Accounting policies
The 2016 financial statements were signed by the members of the Management Board and the members of the Supervisory Board on 6 March 2017. The Supervisory Board will submit the financial statements for adoption by the General Meeting of Shareholders on 5 April 2017.
The accounting policies are based on the assumption of a going concern.
The Alliander group
Alliander N.V. is a public limited liability company, registered in Arnhem, the Netherlands. The principal activities of Alliander and its subsidiaries (also referred to here as 'Alliander', 'the Alliander group', 'the group' or similar expressions) are the operation of electricity and gas networks covering roughly one-third of the Netherlands and the provision of related services.
The subsidiary Liander owns and manages the regional gas and electricity networks in the provinces of Gelderland, Friesland, Noord-Holland, Flevoland and the Noordoostpolder and parts of Zuid-Holland. Under the Electricity Act 1998 and the Gas Act the management of the networks and regional distribution of energy are the exclusive responsibility of the network operator. Liandon provides services relating to the construction and maintenance of complex energy infrastructures. Alliander AG carries on network operation and public lighting activities in Germany. The subsidiary Stam is a medium-sized firm of contractors based in Noord-Holland, engaging in network construction and maintenance work. The activities of Alliander Telecom N.V. and the joint operation CDMA Utilities B.V. concern the group's data communications. Through its subsidiaries, including Allego, Alliander Duurzame Gebiedsontwikkeling, Smart Connections, Smart Society Services and Energy Exchange Enablers set up in recent years, Alliander has taken the initiative in and is facilitating developments and activities aimed at creating a sustainable energy supply for the Netherlands. The increase in sustainable forms of electricity generation on a more decentralised level places demands on the power distribution infrastructure and represents a challenge for network companies. Alliander sees it as its responsibility, together with other market participants, to facilitate this greater sustainability at an acceptable cost to society.
Sale of Endinet and purchase of networks in Friesland/Noordoostpolder
On 24 March 2015, Alliander and Enexis signed heads of agreement on the exchange of regional energy networks. The agreement laid down the terms and conditions of the exchange, including the precise extent of the networks to be exchanged, the specific activities involved and important agreements on the procedure to be followed.
The sale and purchase agreement (SPA) to purchase the Enexis networks in Friesland and the Noordoostpolder (Aktivabedrijf Enexis Friesland B.V., hereafter AEF B.V.) on 1 January 2016 and at the same time sell the networks in the Eindhoven and Zuidoost-Brabant region (Endinet Groep B.V.) was signed on 27 July 2015. The transaction involved Alliander selling the shares of Endinet Groep B.V. to Enexis and buying the shares of AEF B.V. 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 are surrounded by 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.
For the financial statements as at 31 December 2015 this means that, in compliance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, the assets and liabilities of Endinet Groep B.V. have been classified in the balance sheet as assets and liabilities held for sale with effect from 24 March 2015 and Endinet's net profit has been presented in the income statement as profit after tax from discontinued operations. Likewise, in compliance with the held-for-sale classification (IFRS 5), depreciation ceased to be recognised on the Endinet Groep assets carried on Alliander's consolidated balance sheet with effect from 24 March 2015. All intercompany items between Alliander and Endinet were also eliminated prior to recognition of Endinet as 'held for sale' and 'discontinued operations'. The discontinued-operations classification means that Endinet Groep's net profit is presented with that description in the Alliander income statement.
Endinet was sold on 1 January 2016. Alliander's income statement for 2016 recognises the book profit on Endinet as a profit from discontinued operations. AEF was integrated immediately upon acquisition in the network operator Liander. Since that date, therefore, AEF B.V.'s revenue, costs and balance sheet items have been recognised in Liander. Alliander's income statement for continuing operations, therefore, includes AEF B.V. and excludes Endinet (2015: excludes Endinet and AEF B.V.).
The corresponding detailed disclosure required by IFRS 3 has been included in note [1] and note [33].
Purchase of shares of 450connect GmbH
On 31 May 2016, Alliander AG purchased the entire share capital of Inquam Deutschland GmbH (name changed to 450connect GmbH). 450connect GmbH is active in leasing bandwidth to third parties, including provision of related services. The purchase of 450connect GmbH will enable Alliander AG to establish a private mobile communication network for smart meter and smart grid applications among others. Alliander N.V. has been developing a similar communication network in the Netherlands in partnership with Stedin since 2014, owned by the joint operation Utility Connect.
The purchase price amounts to €18 million, made up of a payment of €5 million and a contingent consideration of €13 million, allocated as net assets of €15 million and €3 million in goodwill. For more detailed disclosures see also note [1] to the financial statements.
Non-controlling interests
There are third-party non-controlling interests in Alliander's activities. This concerns a 5% interest on the part of the Municipality of Nijmegen in Indigo B.V., and a 5% interest on part of the Municipality of Hengelo in Warmtenetwerk Hengelo B.V., both subsidiaries of Alliander Duurzame Gebiedsontwikkeling, see note [12].