germany, so that we can keep enjoying the benefits of working from home. Hybrid working means that, for part of the time, employees work together in a way that is not tied to a specific place or time. The basic principle here is that the company’s best interests and proper performance of the work must never be undermined by when and where the work is performed.
Corporate Social Responsibility
Gasunie’s new Corporate Social Responsibility (CSR) policy, which ties in with the United Nations’ Sustainable Development Goals, is increasingly gaining shape. Last year, Gasunie identified nine Green Deals. For these Green Deals, which include zero-emission construction, circular procurement and methane emission reduction, we have meanwhile defined most of the KPIs for the years 2023 and 2030. In the second half of this year, we will be setting up the monitoring of and reporting on these KPIs.
In April, Gasunie and several other Dutch infrastructure companies joined the Verbond Brede Welvaart, a pact for broad prosperity. In this pact, we promise to not only approach our activities from a financial and economic perspective, but also to adopt a broader focus on what we add to society. The concept of Broad Prosperity encompasses everything that people consider to be of value: health, education, the environment and living environment, freedom of political expression, social cohesion, personal development and safety.
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04 Risk management
Risks in a general sense are intensively monitored by Gasunie’s Executive Board and senior management. The focus is specifically on safety risks for our workers, the progress of the energy transition and phase-out of extraction from the Groningen field, consequences for the supply of goods, and our and our partners’ financial stability.
The risk appetite, as specified in the 2020 Annual Report, has not changed over the past six months and the main risks are still present. Like in our previous report, we do not see any material threats to our operations as a result of the COVID-19 pandemic.
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Statement of the Executive Board
Partner
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05 Statement of the Executive Board
(as defined in Article 5:25d, paragraph 2(c) of the Dutch Financial Supervision Act)
The members of the Executive Board hereby declare that, to the best of their knowledge,
1. the interim financial statements give a true and fair view of the assets, liabilities, financial position and result of the company and the undertakings included in the consolidation taken as a whole; and that
2. the half-year report gives a true and fair view of material events that occurred in the first six months of the year and the impact of such events on the interim financial statements, and provides a description of the principal risks and uncertainties faced in the remaining six months of the financial year in question.
Mr J.J. Fennema*, chair Ms J. Hermes* Mr B.J. Hoevers Mr U. Vermeulen
Groningen, 20 July 2021
* Director under the Articles of Association
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Half-year report
Partner
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06 Consolidated half-year report
Condensed consolidated statement of financial position as at 30 June 2021
(before profit appropriation)
In millions of euros Notes 30 June 2021 31 Dec. 2020
Assets
Fixed assets - tangible fixed assets 4 9,084.1 9,125.0 - investments in joint ventures 5 262.0 241.2 - investments in associates 5 0.5 0.5 - other equity interests 8 524.9 509.3 - deferred tax assets 259.5 267.4
Total fixed assets 10,131.0 10,143.4
Total current assets 216.3 242.6
Total assets 10,347.3 10,386.0
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In millions of euros Notes 30 June 2021 31 Dec. 2020
Liabilities
Total equity attributable to shareholder 1 6,313.9 6,341.0
Non-current liabilities - interest-bearing loans 6, 8 2,600.8 2,360.1 - lease liabilities 89.4 92.5 - contract liabilities 46.0 47.2 - deferred tax liabilities 184.4 179.1 - other non-current liabilities and provisions 147.0 157.8
Total non-current liabilities 3,067.6 2,836.7
Current liabilities - current financing liabilities 7 673.2 958.2 - lease liabilities 11.1 7.5 - trade payables, corporate income tax, other 281.5 242.6 payables and contract liabilities
Total current liabilities 965.8 1,208.3
Total liabilities 10,347.3 10,386.0
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Condensed consolidated statement of profit and loss over the first half-year of 2021
In millions of euros Notes First half- First half- year of 2021 year of 2020
Continuing operations Revenues 2, 3 717.2 711.6
Capitalised expenses 31.3 27.2 Personnel expenses and other operating ‑286.2 ‑246.5 expenses Depreciation expenses ‑166.1 ‑160.0 Total expenses ‑421.0 ‑379.3
Operating result 296.2 332.3
Finance income and expenses ‑33.5 ‑34.9 Share in result of joint ventures 5 14.1 15.7 Dividend received from participating 8 - 20.3 interests
Result before taxation 276.8 333.4
Income taxes ‑69.7 ‑76.0
Result after taxation 207.1 257.4
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Consolidated statement of comprehensive income over the first half-year of 2021
In millions of euros Notes First half- First half- year of 2021 year of 2020
Result after taxation according to 207.1 257.4 consolidated statement of profit and loss
Sum of actuarial gains and losses on 9.5 ‑2.7 employee benefits, of which corporate income tax ‑2.8 0.8
Total of results taken to equity which will 6.7 ‑1.9 not be reclassified subsequently to profit and loss
Changes in other participating interests 8 15.6 ‑8.9 measured at fair value
Changes in the cash flow hedge reserve, - ‑0.5 of which corporate income tax - 0.1
Changes in the cash flow hedge reserve 5 5.8 3.2 concerning joint ventures and associates
Total of results taken to equity which will 21.4 ‑6.1 be reclassified subsequently to profit and loss
Total comprehensive income for the year 235.2 249.4
Attributable to shareholder 235.2 249.4
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Consolidated statement of changes in equity over the first half-year of 2021
In millions of euros Share Cash flow Fair value Other Unappropriated Total capital hedge reserve reserve reserves result First half-year of 2021 Balance as at 1 January 2021 0.2 - 336.5 5,404.6 599.7 6,341.0
Total of comprehensive income - - 15.6 12.5 207.1 235.2 for the financial year
Dividend paid for 2020 - - - - ‑262.3 ‑262.3
Added to other reserves - - - 337.4 ‑337.4 -
Balance as at 30 June 2021 0.2 - 352.1 5,754.5 207.1 6,313.9
First half-year of 2020 Balance as at 1 January 2020 0.2 0.9 342.2 5,180.1 412.0 5,935.4
Total of comprehensive income - ‑0.3 ‑8.9 1.3 257.4 249.5 for the financial year
Dividend paid for 2019 - - - - ‑288.4 ‑288.4
Added to other reserves - - - 123.6 ‑123.6 -
Balance as at 30 June 2020 0.2 0.6 333.3 5,305.0 257.4 5,896.5
27 2021 half-year report - N.V. Nederlandse Gasunie
Condensed consolidated statement of cash flows over the first half- year of 2021
In millions of euros Notes First half- First half- year of 2021 year of 2020
Cash flow from business operations 2, 3 537.2 556.7
Net amount of interest paid and received, ‑75.4 ‑22.6 corporate income tax and dividends received
Cash flow from operating activities 461.8 534.1
Cash flow from investing activities 4 ‑141.4 ‑173.1
Cash flow from financing activities Uptake of long-term loans 6 240.0 - Repayment of long-term loans 6 ‑300.0 ‑10.7 Lease payments ‑4.6 ‑3.7 Change in short-term financing 7 15.0 ‑81.8 Dividend paid 1 ‑262.3 ‑288.4
Cash flow from financing activities ‑311.9 ‑384.6
Net cash flow for the financial year 8.5 ‑23.6
Cash and cash equivalents at previous year- 17.9 45.3 end Cash and cash equivalents at year-end 26.4 21.8
Change in cash and cash equivalents 8.5 ‑23.6
28 2021 half-year report - N.V. Nederlandse Gasunie
Notes to the 2021 consolidated interim financial statements
General
Preparation of the half-year report The 2021 half-year report was prepared by the Executive Board on 20 July 2021.
Reporting entity N.V. Nederlandse Gasunie (hereafter: ‘Gasunie’ or ‘the Company’) is a European energy infrastructure company. Gasunie provides regulated transport services in the Netherlands and Germany. In addition, Gasunie jointly operates pipelines that connect the Gasunie transport network to foreign markets. Gasunie also provides other energy infrastructure services, including gas storage and the certification of green gas. Gasunie increasingly seeks to deploy its infrastructure and knowledge for the ongoing development and integration of alternative energy sources, such as hydrogen, heat and green gas and the development of CCS.
The Company has its registered office and place of business at Concourslaan 17, Groningen (Netherlands) and is registered with the Chamber of Commerce under number 02029700.
All shares outstanding as at the balance sheet date are held by the Dutch State.
Financial reporting period These condensed consolidated interim financial statements (hereafter: ‘interim financial statements’) cover the first half-year of 2021, which ended on the balance sheet date of 30 June 2021.
Functional and presentation currency The interim financial statements are presented in euros, which is also the Company’s functional currency. All amounts have been rounded off to the nearest million, unless stated otherwise.
Going concern These interim financial statements have been prepared on the basis of the going concern assumption.
Seasonality Gasunie’s revenues and operating expenses are not recorded evenly over the year, due to factors such as meteorological effects. Both the revenues and the operating expenses are affected by seasonality. The Company’s core activity is the transport of natural gas through the gas transport network. Revenues comprise the sale of available transport capacity and transport-related services. During the winter, customers contract a substantially greater capacity than during the summer, so revenues are substantially higher in winter months than in other months. Part of the cost of network operations depends on the volumes of gas transported, while the other part is fixed. A higher volume of gas transported in the winter months results in higher operating expenses for Gasunie in this period compared to other months.
Use of estimates and management judgements In preparing the interim financial statements, management makes estimates and assessments which affect the assets and liabilities presented as at the balance sheet date and the result for the first six months of the financial year. Actual results may differ from these estimates. Estimates and underlying
29 2021 half-year report - N.V. Nederlandse Gasunie
assumptions are reviewed by management each reporting period. Revisions to estimates are accounted for upon identification and are recognised prospectively in the periods to which the revision relates.
Management judgements and estimates are significant for:
measurement and estimation of the useful life of tangible fixed assets; measurement of participating interests; measurement of deferred tax assets; measurement of pension obligations; classification of participating interests.
Basis for preparation
Statement of compliance The interim financial statements have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’, as endorsed by the European Union. These interim financial statements do not contain all disclosures normally required in a complete set of annual financial statements. For this reason, the interim financial statements must be read in conjunction with N.V. Nederlandse Gasunie’s 2020 annual report.
The interim financial statements have been reviewed by an independent auditor (PricewaterhouseCoopers Accountants N.V.). The independent auditor’s review report can be found after the interim financial statements.
Accounting policies for consolidation and the measurement of assets and liabilities and the determination of the result The Company prepares its consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS), as endorsed by the European Union. In this context, IFRS comprises the IFRS standards 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.
The accounting policies applied in preparing the 2021 interim financial statements are consistent with the accounting policies applied in preparing the 2020 annual report, with the exception of the new and amended standards for financial reporting that are disclosed in the next paragraph.
New and amended standards for financial reporting The following amendments to financial reporting standards are effective from the 2021 financial year onwards:
Amendments to IFRS 4 Insurance Contracts – deferral of IFRS 9 Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2
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The following amendments to financial reporting standards are effective from the 2022 financial year onwards:
Amendments to IFRS 3 Business Combinations, IAS 16 Property, Plant and Equipment and IAS 37 Provisions, Contingent Liabilities and Contingent Assets Annual Improvements 2018-2020
In addition, the following standards or amendments are expected to come into force in the near future. EU endorsement is still pending for these standards.
Amendments to IFRS 16 Leases: Covid-19-Related Rent Concessions beyond 30 June 2021 (from the 2021 financial year) Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current or Non-current and Classification of Liabilities as Current or Non-current - Deferral of Effective Date (from the 2023 financial year) IFRS 17 Insurance Contracts; including Amendments to IFRS 17 (from the 2023 financial year) Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (from the 2023 financial year) Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (from the 2023 financial year) Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (from the 2023 financial year)
Based on analysis by the Company, both the endorsed and the non-endorsed standards do not have a material impact on the Company’s equity and result, and do not require significant additional disclosures. The impact of these amendments on the Company is therefore not disclosed in detail in these interim financial statements.
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Explanatory notes to the condensed consolidated financial statements
1. Significant events and transactions in the first half-year of 2021
COVID-19
Just like in the 2020 financial year, management expects that the pandemic will not have a significant adverse impact on the 2021 financial results. In the first half-year of 2021, the revenues and operational expenses from both the regulated and the non-regulated and/or exempt activities did not deviate significantly from the business plan due to the pandemic. No adjustments were made in the accounting of revenue, purchase and lease contracts. Our present contracts also do not prompt the inclusion of new obligations or provisions in the balance sheet. The refinancing calendar has not changed due to the pandemic and the planned repayment of a non-current loan in the first half-year of 2021 took place as scheduled. The Company’s financial liquidity is good, including access to the money and capital markets. Gasunie has not requested governmental emergency financial support in the Netherlands or Germany.
In particular, management has analysed the impact of the COVID-19 pandemic on the transactions that are accounted for in accordance with the following standards:
Revenues Property, plant and equipment (impairments) Financial instruments Leases Provisions Income taxes
Management concludes that the application of the accounting policies mentioned above need not be revised at the balance sheet date of 30 June 2021 compared to the accounting policies as applied in preparing the 2020 annual report.
Dividend distribution and related party transactions
In the first half of 2021, Gasunie distributed € 262.3 million (first half-year of 2020: € 288.4 million) in dividends to its sole shareholder, the Dutch State. This concerned the appropriation of result for the 2020 financial year in accordance with the resolution of the General Meeting of Shareholders of 29 March 2021.
The nature of Gasunie’s other related parties transactions in the first half-year of 2021 is identical to those disclosed in the 2020 annual report. Related party transactions in the first half-year of 2021 were performed at arm’s length where applicable.
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2. Information about operating segments
Determining operating segments
Financial information is segmented in line with the group’s activities. The operating segments reflect the group’s management structure. The following segments are distinguished by Gasunie:
Gasunie Transport Services This segment covers network management in the Netherlands and is responsible for managing gas transport and developing the transport network and related assets, as well as promoting the market mechanism.
Gasunie Deutschland This segment covers network management in Germany and is responsible for managing gas transport and developing the transport network and related assets, as well as promoting the market mechanism.
Participations This segment focuses on developing projects for the energy transition, ensuring an optimum utilisation of existing participations and facilitating access to the new gas flows for north-western Europe through an LNG connection and long-distance pipelines. This segment also includes jointly operated pipelines that connect the Gasunie transport network with foreign markets, such as the BBL pipeline to the United Kingdom.
The accounting policies for the measurement of assets and liabilities and the determination of the result used for these segments are the same as those applied in preparing these 2021 interim financial statements and the 2020 consolidated annual report.
The assets, revenues and results of a segment comprise both items directly related to the segments and items that can reasonably be attributed to the segments. Because the Company is funded at a corporate level, no segment information is prepared and reported for the Company’s equity and liabilities. Inter-segment transactions are performed at arm’s length. Transactions between segments are eliminated in the information about operating segments.
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Information about revenues and results per segment
Revenues and results per segment are as follows:
In millions of euros Revenue Result First half-year First half-year First half-year First half-year of 2021 of 2020 of 2021 of 2020 Operating segments - Gasunie Transport Services 518.6 495.0 211.2 214.0 - Gasunie Deutschland 142.7 158.0 72.8 91.9 - Participations 76.9 77.8 12.2 26.4 Inter-segment adjustments ‑21.0 ‑19.2 - -
Operating segments total 717.2 711.6 296.2 332.3
Unallocated financial income and expenses ‑19.4 1.1
Result before taxation 276.8 333.4
Income taxes ‑69.7 ‑76.0
Revenue and result after taxation for the 717.2 711.6 207.1 257.4 year
The increase in revenue for the GTS segment can be attributed mainly to an increase in the 2021 entry tariffs together with increased capacity bookings as a result of higher amounts of imported gas. This did not lead to an increase in the result however, due to substantially higher network and electricity costs. The revenues and the result for the Gasunie Deutschland segment declined. This can be attributed mainly to changes in gas flows in Germany, resulting in lower demand for transport capacity from Gasunie Deutschland in the first half-year of 2021. Although the revenue of the Participations segment was approximately the same, the result declined due to substantially higher network and electricity costs and due to an increase in the costs relating to the energy transition.
Inter-segment services amounted to € 21.0 million in total in the first half-year of 2021 (first half-year of 2020: € 19.2 million). During the first half-year of 2021, the Gasunie Transport Services segment rendered inter-segment services of € 7.0 million (first half-year of 2020: € 5.5 million), the Gasunie Deutschland segment rendered inter-segment services of € 0.2 million (first half-year of 2020: € 0.1 million) and the Participations segment rendered inter-segment services of € 13.7 million (first half-year of 2020: € 13.6 million).
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Information about assets per segment
The assets for each operating segment are as follows:
In millions of euros Assets 30 June 2021 31 Dec. 2020
Operating segments - Gasunie Transport Services 6,856.7 6,898.7 - Gasunie Deutschland 1,611.8 1,587.9 - Participations 1,403.0 1,389.4
Operating segments total 9,871.5 9,876.0
Unallocated assets 475.8 510.0
Total consolidated assets 10,347.3 10,386.0
Unallocated assets comprise deferred tax assets and current assets. The most important investments are further disclosed in note 4 ‘Tangible fixed assets’.
3. Revenue disaggregation
Revenue increased by 0.8% compared to the first half-year of 2020 (first half-year of 2020: increase of 4.3%). A further revenue breakdown is included below.
Information about operating activities
The Company categorises its revenues according to the way in which economic factors influence the nature, amount, timing and uncertainty of the cash flows. A distinction can be made between two categories in the case of Gasunie. The first revenue stream relates to revenue from regulated transport and related services, as generated by Gasunie Transport Services and Gasunie Deutschland. The Dutch and German regulatory authorities set the permitted income for this revenue stream for the long term.
The second revenue stream relates to 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 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 segment.
Revenue for each operating activity is as follows:
In millions of euros Revenue First half-year of First half-year of 2021 2020
Regulated services 640.3 636.6 Non-regulated and/or exempt services 76.9 75.0
Total revenue 717.2 711.6
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Information about products and services
Revenues can be divided into revenues from gas transport and related services, and other activities. Gas transport and associated services covers both revenues from regulated gas transport and revenues from non-regulated and/or exempt gas transport. Other activities include, among other things, revenues from gas storage services.
The breakdown is as follows:
In millions of euros Revenue First half-year of First half-year of 2021 2020
Gas transport and related services 666.8 668.9 Other services 50.4 42.7
Total revenue 717.2 711.6
Information about geographical areas
Revenues by geographical area are determined on the basis of the area where the activities take place (within the Netherlands or outside the Netherlands).
The geographical distribution of revenues is as follows:
In millions of euros Revenue First half-year of First half-year of 2021 2020
Netherlands 574.5 553.7 Outside the Netherlands 142.7 157.9
Total revenue 717.2 711.6
4. Tangible fixed assets
Investments
Investments in tangible fixed assets in the first half-year of 2021 amounted to € 126.3 million (first half- year of 2020: € 191.0 million). This amount does not include investments in right-of-use assets. The investments mainly relate to the development of Gasunie Transport Services’ nitrogen installation in Zuidbroek, construction of a natural gas pipeline to Volkswagen’s car factories in Wolfsburg and to the development of the second pipe of the EUGAL pipeline in Germany. As at 30 June 2021, Gasunie had entered into conditional investment obligations of € 197.3 million (year-end 2020: € 205.2 million). These obligations mainly relate to the aforementioned construction projects.
Impairment of fixed assets
At regular intervals, management determines whether there is any event or indication of impairment of fixed assets. As mentioned in note 1 ‘Significant matters and events in 2020’, the COVID-19 pandemic had no consequences for the valuation of fixed assets as at 31 December 2020. The outcomes of this
36 2021 half-year report - N.V. Nederlandse Gasunie
analysis for each significant cash-generating unit are shown below.
Gas transport network in the Netherlands Valuation of the gas transport network in the Netherlands depends, among other things, on the Company’s income from regulated services. Management tested the valuation of the gas transport network in the Netherlands at year-end 2020, due to the release of the GTS 2022-2026 method decision on 1 February 2021. The outcome of the test was recognised in the 2020 financial statements. After preparing the 2020 annual report, both GTS and market parties filed a pro forma appeal against the method decision at the Dutch Trade and Industry Appeals Tribunal (CBb). Grounds for the appeal will be further determined in the second half of 2021. As at the date of these financial statements, it is unknown when the Trade and Industry Appeals Tribunal will handle the substance of the appeal.
No events or circumstances were identified in the first half-year of 2021 that may give rise to significant changes in estimates and judgements made as at year-end 2020.
Management’s review did not identify any other events or indications that the gas transport network in the Netherlands may be impaired as at 30 June 2021.
Gas transport network in Germany Valuation of the gas transport network in Germany depends, among other things, on the Company’s income from regulated services. In 2019, an investigation was launched by the German Ministry for Economic Affairs and Energy with respect to a change in the regime for investment measures, among other things. Since then, it has been investigated whether the present regulatory regime should be amended in this regard in the future with the aim of accelerating the investments necessary for the energy transition. The changes are to result in a faster commissioning of planned and approved investments.
On 25 June 2021, the German Bundesrat gave final approval for the new bill (the ‘AregV Novelle’). An important change starting from the new regulatory period on 1 January 2023 is that the present regime of investment measures (known as IMAs) is abolished. At the same time, the commitment to pay back historically accumulated investment allowances is also abolished. In addition, a change in determining capital cost allowances is introduced for other investments. For the period up to 2028, a transition arrangement is in place.
Management tested whether the intermediate change of some principles in the present regulatory framework constitutes an indication that the gas transport network may be impaired. Management’s review demonstrates that, among other things due to the transition arrangement, the effect of abolishment of the investment measures and the introduction of a capital cost comparison model are largely offset by forgiving the repayment of historically accumulated investment allowances. Management therefore concludes that the introduction of the AregV Novelle is not an indication for an impairment of the gas transport network in Germany as at 30 June 2021.
Management’s review did not identify any other events or indications that the gas transport network in Germany may be impaired as at 30 June 2021.
BBL Company Management’s assessment has not revealed any event or indication of an impairment of BBL Company’s tangible fixed assets as at 30 June 2021.
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EnergyStock Management’s assessment has not revealed any event or indication of an impairment of EnergyStock’s tangible fixed assets as at 30 June 2021.
Other tangible and financial fixed assets Management’s assessment has not revealed any event or indication of an impairment of other tangible and financial fixed assets as at 30 June 2021.
5. Investments in joint ventures, joint operations and associated companies
Joint ventures
The movements in joint ventures in the first half-year of 2021 are as follows:
In millions of euros First half-year of 2020 2021
Balance as at 1 January 241.2 212.2
Investments 18.7 14.7 Changes in equity 5.8 5.7 Result from joint ventures 14.1 31.0 Dividend received ‑17.8 ‑22.4
Closing balance as at 30 June and 31 December 262.0 241.2
In the first half-year of 2021, Gasunie mainly invested in Gate terminal’s LNG storage facilities and in joint ventures that focus on establishing infrastructure for the ongoing development and integration of alternative energy sources.
The changes in equity concern the revaluation of the participation in Gate terminal as a result of the fair value change of Gate terminal’s cash flow hedge. Gasunie recorded this change in equity in comprehensive income.
Joint operations
The joint operation Ambigo V.O.F. was dissolved as of January 2021. The entity already ceased its operational activities earlier. Following the termination of Ambigo V.O.F., Gasunie Ambigo B.V. was dissolved in June 2021 as well. Both dissolvements had no important financial impact on the Company.
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Associated companies
In June 2021, GASPOOL Balancing Services (GASPOOL) GmbH merged with NetConnect Germany GmbH & Co. KG (NCG) to form Trading Hub Europe GmbH (THE). Gasunie previously held an interest in GASPOOL and obtained a share in THE due to the merger. The merger is the result of a legislative change in Germany with the aim of establishing one integrated German market area. The merger will get rid of the separate northern and southern market areas and establish a new commonly controlled market area with a single entry and exit zone.
The merger has no significant financial impact on Gasunie. The financial interest in THE amounts to € 0.5 million. This equals the amount previously held in GASPOOL. Based on the cooperation agreement, all eleven shareholders each have an identical financial interest (of 9.09%). Based on the cooperation agreement, Gasunie has significant influence over the relevant activities of THE. The financial interest is therefore considered an associate company and measured in accordance with the equity method.
6. Interest-bearing loans
As at 30 June 2021, the nominal amount of € 3,042.4 million (year-end 2020: € 3,102.4 million) in non- current loans comprised € 2,252.4 million (year-end 2020: € 2,552.4 million) in bond loans and € 790.0 million (year-end 2020: € 550.0 million) in private loans. The transaction costs and discount still to be amortised amounted to € 8.4 million as at 30 June 2021 (year-end 2020: € 9.1 million).
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The movements in interest-bearing loans are as follows:
In millions of euros First half-year of 2020 2021
Principle amount as at 1 January 3,300.0 3,450.0 Total repayments as at 1 January ‑197.6 ‑326.2 Remaining principle amount as at 1 January 3,102.4 3,123.8
Costs and discounts on loans to be amortised ‑9.1 ‑10.5 Balance as at 1 January 3,093.3 3,113.3
Movements in the first half-year resp. the financial year
Repayments ‑300.0 ‑21.4 Loans and bonds issued 240.0 - Amortisation of costs and discounts on loans 0.7 1.4
Total movements in the first half-year resp. the financial year ‑59.3 ‑20.0
Principle amount as at 30 June resp. 31 December 3,240.0 3,300.0 Total repayment as at 30 June resp. 31 December ‑197.6 ‑197.6 Remaining principle amount as at 30 June resp. 31 December 3,042.4 3,102.4
Costs and discounts on loans to be amortized ‑8.4 ‑9.1 Balance as at 30 June resp. 31 December 3,034.0 3,093.3
Included under current liabilities ‑433.2 ‑733.2
Total 2,600.8 2,360.1
In the first half-year of 2021, the Company repaid € 300.0 million (first half-year of 2020: € 10.7 million) in non-current loans.
In May 2021, an amount of € 90.0 million was drawn from a facility granted by the European Investment Bank (EIB) regarding the construction of GTS’ nitrogen installation. The effective interest rate is fixed at 0.258%. Repayment of the loan will take place in a single instalment in May 2030 at the latest. Subsequently, the remaining part of the facility amounting to € 150.0 million was drawn in June 2021. The effective interest rate for this part of the loan is fixed at 0.127%. Repayment will take place in a single instalment in June 2029 at the latest. Early repayment is allowed for both parts of the loan.
N.V. Nederlandse Gasunie provided no securities to its credit providers for the interest-bearing loans and other facilities. Existing loan agreements are unchanged compared to 2020.
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Future repayment obligations are as follows:
In millions of euros First half-year Second half-year Total
Repayment in 2021 433.2 433.2 2022 369.2 125.0 494.2 2023 0.0 125.0 125.0 2024 50.0 125.0 175.0 2025 0.0 125.0 125.0 after 2025 1,690.0 Total repayment obligations 3,042.2
The Company has an uncommitted current account facility of € 45 million (year-end 2020: € 45 million), a committed credit facility of € 600 million (year-end 2020: € 600 million) and a Euro Commercial Paper (ECP) programme of € 750 million (year-end 2020: € 750 million). In March 2021, the committed credit facility was extended by one year and now has a term up to April 2026. No amounts were drawn on the committed credit facility in the past half-year. However, as part of its normal operating activities, Gasunie 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, € 2.3 billion was issued in loans as at 30 June 2021 (year-end 2020: € 2.6 billion). The EMTN programme is being updated as at 30 June 2021.
The long-term and short-term credit ratings by S&P and Moody’s have not changed in the first half-year of 2021. Moody’s reconfirmed the current ratings (A1, P-1) in May 2021. S&P’s latest update dates from June 2020.
7. Current financing liabilities
Current financing liabilities are as follows:
In millions of euros 30 June 2021 31 Dec. 2020
Repayment obligation on non-current loans 433.2 733.2 Short-term loans 240.0 225.0
Total current financing liabilities 673.2 958.2
For further details on non-current loans, please refer to note 6 ‘Interest-bearing loans’.
Gasunie drew an amount of € 240.0 million in short-term interest-bearing loans as at 30 June 2021 (year-end 2020: € 225.0 million). This concerns deposit loans and ECPs with a term of less than one year.
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8. Financial instruments
These interim financial statements contain the following financial instruments:
Other participating interests Interest-bearing loans Other primary financial instruments
Gasunie applies the following hierarchy of valuation techniques to determine and measure the fair value of financial instruments:
Level 1: Based on quoted prices in active markets for an identical instrument.
Level 2: Based on quoted prices in active markets for similar instruments, or based on other measurement methods, with all required key data being derived from publicly available market information.
Level 3: Based on other measurement methods, in which all required key data is not derived from publicly available market information.
Other participating interests
Other participating interests are as follows:
Company name Registered office Interest 30 June 2021 31 Dec. 2020
Energie Data Services Nederland (EDSN) B.V. Arnhem 12.5% 12.5% Nord Stream AG Zug, Switzerland 9.0% 9.0% PRISMA European Capacity Platform GmbH Leipzig, Germany 12.7% 12.7%
The fair value of the other participating interests as at 30 June 2021 totals € 524.9 million (year-end 2020: € 509.3 million). The increase in fair value of other participating interests amounting to € 15.6 million (first half-year of 2020: decrease of € 8.9 million) is taken directly to the fair value reserve. Nord Stream did not distribute dividend in the first half-year of 2021 (first half-year of 2020: € 20.3 million). In consultation with the shareholders, Nord Stream’s dividend distribution will take place in the second half of 2021.
The determination of the fair value of other participating interests is based on the present value of the expected cash flows. This is considered a level 3 fair value measurement (year-end 2020: level 3). When determining the fair value of the aforementioned other participating interests, Gasunie applies a discount rate based on the risk-free yield, plus credit and liquidity surcharges. This discount rate varies between 3% and 6% after tax, depending on the risk profile of the other participating interest to be measured.
The valuation of the interest in Nord Stream is based on the present value of the expected future cash flows. A calculation model is used and this model is updated annually by Nord Stream based on the most recent business plan. This model is submitted for review and approval to the shareholders of Nord Stream, including Gasunie. The model is subsequently tested by Gasunie’s management on the basis of Nord Stream’s periodic financial reports. The expected cash flows are based on contractual agreements,
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among other things. All things being equal, if the discount rate changes by 0.5 percentage points, this will result in a change in the fair value amount of approximately € 18.0 million (year-end 2020: € 20.0 million).
The cumulative book value of the interests in Prisma and EDSN amounts to less than € 0.1 million (year- end 2020: less than € 0.1 million). Given this low value, it is assumed that the book value approximates the fair value, and the fair value calculation and a sensitivity analysis for these interests have not been included in these interim financial statements.
Interest-bearing loans
Interest-bearing loans relate to bond loans listed on Euronext in Amsterdam and to private loans.
The fair value of listed bond loans is the same as the exit price on the reporting date. This is a level 1 fair value measurement (year-end 2020: level 1). The fair value of the private loans is measured by calculating the present value of the expected future cash flows at a discount rate equal to the applicable risk-free market yield for the remaining term, plus credit and liquidity surcharges. The Company’s risk profile is also taken into account in this calculation. This is a level 3 fair value measurement (year-end 2020: level 3).
The carrying amount and the fair value of interest-bearing loans as at 30 June 2021 is as follows:
In millions of euros 30 June 2021 31 Dec. 2020 Carrying Fair value Difference Carrying Fair value Difference amount amount
Bonds 2,252.4 2,326.0 73.6 2,543.3 2,669.8 126.5 Private loans 790.0 860.6 70.6 550.0 631.3 81.3
Total interest-bearing 3,042.4 3,186.6 144.2 3,093.3 3,301.1 207.8 loans
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 long-term loans) and trade and other payables.
Given the short term of these instruments, their fair value approximates the carrying amount.
Cash and cash equivalents are included in the current assets and, as at 30 June 2021, amount to € 26.4 million (year-end 2020: € 17.9 million).
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9. Events after the balance sheet date
No significant events occurred between the balance sheet date and the date of these interim financial statements that could give rise to an adjustment or a disclosure in these interim financial statements.
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07 Signature
The Executive Board,
Mr J.J. Fennema*, chair Ms J. Hermes* Mr B.J. Hoevers Mr U. Vermeulen
Groningen, 20 July 2021
* Director under the Articles of Association
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46 2021 half-year report - N.V. Nederlandse Gasunie
08 Review report
The accompanying 2021 interim financial statements have been reviewed by an independent auditor (PricewaterhouseCoopers Accountants N.V.). The independent auditor’s review report is included in the Dutch version of the 2021 half-year report. Refer to the section entitled ‘Beoordelingsverklaring’.
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09 Disclaimer
In the event of inconsistencies or differences of interpretation between the original Dutch report and the translated English report, the Dutch report shall prevail.
48