Note 4 Intangible assets

The reclassification to ‘assets held for sale’ relates to Kenter.

Goodwill allocation by segment

Of the goodwill allocated to Liander as at year-end 2023, €209 million (2022: €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 (2022: €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 TReNT.

At year-end 2023, impairment tests were performed on the carrying amounts of the networks of Liander and the TReNT telecommunications networks, including the associated goodwill recognised. In addition, impairment tests were performed at a group company facilitating current and future decentralised energy markets and in relation to a specific sustainability project.

The value in use was taken as the basis for these tests and was measured on the basis of the most recent business plans.

In the 2023 financial year, Liander applied a pre-tax fair discount rate of 5.7% (2022: 3.7%). This figure will increase to 7.0% in 2028. The main assumptions on which the 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 9.4% was applied for the telecom networks (2022: 8.0%). 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.

A pre-tax discount rate of 9.6% was applied for the impairment test performed on the assets of the group company facilitating decentralised energy markets. The outcome did not result in an impairment.

An impairment test was also performed in relation to a sustainability project, using a pre-tax discount rate of 9.4%. This led to an impairment charge of €2 million in respect of property, plant and equipment.