Events after balance sheet date
Sale of Endinet and purchase of networks in Friesland/Noordoostpolder
The contract (SPA) to acquire parts of the Enexis networks in Friesland and the Noordoostpolder (Activabedrijf Enexis Friesland B.V. – AEF B.V.) with effect from 1 January 2016 and simultaneously to sell to Enexis the networks in the geographical areas of Eindhoven and Zuidoost-Brabant (Endinet Groep B.V. ) was signed on 27 July. The transaction involved Alliander selling the shares of Endinet Groep B.V. to Enexis and buying the shares of AEF B.V. (networks in Friesland and the Noordoostpolder) from Enexis with an additional payment by Enexis of €365 million.
AEF B.V. has 51,000 electricity and 196,000 gas connections in Friesland and 28,000 electricity and 27,000 gas connections in the Noordoostpolder. The AEF B.V. networks lie at the heart of the area serviced by Liander and their acquisition will make for more efficient operations. The acquisition is also entirely in line with the strategy of having a single network operator for both electricity and gas in any one area or region.
Alliander acquired total control of AEF B.V. on 1 January 2016 and will be including the company in the Alliander consolidation with effect from that date. Enexis Groep B.V. will consolidate Endinet Groep B.V. from the same date.
Under IFRS there are two separate transactions, viz.:
- the sale of the shares of Endinet Groep B.V., and
- the purchase of the shares of AEF B.V.
Since this is a transaction that took place on 1 January 2016 (an event after the balance sheet date) but one which predated the publication of the financial statements, the purchase of AEF B.V. and the sale of Endinet have been accounted for in the 2015 financial statements as events after the balance sheet date. The two transactions will be accounted for in the 2016 reporting period.
Sale of shares of Endinet Groep B.V.
For the purposes of calculating the book profit on the sale of the shares of Endinet Groep B.V., IFRS requires the fair value of Endinet to be measured. This has been done on the basis of cash flows for the medium and long term, regulatory developments, outperformance effects and synergistic gains. The fair value of Endinet Groep B.V. as at 1 January 2016 has been calculated at €705 million.
The net assets and liabilities to be transferred to Enexis amount to €518 million, made up as follows:
The assets and liabilities are presented as assets and liabilities 'held for sale' in the consolidated balance sheet of Alliander as at 31 December 2015. The total net assets include goodwill amounting to €36 million relating to Endinet's activities.
The book result has been calculated as follows:
The contribution for staff relates to the payment to be made by Alliander to Enexis in respect of the transfer of ‘Not Primarily Network’ staff from Alliander / Endinet to Enexis. This is covered by separate agreements in the SPA. The finalised book profit will be recognised in the income statement for 2016.
In this context, incidentally, the agreements reached also provide for a separate external audit of Endinet’s figures as at 31 December 2015. Any changes to the net assets will obviously affect the book profit.
Purchase of shares of AEF B.V.
At the time of preparation of these financial statements, there was not yet a complete picture of the AEF B.V. balance sheet, and the liabilities not shown on the face of the balance sheet, or of the accounting policies used. The SPA states that a set of financial statements for 2015 is to be prepared for AEF B.V., which will have an unqualified auditors’ report produced by the external auditors of Enexis, providing assurance of the true and fair nature of the figures. Under the terms of the agreement, these financial statements are to be ready by 25 March 2016 at the latest. The finalised fair values of all the identifiable assets and liabilities will be arrived at on the basis of these financial statements and will be published for the first time in Alliander’s half-year report for 2016. The SPA also lays down that a number of set-offs will be made between working capital and borrowings, based on the audited figures of AEF B.V. as at 31 December 2015. This will affect the final purchase price.
The debt-free purchase price for AEF B.V. has been calculated at a fair value of €340 million. This figure has again been arrived at on the basis of cash flows for the medium and long term, regulatory changes and any outperformance effects and synergistic gains. The provisional allocation of the purchase price is presented in the following statement.
The provisional total purchase price as at 1 January 2016 amounted to €340 million. The provisional allocation of this purchase price is shown in the above statement. It should also be mentioned that the above figures are subject to change, to reflect the actual situation as at 1 January 2016, at any time up to one year after the acquisition date (i.e. in the period up to 1 January 2017).
Net assets acquired (€329 million)
The property, plant and equipment acquired with AEF B.V. relate to distribution networks and connections valued at €311 million and other property, plant and equipment, essentially comprising electricity and gas meters and land and buildings amounting to €32 million. The intangible assets of €3 million relate to lease contracts for switching installations, transformers and compact substations.
The deferred tax liabilities relate to the difference between the reported carrying amounts of the electricity and gas distribution networks and the corresponding tax bases. The provisions relate mainly to provisions for employee benefits and are directly connected with the 125 staff taken over from Enexis.
Goodwill (€11 million)
The goodwill of €11 million is largely related to the provision for deferred tax liabilities.
The total costs associated with the acquisition of AEF B.V. amounted to €2.5 million. An amount of €0.7 million of these costs has been recognised in the income statement for 2015 and the remainder will be accounted for in 2016. AEF B.V. has been incorporated exclusively for the purposes of this transaction. The estimated revenue of AEF B.V. for 2015 is €63 million and the operating profit over the same period is put at €26 million.
Dividend proposal 2015
The Management Board has determined, with the approval of the Supervisory Board, to add €149.8 million of the profit to other reserves. The remaining profit of €85.0 million is at the disposal of the General Meeting of Shareholders. This equates to 45% of profit after taxation, excluding incidental items after tax that did not generate cash flows in the 2015 financial year.
The dividend for 2015 decreased relative to 2014 by €40 million due to the lower net profit for 2015.