Note 4 Intangible assets

In 2020, Alliander acquired all shares in TReNT B.V. and TReNT Infra B.V., for which acquisition goodwill amounting to €18 was recognised. Please see note [1] for further information. There were no investments in 2019. The amortisation of €2 million in 2019 and 2020 mainly relates to the intangible assets of 450connect.

The new consolidations concern the intangible assets on the acquired TReNT balance sheet (€14 million), comprising the contract value for the rental of telecom lines. The remaining amortisation period is 20 years.

Goodwill allocation by segment

Of the total amount of goodwill allocated to Liander as at year-end 2020, €209 million (2019: €209 million) relates to electricity and gas networks and dates from the contribution of the networks when N.V. Nuon was created in 1999. Of the remainder, amounting to €77 million (2019: €77 million), €61 million relates to the purchase of Endinet in 2010, €7 million to Stam and €9 million to the purchase of AEF B.V. in 2016. The goodwill item in the other line concerns the investment relating to 450connect and TReNT.

At year-end 2020, impairment tests were performed on the carrying amounts of the networks of Liander and the TReNT telecommunications networks, including the associated goodwill recognised. The value in use was taken as the basis for this calculation. The value in use was measured on the basis of the most recent business plans.

In the 2020 reporting period, Liander used a pre-tax discount rate of 7.1% (2019: 8.1%). This figure will drop to 3.9% up to 2025. The main assumptions on which these business plans are based are the number of connections, the most recent tariff estimates and estimates of operating expenses and other costs. To a large extent, these assumptions are based on past experience, coupled with the latest information on tariff regulation. The business plans cover a period of five years and the terminal value is calculated using the projected cash flows at the end of that period. A zero growth rate has been applied. The terminal value for the regulated activities is based on achieving the ‘reasonable return’ that a network operator can expect to achieve on its standardised asset value. Where appropriate, account is also taken of temporary or structural synergistic effects or other departures from the reasonable return. There is such a margin between the value in use and the carrying amount of the Liander networks that the sensitivity to changes in the estimates and assumptions used is limited.

A pre-tax discount rate of 7.3% was used for the telecom networks. From the impairment test it emerged that the margin between the value in use and the carrying amount, including goodwill, is such that the sensitivity to changes in the estimates and assumptions used is limited.

For the impairment test on the assets of 450connect, the higher value of the assets’ direct realisable value less costs to sell and their value in use was taken into account. Here, too, there is a considerable margin between this value and the carrying amount including goodwill.