5. Depreciation and decommissioning

The depreciation charges can be specified as follows:

Property, plant and equipment

Gas assets are depreciated using the diminishing balance depreciation method. All other tangible fixed assets are depreciated using the straight-line depreciation method. 

The expected future useful life of the asset is taken into account in determining the depreciation. The useful life and residual value of assets are assessed each year. Any adjustments are recognised prospectively. Land is not depreciated. A tangible fixed asset is no longer recognised on the balance sheet when it is divested or when no future economic benefits are expected from the continued use of the asset or in the event of disposal of the asset. Any profit or loss arising from the de-recognition of an asset is recognised in the result.

The expected useful lives of the main categories of property, plant and equipment are as follows:

Diminishing balance depreciation method gas assets

As of the financial year 2022, Enexis depreciates its gas assets using the diminishing balance depreciation method. Enexis estimates that the number of users of the gas grid will continue to decrease up to and including 2050. However, Enexis expects that the decrease in the number of users of the gas grid will not lead to the large-scale decommissioning of gas assets. As, despite the decrease in the number of users of the gas grid, the main infrastructure of the gas grid will remain largely operational. In addition, the gas grid is expected to remain relevant for natural gas and sustainable alternatives such as green gas and hydrogen. Therefore, Enexis sees no reason to shorten the economic and technical useful lives of the gas assets.

The depreciation method is based on the expected future consumption pattern of the future economic benefits embodied in the asset. The consumption pattern is reflected most accurately by the expected use pattern. The expected use pattern of the gas grid is determined based on Enexis's most recent forecast of the number of users of the gas grid in the period up to and including 2050. As the expected use pattern of the gas grid shows a diminishing balance, Enexis is applying the diminishing balance depreciation method as from the financial year 2022. The amortisation pattern of the contributions paid in advance for the gas assets was also revised as of the financial year 2022 in line with this diminishing balance method. As a result, the net depreciation charges (gross depreciation less the amortised contributions) of the gas assets follow a diminishing balance pattern.

For the 2023 financial statements, Enexis updated its forecast for the decrease in the number of users of the gas grid in the period up to and including 2050. This update took place based on the Enexis Netbeheer B.V. draft 2024 investment plan and the actual decrease of the number of gas connections up to the present.

The gross depreciation charges of the gas assets were € 26 million higher and the amortised amounts were € 4 million higher in 2023 than if the straight-line depreciation method would have been used. The net depreciation charges were thus € 22 million higher. Based on the current estimates, the increase in the annual net depreciation charges compared to the straight-line method will decrease every year in the period 2030-2035 until the annual difference is nil, after which the diminishing balance depreciation method will lead to a lower annual depreciation charge than the straight-line deprecation method.

Intangible fixed assets

Depreciation is calculated in accordance with the straight-line method. The expected future useful life is taken into account in determining the depreciation. The useful life is assessed each year. Any adjustments are recognised prospectively.

The estimated useful life of the main intangible fixed asset categories is as follows:

Depreciation of right-of-use assets

Leases are recognised on the balance sheet as right-of-use assets. Right-of-use assets are then depreciated on a straight-line basis over the total term of the lease.

Impairments

For a more detailed specification of the impairments, reference is made to note 13: Intangible fixed assets. There were no impairments in 2023.