2
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
ELENIA VERKKO OYJ GROUP - REPORT OF THE BOARD OF DIRECTORS 2023
Elenia Verkko Oyj Group’s Business Operations
Elenia Verkko Oyj Group (”Elenia or ”Elenia Verkko Oyj”) con-
sisted of Elenia Verkko Oyj (the parent company) and its fully-
owned subsidiary Elenia Innovations Oy. Elenia Innovations had
no business in 2023. Elenia Verkko Oyj is a fully-owned subsidi-
ary of Elenia Oy.
Business Review and financial performance
Elenia Verkko Oyj is Finland’s second-largest electricity distribu-
tion system operator (DSO) with a 18 % market share in terms of
total length of the network and 12% market share in terms of the
number of customers. The company has a regional monopoly po-
sition, and it serves all customers in the geographical areas de-
fined in the licence granted by the Energy Authority (EA). The li-
cence holder has the exclusive right to build and operate an elec-
tricity distribution network in its geographical area of responsi-
bility.
With an electricity network of approximately 76,600 kilome-
tres, Elenia Verkko Oyj supplies electricity to 440,000 end users.
In addition to residential customers, key customer segments in-
clude industrial, service, construction and public sectors. The
company has operations in more than 100 cities and municipali-
ties spanning a geographical area of nearly 600 km in length
across central Finland, from Southern Häme to Northern Ostro-
bothnia.
During the financial year, Elenia’s network business distrib-
uted 6,037 GWh of electricity, compared to 6,260 GWh in the
previous year. The distribution volume declined by 223 GWh
(3.6%). The decline is mostly attributable to the energy saving
measures undertaking by Elenia’s customers originally in re-
sponse to the exceptionally high electricity prices and national
concern over electricity shortage. Elenia was well prepared for
an electricity shortage and did significant stakeholder and media
cooperation, guiding its customers to prepare and save electric-
ity. With warm and windy beginning for 2023 along with the cus-
tomers’ energy saving measures, the electricity shortage did not
materialize. While the volumes partially recovered during
Q4/2023, the impact was not significant enough to offset the
volume decline during Q1-Q3/2023.
Revenue from the network business came to EUR 318.1 mil-
lion (EUR 310.8 million in 2022). Revenue increased by EUR 7.2
million (2.3%). The EBITDA of the network business was EUR
213.2 million (EUR 203.1 million in 2022). EBITDA increased by
EUR 10.1 million (5.0%). The positive revenue and EBITDA de-
velopment was driven by the said tariff increase. Additionally,
the TSO rebates contributed to the positive EBITDA perfor-
mance. Furthermore, the weather was characterised as benign
with no major power disruptions i.e. snow loads or storms (class
3 or 4).
The first half of the year was calm but in the latter half of the
year, four major low-pressure storms occurred, Sylvia in August,
Varpu in September, and Pirjo and Otso in October (all class 2
storms). The largest number of customers without electricity at
the same time was during the Otso storm, a total of approxi-
mately 19,000. The longest outages lasted almost two days in
the Varpu and Pirjo storms due to difficult weather conditions
that prevented fault repairing for a considerable time. However,
electricity was restored to most of customers within a few hours.
Depending on the storm, the number of fault repair tasks varied
between 320 and 550 single tasks.
Elenia raised its preparedness nine times during in 2023. Six
times the preparation was at the yellow level (the lowest level of
preparedness of the whole major power disruption organization)
and once at the orange level (the second highest level). The costs
caused by the storms was approximately EUR 3.3 million during
2023. Of these, almost EUR 2.8 million was caused by the four
storms mentioned above.
The SAIDI (System Average Interruption Duration Index)
was 95 minutes due to the storms (70 minutes in 2022). Exclud-
ing the influence of these storms, the result was 44 minutes,
which can be considered excellent. System Average Interruption
Frequency Index SAIFI was the at all-time low with 2.5 interrup-
tions per customer. The number of short interruptions (less than
3 minutes) per customer was also the at the lowest recorded
level at 3.4.
The Electricity Market Act (“EMA”) states that 100% of cus-
tomers must be within the scope of the quality requirements by
the end of 2036 . Elenia has sought to achieve this target by in-
creasing the underground cabling rate to 75% by the end of
2028. The investment plan of Elenia’s network business is de-
signed to improve the security of supply via underground ca-
bling. Since 2009, Elenia has built only weatherproof distribution
lines. At the end of the year, 63.8% of Elenia’s network was un-
derground, compared to 61.7% at the end of 2022.
At the end of the year, 82% of the customers of Elenia’s net-
work business were within the scope of the quality requirements
stipulated by the EMA. The corresponding figure at the end of
2022 was 80%. While the main focus in the development of the
security of supply is on underground cabling, Elenia also seeks to
improve the security of supply by other means. In 2020, a bat-
tery pack was successfully deployed in the Kuru area to provide
electricity to local households in case of an outage. Elenia is in-
vesting into two additional battery packs, one of which was par-
tially commissioned in 2023.
Elenia invested EUR 140.5 million in developing electricity
networks during the financial year. In 2022, the corresponding
investments amounted to EUR 175.8 million. Elenia Verkko Oyj
cut its investments significantly in 2023 as the result of the sud-
den mid-period change to the regulatory methods by the EA.
In June 2024 Elenia will submit to the EA its statutory net-
work development plan. In the previous plan published in June
2022, Elenia’s capex requirements to replace aging overhead
lines and improve the security of supply exceeded EUR 1,500
million by 2036. Additionally, green transition related capex in-
cluding e.g. deployment of smart meters and increasing network
capacity to enable connection of wind power, was expected to
amount to approximately EUR 500 million by 2031. Given the
changes into the regulatory methods, Elenia will need to revise
its network development plan.
3
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
As part of the 2022 network development plan, Elenia was
required for the first time to organise a public hearing for its cus-
tomers and stakeholders on the network development plan. One
of the findings of the hearing was that 85% of the customers
think that 12 hours is the maximum acceptable outage length,
which is significantly shorter than the 36-hour limit set in EMA
for 2036.
In 2023, 300 MW of new wind power capacity (254.8 MW in
2022) and 4,865 new small-scale solar panel installations (4,457
in 2022) were connected to Elenia's distribution grid. There is a
clear increase among our corporate customers in industrial elec-
trification solutions and interest in battery solutions. For the
consumer customers there is a clear increase in the solar panel
installations and electric vehicle charging, and the interest to-
wards real-time electricity consumption data, our online services
and Elenia Aina application. For corporate customers the inter-
est is driven by the green transition and the need to move away
from fossil-fuel based solutions (such as natural gas) and for con-
sumer customers the interest is driven additionally by the very
high electricity prices.
Elenia Verkko Oyj continued to develop its asset manage-
ment system according to the international standard ISO
55001:2014. The requirements ISO 55001 guide the construc-
tion, operation, maintenance and repairs of Elenia’s electricity
network. This ensures that the company will continue to operate,
maintain and upgrade its electricity network in order to respond
to its customers’ needs. The standards also require that suppliers
and service providers commit to responsible, high-quality opera-
tions. The asset management system of Elenia’s network busi-
ness was recertified in November 2022 by Lloyd’s Register and
first surveillance visit was in 2023.
The EA oversees the operations of Finnish distribution sys-
tem operators. The regulation is based on four-year regulatory
periods. The past year was the fourth year of the fifth regulatory
period (2020–2023) and second year with the regulatory meth-
ods that were suddenly amended mid-period for 2022–2023.
Elenia received a new regulatory decision on 29 December
2023 regarding the regulatory methods that are in force for two
consecutive regulatory periods: sixth regulatory period from 1
January 2024 until 31 December 2027 and seventh regulatory
period from 1 January 2028 until 31 December 2031.
There are numerous changes in the new regulatory methods
compared to the previously applied methods. The key changes to
the previous methods include freezing of the asset base to 2022
construction costs, calculation of industry wide unit prices and
calculation of WACC methodology. The changes compared to
the previous methods were significant and in Elenia’s view un-
necessary, sudden and unjustified.
In 2023 the reasonable rate of return increased from 3.97% in
2022 to 6.08% mainly due the sharp rise in the interest rates in
2022. For 2024, the EA has confirmed that the reasonable rate
of return is 7.37%. The WACC increased due to higher interest
rates in 2023 compared to 2022.
Financing
Elenia’s financing activities are centralised into Elenia Verkko
Oyj. In 2023, Elenia Verkko Oyj did not issue any new bonds (no
new bonds were issued in 2022). The Group’s solvency and li-
quidity remain very strong after the bond issue carried out in
2020 and due to the lower-than-expected capex in 2022 and
2023. At the end of the financial year, cash and cash equivalents
amounted to EUR 60 million (EUR 52 million at the end of 2022).
The Group’s credit facilities consist of a EUR 250 million
Capex Facility, a EUR 50 million Working Capital Facility and a
EUR 70 million Liquidity Facility that were renewed in 2023. The
first two mature in May 2028 and they both have two one-year
extension options. These facilities also for the first time have a
sustainability linkage. Elenia’s performance on LTIF, SAIDI and
CO2 emissions will in the future determine the margin that
Elenia pays on these facilities. The five-year Liquidity Facility ma-
tures in May 2028 and it is renewed annually. All the credit facili-
ties were entirely undrawn at year end (as was the case at the
end of 2022). During the year Elenia drew in its entirety the EUR
100 million European Investment Bank facility.
Elenia has two financial covenants in its financing agreements:
Interest Coverage Ratio (ICR) and Leverage Ratio (LR). For each
relevant period until 31 December 2027 (“the First Ratio Adjust-
ment period”), the trigger event ratio levels are 1.46x for ICR and
10.18x for LR and the default ratios are 0.96x for ICR and 11.33x
for LR. At the end of 2023, the ICR and LR were 4.56 and 8.68,
respectively. At end of 2022, the corresponding levels were 5.21
and 8.69. Elenia Group is in compliance with the financial cove-
nants. Elenia retains adequate headroom to both financial cove-
nants on a historical and forward-looking basis.
Employees
Elenia Verkko Oyj number of employees increased moderately in
2023.
31 Dec 2023
FTE
31 Dec 2022
FTE
Elenia Verkko Oyj
77
73
The year-end, the total FTE of Elenia Verkko Oyj was 77 (73 in
2022). However, the total employment effect of the Group and
its external subcontractor’s operations related to Elenia is ap-
proximately 1,000 people.
In 2023, we continued the safety TUISKU project, which was
launched in 2022 to promote and improve the safety culture in
cooperation with our partners. At the end of the year, we
launched the Safety Academy, which aims to further strengthen
and deepen the safety behaviour and activities of our staff and
partners.
We continued to systematically develop staff skills and train-
ing as the ongoing energy transition changes the demands of the
job. At the end of the year, we launched the second Expert Acad-
emy training programme with Aalto University. The first Expert
Academy took place in 2022 and it was developed from the
Team Lead Academy organised in 2020 with for expert skill de-
velopment in mind. In addition, we have produced topical Elenia
Academy presentations for staff on topics such as equality, resili-
ence, recovery and cybersecurity. For several weeks in the au-
tumn, we focused on maintaining our own wellbeing and health
through a multidisciplinary programme. In our recruitment, we
are taking diversity into account, and in our collaboration with
educational institutions, we are emphasising the use of the latest
technology in our business. We offer internships and thesis op-
portunities to students throughout the year. We renovated our
premises to reflect the current hybrid working model with better
facilities for external meetings from the perspective of data se-
curity and privacy.
For more information on Elenia’s personnel, please see our
sustainability report at www.elenia.com.
4
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
Acquisitions and Divestments
There were no acquisitions or divestments during fiscal years
2022 and 2023.
Corporate governance
Elenia Verkko Oyj’s Board of Directors has six members: Tapani
Liuhala (Chairman), Jorma Myllymäki, Ville Sihvola, Jarkko Koh-
tala, Tommi Valento and Anne-Marie Malmberg. There were no
changes to the board during the fiscal year. The Board of Direc-
tors made 9 written resolutions during the financial year and no
meetings were held.
Auditor
Elenia Verkko Oyj’s auditor is Ernst & Young Oy, with Miikka Hi-
etala, Authorised Public Accountant, as the auditor with princi-
pal responsibility.
Shares
Elenia Verkko OyJ has ninety (90) outstanding shares. Each
share entitles the holder to one vote at the Annual General
Meeting and carries equal rights to dividends.
Corporate Responsibility and Sustainability
Please see Elenia’s sustainability report at www.elenia.com.
Risk Management
Please see Elenia’s sustainability report at www.elenia.com.
Cybersecurity and IT
In 2023, geopolitical situation in the Europe highlighted the im-
portance of preparedness against cyber threats within critical in-
frastructure. Elenia was active both in internal cyber security de-
velopment and in national forums and events such as the Nordic
Pine, a joint exercise with NATO dedicated to deeper under-
standing of the energy-hybrid threats and infrastructural resili-
ence.
From the operational development viewpoint, preparedness
for reliable demand flexibility was one of the key themes in
Elenia’s digital development. Elenia was the first Finnish DSO to
launch an easy-to-use digital service to enable customers to opti-
mize their electricity consumption based on electricity market
price. This development was based on Elenia’s renewal of Auto-
matic Meter Reading technology, providing fast bi-directional
connectivity and near real-time communication.
Events after the Balance Sheet Date
The bonds issued by Elenia Verkko Oyj are rated by S&P Global
Ratings (“S&P”). S&P downgraded the rating to BBB (stable) at
the end of January 2022 as a result of the changes in the regula-
tory methods in the middle of the regulatory period. After the
new methods became effective from 1 January 2024, S&P placed
Elenia on a negative credit watch on 10 January 2024. The out-
come of S&P’s assessment of Elenia is still uncertain at the time
of this report.
In January, Elenia appealed to the Market Court to repeal the
decision of the Energy Authority with regard to the key aspects
of the regulatory methods for 2024-2027 and 2028-2031. The
outcome of the appeal is expected in the next 2-4 years. Concur-
rently, Elenia has also the previous Market Court appeal in pro-
cess with regards to sudden mid-period regulatory changes for
2022 and 2023, and the ruling is expected to be received within
the next 12-18 months.
Jorma Myllymäki has been nominated as CEO of Elenia Oy, ef-
fective from 1 April 2024. Tapani Liuhala has been elected as the
Chairman of the Board of Elenia Oy, effective from 1 April 2024.
Tommi Valento has been nominated as member of the Board of
Elenia Oy, effective from 1 April 2024.
Outlook
The electricity prices in Finland surged during 2022 as a result of
the Russian war in Ukraine. Elenia is a major electricity pur-
chaser due to the distribution losses (which are 3-4% of the dis-
tribution volumes) that Elenia needs to cover, which makes
Elenia susceptible to the electricity price changes despite the
company’s four-year hedging policy and program. The prices
have declined significantly in 2023, but are still higher than his-
torically and the market is still experiencing significant volatility,
as evidenced by the record high prices on 5 January 2024. The
volatility is expected to continue in 2024 and have an impact on
Elenia’s financial performance.
TSO Fingrid has informed DSOs that it will not charge trans-
mission grid fees from DSOs for six months in 2024 as its conges-
tion income has soared due to the very high local electricity
prices in 2022-2023. The fees will not be charged for 6 months in
2024, i.e. January, February and June and additional three
months that have not yet been defined. In 2023, the fees were
not charged for January, February, June, July, November and
December. Elenia estimates that the net cost savings from trans-
mission grid fees to be EUR 19.2 million, which will entirely be
treated as exceptional for covenant calculation purposes.
The high electricity prices and TSO rebates partially offset
each other. The high electricity price is, however, affecting Elenia
also otherwise. Electricity consumption, which has increased
steadily over the last few years driven by electrification, declined
as customers saved electricity in response to the surging elec-
tricity prices. The 2023 figures from January to September illus-
trate that customers (especially consumer customers) can re-
duce their electricity consumption by 10-15%, depending on the
outside temperature. However, during October to December
2023, the volumes partially recovered. Hence in 2024, if the win-
ter is warm, the volumes can decline compared to winter of
2023. However, the full-year impact of the approximately 5.8%
post-tax tariff increase in May 2023 will be reflected in 2024 fig-
ures.
From the regulatory perspective, both distribution losses as
well as the grid costs are considered as pass-through items and
Elenia can recoup them in the coming years. Additionally, the
regulation is also volume neutral, which offers protection against
declining volumes.
Investments in the electricity network will continue in 2024, but
Elenia will invest significantly less than previously planned. The
significant reduction in investments is due to changes in regula-
tory methods implemented by the EA, especially the significant
changes in the calculation of the of industry wide unit prices and
the definition of the regulatory asset base for which the reasona-
ble return is based on. Elenia is still analysing the impact of the
new regulatory methods on its business and operations, and the
potential actions it will take to mitigate the impact and protect
the credit rating.
The Board of Directors’ Proposal Concerning Distribution
of Profits
The Board of Directors proposes that no dividend be distributed.
5
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
CONSOLIDATED FINANCIAL STATEMENTS 2023
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 31 December 2023
Consolidated statement
EUR 1,000
Note
1 Jan - 31 Dec 2023
1 Jan - 31 Dec 2022
Revenue
2.1.1
Other operating income
2.2.1
Materials and services
-73,792
-82,267
Employee benefit expenses
2.3.3
-3,809
-3,526
Depreciation, amortisation and impairment
3
-92,854
-88,627
Other operating expenses
2.3.1
-27,292
-21,977
Operating profit
Finance income
Finance costs
-48,495
-39,990
Finance income and costs
4.1
-46,164
-39,731
Profit before tax
Income tax
6.1.1
-18,534
-18,877
Profit for the year
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
for the year ended 31 December 2023
EUR 1,000
1 Jan - 31 Dec 2023
1 Jan - 31 Dec 2022
Profit for the year
Other comprehensive income
Other comprehensive income not to be reclassified to
profit or loss in subsequent years:
Re-measurement gains on defined benefit plans
-13
Income tax effect
-39
Other comprehensive income / (loss) for the year after tax
-10
Total comprehensive profit for the year
The accompanying notes are an integral part of these con-
solidated financial statements.
6
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
as at 31 December 2023
Consolidated statement
of financial position
EUR 1,000
Note
31 Dec 2023
31 Dec 2022
Assets
Non-current assets
Property, plant and equipment
3.1
Goodwill
3.2
Intangible assets
3.2
Right-of-use assets
3.1, 3.3
Other non-current financial assets
Other non-current receivables
Deferred tax assets
6.1.2
Total non-current assets
Current assets
Trade receivables
2.1.4
Other current receivables
2.1.4
Cash and cash equivalents
Total current assets
Total assets
EUR 1,000
Note
31 Dec 2023
31 Dec 2022
Equity and liabilities
Equity
Share capital
4.4
Unrestricted equity
4.4
-548,843
-548,843
Retained earnings
4.4
Total equity
-27,051
-100,041
Non-current liabilities
Loans from financial institutions
4.2
Bonds and notes
4.2
Lease liabilities
3.3
Employee benefit liability
6.2
Provisions
2.3.4
Liabilities related to contracts with custom-
ers
2.1.3
Deferred tax liabilities
6.1.2
Total non-current liabilities
Current liabilities
Lease liabilities
2.3.2, 3.3
Trade payables
2.3.2
Liabilities related to contracts with custom-
ers
2.1.3
Other current liabilities
2.3.2
Total current liabilities
Total equity and liabilities
The accompanying notes are an integral part of these consolidated financial statements.
7
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2023
Consolidated statement
of cash flows
1 000 EUR
1 Jan - 31 Dec
2023
1 Jan - 31 Dec
2022
Operating activities
Profit for the year
Adjustments to reconcile profit to net cash flows
Depreciation, amortisation and impairment
Gains and losses on the disposal of non -current assets
-359
Finance income
-2,331
-258
Finance costs
Taxes
Other adjustments
-18
Other short-term and low value rental expenses
Working capital adjustments
Increase (+) / decrease (-) in trade and other current liabilities
Increase (-) / decrease (+) in trade and other current receiva-
bles
-8,349
Increase (+) / decrease (-) in provisions
-1,546
Interests received
Interest and financial expenses paid
-46,436
-38,724
Interest paid on lease liabilities
-13
-307
Taxes paid
-5,354
Net cash flows from operating activities
1 000 EUR
1 Jan - 31 Dec
2023
1 Jan - 31 Dec
2022
Investing activities
Capital expenditure
-139,631
-178,127
Changes in investments
Net cash flows used in investing activities
-139,625
-173,906
Financing activities
Proceeds from long-term borrowings
Equity repayment
-134,000
-27,000
Repayment of lease liabilities
-414
-1,566
Group contributions received/paid
Net cash flows from financing activities
-13,711
-28,566
Net increase in cash and cash equivalents
-20,688
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Cash and cash equivalents comprises of cash balance at bank accounts.
The accompanying notes are an integral part of these consolidated financial state-
ments.
8
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated statement
of changes in equity
for the year ended 31 December 2023
Unrestricted equity
EUR 1,000
Share capital
Reserve for invested unre-
stricted equity
Common control reserve
Retained earnings
Total equity
Equity at 1 January 2023
-2,206,243
-100,041
Profit for the year
Other components of comprehensive income (adjusted by tax effect)
-10
-10
Total comprehensive income for the year
Transactions with shareholders
Group contributions
Total transactions with shareholders
Equity at 31 December 2023
-2,206,243
-27,051
for the year ended 31 December 2022
Unrestricted equity
EUR 1,000
Share capital
Reserve for invested unre-
stricted equity
Common control reserve
Retained earnings
Total equity
Equity at 1 January 2022
-2,206,243
-176,773
Profit for the year
Other components of comprehensive income (adjusted by tax effect)
Total comprehensive income for the year
Transactions with shareholders
Group contributions
Total transactions with shareholders
Equity at 31 December 2022
-2,206,243
-100,041
The accompanying notes are an integral part of these consolidated financial statements.
Changes in the equity are explained in more details in Note 4.4.
9
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
1 GROUP ACCOUNTING POLICIES
1.1 GENERAL INFORMATION
in Tampere. Address is
Elenia Verkko Oyj’s parent company is
, having its
registered office at Patamäenkatu 7,
. The ultimate par-
ent of the Group is
bourg.
The consolidated financial statements of
") are consolidated in the financial
statements of Elenia Oy ("Elenia Group"), available at the follow-
ing address: Patamäenkatu 7, 33900 Tampere. Elenia Group is
the owner and operator of an electricity distribution network
(Elenia Verkko Oyj, ’Elenia Networks’) and it also has a customer
service business, construction business and intercompany ser-
vices (Elenia Oy, ’Elenia Services’).
Elenia Networks Group is the owner and operator of an elec-
tricity distribution network. The group was formed on 1.1.2020.
The Board of Directors approved the consolidated financial
statements on 5 March 2024. The shareholders have the right ei-
ther to approve, reject or change the consolidated financial
Accounting policies
have been described in the
relevant note and can be recognized from char-
acter:
Significant judgements, estimates and assump-
tions made by the Group management
have
been presented in the relevant note and can be
recognized from character:
Risk management principles
have been de-
scribed in the relevant note and can be recog-
nized from character:
statements in the Annual General Meeting.
1.2 BASIS OF PREPARATION
The consolidated financial statements for the year ended 31 De-
cember 2023 have been prepared in accordance with the Inter-
national Financial Reporting Standards (IFRS) and their interpre-
tations (IFRIC) approved for application within the European Un-
ion (EU). The consolidated financial statements are compliant
with the provisions of the Finnish Accounting Act and other reg-
ulations governing the preparation of financial statements in Fin-
land.
The consolidated financial statements have been prepared
based on a historical cost. All Group companies use euro (“EUR”)
as their operating currency and all figures are reported in euros.
The consolidated financial statements are presented in thou-
sands of euros. There may be rounding discrepancies in the sum
totals due to the presentation method used.
1.3 CHANGES IN ACCOUNTING POLICIES AND DISCLO-
SURES
The Group applied for the first-time certain standards and
amendments which are effective for annual periods beginning on
or after 1 January 2023. The nature of each new standard and
amendment adopted by the Group has been described in the rel-
evant note. New standards, amendments and interpretations not
material for the Group have been described in Note 5.
1.4 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS
The preparation of consolidated financial statements requires
management to make judgements, estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues,
expenses and the accompanying disclosures and the disclosure
of contingent liabilities.
Estimates and assumptions are based on the management’s
best judgement on the reporting date. Estimates are made based
on historical experience and expectations of future events that
are considered probable on the reporting date. However, uncer-
tainty about these assumptions and estimates could result in
outcomes that require an adjustment to the carrying amount of
assets and liabilities affected in future periods. The Group’s sig-
nificant accounting judgements, estimates and assumptions are
described either below or in the relevant notes.
10
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
1.4.1 Judgements
The preparation of consolidated financial statements requires
management to make judgements in applying the accounting
principles. The significant judgements made by the Group man-
agement have been presented in the relevant note except for the
going concern which is described below.
GOING CONCERN
The consolidated financial statements are prepared on a going
concern basis. The Board of Directors has noted that the Group
made a profit before tax for 2023 of EUR 74 199 thousands and
has a net equity of EUR -27 051 thousands as at 31 Decem-
ber2023.
The Group's management has made an assessment of the
Group's ability to continue as a going concern and is satisfied
that the Group has sufficient resources to continue in business
for the foreseeable future. The management's assessment is ba-
sed on the following:
•
The Group has issued bonds under the EUR 3 billion EMTN
programme. As at 31 December 2023, the Group has uti-
lized 1 171 million out of this programme. In February 2020
Elenia Verkko Oyj (Elenia Finance Oyj) issued a new EUR
500.0 million benchmark bond maturing in 2027 which was
oversubscribed several times, reflecting strong investor de-
mand for the securities issued by Elenia.This programme is
supported by strong credit rating of BBB with based on S&P
Global Ratings' assessment.
•
The Group has sufficient liquidity based on its cash position
and undrawn credit facilities of EUR 370 million from a syn-
dicate of international banks (as fully described in Note
4.2.9).
CLIMATE CHANGE
In accordance with the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD), Elenia's manage-
ment has assessed the financial risks and opportunities related
to climate change to Elenia's business. The main risks are related
to extreme weather events and the opportunities are related to
the green transition. The impact of extreme weather events on
Elenia's business is mitigated by Elenia's significant investment
in a weatherproof underground network between 2012 and
2023. These investments will continue until at least 2036, for ex-
ample increasing the level of underground cabling to around
90%, which will further reduce the impact of extreme weather
events. In addition, the electricity network regulation mitigates
the economic impact of both risks and opportunities for Elenia.
For these reasons, the impact of climate change risks on Elenia's
financial statements is not material.
1.4.2 Estimates
Estimates are based on the management’s best judgement on the
reporting date. Estimates are made on the basis of historical ex-
perience and expectations of future events that are considered
probable on the reporting date. However, actual results and tim-
ing may differ from these estimates. The Group’s significant ac-
counting estimates have been described in the relevant note.
11
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
2 OPERATING PROFIT
2.1 REVENUE AND TRADE AND OTHER CURRENT
RECEIVABLES
2.1.1 Contracts with customers: revenue recognition and
payment terms
REVENUE BY TYPE OF SERVICE
EUR 1,000
2023
2022
Distribution of electricity
313,128
305,758
Connection fees
1,657
1,304
Other revenues
1,821
1,490
Total
316,606
308,552
TIMING OF REVENUE RECOGNISION
EUR 1,000
2023
2022
Transferrred at a point in time
314,949
307,248
Transferred over time
1,657
1,304
Total
316,606
308,552
Revenue from the distribution of electricity is recognised at the
time of delivery. Revenue from customer service operations and
other revenue, for example contracting income is recognised in
the period in which such services are rendered.
Connection fees paid by customers for joining an electricity
network or fibre network are recognised as revenue in the con-
solidated statement of profit or loss. Until the end of 2017 reve-
nue from new connections was recognised immediately after
signing of the contract or completion of the physical distribution
network connection. As a result of the implementation of IFRS
15 standard, from 1 January 2018 onwards the new connection
revenue has been recognised over a period of 30 years for the
electricity network connections. The time period is in line with
the depreciation period of the connection assets.
Electricity network connection fees, which have been paid
by the customers before 2008, must be refunded net of demoli-
tion costs, if the customer wants to terminate the electricity
connection. Similar refunding obligation applies to all district
heating connection fees. A provision has been recorded for fu-
ture refunds.
The Group pays to the customers voluntary outage compen-
sations due to interruption of over 6 hours in the electricity dis-
tribution. These compensations are recognised as a reduction of
revenue at a point in time and included in the item "distribution
of electricity" in the disaggregation of revenue -table below.
Outage compensations in accordance with the Electricity Mar-
ket Act, which are paid to the customers due to interruption of
over 12 hours in the electricity distribution, are recognised as
other operating expenses (Note 2.3.1).
Payments from all the Group's contracts with customers are
generally due within 14 days and consideration for services are
paid in cash. Contracts do not have any significant financing
components.
ACCOUNTING POLICY
2.1.2 Disaggregation of revenue
Group revenue consists of revenue from the distribution of elec-
tricity, connection fees paid by the customers for joining an elec-
tricity network and other revenues. Other revenues consist
mainly contracting income.
2.1.3 Liabilities related to contracts with customers
EUR 1,000
2023
2022
Non-current liabilities related to contracts with
customers
47,663
38,954
Current liabilities related to contracts with cus-
tomers
1,825
1,467
Total
49,488
40,421
Liabilities related to contracts with customers include the unrec-
ognised part of new connection revenue for the electricity net-
work and fibre network connections. Revenue will be recognised
over a period of next 30 years for the electricity network con-
nections. The amount reported as current liabilities will be rec-
ognized during the next 12 months.
12
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
2.1.4 Trade and other current receivables
TRADE RECEIVABLES
Trade receivables are recorded on the balance sheet at their
transaction price. Impairment is recorded on trade receiva-
bles when there is evidence that the Group will not be able
to collect all amounts due according to the original terms of
the agreements. The Group records impairment based on
lifetime expected credit losses from all trade receivables in-
curred as a result of transactions subject to IFRS15. The im-
pairment amount is measured as the difference between the
asset’s original carrying value and the estimated future cash
flows.
Trade receivables also include invoiced sales revenue
based on estimates.
ACCOUNTING POLICY
CREDIT RISK
Invoicing for electricity distribution services is based on
measured consumption and the distribution tariffs specified
in the public electricity network price list.
The invoicing period may be one month or two months.
In the event that a customer fails to pay the invoice, the
electricity distribution company has the right to discontinue
the supply of electricity after sending the required collec-
tion letters. Also the wide fragmentation of the customer
base reduces the credit risk.
DISTRIBUTION VOLUME AND PRICE RISKS
Electricity distribution operations do not involve particular
volume or price risks in the medium term due to being sub-
ject to reasonable return under electricity distribution li-
cense. In the short term changes in distribution volumes and
electricity prices has an impact on revenues and operating
expenses respectively.
RISK MANAGEMENT
TRADE AND OTHER CURRENT RECEIVABLES
EUR 1,000
2023
2022
Trade receivables
19,331
17,987
Accrued income and prepaid expenses
43,137
35,842
Group contribution receivable
17,336
20,704
Other current receivables
232
3,088
Total trade and other receivables
80,036
77,620
BREAK-DOWN OF ACCRUED INCOME AND PREPAID EXPENSES
EUR 1,000
2023
2022
Sales accruals
42,474
35,539
Accrued financial items (prepayments)
564
0
Other accrued income and receivables
99
303
Total accrued income
43,137
35,842
TRADE RECEIVABLES
The Group's trade receivables at the end of 2023 were EUR 19.3
million (2022: EUR 18.0 million). EUR 0,0 million collateral secu-
rities were received for trade receivables (2022: EUR 0.0 mil-
lion).
Change in expected credit losses
EUR 1,000
2023
2022
Expected credit loss 1 Jan
662
437
Additions
764
1,059
Realized credit losses
-771
-834
Expected credit loss 31 Dec
655
662
IMPAIRMENT OF TRADE RECEIVABLES
Group records lifetime expected credit losses from all trade re-
ceivables incurred as a result of transactions subject to IFRS15.
Trade receivables do not contain any significant financing com-
ponent.
However, applying the impairment requirements of IFRS 9
has had an impact on the method used in calculation of the credit
loss allowance for trade receivables, but the amount of credit
loss allowances has not changed remarkably. The Group has ap-
plied the simplified approach and recorded lifetime expected
losses on all trade receivables.
The amount of Credit loss allowance for trade receivables is
checked and updated quarterly and it is recognised with similar
principals both in IFRS- and FAS-reporting. Uncertain receiva-
bles are booked to separate book-keeping account in Group re-
porting. The calculation of the amount of credit loss reserve is
based on the relative proportion of credit losses calculated from
historically realized level. The customers are segmented to pri-
vate and company customers to be able to take into account the
differences between these customer groups in the calculation.
Generally, trade receivables are written-off on a monthly basis
based on customers' credit rating level and payment history.
13
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
BREAKDOWN AND IMPAIRMENT OF TRADE RECEIVABLES BY AGE
31 Dec 2023
Trade receivables
EUR 1,000
Undue
1-90 days
91-180 days
Over 180 days
Total
Trade receivables by age
14,596
4,267
400
722
19,985
Expected credit loss rate, private customers
0.1 %
6.5 %
34.4 %
51.8 %
Expected credit loss, private customers
-13
-177
-109
-126
-425
Expected credit loss rate, company customers
0.1 %
2.4 %
23.3 %
35.7 %
Expected credit loss, company customers
-3
-37
-20
-171
-231
Total expected credit losses
-16
-214
-128
-297
-655
Total trade receivables
14,580
4,053
272
425
19,331
31 Dec 2022
Trade receivables
EUR 1,000
Undue
1-90 days
91-180 days
Over 180 days
Total
Trade receivables by age
14,643
3,169
244
594
18,649
Expected credit loss rate, private customers
0.2 %
10.3 %
52.8 %
78.9 %
Expected credit loss, private customers
-17
-204
-114
-142
-476
Expected credit loss rate, company customers
0.1 %
1.6 %
32.0 %
37.5 %
Expected credit loss, company customers
-3
-18
-9
-155
-186
Total expected credit losses
-21
-222
-123
-297
-662
Total trade receivables
14,622
2,946
121
297
17,987
14
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
2.2 OTHER OPERATING I NCOME
ACCOUNTING POLICY
2.2.1 Other operating income
Other operating income includes income from non-operat-
ing activities, such as income from trade receivables collec-
tion and from sales of used fixed assets, insurance compen-
sation and rental income.
Government grants relating to the other purpose than
the purchase of property, plant and equipment are recog-
nised as other income in the consolidated statement of
profit or loss for the period in which the expenses relating to
the grant are incurred and in which the decision on the grant
is received.
OTHER OPERATING INCOME
EUR 1,000
2023
2022
Indemnities
433
713
Income from the trade receivables collection
943
1,041
Gains on sales of fixed assets
0
360
Other operating income
127
214
Total
1,504
2,328
2.3 OTHER OPERATING EXPENSES AND RELATED
LIABILITIES
2.3.1
Other operating expenses
Outage compensations
Outage compensations in accordance with the Electricity
Market Act, which are paid to the customers due to inter-
ruption of over 12 hours in the electricity distribution, are
recognised as other operating expenses and included in the
item "Outage compensation costs" in the table below. The
Group pays to the customers voluntary outage compensa-
tions due to interruption of over 6 hours in the electricity
distribution. These compensations are recognised as a re-
duction of revenue at a point in time (Note 2.1.1).
Research and development costs
Research costs are expensed as incurred. Development
expenditures on an individual project are recognised as an
intangible asset only when the Group can demonstrate:
The technical feasibility of completing the intangible as-
set so that the asset will be available for use or sale
Its intention to complete and its ability to use or sell the
asset
How the asset will generate future economic benefits
The availability of resources to complete the asset
The ability to measure reliably the expenditure during
development
Following initial recognition of the development ex-
penditure as an asset, the asset is carried at cost less any ac-
cumulated amortisation and accumulated impairment
losses. Amortisation of the asset begins when development
is complete and the asset is available for use. It is amortised
over the period of expected future benefit. During the pe-
riod of development, the asset is tested for impairment an-
nually. The Group has not recognised any development ex-
penditures as an intangible asset.
OTHER OPERATING EXPENSES
EUR 1,000
2023
2022
Lease expenses
-489
-387
External services
-3,134
-1,765
IT and communication expenses
-3,768
-3,330
Research and development costs
234
-353
Marketing and communications
-81
-124
Insurances
-252
-232
Mailing expenses
-173
-4
Other personnel expenses
-238
-167
Travelling expenses
-84
-58
Outage compensation costs
-726
-225
Elenia service expenses
-15,752
-14,236
Other expenses
-2,830
-1,097
Total
-27,292
-21,977
Research and development costs mainly include costs of re-
search projects that do not meet the criteria for capitalization.
15
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
AUDIT FEES
EUR 1,000
2023
2022
Auditing fees
-160
-101
Fees for tax services
-6
-7
Fees for other services
-15
-6
Total
-181
-114
Ernst & Young was appointed as the auditor until the Annual
General Meeting held in the 2024 reporting period..
AUDITING FEES
Auditing fees include fees for auditing the consolidated financial
statements and interim accounts and for auditing the parent
company and subsidiaries. Fees for tax services include fees
charged for tax advice. Fees for other services consist of other
assignments.
TRADE AND OTHER CURRENT PAYABLES
EUR 1,000
2023
2022
Short-term financial lease liabilities
111
425
Trade payables
4,380
5,639
Accrued expenses
Employee benefits expenses
1,688
1,570
Interest expenses
16,694
13,359
Other accrued expenses
42,049
54,865
Liabilities related to contracts with customers
1,825
1,467
Other liabilities
VAT liability
15,509
8,937
Energy taxes
19,069
16,321
Prepayments received
3,880
6,783
Equity repayment liability
43,447
177,447
Other liabilities
1,881
2,655
Total
150,533
289,467
2.3.2 Trade and other current payables
According to the management’s estimate, the fair value of trade
and other payables does not materially deviate from the balance
sheet value.
Trade payables are non-interest bearing and are normally
settled on 14-30 days terms. Other accrued expenses comprise
mainly of deferred material and service purchases as well as de-
ferred financing items.
2.3.3 Employee benefits expense
The total remuneration paid by Elenia Verkko to its employees
consists of salaries, fringe benefits and short-term performance
bonuses.
EMPLOYEE BENEFIT EXPENSES
EUR 1,000
2023
2022
Salaries and remuneration
-3,166
-2,958
Pensions
Defined contribution plans
-568
-503
Defined benefit plans
0
5
Social security costs
-75
-70
Total
-3,809
-3,526
EUR 1,000
2023
2022
Salaries and remuneration paid to other
key members of the management
Salaries and other short-term employee
benefits
261
236
Other long-term employee benefits
36
49
Pension expenses related to salaries and
employee benefits
53
51
Total
351
336
Salaries and remuneration were not paid to CEO in 2023 and
2022.
Elenia Group applies two incentive plans. All employees of the
Elenia Group are included within the scope of the short-term an-
nual performance bonus plan; in addition the key members of the
management are included by a long-term incentive plan. Both of
the plans are company-specific but the principles and criteria are
mainly uniform. Companies’ Boards of Directors approve both
the criteria as well as payment under the plans. The total remu-
neration paid by the Group to its employees consists of salaries,
16
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
fringe benefits and short-term performance bonuses. All em-
ployees of the Group are included within the scope of the perfor-
mance bonus scheme.
The annual performance bonuses (i.e. short-term annual per-
formance bonus plan) are based for example on the Group profit-
ability, work safety and customer or personnel satisfaction. Also
the achievement of the individual key objectives in employee’s
own responsibility area is taken into consideration.
The key members of the management personnel of Elenia
Group companies are included within the scope of the long-term
incentive plan. The purpose of the plan is to align the interests of
the management with those of the shareholders in order to im-
prove the competitiveness of the business and promote long-
term financial success. Key management includes management
team and Board members of Elenia Oy.
The long-term incentive plan is measured over a three year
period and potential remunerations are paid during the following
three years after the earnings period. The payment is made only
if the goals have been achieved also during the year preceding
the payment. In 2023, the remunerations related to the 2018-
2020, 2019-2021 and 2020-2022 programmes were paid. Dur-
ing 2023 there were three programmes on-going: 2021-2023,
2022-2024 and 2023-2025.
During 2023 EUR 43 thousand (2022: EUR 61 thousand) was
paid out related to the long-term incentive plan in Elenia Verkko
Oyj.
The key members of the management have no share or op-
tion based incentive schemes. Five of the key management per-
sons of Elenia Oy and Elenia Verkko Oyj have invested into Elton
Investment S.à r.l. which is the ultimate owner of Elenia Oy. The
management investment is channelled through a management
owned holding company Manco Investment Oy, which owns ap-
proximately 0.3% of Elton Investment S.à r.l. after the arrange-
ment. The equity investment has been made at fair market val-
ues and it therefore is not a compensation plan. The equity own-
ership forms an additional tool for retaining key management
members and therefore promotes continuity, and it also signals
strong commitment from the senior management into the long-
term development of Elenia.
2.3.4 Provisions
ACCOUNTING POLICY
PROVISIONS
Provisions are recognised when the Group has a present le-
gal or constructive obligation as a result of past events to a
third party, provided that it is probable that the obligation
will be realised and the amount can be reliably estimated.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS
PROVISIONS
Electricity network connection fees, which have been paid
by the customers prior to 2008, must be refunded net of
demolition costs, if the customer wants to terminate the
electricity connection.
A provision for refundable connection fees for electricity
network has been calculated by discounting estimated fu-
ture annual connection fee refunds to their present value.
The calculation is based on the management’s estimate of
the volume and timing of refundable connection fees. The
historical level of refunded connection fees is taken into ac-
count while compiling the calculations and the discount
rates applied correspond to the rates used in impairment
testing of goodwill for network and heat businesses.
PROVISIONS
2023
EUR 1,000
Provision for refunds of con-
nection fees
Provisions at 1 January
6,119
Increase
994
Use of provisions
-592
Provisions at 31 December
6,521
PROVISIONS
2022
EUR 1,000
Provision for refunds of con-
nection fees
Provisions at 1 January
7,665
Decrease
-1,243
Use of provisions
-302
Provisions at 31 December
6,119
17
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
3
INVESTMENTS AND LEASE COMMITMENTS
3.1 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment comprise mainly electricity
distribution networks, machinery, equipment and buildings.
Property, plant and equipment are stated at original ac-
quisition cost less accumulated depreciation and accumu-
lated impairment losses, if any (see Note 3.2 Accounting pol-
icy for Impairment of non-financial assets). The original ac-
quisition cost includes expenditure that is directly attributa-
ble to the acquisition of an item. Subsequent costs are in-
cluded in the asset’s carrying amount or recognised as a sep-
arate asset, as appropriate, only when it is probable that fu-
ture economic benefits associated with the item will flow to
the Group and the acquisition cost of the item can be relia-
bly measured.
When a property, plant and equipment asset no longer
has any expected revenue streams, the asset is dismantled
and the remaining carrying value is recognised as an ex-
pense under depreciation, amortisation and impairment.
Acquired assets on the acquisition of a new subsidiary
are stated at their fair values at the date of acquisition.
The same principles are followed as in the Elenia Group
and have been followed before the restructuring and the
formation of the Elenia Network Group. Until December 31,
2018 land use rights for underground cables have been capi-
talized in intangible assets for other long-term expenditure,
but those rights have been capitalized in property, plant and
equipment as networks as of January 1, 2019. According to
the estimate of the Group's management, they are not
treated as lease contracts under IFRS 16.
All other repairs and maintenance costs are charged to
the consolidated statement of profit or loss during the finan-
cial period in which they are incurred.
Land and water areas are not depreciated since they have
indefinite useful lives. Depreciation on other assets is calcu-
lated on a straight-line basis over the estimated useful lives
of the assets as follows:
Buildings and structures
15-50 years
Electricity distribution network
10-30 years
Electricity transmission network
25-40 years
Machinery and equipment3
3-30 years
Right-of-use assets are depreciated on a straight-line basis
over the lease term between the commencement date of
the lease and the end of the lease term or using the esti-
mated useful life of the asset. Leases of buildings and vehi-
cles generally have lease terms between 3 and 5 years and
electricity meters 10 years.
The assets’ residual values and useful lives are reviewed
and adjusted, if appropriate, at each financial year end. An
asset’s carrying amount is written down immediately to its
recoverable amount if the as set’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on the sales of property, plant and
equipment are recorded as the difference between the sell-
ing price and carrying value and recognised in the consoli-
dated statement of profit or loss under other operating in-
come or expenses.
Government grants
Government grants relating to the purchase of property,
plant and equipment are recognised by reducing the book
value of the asset they relate to when the decision on the
grant has been received. The grants are thus reflected in the
form of lower depreciation over the useful life of the asset.
Borrowing costs
Borrowing costs directly attributable to the acquisition or
construction of an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale are
capitalised as part of the cost of the asset. All other borrow-
ing costs are expensed in the period in which they occur.
Borrowing costs consist of interest and other costs that an
entity incurs in connection with the borrowing of funds.
ACCOUNTING POLICY
18
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
PROPERTY PLANT AND EQUIPMENT
Land and wa-
ter areas
Buildings
Networks
Machinery and
equipment
Other tangible
assets
Prepayments
Total
EUR 1,000
Cost at 1 January 2023
2,145
6,632
2,692,192
175,228
56
20,146
2,896,399
Additions
33
7
112,896
23,952
0
-472
136,415
Additions due to revaluations
0
205
0
0
0
0
205
Disposals
0
-7
-5,519
-36
0
0
-5,561
Transfers between balance sheet items
-3
0
0
0
0
-410
-412
Cost at 31 December 2023
2,175
6,837
2,799,569
199,145
56
19,264
3,027,046
Accumulated depreciation, amortisation and impairment at 1 January 2023
0
-5,960
-1,097,460
-149,637
-55
-1,253,113
Depreciation and amortisation for the year
0
-167
-82,428
-4,867
-1
-87,462
Accumulated depreciation and amortisation on disposals
0
0
5,519
0
0
5,519
Impairment for the year*
-1
0
-2,350
0
0
-2,351
Accumulated depreciation, amortisation and impairment at 31 December 2023
-1
-6,127
-1,176,719
-154,504
-56
-1,337,407
Book value at 31 December 2023
2,174
710
1,622,850
44,641
0
19,264
1,689,639
Book value at 31 December 2022
2,144
671
1,594,732
25,591
1
20,146
1,643,285
*Networks' impairment for the year relates to the demolition of electricity networks.
Land and wa-
ter areas
Buildings
Networks
Machinery and
equipment
Other tangible
assets
Prepayments
Total
EUR 1,000
Cost at 1 January 2022
2105
6,400
2,545,006
160,604
56
21,421
2,735,592
Additions
11
0
157,334
14,638
0
448
172,430
Additions due to revaluations
0
435
0
0
0
0
435
Disposals
-1
-203
-11,286
-14
0
0
-11,503
Transfers between balance sheet items
30
0
1,137
0
0
-1,723
-555
Cost at 31 December 2022
2,145
6,632
2,692,192
175,228
56
20,146
2,896,399
Accumulated depreciation, amortisation and impairment at 1 January 2022
0
-5,761
-1,024,075
-145,326
-55
-1,175,216
Depreciation and amortisation for the year
0
-200
-78,322
-4,311
-1
-82,833
Accumulated depreciation and amortisation on disposals
0
0
8,045
0
0
8,045
Impairment for the year*
-1
0
-3,109
0
0
-3,110
Accumulated depreciation, amortisation and impairment at 31 December 2022
-1
-5,960
-1,097,460
-149,637
-55
-1,253,114
Book value at 31 December 2022
2,144
671
1,594,732
25,591
1
20,146
1,643,285
Book value at 31 December 2021
2,105
639
1,520,932
15,278
1
21,421
1,560,376
19
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
3.2
INTANGIBLE ASSETS
Intangible assets, except goodwill and intangible assets
with indefinite life, are stated at original acquisition cost
less accumulated amortisation and impairment losses if
applicable and amortised on a straight-line method over
their expected useful lives.
Computer software and licences
Acquired computer software licences are capitalised
based on the costs incurred from the acquisition and im-
plementation of the software. These costs are amortised
over their estimated useful lives (three to five years). Costs
associated with developing or maintaining computer soft-
ware are recognised as an expense as incurred. IFRS inter-
pretations committee issued an agenda decion in April
2021 on configuration and customazation costs in a cloud
computing arrangement. In the agenda decision the
comittee considered whether an intangible asset accord-
ing to IAS 38 can be recognised related to configuration
and customization costs of a cloud-based software and if
not, how these costs should be accounted for.
Licenses concerning cloud-based software can only be
capitalized if the group has the right and ability to take
possession of the software and run it on own servers. Oth-
erwise, the license is consideer to be a service contract and
costs are expensed when incurred. Concerning the imple-
mentation costs of a cloud-based software only customiza-
tion related costs can be capitalized if they create and as-
set that is distinct, controlled by the group and it creates
economic benefits that flow to the group. The part of the
implementation costs that is not capitalized is expensed
when incurred.
Compensation paid to landowners
One-time compensation payments paid to landowners for
inconvenience and damage caused by the network com-
pany’s overhead lines, cables and equipment are capital-
ized.
Until December 31, 2018 land use rights for underground
cables have been capitalized in intangible assets for other
long-term expenditure, but those rights have been capital-
ized in property, plant and equipment as networks as of Jan-
uary 1, 2019. According to the estimate of the Group's man-
agement, they are not treated as lease contracts under IFRS
16. Recurring annual compensation payments are recog-
nised as an expense on the consolidated statement of profit
or loss under other operating expenses
.
Contractual customer relationships
Contractual customer relationships acquired in a business
combination are recognised at fair value on the acquisition
date. The contractual customer relations have a finite useful
life and are carried at acquisition cost less accumulated
amortisation and assessed for impairment whenever there
is an indication that the intangible asset may be impaired.
Amortisation is calculated using the straight-line method
over the useful economic life of the customer relationship.
Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the Group’s share of net assets of the
acquired subsidiary/associate at the date of acquisition.
Goodwill on acquisitions of subsidiaries is included in intan-
gible assets. Goodwill is tested annually for impairment and
carried at acquisition cost less accumulated impairment
losses. Impairment losses on goodwill are not reversed.
Amortisation periods for intangible assets
Computer software and licences
3-5 years
Customer relationships
20 years
Compensation paid to landowners
10-30 years
The assets’ useful lives are reviewed and adjusted, if appro-
priate, at each financial year end.
Impairment of non-financial assets
Besides the information given below, disclosures relating to
impairment of non-financial assets are also provided in the
note 3.1 concerning property, plant and equipment.
The carrying values for individual assets are assessed at
each reporting date to determine whether there is any indi-
cation of impairment. When considering the need for im-
pairment, the Group assesses whether events or changes in
circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised if the carrying
value of an asset or cash-generating unit exceeds its recov-
erable amount. An asset’s recoverable amount is the higher
of an asset’s or cash-generating unit’s fair value less costs to
sell and its value in use.
An impairment loss relating to property, plant and equip-
ment and intangible assets other than goodwill is reversed in
the event of a change in circumstances that results in the as-
set’s recoverable amount changing from the time the impair-
ment loss was recorded. An impairment loss recorded on
goodwill is not reversed under any circumstances.
Intangible assets with indefinite useful lives are tested
for impairment annually as at 31 December either individu-
ally or at the cash-generating unit level, as appropriate, and
when circumstances indicate that the carrying value may be
impaired.
Goodwill is tested for impairment annually as at 31 De-
cember and when circumstances indicate that the carrying
value may be impaired. In assessing value in use, the esti-
mated future cash flows expected to be derived from a cash-
generating unit are discounted to their present value. The fi-
nancial projections used in the calculations are based on
business plans approved by management.
ACCOUNTING POLICY
20
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
IMPAIRMENT TESTING OF GOODWILL
Goodwill has been allocated to the cash generating unit, Net-
work business segment, of EUR 418 million. Projected cash flows
have been assessed based on long-term operational plans, which
have been approved by the senior management and the Board of
Directors. Cash flows have been discounted to determine the
value in use. The discount rate applied (pre-tax) reflects the risk
profile of the business.
The company performed its annual impairment test in Janu-
ary 2024. Due to the regulated and stable nature of the electric-
ity distribution business, the basis for cash flow projections is the
long-term business plan covering the period 2024-2055 which
has been approved by the Board of Directors. A volume growth
of approximately 0.5% p.a. has been incorporated for the fore-
cast period. The discount rate applied is 5.7% (pre-tax), calcu-
lated based on relevant studies and the Energy Authority's com-
munication regarding the required rate of return in the distribu-
tion business (in 2022 the applied discount rate was 5.9%). Long
term capital expenditure plans have been prepared to meet the
security of supply requirements in line with the Electricity Mar-
ket Act as well as the expected requirements of electrification as
per the government’s national net zero emission commitment of
2035.
The projected cash flows reflect the regulatory methods con-
firmed by the Energy Authority for the period 2024-2031, but
based on the current understanding of the company senior man-
agement and the Board of Directors as well as public communi-
cation by other system operators and stakeholders, the current
regulatory methods do not enable the execution of the invest-
ments required by the electrification of the society, nor the secu-
rity of supply investments required by the Electricity Market Act
(588/2013) within the required period by the end of 2036.
Therefore, Elenia and other DSOs have appealed the confirmed
regulatory methods to the market court. As a result, the impair-
ment test calculation has been performed using scenarios taking
into account the impacts of the alternative outcomes of the
court process on the company’s business plan. One scenario as-
sumes a ruling in favor of the industry with regards to the defini-
tion of the asset base, and the other scenario, a ruling against the
industry resulting in cash flow projections based on the regula-
tory methods confirmed by the Energy Authority on December
29, 2023 with no changes. The value in use has been calculated
based on these outcomes, weighting them equally (50%/50%).
This reflects the view of the senior management and the Board
of Directors on the company’s recoverable value Based on the
analysis in January 2024 there is a headroom of 1 793 million eu-
ros.
SENSITIVITY TO CHANGES IN ASSUMPTIONS IN DISCOUNT
RATE
Discount rate of the projected cashflows is based on the actual
risk-free interest rates of the valuation timing and the parame-
ters based on the Energy Authority's communication regarding
the required rate of return in the distribution business. The dis-
count rate (pre-tax) increasing by 3.1% (307 bps) would cause
the recoverable value of the assets to be equal to its book value.
SIGNIFICANT ACCOUNTING JUDGEMENTS
GOODWILL IMPAIRMENT TESTING
The Group tests goodwill annually for impairment. The re-
coverable amounts of cash-generating units are based on es-
timated future cash flows. Preparation of these estimates
requires management to make assumptions relating to fu-
ture cash flows. The main variables in determining cash
flows are the discount rate and the assumptions and esti-
mates used.
The Group has conducted a sensitivity analysis of the ef-
fects of the key assumptions underlying the impairment
testing on the test results.
ing business which was sold in 2019.
GOODWILL IMPAIRMENT TESTING
The Group tests goodwill annually for impairment. The re-
coverable amounts of cash-generating units are based on es-
timated future cash flows. Preparation of these estimates
requires management to make assumptions relating to fu-
ture cash flows. The main variables in determining cash
flows are the discount rate and the assumptions and esti-
mates used.
The Group has conducted a sensitivity analysis of the ef-
fects of the key assumptions underlying the impairment
testing on the test results.
E
STIMATES AND ASSUMPTIONS
21
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
INTANGIBLE ASSETS
EUR 1,000
Goodwill
Intangible rights
Other long-term
expenditure
Total
Cost at 1 January 2023
417,823
22,583
42,862
483,269
Additions
0
123
4,007
4,130
Disposals
0
0
-366
-366
Cost at 31 December 2023
417,823
22,707
46,503
487,033
Accumulated depreciation, amortisation and impairment at 1 January
0
-14,802
-23,940
-38,742
Depreciation and amortisation for the year
0
-537
-2,505
-3,042
Accumulated depreciation, amortisation and impairment at 31 De-
cember 2023
0
-15,338
-26,445
-41,783
Book value at 31 December 2023
417,823
7,368
20,058
445,249
Book value at 31 December 2022
417,823
7,782
18,922
444,527
Goodwill
Intangible rights
Other long-term
expenditure
Total
EUR 1,000
Cost at 1 January 2022
417,823
22,568
38,977
479,368
Additions
0
15
3,331
3,346
Transfer between balance sheet items
0
0
555
555
Cost at 31 December 2022
417,823
22,583
42,862
483,269
Accumulated depreciation, amortisation and impairment at 1 January
2022
0
-14,244
-21,813
-36,057
Depreciation and amortisation for the year
0
-557
-2,127
-2,684
Accumulated depreciation, amortisation and impairment at 31 De-
cember 2022
0
-14,802
-23,940
-38,742
Book value at 31 December 2022
417,823
7,782
18,922
444,527
Book value at 31 December 2021
417,823
8,324
17,164
443,310
As a result of acquisitions in 2012 goodwill of EUR 515.6 million was created. Goodwill is based on the assesment of organisational competence and knowhow which is
expected to benefit business operations in coming years. At the end of 2021 the value of Goodwill is 417,8 million e uros, since 97,8 million euros was allocated to heating
business which was sold in 2019.
.
22
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
The Group’s management has estimated that lease con-
tracts related to indoor secondary substations, primary sub-
stations and certain office premises are immaterial contracts
(referring to IAS 1 which defines the materiality of the infor-
mation presented in the financial statements) and therefore
IFRS 16 has not been applied to these contracts. The defini-
tion of contracts as “immaterial” is based on the low value of
leases paid under these contracts which causes the lease lia-
bilities arising from them to be immaterial in relation to the
Group’s consolidated statement of financial position. Lease
payments on these contracts are recognised on the consoli-
dated statement of profit or loss as other operating expenses
over the lease term. The effect of these costs on the income
statement in 2023 was approximately EUR 117 thousand
(2022:EUR 78 thousand).
One-time subsurface rights compensations are paid to
landowners based on perpetual contracts. Compensations are
capitalized to the networks assets in the consolidated state-
ment of financial position and amortized over their expected
useful lives. Normally subsurface rights should be recognised
as leases under IFRS 16 but as compensations are paid based
on perpentual contracts, they are not treated as lease con-
tracts under IFRS 16.
ACCOUNTING POLICY
3.3.1LEASES (ACCOUNTING POLICY)
The Group assesses at contract inception whether a contract
is, or contains, a lease. That is, if the contract conveys the right
to control the use of an identified asset for a period of time in
exchange for consideration.
3.3.2 GROUP AS THE LESSOR (ACCOUNTING POLICY)
Leases in which the Group does not transfer substantially all
the risks and rewards incidental to ownership of an asset are
classified as operating leases. Initial direct costs incurred in
negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and recognised over the
lease term on the same basis as rental income. Contingent
rents are recognised as other operating income in the period
in which they are earned (See Note 2.2).
Lease agreements comprise fixed-term agreements and
agreements which are valid until further notice.
3.3.3 THE GROUP AS THE LESSEE (ACCOUNTING POLICY)
According to the requiremets of IFRS 16 the Group recog-
nises lease liabilities to make lease payments and right-of-use
assets representing the right to use the underlying assets con-
cerning certain lease contracts related to office premises, car
leasing contracts, and lease contracts related to electricity
meters.
The Group applies the short-term lease exemption to a
part of the contracts related to office premises and to IT-con-
tracts. Lease payments on short-term leases are recognised in
the consolidated statement of profit or loss as other operating
expenses over the lease term. The impact of these costs on
the income statement in 2023 was approximately EUR 35
thousand (2022:EUR 35 thousand).
Right-of-use assets
The Group recognizes right-of-use assets at the commencement
date of the lease (the date the underlying asset is available for
use). Right-of-use assets are measured at cost, less any accumu-
lated depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognized, initial direct
costs incurred, and lease payments made at or before the com-
mencement date less any lease incentives received. Right-of-use
assets are depreciated on a straight-line basis over the lease
term between the commencement date of the lease and the end
of the lease term or using the estimated useful life of the asset.
Leases of buildings and vehicles generally have lease terms be-
tween 3 and 5 years and electricity meters 10 years.
If ownership of the leased asset transfers to the Group at the
end of the lease term or the cost reflects the exercise of a pur-
chase option, depreciation is calculate using the estimated useful
life of the asset. The right-of-use assets are also subject to im-
pairment (see accounting policies in Notes 3.1 and 3.2).
Lease liabilities
At the commencement date of the lease, the Group recognizes
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments (including insubstance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by
the Group and payments of penalties for terminating the lease, if
the lease term reflects the Group exercising the option to termi-
nate. In calculating the present value of lease payments, the
Group uses as interest rate an estimated average medium-term
financing cost at the lease commencement date because the in-
terest rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities
is increased to reflect the accretion of interest and reduced for
the lease payments made. In addition, the carrying amount of
lease liabilities is remeasured if there is a change in the lease
23
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
Set out below are the carrying amounts of right-of-use assets recognised and the move-
ments during the period
EUR 1,000
Buildings
Machinery
and equip-
ment
Total
As at 1 January 2023
412
140
552
Additions
0
159
159
Revaluations
205
0
205
Disposals
0
-36
-36
Depreciations
-155
-88
-243
As at 31 December 2023
462
176
638
Machinery
and equip-
ment
EUR 1,000
Buildings
Total
As at 1 January 2022
368
1098
1466
Additions
0
122
122
Revaluations
435
0
435
Disposals
-203
-14
-216
Depreciations
-188
-1066
-1254
As at 31 December 2022
412
140
552
term, a change in the lease payments (e.g., changes to future pay-
ments resulting from a change in an index or rate used to deter-
mine such lease payments) or a change in the assessment of an
option to purchase the underlying asset.
The Group’s lease liabilities are included in non-current and
current financial liabilities.
Set out below are the carrying amounts of lease liabilities and the movements during
the period
LEASE LIABILITIES
EUR 1,000
2023
2022
As at 1 January
735
1927
Additions
765
556
Disposals
-414
-209
Payments
-414
-1,531
Interest expenses
-13
-7
As at 31 December
659
735
The maturity analysis of lease liabilities are disclosed in Note 4.2.6.
During 2023 the Group had total cash outflows for leases of EUR 566 thousand (2022: EUR
1 873 thousand).
The Group has several lease contracts that include extension and termination options.
These options are negotiated by management to provide flexibility in in managing the
leased-asset portfolio according to needs of business. Management exercises significant
judgement in determining whether these extension and termination options are reasonably
certain to be exercised (see Note 1.4).
The lease contract concerning the main premises of the group changed from a valid un-
till further notice to a two year fixed term contract in March 2023. The lease contract has
been revaluated based on this change and the resulting addition to lease liabilities in 2023
is 352 thousand euros.
According to management's assumption, the Group estimates that it will not use termi-
nation options of car's leases.
Amounts recognised in profit or loss
EUR 1,000
2023
2022
Depreciation expense of right-of-use assets
-243
-1,254
Interest expense on lease liabilities
-13
-7
Expense related to short-term leases
(incl. in other operating expenses)
-35
-35
Total amount recognised in profit or loss
-291
-1,297
24
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
4 CAPITAL STRUCTURE AND FINANCIAL ITEMS
4.1 FINANCE INCOME AND COSTS
FINANCIAL RISK MANAGEMENT
FINANCIAL RISK MANAGEMENT
The management of financial risks is based on the following
principles.
The Group's Treasury policy, approved by the Board of
Directors, defines financial risk management governance,
responsibilities and processes for reporting risks and risk
management. Treasury Policy defines principles covering
currency, liquidity, interest rate and counterparty risks. Also
the Group's existing loan arrangements include guidelines
and restrictions pertaining to financial risk management.
Elenia Verkko Oyj is responsible for the Group financial risk
management.
◾
For credit risk management refer Note 2.1.4.2;
◾
For liquidity risk, refinancing risk, interest rate risk
and currency risk management refer Note 4.2.9.
CAPITAL MANAGEMENT
As the electricity distribution business is a capital-intensive,
the Group must ensure it has adequate capital to meet its
operating requirements. Business planning includes as-
sessing the adequacy of available capital in relation to the
risks arising from business operations and the operating en-
vironment.
ACCOUNTING POLICY
TRANSLATION DIFFERENCES
Transactions in foreign currencies are initially recorded by
the Group's entities at their respective functional currency
spot rates at the date the transaction first qualifies for
recognition. Monetary assets and liabilities denominated in
foreign currencies are translated at the functional currency
spot rates of exchange at the reporting date. Differences
arising on settlement or translation of monetary items are
recognised in the consolidated statement of profit or loss
with the exception of monetary items that are designated as
part of the hedge of the Group's net investment of a foreign
operation. These are recognised in other comprehensive in-
come until the net investment is disposed of, at which time,
the cumulative amount is reclassified to the consolidated
statement of profit or loss. Tax charges and credits attribut-
able to exchange differences on those monetary items are
also recorded in other comprehensive income.
Non-monetary items that are measured in terms of his-
torical cost in a foreign currency are translated using the ex-
change rates at the dates of the initial transactions. Non-
monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the
fair value is determined.
The gain or loss arising on translation of non-monetary
items measured at fair value is treated in line with the recog-
nition of gain or loss on change in fair value of the item (i.e.,
translation differences on items whose fair value gain or loss
is recognised in other comprehensive income or consoli-
dated statement of profit or loss are also recognised in other
comprehensive income or statement of profit or loss, re-
spectively).
Any goodwill arising on the acquisition of a foreign oper-
ation and any fair value adjustments on the carrying
amounts of assets and liabilities arising on the acquisition
are treated as assets and liabilities of the foreign operation
and translated at the spot rate of exchange at the sport rate
The assets and liabilities of foreign operations are
translated into EUR at the rate of exchange prevailing at the
reporting date and their statement of profit or loss and
other comprehensive income are translated at exchange
rates prevailing at the dates of the transactions. The
exchange differences arising on translation for
consolidation are recognised in other comprehensive
income.
EUR 1,000
2023
2022
Interest expenses
Loans from financial institutions
-8,674
-729
Bonds and notes
-36,836
-36,050
Interest expenses related to lease lia-
bilities
-13
-7
Other interest expenses
-10
-240
Total interest
-45,533
-37,026
Other finance costs
-2,961
-2,963
Exchange rate losses
Loans and receivables
-1
0
Total finance costs
-48,495
-39,990
Interest income
Other interest income
2,330
257
Exchange rate gains
Other finance income
1
1
Total finance income
2,331
258
Finance costs (net)
-46,164
-39,731
25
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
4.2 FINANCIAL ASSETS AND LIABILITIES
IFRS 9 FINANCIAL INSTRUMENTS
The initial measurement of financial instruments is made at fair
value for all financial assets. Financial assets that are debt in-
struments and to which the fair value option is not applied are
measured following initial recognition either at amortized cost
or fair value, depending on the company’s business model for the
management of financial assets and contractual cash flows of the
financial assets.
As a rule, all equity instruments are measured at fair value
following the initial measurement, either through consolidated
statement of profit or loss or through consolidated statement of
other comprehensive income. All equity instruments held for
trading are to be measured at fair value through profit or loss.
Items that are recognized through other comprehensive income
will no longer be recognized in the consolidated statement of
profit or loss if the entity has elected to measure it at fair value
through consolidated statement of other comprehensive in-
come.
The impairment requirements in IFRS 9 are based on an ex-
pected credit loss model. In addition, IFRS 9 standard comprises
a new hegde accounting model in which the criteria for applying
the hedge accounting are relieved and more designations of
groups of items as the hedged items are possible. The new hedge
accounting model aims to enable companies to better reflect
their risk management strategy and objectives in the financial
statements.
The Group has adapted the standard on the required effective
date but comparative information has not been restated. Over-
all, the effect of the IFRS 9 standard on the consolidated financial
statements has not been very significant. However, applying the
impairment requirements of IFRS 9 has had an impact on the
method used in calculation of the credit loss allowance for trade
receivables, but the amount of credit loss allowances has not
changed remarkably. The Group has applied the simplified ap-
proach and recorded lifetime expected losses on all trade receiv-
ables.
26
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
FINANCIAL INSTRUMENTS – INITIAL RECOGNITION AND
SUBSEQUENT MEASUREMENT
Classification of current and non-current assets and liabilities
An asset or a liability is classified as current when it is expected
to be realized within twelve months after the financial year end
or it is classified as financial assets or liabilities held at fair
value through profit or loss. Liquid funds are classified as cur-
rent assets.
All other assets and liabilities are classified as non-current
assets and liabilities.
4.2.1 Cash and cash equivalents
Cash and cash equivalents comprise cash at banks and on hand
and short-term deposits with a maturity of three months or
less.
4.2.2 Financial assets
Initial recognition and measurement
Financial assets within the scope of IFRS 9 are classified as fi-
nancial assets carried at amortized cost, financial assets at fair
value through profit or loss or financial assets at fair value
through other comprehensive income (OCI), as appropriate.
The Group determines the classification of its financial assets
at initial recognition.
All financial assets are recognized initially at fair value plus
transaction costs, except in the case of financial assets rec-
orded at fair value through profit or loss. Purchases or sales of
financial assets are recognized on the trade date.
The classification of financial assets at initial recognition de-
pends on the financial asset's contractual cash flow character-
istics and the Group's business model for managing them. The
group does not have any financial assets measured at fair value
in 2022. Trade receivables that do not contain a significant fi-
nancing component or for which the Group has applied the
practical expedient are measured at the transaction price de-
termined under IFRS15. Refer to the accounting policies in
Note 2.1.1 Revenue from contracts with customers.
If, in a subsequent year, the amount of the estimated impair-
ment loss increases or decreases because of an event occur-
ring after the impairment was recognised, the previously rec-
ognised impairment loss is increased or reduced by adjusting
the allowance account. If a write-off is later recovered, the re-
covery is credited to finance costs in the consolidated state-
ment of profit or loss.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include fi-
nancial assets held for trading and financial as-sets designated
upon initial recognition at fair value through profit or loss. Fi-
nancial assets are classified as held for trading if they are ac-
quired for selling or repurchasing in the near term.
Derivatives, including separated embedded derivatives
are also classified as held for trading unless they are desig-
nated as effective hedging instruments as defined by IFRS
9.Financial assets at fair value through profit or loss are car-
ried in the consolidated statement of financial position at fair
value with net changes in fair value presented as finance costs
(negative net changes in fair value) or finance income (positive
net changes in fair value) in the consolidated statement of
profit or loss. Financial assets designated upon initial recogni-
tion at fair value through profit or loss are designated at their
initial recognition date and only if the criteria under IFRS 9 are
satisfied.
Financial assets at fair value through other comprehensive
income (OCI)
Derivatives are measured at fair value and gains and los-
ses from fair value measurement are treated as determined by
the purpose of the derivatives. The effects on results of chan-
ges in the value of derivatives that are eligible for hedge ac-
counting and that are effective hedging instruments are pre-
sented consistent with the hedged item. Derivatives eligible
for hedge accounting are classified as financial assets at fair
value through other comprehensive income. The effective
portion of the gain or loss on the hedging instrument is recog-
nized directly in other comprehensive income.
Subsequent measurement
The subsequent measurement of financial assets depends on
their classification as described below:
Financial assets carried at amortised cost
Financial assets carried at amortised cost are non-derivative
financial assets with fixed or determinable payments that are
not quoted in an active market. Financial assets carried at
amortised cost also include trade receivables and other re-
ceivables. Loans are carried at amortised cost using the effec-
tive interest rate method less accumulated impairment. Amor-
tised cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral
part of the effective interest rate. The effective interest rate
amortisation is included in finance income in the consolidated
statement of profit or loss. The losses arising from impairment
are recognised in the consolidated statement of profit or loss
in finance costs for loans and in cost of sales or other operat-
ing expenses for receivables.
If there is objective evidence that an impairment loss has
been incurred, the amount of the loss is measured as the dif-
ference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future ex-
pected credit losses that have not yet been incurred). The pre-
sent value of the estimated future cash flows is discounted at
the financial asset’s original effective interest rate. If a loan
has a variable interest rate, the discount rate for measuring
any impairment loss is the current effective interest rate.
The carrying amount of the asset is reduced using an al-
lowance account and the loss is recognised in the consolidated
statement of profit or loss. Interest income continues to be ac-
crued on the reduced carrying amount and is accrued using
the rate of interest used to discount the future cash flows for
measuring the impairment loss. The interest income is rec-
orded as finance income in the consolidated statement of
profit or loss. Loans together with the associated allowance
are written off when there is no realistic prospect of future re-
covery and all collateral has been realised or has been trans-
ferred to the Group.
ACCOUNTING POLICY
27
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
Any ineffective portion is recognized immediately in the con-
solidated statement of profit or loss as financial income or
costs. The group had no derivatives at the balance sheet date.
Derecognition of financial assets
Financial assets are derecognized when:
◾
The rights to receive cash flows have expired; or
◾
The Group has transferred its rights to receive cash flows
from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a
third party under a ‘pass-through’ arrangement; and ei-
ther (a) the Group has transferred substantially all the
risks and rewards of the asset, or (b) the Group has nei-
ther transferred nor retained substantially all the risks
and reward s of the asset, but has transferred control of
the asset.
4.2.3 Impairment of financial assets
The Group recognizes an allowance for expected credit losses
(ECLs) for all debt instruments not held at fair value through
profit or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract
and all the cash flows that the Group expects to receive, dis-
counted at an approximation of the original effective interest
rate.
ECL' are recognized in two stages. For credit exposures for
which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses
that result from default evets that are possible within the next
12-months (a 12-month ECL). For those credit exposures for
which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective
of the timing of the default (a lifetime ECL).
For trade receivables and other receivables, the Group ap-
plies a simplified approach in calculating ECLs. Therefore, the
Group does not track changes in credit risk, but instead recog-
nizes a loss allowance based on lifetime ECLs at each report-
ing date. The Group has established a provision matrix that is
based on its historical credit loss experience, adjusted for for-
ward-looking factors specific to the debtors and the economic
environment.
4.2.4 Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of FRS 9 are classified as fi-
nancial liabilities at fair value through profit or loss, loans and
borrowings, payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. The Group
determines the classification of its financial liabilities at initial
recognition.
All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings, net of directly at-
tributable transaction costs.
The Group’s financial liabilities include trade and other pay-
ables, loans and borrowings and derivative financial instru-
ments.
Subsequent measurement
The measurement of financial liabilities depends on their classi-
fication as described below:
Loans and borrowings
After initial recognition, interest bearing loans and borrowings
are subsequently measured at amortized cost using the effec-
tive interest rate method. Gains and losses are recognized in
the consolidated statement of profit or loss when the liabilities
are derecognized as well as through the effective interest rate
amortization process.
Amortized cost is calculated by taking into account any dis-
count or premium on acquisition and fees or costs that are an
integral part of the effective interest rate. The effective inter-
est rate amortization is included as finance costs in the consoli-
dated statement of profit or loss.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include
financial liabilities held for trading and financial liabilities des-
ignated upon initial recognition as at fair value through profit
or loss. Financial liabilities are classified as held for trading if
they are acquired for the purpose of selling in the near term.
This category includes derivative financial instruments en-
tered into by the Group that are not designated as hedging in-
struments in hedge relationships as defined by IFRS 9. Gains
or losses on liabilities held for trading are recognized in the
consolidated statement of profit or loss.
Derecognition of Financial liabilities
A financial liability is derecognized when the obligation under
the liability is discharged or cancelled, or expires. When an ex-
isting financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an ex-
isting liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original lia-
bility and the recognition of a new liability. The difference in
the respective carrying amounts is recognized in the consoli-
dated statement of profit or loss.
4.2.5 Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net
amount is reported in the consolidated statement of financial
position if there is a currently enforceable legal right to offset
the recognized amounts and there is an intention to settle on a
net basis, to realise the assets and settle the liabilities sim-
ultaneously.
28
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
4.2.6 Carrying amounts by category and maturity profile of financial assets and liabilities
CARRYING AMOUNTS OF FINANCIAL ASSETS AND LIABILITIES BY CATEGORY
VALUES at 31 DECEMBER 2023
Balance sheet item, EUR 1,000
Note
Amortised cost
Carrying value
of balance sheet
items
Fair value
Current financial assets
Trade receivables and other non-interest -bearing
receivables
2.1.4
19,330
19,330
19,330
Cash and cash equivalents
60,161
60,161
60,161
Total Current assets
79,491
79,491
79,491
Carrying amount by category
79,491
79,491
79,491
Non-current financial liabilities
Bonds and notes
4.2.8-9
-1,684,021
-1,684,021
-1,585,123
Loans from financial institutions
4.2.8-9
-250,000
-250,000
-250,000
Interest-bearing non-current liabilities
- Leases
3.3
-548
-548
-548
Total interest-bearing non-current liabilities
-1,934,569
-1,934,569
-1,835,671
Bonds and notes
Other current interest-bearing liabilities
- Leases
3.3
-111
-111
-111
Trade payables
2.3.2
-4,380
-4,380
-4,380
Total current financial liabilities
-4,491
-4,491
-4,491
Carrying amount by category
-1,939,060
-1,939,060
-1,840,162
VALUES at 31 DECEMBER 2022
Balance sheet item, EUR 1,000
Note
Amortised cost
Carrying value
of balance sheet
items
Fair value
Current financial assets
Trade receivables and other non-interest -bearing
receivables
2.1.4
17,987
17,987
17,987
Cash and cash equivalents
51,154
51,154
51,154
Total Current assets
69,140
69,140
69,140
Carrying amount by category
69,140
69,140
69,140
Non-current financial liabilities
Bonds and notes
4.2.8-9
-1,683,025
-1,683,025
-1,480,588
Loans from financial institutions
4.2.8-9
-150,000
-150,000
-150,000
Interest-bearing non-current liabilities
- Leases
3.3
-311
-311
-311
Total interest-bearing non-current liabilities
-1,833,336
-1,833,336
-1,630,899
Bonds and notes
4.2.8-9
Other current interest-bearing liabilities
- Leases
3.3
-425
-425
-425
Trade payables
2.3.2
-5,639
-5,639
-5,639
Total current financial liabilities
-6,064
-6,064
-6,064
Carrying amount by category
-1,839,400
-1,839,400
-1,636,963
The valuation of financial assets and liabilities at fair value has not had an effect on the income
statement or the statement of comprehensive income in 2023 and 2022.
29
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
The table below summarizes the maturity profile of the Group's financial liabilities based on contractual payments.
CASH AT BANKS AND ON HAND
Elenia had short-term bank deposits amounting to EUR 60,2 mil-
lion (2022: EUR 51,2 million). All bank deposits were denomi-
nated in euros.
BONDS AND NOTES
The fair value of the bonds have been calculated based on the re-
quired rate of return estimated using the EUR-denominated
swap rate yield curve and the estimated risk premium calculated
based on the market quotes of Elenia Verkko Oyj's bonds at the
balance sheet date.
FINANCIAL LIABILITIES
Interest-bearing liabilities increased by EUR 99.9 million (2022:
EUR 0 million) during the year and interest-bearing liabilities at
the balance sheet date totaled EUR 1,944.5 million (2022: EUR
1,835.1 million).
The fair value of short-term trade receivables and payables,
other non-interest-bearing receivables, finance leases and cash
and cash equivalents corresponds essentially the carrying
amount.
31 December 2023
Effec-
tive in-
terest
rate %
Maturity
EUR 1,000
Within 1 year
1-5 years
Over 5 years
Total
Loans from financial institutions
4.84%
0
50,000
200,000
250,000
Bonds
1.98%
0
640,000
531,000
1,171,000
Notes
2.71%
0
79,000
439,500
518,500
Lease liabilities
0
548
0
548
Total interest-bearing non-current liabilities
0
769,548
1,170,500
1,940,048
Lease liabilities
111
0
0
111
Total current interest -bearing liabilities
111
0
0
111
Trade payables
4,380
0
0
4,380
Total current financial liabilities
4,491
0
0
4,491
Total
4,602
769,548
1,170,500
1,944,650
31 December 2022
Effec-
tive in-
terest
rate %
Maturity
EUR 1,000
Within 1 year
1-5 years
Over 5 years
Total
Loans from financial institutions
1.93%
0
0
150,000
150,000
Bonds
1.91%
0
640,000
531,000
1,171,000
Notes
2.71%
0
0
518,500
518,500
Lease liabilities
0
311
0
311
Total interest-bearing non-current liabilities
0
640,311
1,199,500
1,839,811
Lease liabilities
425
0
0
425
Total current interest -bearing liabilities
425
0
0
425
Trade payables
5,639
0
0
5,639
Total current financial liabilities
6,064
0
0
6,064
Total
6,064
640,311
1,199,500
1,845,875
30
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
The "Other changes" column includes the effect of reclassification of non-current portion of obligations under finance leases to
current due to passage of time, the effect of capitalization of interests of other long-term loans and the effect amortisation of trans-
action costs of bonds and notes using the effective interest rate method.
The Group classifies interest paid as cash flows from operating activities.
EUR 1,000
1 January
2023
Cash flows
New leases
IFRS 16
Other changes
31 December
2023
Current obligations under lease liabilities
425
-414
0
100
111
Non-current interest-bearing loans and borrowings
(excl. items listed below)
1,833,025
100,000
0
995
1,934,021
Non-current obligations under lease liabilities
311
0
556
-319
548
EUR 1,000
1 January
2022
Cash flows
New leases
IFRS 16
Other changes
31 December
2022
Current obligations under lease liabilities
1,531
-1,531
0
425
425
Non-current interest-bearing loans and borrowings
(excl. items listed below)
1,832,046
0
0
979
1,833,025
Non-current obligations under lease liabilities
395
0
0
-85
311
4.2.7 Changes in financial liabilities arising from financing activities
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
4.2.8 Fair value hierarchy of financial assets and liabilities
ACCOUNTING POLICY
FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
Fair value related to disclosures for financial instru-
ments and non-financial assets that are measured at fair
value or where fair values are disclosed, are summarised in
the following notes:
◾
Disclosures for valuation methods, significant estimates
and assumptions Notes 4.2.6 and 4.2.8
◾
Quantitative disclosures of fair value measurement hier-
archy Note 4.2.8
◾
Financial instruments (including those carried at amor-
tised cost) Note 4.2.6
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction be-
tween market participants at the measurement date. The
fair value measurement is based on the presumption that
the transaction to sell the asset or transfer the liability takes
place either:
◾
In the principal market for the asset or liability, or
◾
In the absence of a principal market, in the most advan-
tageous market for the asset or liability
The principal or the most advantageous market must be ac-
cessible by the Group.
The fair value of an asset or a liability is measured using
the assumptions that market participants would use when
pricing the asset or liability, assuming that market partici-
pants act in their economic best interest. The Group uses
valuation techniques that are appropriate in the circum-
stances and for which sufficient data are available to meas-
ure fair value.
The fair value of financial instruments that are traded in
active markets at each reporting date is determined by ref-
erence to quoted market prices or dealer price quotations,
without any deduction for transaction costs.
31
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
FAIR VALUE HIERARCHY
All assets and liabilities for which fair value is measured or dis-
closed in the consolidated financial statements are categorised
within the fair value hierarchy, described as follows, based on
the lowest level input that is significant to the fair value meas-
urement as a whole:
Level 1 Quoted (unadjusted) market prices in active markets
for identical assets or liabilities
that is significant to the fair value measurement is directly or in-
directly observable
Level 3 Valuation techniques for which the lowest level input
that is significant to the fair value measurement is unobservable
For financial instruments not traded in an active market, the
fair value is determined using appropriate valuation tech-
niques. Such techniques may include:
◾
Using recent arm’s length market transactions
◾
Reference to the current fair value of another instrument
that is substantially the same
◾
A discounted cash flow analysis or other valuation mod-
els
For assets and liabilities that are recognised in the consoli-
dated financial statements at fair value on a recurring basis,
the Group determines whether transfers have occurred be-
tween levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the fair
value measurement as a whole) at the end of each reporting
period. The transfers between levels of the fair value hierar-
chy shall be disclosed at the date of the event or change in
circumstances that caused the transfer.
For fair value disclosures, the Group has determined
classes of assets and liabilities on the basis of the nature,
characteristics and risks of the asset or liability and the level
of the fair value hierarchy as explained next.
An analysis of fair values of financial instruments and
further details as to how they are measured are provided in
Notes 4.2.6 and 4.2.8.
As at 31 December 2023, the Group held the following financial instruments carried at amortised cost in the con-
solidated statement of financial position:
FINANCIAL ASSETS AND LIABILITIES
Level 2
Level 3
Total
EUR 1,000
2023
2022
2023
2022
2023
2022
2023
2022
Financial instruments, non-current lia-
bilities
Bonds and notes
0
0
-1,585,123
-1,480,588
0
0
-1,585,123
-1,480,588
Loans from financial institutions
-250,000
-150,000
0
0
0
0
-250,000
-150,000
Total non-current financial liabilities
-250,000
-150,000
-1,585,123
-1,480,588
0
0
-1,835,123
-1,630,588
Total financial liabilities
32
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
4.2.9 Risk management
FINANCIAL RISK MANAGEMENT
COMMODITY PRICE RISK
Changes in commodity prices affect mainly electricity pur-
chases used for distribution losses and purchases of electric-
ity network components. The Group has a hedging policy
covering electricity purchases for at least the following 2-3
years to mitigate the impact of short-term price fluctua-
tions. The majority of electricity purchases are hedged for
the following year, with a declining hedging profile for the
subsequent years. The regulatory methods governing elec-
tricity distribution operations provide protection against
changes in commodity prices over the medium term.
Changes in raw material prices such as oil, aluminum and
copper affecting purchases of network components, causes
fluctuations primarily in capital expenditure.
COUNTERPARTY AND CREDIT RISK
Accepted financial counterparties are counterparties ap-
proved in existing financing agreements and other counter-
parties separately approved by the Board of Directors. Cash
and cash equivalents consist solely of short-term bank de-
posits.
The Group has financial covenants relating to interest cover
and leverage. The covenants are typical in. such arrange-
ments. There were no covenant breaches in 2023. Elenia
Verkko Oyj monitors the financial markets in order to carry
out loan refinancing at an appropriate time, ahead of the due
date of the current loans.
At the balance sheet date, the company had no draw
downs on the Capex credit limit (2022: no drawings) nor the
working capital limit (2022: no drawings) granted by inter-
national banks. At the balance sheet date, Elenia Verkko Oyj
had a EUR 250 million credit limit from the European Invest-
ment Bank (EIB). The loans mature between 2028 and 2033.
INTEREST RATE RISK
Elenia is exposed to interest rate risk mainly through its in-
terest-bearing net debt. The objective of the Group's inter-
est rate risk management is to limit volatility of interest ex-
penses in the income statement. The Group's interest rate
risk management is handled by Group Treasury.
The interest rate risk is managed primarily by entering
into loans with fixed interest. At the balance sheet date 87%
(2022: 91%) of the loans were fixed rate loans.
A parallel shift of +/- 1.0 percentage points in the inter-
est rate curve at the balance sheet date would have EUR +/-
2.7 million (2022: EUR +/-1.7 million) effect on the interests
relating to floating rate loans.
LIQUIDITY RISK
Liquidity risk refers to the risk of the Group not having ade-
quate liquid assets to finance its operations, pay interest and
repay its loans.
The management of liquidity risk is divided into short-
term and long-term liquidity management. Short-term li-
quidity risk is managed by cash flow planning that takes into
account the expected trade receivables, trade payables and
other known expenses for a period of two weeks. The ade-
quacy of long-term liquidity is assessed by 12-month fore-
casts conducted monthly.
CURRENCY RISK
Elenia operates in Finland and uses the Euro as its primary
operating currency. Elenia's currency risk is based on pur-
chases of raw materials and services denominated in curren-
cies other than the Euro. The purchases of raw materials and
services denominated in currencies other than the Euro
have a negative effect on Elenia's result and cash flow in the
event that the currencies in question appreciate against the
Euro. As the Group's purchasing operations are currently
primarily focused on Finland, the currency risk related to
purchasing is limited.
The Group has guidelines for the management of cur-
rency risk as part of the purchasing policy for network oper-
ations approved by the Management team . Currency risks
that have an impact on profit or loss are primarily hedged
operationally through contractual currency rate clauses.
Operating profit or finance costs does not include mate-
rial exchange rate differences in 2023. At the end of 2023
there were no outstanding receivables or payables in for-
eign currencies.
REFINANCING RISK
Elenia Verkko Oyj issues bonds and notes. Bonds are issued
under the EMTN programme and listed at the London Stock
Exchange. Notes are unlisted private placements targeted
mostly to the North American investors through private
placements.
CASH AND CASH EQUIVALENTS AND COMMITTED UNU-
TILIZED CREDIT FACILITIES
31 December 2023
EUR 1,000
Facility amount
In use
Available amount
Maturity
Capex facility
250,000
0
250,000
1 - 5 years
Working Capital facility
50,000
0
50,000
1 - 5 years
Liquidity facility
70,000
0
70,000
1 - 5 years
EIB credit facility
250,000
250,000
0
Over 5 years
Cash and cash equivalents
60,161
Total
620,000
250,000
430,161
33
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
4.3 OTHER COMMITMENTS AND CONTINGENCIES
OTHER COMMITMENTS
EUR 1,000
2023
2022
Registered floating charges:
Provided on behalf of own and Group liabili-
ties
9,000,000
9,000,000
Mortgages
202,000
202,000
Refundable connection fees
284,437
283,337
Group bank accounts have been pledged as security for loans from fi-
nancial institutions and bonds.
4.4 EQUITY
Share capital
The share are issued and fully paid.
Reserve for invested unrestricted equity
The reserve for invested non-restricted equity comprises of all
other equity investments and paid share subscription price, that
has not been specifically booked as share capital.
Equity repayment
The meeting of Elenia Verkko Oyj's shareholders decided on De-
cember 15, 2020 proactively the equity repayment of €550.0m
to its sole shareholder Elenia Oy during 2020-2023. The equity
repayment was done from Unrestricted equity and was trans-
ferred to short-term payables in December 2020.
Equity investment and common control reserve
In 2022 or 2023 there were no restructurings.
EUR 1,000
2023
2022
Unrestricted equity 1 Jan
-548,843
-548,843
Unrestricted equity 31 Dec
-548,843
-548,843
Retained earnings
The change in retained earnings of 17 336 thousand euros for
the fiscal year 2023 is due to group contribution received from
Elenia Oy. The change in retained earnings of 20 704 thousand
euros for the fiscal year 2022 consists of the group contribution
received from Elenia Oy.
Earnings per share
Earnings per share are calculated by dividing the profit or loss at-
tributable to equity holders of the parent by the average number
of shares during the reporting period:
EUR
2023
2022
Profit attributable to equity holders of
the parent, EUR
55,654,083
56,029,046
Average number of shares, pcs
90
90
Earnings/share, EUR - basic = diluted
618,379
622,545
34
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
5 CONSOLIDATION
5.1 BASIS OF CONSOLIDATION
The consolidated financial statements comprise the parent com-
pany Elenia Oy and its subsidiaries which the Group controls.
Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has
ability to affect those returns through its power over the inves-
tee. The consolidated financial statements also include, as asso-
ciated companies, any companies over which the Group has sig-
nificant influence. Significant influence generally involves a
shareholding of over 20% of the voting rights or when the Group
has the power to participate in the financial and operating policy
decisions of the investee but has not control or joint control over
those policies.
Subsidiaries are included in the consolidated financial state-
ments using the acquisition cost method. The acquisition cost is
measured as the aggregate of the fair value of the assets given
and liabilities incurred or assumed at the date of exchange. Costs
related to acquisitions are recorded on the consolidated state-
ment of profit or loss as other operating expenses. The excess of
the cost of acquisition over the fair value of the Group’s share of
the net assets acquired is recorded as goodwill. Subsidiaries are
fully consolidated from the date on which control is transferred
to the Group.
Intercompany transactions, receivables and debts are elimi-
nated in the consolidated financial statements.
Where necessary, the accounting policies of subsidiaries
have been changed to ensure consistency with the accounting
policies adopted by the Group.
As at 31 December 2023, the subsidiaries do not have non-
controlling interests.
5.2 BUSINESS COMBINATIONS AND GOODWILL
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the aggregate
of the consideration transferred, which is measured at acquisi-
tion date fair value and the amount of any non-controlling inter-
est in the acquiree. For each business combination, the Group
elects whether to measure the non-controlling interest in the ac-
quiree at fair value or at the proportionate share of the ac-
quiree’s identifiable net assets. Acquisition-related costs are ex-
pensed as incurred and included in administrative expenses.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition
date. This includes the separation of embedded derivatives in
host contracts by the acquiree.
If the business combination is achieved in stages, the previ-
ously held equity interest is remeasured at its acquisition date
fair value and any resulting gain or loss is recognised in the state-
ment of profit or loss. It is then considered in the determination
of goodwill. Any contingent consideration to be transferred by
the acquirer will be recognised at fair value at the acquisition
date. Contingent consideration classified as an asset or liability
that is a financial instrument and within the scope of IFRS 9 Fi-
nancial Instruments, is measured at fair value with changes in
fair value recognised either in the statement of profit or loss or
as a change to other comprehensive income. If the contingent
consideration is not within the scope of IFRS 9, it is measured in
accordance with the appropriate IFRS. Contingent consideration
that is classified as equity is not remeasured and subsequent set-
tlement is accounted for within equity.
Goodwill is initially measured at cost, being the excess of the
aggregate of the consideration transferred and the amount rec-
ognised for non-controlling interests, and any previous interest
held, over the net identifiable assets acquired and liabilities as-
sumed. If the fair value of the net assets acquired is in excess of
the aggregate consideration transferred, the Group re-assesses
whether it has correctly identified all of the assets acquired and
all of the liabilities assumed and reviews the procedures used to
measure the amounts to be recognised at the acquisition date. If
the reassessment still results in an excess of the fair value of net
assets acquired over the aggregate consideration transferred,
then the gain is recognised in the consolidated statement of
profit or loss.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash-generat-
ing units that are expected to benefit from the combination, irre-
spective of whether other assets or liabilities of the acquiree are
assigned to those units.
Where goodwill has been allocated to a cash-generating unit
and part of the operation within that unit is disposed of, the
goodwill associated with the disposed operation is included in
the carrying amount of the operation when determining the gain
or loss on disposal. Goodwill disposed in these circumstances is
measured based on the relative values of the disposed operation
and the portion of the cash-generating unit retained.
5.3 ACQUISITIONS AND DISPOSALS
In 2023 or 2022 there were no business disposals. In 2023 and
2022 there were no acquisitions to be accounted for as business
combinations.
35
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
5.4 OTHER CHANGES IN ACCOUNTING POLICIES AND
DISCLOSURES / NEW AND AMENDED STANDARDS AND
INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE
5.4.1 Changes in accounting policies and disclosures
The Group applied for the first-time certain standards and
amendments which are effective for annual periods beginning on
or after 1 January 2023. The nature of each new standard and
amendment adopted by the Group has been described in the rel-
evant note. New standards and amendments not material for the
Group have been described below:
AMENDMENTS TO IAS 1 PRESENTATION OF FINANCIAL
STATEMENTS: CLASSIFICATION OF LIABILITIES AS CURRENT
OR NON-CURRENT AND CLASSIFICATION OF LIABILITIES AS
CURRENT OR NON-CURRENT
The amended standard has been effective for annual periods be-
ginning on or after 1 January 2023, early application was permit-
ted.
The amendments clarify a criterion in IAS 1 for classifying a
liability as non-current: the requirement for an entity to have the
right to defer settlement of the liability for at least 12 months af-
ter the reporting period.
The amendments do not have a material impact on the con-
solidated financial statements.
AMENDMENTS TO IAS 8 DEFINITION OF ACCOUNTING ESTI-
MATES
The amended standard has been effective for annual periods be-
ginning on or after 1 January 2023, early application was permit-
ted.
The amendments clarify the definitions of accounting esti-
mates. After implementing the changes the standard more
clearly distinguish between accounting estimates, changes in ac-
counting policies and correction of errors.
The amendments do not have a material impact on the con-
solidated financial statements.
AMENDMENTS ON IAS 1 DISCLOSURE OF ACCOUNTING
POLICIES
The amended standard has been effective for annual periods be-
ginning on or after 1 January 2023, early application was permit-
ted.
The amendments include a requirement for entities to dis-
close their material accounting policies rather that their signifi-
cant accounting policies. Also guidance and examples have been
added to support the recognition of material accounting policies.
The amendments do not have a material impact on the con-
solidated financial statements.
AMENDMENTS ON IAS 12 DEFERRED TAX RELATED TO AS-
SETS AND LIABILITIES ARISING FROM A SINGLE TRANSAC-
TION
The amended standard has been effective for annual periods be-
ginning on or after 1 January 2023, early application was permit-
ted.
The amendments clarify the recognition of deferred tax
when an entity accounts for transactions, such as leases or de-
commissioning obligations, by recognizing both an asset and a li-
ability.
The amendments do not have a material impact on the con-
solidated financial statements.
5.4.2 New and amended standards and interpretations is-
sued but not yet effective
Certain new and amended standards and interpretations are is-
sued but not yet effective up to the date of issuance of the con-
solidated financial statements. The Group intends to adopt these
standards, amendments and interpretations, if applicable, when
they become effective. The nature of each new standard and
amendment to be adopted by the Group has been described in
the relevant note. New standards and amendments which have
been issued but are not yet effecetive nor material for the Group
have been described below:
AMENDMENTS ON IFRS 16: LEASE LIABILITY IN SALEA AND
LEASEBACK
The amended standards will be effective for annual periods be-
ginning on or after 1 January 2024 with early adoption permit-
ted.
The changes affect how the seller-lessee handles the variable
rental payments arising in a sale and leaseback transaction. With
the changes, a new variable payment accounting model will be
introduced, which requires that seller-lessees reevaluate and
possibly correct sales and leaseback transactions made since
2019.
The amendments do not have a material impact on the con-
solidated financial statements.
AMENDMENTS ON IAS 1: CLASSIFICATION OF LIABILITIES AS
CURRENT OR NON-CURRENT LIABLITIES WITH COVENANTS
The amended standards will be effective for annual periods be-
ginning on or after 1 January 2024 with early adoption permit-
ted.
The amendments clarify the financial statement information
that entities provide in a situation where the right to postpone
the payment of the debt requires fulfilling the covenant condi-
tions during the twelve months following the reporting date. En-
tities must present information that enables the user of the fi-
nancial statements to understand the risk that the debt may be
settled within twelve months from the end of the reporting pe-
riod. The amendments do not have a material impact on the con-
solidated financial statements.
REGULATORY ASSETS AND REGULATORY LIABILITIES:POS-
SIBLE NEW STANDARD
The International Accounting Standards Board published in Jan-
uary 2021 an exposure draft on Regulatory Assets and Regula-
tory Liabilities. The Exposure Draft sets out the IASB’s proposals
for a model to account for regulatory assets and regulatory
liabilities. If issued as a new IFRS Standard, the proposals would
replace IFRS
14
Regulatory Deferral Accounts
. The IASB discussed
feedback on the Exposure Draft during October and November
2021 and will begin redeliberating the proposals in the Exposure
Draft at a future meeting.
Group is following closely the development of this initiative
and evaluating impacts.
36
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
6 OTHER NOTES
6.1 TAXES
6.1.1 Income taxes
ACCOUNTING POLICY
INCOME TAXES
Current income tax assets and liabilities for the current pe-
riod are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and
tax laws used to compute the amount are those that are en-
acted or substantively enacted, at the reporting date in the
countries where the Group operates and generates taxable
income.
Current income tax relating to items recognised directly
in equity is recognised in equity and not in the consolidated
statement of profit or loss. Management periodically evalu-
ates positions taken in the tax returns with respect to situa-
tions in which applicable tax regulations are subject to inter-
pretation and establishes provisions where appropriate.
SIGNIFICANT ACCOUNTING JUDGEMENTS,
ESTIMATES AND ASSUMPTIONS
INCOME TAXES
Uncertainties exist with respect to the interpretation of
complex tax regulations, changes in tax laws, and the
amount and timing of future taxable income. Given the long-
term nature and complexity of existing contractual agree-
ments, differences arising between the actual results and
the assumptions made, or future changes to such assump-
tions, could necessitate future adjustments to the tax esti-
mation.
The Group companies establish provisions based on rea-
sonable estimates. In the case that the final taxes are differ-
ent than the amounts initially recognized, these differences
will affect income tax and provisions for deferred tax during
the year when the determination of tax differences took
place. Management estimates that the estimated tax shown
in the consolidated financial statement represent a reasona-
ble estimate of the Group's tax position.
The major components of income tax expense for the
years ended 31 December 2023 and 2022 are:
CONSOLIDATED STATEMENT OF PROFIT
AND LOSS
EUR 1,000
2023
2022
Current income tax charge
-2,504
-2,501
Adjustments in respect of current income tax
of previous periods
1
-3
Deferred taxes
-16,031
-16,373
Income tax expense reported in the consoli-
dated statement of profit or loss
-18,534
-18,877
CONSOLIDATED STATEMENT OF OCI
EUR 1,000
2023
2022
Deferred tax related to items recognised in
OCI during the year:
Remeasurement gains (losses) on defined
benefit plans
3
-39
Deferred tax charged to OCI
3
-39
INCOME TAX RATE
Tax on profit before tax deviates from the nominal tax calculated ac-
cording to the tax rate as follows:
EUR 1,000
2023
2022
Profit before tax
74,199
74,751
Theoretical income tax using the nominal tax
rate of 20.0% (2022: 20.0%)
-14,840
-14,950
- tax-free income items
0
-60
- expenses that are non-deductible in taxation
-229
278
- adjustment of taxes based on previous peri-
ods
1
-3
- deductible expenses not recorded in profit
and loss (group contribution)
-3,466
-4,141
Income tax in the income statement
-18,534
-18,877
Effective tax rate was 25% (2022: 25%)
37
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
6.1.2 Deferred tax
ACCOUNTING POLICY
DEFERRED TAX
Deferred tax is provided using the liability method on tempo-
rary differences between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes at
the reporting date.
Deferred tax liabilities are recognised for all taxable tempo-
rary differences, except:
◾
When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a transac-
tion that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor
taxable profit or loss.
◾
In respect of taxable temporary differences associated
with investments in subsidiaries, associates and interests
in joint ventures, when the timing of the reversal of the
temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the fore-
seeable future.
Deferred tax assets are recognised for all deductible tempo-
rary differences, the carry forward of unused tax credits and
any unused tax losses. Deferred tax assets are recognised to
the extent that it is probable that taxable profit will be availa-
ble against which the deductible temporary differences, and
the carry forward of unused tax credits and unused tax losses
can be utilised, except:
◾
When the deferred tax asset relating to the deductible
temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects nei-
ther the accounting profit nor taxable profit or loss.
◾
In respect of deductible temporary differences associated
with investments in subsidiaries, associates and interests
in joint ventures, deferred tax assets are recognised only
to the extent that it is probable that the temporary differ-
ences will reverse in the foreseeable future and taxable
profit will be available against which the temporary differ-
ences can be utilized.
The carrying amount of deferred tax assets is reviewed at
each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available
to allow all or part of the deferred tax asset to be utilised. Un-
recognised deferred tax assets are reassessed at each report-
ing date and are recognised to the extent that it has become
probable that future taxable profits will allow the deferred tax
asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the
reporting date.
Deferred tax relating to items recognised outside the state-
ment of profit or loss is recognised outside the statement of
profit or loss. Deferred tax items are recognised in correlation
to the underlying transaction either in other comprehensive in-
come or directly in equity.
The Group offsets deferred tax assets and deferred tax lia-
bilities if, and only if, it has a legally enforceable right to set off
current tax assets and current tax liabilities and the deferred
tax assets and deferred tax liabilities relate to income taxes
levied by the same taxation authority on either the same taxa-
ble entity or different taxable entities which intend either to
settle current tax liabilities and assets on a net basis, or to real-
ise the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax lia-
bilities or assets are expected to be settled or recovered.,
ACCOUNTING JUDGEMENTS
DEFERRED TAX
The Group recognizes deferred tax assets by taking into ac-
count their recoverability, based on the existence of de-
ferred tax liabilities with similar maturities for netting and
the possibility of generation of sufficient future taxable
profits. The management assessed the deferred tax booked
in the financial statements to be recoverable.
The estimations and the actual flows of taxes paid or re-
ceived could differ from the estimates made by the Group as
a result of unforeseen future legal changes in estimates.
ACCOUNTING ESTIMATES
DEFERRED TAX
The Group has deferred tax assets and liabilities which are
expected to be realised through the consolidated statement
of profit or loss over certain periods of time in the future.
The calculation of deferred tax assets and liabilities involves
making certain assumptions and estimates regarding the fu-
ture tax consequences attributable to differences between
the carrying amounts of assets and liabilities as recorded in
the financial statements and their tax basis.
38
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
CHANGE IN DEFERRED TAX ASSETS AND LIABILITIES IN 2023
Deferred tax assets
Balance
sheet 1
Jan 2023
Recognised in
the statement of
profit or loss
Recognised in
other compre-
hensive income
Balance
sheet 31 Dec
2023
EUR 1,000
Defined benefit plans
49
-10
0
39
Liabilities related to contracts with cus-
tomers
8,086
1,813
0
9,899
Finance leases
53
-42
0
11
Cloud computing arrangements
0
18
0
18
Total
8,188
1,779
0
9,967
Deferred tax assets
8,188
9,967
Deferred tax liabilities
Balance
sheet 1
Jan 2023
Recognised in
the statement of
profit or loss
Recognised in
other compre-
hensive income
Balance
sheet 31 Dec
2023
EUR 1,000
Interest-bearing liabilities
1,101
-152
0
949
Depreciation differences
101,711
22,272
0
123,983
Measurement of assets at fair value in
acquisition
54,076
-4,314
0
49,762
Total
156,888
17,806
0
174,694
Deferred tax liabilities
156,888
174,694
CHANGE IN DEFERRED TAX ASSETS AND LIABILITITES IN 2022
Deferred tax assets
Balance
sheet 1
Jan 2022
Recognised in
the statement of
profit or loss
Recognised in
other compre-
hensive income
Balance
sheet
31 Dec2022
EUR 1,000
Defined benefit plans
91
-3
-39
49
Liabilities related to contracts with cus-
tomers
6,201
1,884
0
8,086
Finance leases
181
-128
0
53
Total
6,473
1,753
-39
8,188
Deferred tax assets
6,473
8,188
Deferred tax liabilities
Balance
sheet 1
Jan 2022
Recognised in
the statement of
profit or loss
Recognised in
other compre-
hensive income
Balance
sheet
31 Dec2022
EUR 1,000
Interest-bearing liabilities
1,306
-205
0
1,101
Depreciation differences
79,081
22,629
0
101,711
Measurement of assets at fair value in
acquisition
58,375
-4,299
0
54,076
Total
138,762
18,125
0
156,888
Deferred tax liabilities
138,762
156,888
39
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
6.2 PENSIONS AND OTHER POST-EMPLOYMENT
BENEFITS
ACCOUNTING POLICY
PENSION OBLIGATIONS
Pension arrangements are categorised as defined benefit or
defined contribution plans. Under defined contribution
plans, the Group pays fixed pension contributions and has
no legal or constructive obligation to make additional pay-
ments. This category includes the Finnish Statutory Employ-
ment Pension Scheme (TyEL). Payments relating to defined
contribution pension plans are recognised in the consoli-
dated statement of profit or loss under personnel expenses
for the period in which they are due. For defined benefit
plans, pension costs are assessed using the projected unit
credit method. The cost of providing pensions is recorded in
the consolidated statement of profit or loss as to spread the
service cost over the service lives of employees. The defined
benefit obligation is calculated annually on the reporting
date and is measured as the present value of the estimated
future cash flows.
The Group applies the IAS 19 standard to calculations on
defined benefit pension plans. Under this standard, all actu-
arial gains and losses are recognised in the period in which
they occur in total in other comprehensive income and the
net defined benefit liability or asset is presented in full on
the consolidated statement of financial position. The ex-
pected return on plan assets is calculated using the same
discount rate as applied for discounting the benefit obliga-
tion to its present value. Current and past service costs as
well as net interest on net defined benefit liability is rec-
orded in the consolidated statement of profit or loss. Items
arising from the remeasurement of the net defined benefit
liability are recognised in consolidated statement of other
comprehensive income. The Group has defined contribution
pension plans concerning additional pensions. The benefits
are insured with an insurance company.
The benefits include both defined benefit (DB) and de-
fined contribution (DC) parts as defined in IAS 19. In the fol-
lowing tables, figures are presented for DB part of the plan.
Items recognised on the consolidated statement of financial po-
sition at 31 December:
EUR 1,000
2023
2022
Items recognised on the consolidated statement
of financial position at 31 December
Current value of funded obligations
1,557
1,625
Fair value of assets
-1,365
-1,381
Deficit
192
244
Value of the obligation on the consolidated
statement of financial position
192
244
The obligations of defined benefit pension plans have changed as
follows:
EUR 1,000
2023
2022
Obligation at the beginning of the year
1,625
2,659
Interest expenses
60
18
Actuarial losses
48
-597
Settlements
0
-270
Benefits paid
-175
-184
Obligation at the end of the year
1,557
1,625
The fair value of the assets of defined benefit pension plans has
developed as follows:
EUR 1,000
2023
2022
Fair value of plan assets at the beginning of the
year
1,381
2,206
Expected income from assets
50
15
Actuarial gains
35
-404
Settlements
0
-264
Payments by the employer
74
13
Benefits paid
-175
-184
Fair value of plan assets at the end of the year
1,365
1,381
The obligation in the consolidated statement of financial position
consists of the following items:
EUR 1,000
2023
2022
Obligation at the beginning of the year
244
453
Net cost recognised in the statement of profit or
loss
9
-2
Payments by the employer
-74
-13
Profits and losses recognised in other compre-
hensive income
13
-193
Value of the obligation at year end
192
244
Items recognised in the consolidated statement of profit or loss:
EUR 1,000
2023
2022
Expenses based on service in the reporting year
0
-5
Interest income
-50
-15
Interest expenses
60
18
Total
9
-2
Items recognised in the consolidated statement of other compre-
hensive income for the year:
EUR 1,000
2023
2022
Actuarial gains/(losses) on assets
-35
404
Actuarial gains/(losses) on obligations
48
-597
Total
13
-193
40
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
Sensitivity analysis of defined benefit pension plans
The following table shows how the discount rate affects to projected benefit obligation, related
service cost and interest cost.
2023
Assumption
EUR 1,000
Defined bene-
fit obligations
Fair value of
Plan assets
Net Liability
Net interest
Discount rate 4.1%
1,557
1,365
192
6
0.5% increase
1,488
1,310
178
6
0.5% decrease
1,633
1,424
209
6
2022
Assumption
EUR 1,000
Defined bene-
fit obligations
Fair value of
Plan assets
Net Liability
Net interest
Discount rate 3,9 %
1,625
1,381
244
9
0.5% increase
1,553
1,327
226
10
0.5% decrease
1,704
1,440
265
9
41
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
As the defined benefit plans are managed by an external insur-
ance company, it is not possible to present a division of the fair
values of the plan assets.
Expected contributions for 2024 are estimated to be EUR 78
thousand.
The weighted average duration of defined benefit obligation
is 10-13 years.
The following table shows the maturity profile of the future
benefit payments.
EUR 1,000
2023
2022
Under 1 year
185
197
1-10 years
959
997
10-20 years
697
686
20-30 years
410
412
Over 30 years
235
246
Total
2,486
2,537
ACTURIAL ASSUMPTIONS USED IN CALCULATIONS
%
2023
2022
Discount rate
4.1 %
3.9 %
Estimate of salary increases
2.7 %
2.6 %
Inflation
2.5 %
2.4 %
6.3 RELATED PARTY DISCLOSURES
In accordance with IAS 24, related parties include the board of
directors, CEO and other members of the Elenia Oy group's man-
agement team, the head of the Elenia Oy group's procurement
and development unit, their close family members, and entities in
which the above-mentioned persons directly or indirectly exer-
cise control. In addition, related parties include Elenia's signifi-
cant shareholders who own more than 20 percent of the compa-
ny's shares or the combined number of votes of all shares.
The company maintains lists of related parties. The company
has guidelines for identifying related party transactions of enti-
ties identified in the related party register, and they are obliged
to notify the company in advance of their planned contracts and
legal actions with companies belonging to the group, if the value
of the transaction exceeds EUR 5,000.00. In addition, they are
asked annually to confirm the related party activities that have
been carried out. Related party transactions that are not part of
the company's normal business or are made outside of the usual
commercial terms are handled in the company in accordance
with the applicable related party administration guidelines.
Shareholders
All of the shares in Elenia Verkko Oyj are owned by a Finnish
company, Elenia Oy.
owned by a consortium of infrastructure investors: Société
Foncière Européenne B.V.(SFE) and Allianz Infrastructure Lux-
embourg I S.à r.l. (AIL), Lynx Elton S.à r.l. (Lynx Elton), Allianz Eu-
ropean Infrastructure Acquisition Holding S.à r.l. (AEIAH), Elton
Ventures S.à r.l., Manco Investment Oy and Valtion Eläkerahasto
(VER).
SFE and AIL are fully indirect subsidiaries of Allianz SE, and
therefore members of the Allianz Group. AEIAH is an investment
vehicle of the Allianz European Infrastructure Fund S.A. RAIF
(AEIF), a fund managed by Allianz Capital Partners (ACP) and
Lynx Elton is a vehicle managed by CapMan Infra and advised by
ACP. Elton Ventures S.à r.l. is an entity managed by Macquarie
Infrastructure and Real Assets (Europe) Limited (MIRA) and
whose majority shareholder is Macquarie Super Core Infrastruc-
ture Fund SCSp. Manco Investment Oy is owned by five Elenia's
key management persons.
SUBSIDIARIES AND ASSOCIATES
Elenia Verkko Group was formed on January 1, 2020 as a result
of corporate restrucutrings. Elenia Verkko Oyj owns all the
shares in Elenia Innovations Oy.
SENIOR MANAGEMENT
Elenia Verkko Oyj is managed by its Board of Directors. Elenia's
senior management includes the Board of Directors and the
CEO. Elenia Group has not had any business transactions with
persons included in its senior management and Elenia Group has
not granted loans to these persons.
Five of the key management persons have invested into Elton
Investment S.à r.l. which is the ultimate owner of Elenia Oy. The
management investment is channelled through a management
owned holding company Manco Investment Oy, which owns ap-
proximately 0.3% of Elton Investment S.à r.l. after the arrange-
ment. The equity investment has been made at fair market val-
ues.
MANAGEMENT TEAM
Management team of Elenia Verkko Oyj's parent company
Elenia Oy is included within the scope of the long-term incentive
plan. Description of the long-term incentive plan has been dis-
closed in note 2.3.3
42
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
BUSINESS TRANSACTIONS
All transactions with related parties take place in an arm's length
manner.
Group companies have no intercompany transactions but
Elenia Verkko Oyj has transaction with a parent company Elenia
Oy and upper Finnish entity Elenia Group Oy. Transactions are
related to internal services and construction provided by Elenia
Oy and Elenia Group Oy to Elenia Verkko Oyj.
During the fiscal year 2023, the group did not have any long-
term loans with related parties.
The meeting of Elenia Oy's shareholders decided on 13 No-
vember 2020 the equity repayment of €550.0m based on the in-
terim financial statements as of September 30, 2020 to its sole
shareholder Elenia Investment S.à r.l. during 2020-2023. During
financial year 2023 the payment period was extended until end
of 2025.
The equity repayment was done from Unrestricted equity
and was transferred to short-term payables in December 2020.
The following table includes the specification of equity repay-
ments from 2021 to 2023.
Unrestricted eq-
uity repayment li-
ability 1 Jan 2021
Decrease during
2021-2023
Unrestricted eq-
uity repayment li-
ability 31 Dec
2023
EUR 1,000
Elenia Oy
550,000
506,553
43,447
Total
43
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
6.4 EVENTS AFTER THE REPORTING PERIOD
The bonds issued by Elenia Verkko Oyj are rated by S&P Global Ratings (“S&P”). S&P downgraded
the rating to BBB (stable) at the end of January 2022 as a result of the changes in the regulatory
methods in the middle of the regulatory period. After the new methods became effective from 1 Ja-
nuary 2024, S&P placed Elenia on a negative credit watch on 10 January 2024. The outcome of
S&P’s assessment of Elenia is still uncertain at the time of this report.
In January, Elenia appealed to the Market Court to repeal the decision of the Energy Authority
with regard to the key aspects of the regulatory methods for 2024-2027 and 2028-2031. The out-
come of the appeal is expected in the next 2-4 years. Concurrently, Elenia has also the previous Mar-
ket Court appeal in process with regards to sudden mid-period regulatory changes for 2022 and
2023, and the ruling is expected to be received within the next 12-18 months.
Jorma Myllymäki has been nominated as CEO of Elenia Oy, effective from 1 April 2024. Tapani
Liuhala has been elected as the Chairman of the Board of Elenia Oy, effective from 1 April 2024.
Tommi Valento has been nominated as member of the Board of Elenia Oy, effective from 1 April
2024.
44
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
6.5
CONSOLIDATED STATEMENT OF PROFIT OR LOSS (ADJUSTED FOR COMPARABILITY)
ACCOUNTING POLICY
COMPARABILITY WITH PREVIOUS YEAR FIGURES
.
EUR 1,000
Note
1 Jan - 31 Dec 2023
1 Jan - 31 Dec 2022
Revenue
2.1.1
316,606
308,552
Items affecting comparability included in revenue
-3,295
-626
Other operating income
2.2.1
1,504
2,328
Items affecting comparability included in other operating income
0
347
Materials and services
-73,792
-82,267
Employee benefit expenses
2.3.3
-3,809
-3,526
Other operating expenses
2.3.1
-27,292
-21,977
Operating expenses Total
-104,893
-107,770
Items affecting comparability included in operating expenses
1,587
-1,206
EBITDA
213,216
203,110
EBITDA before Items affecting comparability
214,925
204,594
Depreciation and amortisation
3
-92,854
-88,627
Operating profit
120,363
114,482
Operating profit before Items affecting comparability
122,071
115,967
The purpose of the table is to illustrate the underlying profitabil-
ity of the business without any items affecting comparability (de-
fined in the finance documentation as “exceptional, one off, non-
recurring or extraordinary items”). The financial covenants re-
lated to Group’s financing are calculated excluding Exceptional
Items.
In 2023 in total EUR 1 709 thousand was recognised as items
affecting comparability. This amount consists of exceptional net-
work losses of EUR 17 328 thousand, costs that relate to legal
actions due to regulatory changes of EUR 225 thousand, tempo-
rary rebate to customers of EUR 19 431 thousand, temporary
network upstream cost rebate of EUR 3 295 thousand and in-
creased costs of electricity used in substations EUR 292 thou-
sand.
The maximum monthly average electricity price in Finland
during the previous 10-year period was 57 €/MWh as per June
2021. On this basis, costs from network losses exceeding 60
€/MWh on a monthly basis are treated as exceptional. Finland’s
transmission system operator, Fingrid did not invoice grid ser-
vice fees from distribution system operators from December
2022. Based on the company’s announcement in October 2022,
the rebate, which will be granted also for 3-6 months in 2023, is
the result of significantly higher than expected congestion in-
come caused by electricity price differences at Finland’s board-
ers. Rebate was granted for six months in 2023. Elenia’s distribu-
tion revenue decreased correspondingly by the proportion of
grid service fees invoiced directly from customers connected to
Elenia’s high voltage network.
In 2022 in total EUR 1 485 thousand was recognised as items
affecting comparability. This amount consists of exceptional net-
work losses of EUR 7 005 thousand, costs that relate to legal ac-
tions due to regulatory changes of EUR 229 thousand, tempo-
rary rebate to customers of EUR 626 thousand, temporary net-
work upstream cost rebate of EUR 4 482 thousand, compensa-
tion related to a bankruptcy of EUR 347 thousand and decrease
in connection fee related provision due do increase in market
rates of EUR 1 546 thousand.
45
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
PARENT COMPANY
FINANCIAL STATEMENTS (FAS)
46
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
PARENT COMPANY INCOME STATEMENT
EUR
Notes
1 Jan - 31 Dec 2023
1 Jan - 31 Dec 2022
Revenue
1.1
326,264,136.09
318,272,620.67
Other operating income
1.2
1,503,792.93
2,328,466.75
Materials and services
1.3
-73,792,084.56
-82,266,814.13
Personnel expenses
1.4
-3,882,588.08
-3,544,567.02
Depreciation, amortisation and impairment
1.5
-161,851,539.70
-156,686,092.64
Other operating expenses
1.6
-27,267,977.19
-25,424,487.29
Operating profit
60,973,739.49
52,679,126.34
Finance income and expenses
1.7
-45,382,189.46
-38,696,748.50
Profit / loss before appropriations and taxes
15,591,550.03
13,982,377.84
Appropriations
1.8
Change in accelerated depreciations
-111,362,112.43
-113,147,000.00
Group contributions
17,336,000.00
20,703,500.00
Income taxes
1.9
1,754,757.66
1,754,168.02
Profit / loss for the year
-76,679,804.74
-76,706,954.14
47
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
PARENT COMPANY BALANCE SHEET
EUR
Notes
31 Dec 2023
31 Dec 2022
ASSETS
Non-current assets
Intangible assets
2.1
Intangible rights
22,449,136.77
22,778,056.98
Goodwill
2,043,837,295.10
2,099,832,837.50
Other capitalized long term expenditure
20,058,141.34
18,922,324.39
2,086,344,573.21
2,141,533,218.87
Tangible assets
2.2
Land and water areas
2,174,123.88
2,144,088.88
Buildings and constructions
248,129.97
259,400.00
Network
2,124,845,487.04
2,110,056,870.27
Machinery and equipments
44,465,200.35
25,451,078.83
Other tangible assets
222.80
795.44
Advance payments and construction in progress
19,352,342.95
20,145,983.33
2,191,085,506.99
2,158,058,216.75
Investments
2.3
Other shares and holdings
194,229.69
194,229.69
194,229.69
194,229.69
Total non-current assets
4,277,624,309.89
4,299,785,665.31
EUR
Notes
31 Dec 2023
31 Dec 2022
Current assets
Long-term receivables
2.4
Loan receivables
2,373,707.39
731,828.84
2,373,707.39
731,828.84
Short-term receivables
2.4
Trade receivables
19,330,013.96
17,986,726.25
Receivables from group companies
17,394,771.35
20,903,451.51
Other receivables
468,211.08
474,497.55
Prepayments and accrued income
43,087,772.63
38,500,127.14
80,280,769.02
77,864,802.45
Cash and cash equivalents
2.4
60,161,110.56
51,153,571.67
Total current assets
142,815,586.97
129,750,202.96
TOTAL ASSETS
4,420,439,896.86
4,429,535,868.27
48
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
PARENT COMPANY BALANCE SHEET
EUR
Notes
31 Dec 2023
31 Dec 2022
EQUITY AND LIABILITIES
Capital and reserves
3.1
Subscribed capital
80,000.00
80,000.00
Non restricted equity
1,657,400,000.00
1,657,400,000.00
Retained earnings
-163,760,780.28
-87,053,826.14
Profit / Loss for the financial year
-76,679,804.74
-76,706,954.14
1,417,039,414.98
1,493,719,219.72
Cumulative accelerated depreciations
3.2
619,915,622.10
508,553,509.67
Liabilities
3.3
Non-current liabilitites
Connection fees
201,742,349.81
202,334,106.49
Bonds and notes
1,689,500,000.00
1,689,500,000.00
Loans from financial institutions
250,000,000.00
150,000,000.00
Deferred tax liabilities
93,679,462.81
97,937,620.21
2,234,921,812.62
2,139,771,726.70
Current liabilities
Trade payables
4,379,866.44
5,639,368.07
Liabilities to group companies
79,575,498.84
226,558,894.55
Other short-term liabilities
36,459,360.79
27,912,796.46
Accruals and deferred income
28,148,321.09
27,380,353.10
148,563,047.16
287,491,412.18
Total liabilities
2,383,484,859.78
2,427,263,138.88
TOTAL EQUITY AND LIABILITIES
4,420,439,896.86
4,429,535,868.27
49
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
PARENT COMPANY CASH FLOW STATEMENT
EUR
1 Jan - 31 Dec 2023
1 Jan - 31 Dec 2022
Cash flow fron operating activities
Profit / Loss before appropriations and taxes
15,591,550.03
13,982,377.84
Adjustments
Depreciation, amortisation and impairment
161,851,539.70
156,686,092.64
Finance income and expenses
45,382,189.46
38,696,748.50
Other adjustments
0.00
-358,774.74
Cash flow before change in working capital
222,825,279.19
209,006,444.24
Change in working capital:
Increase (-) / decrease (+) in non-interest bearing re-
ceivables
-9,946,677.72
12,707,850.87
Increase (+) / decrease (-) in non-interest bearing liabili-
ties
-9,376,252.30
1,959,787.67
Operating cash flow before financial items and taxes
203,502,349.17
223,674,082.78
Interest payments
-42,186,123.18
-36,657,987.57
Interests received
2,318,479.19
257,357.14
Payments for other finance items
-2,555,981.04
-2,002,888.85
Connection fee refunds
591,756.68
302,342.36
Taxes paid
346,587.02
-5,353,976.14
Cash flow from operating activities
162,017,067.84
180,218,929.72
EUR
1 Jan - 31 Dec 2023
1 Jan - 31 Dec 2022
Cash flow from investing activities
Capital expenditures
-139,719,533.25
-178,126,982.19
Proceeds from disposals of investments
6,504.30
4,220,501.66
Cash flow from investing activities
-139,713,028.95
-173,906,480.53
Cash flow from financing activities
Proceeds from long-term borrowings
100,000,000.00
0.00
Equity repayment
-134,000,000.00
-27,000,000.00
Group contributions received and paid
20,703,500.00
0.00
Cash flow from financing activities
-13,296,500.00
-27,000,000.00
Change in cash and cash equivalents
9,007,538.89
-20,687,550.81
Cash and cash equivalents 1 Jan
51,153,571.67
71,841,122.48
Cash and cash equivalents 31 Dec
60,161,110.56
51,153,571.67
In the balance sheet, the group bank account is presented as receivables from group companies, and in the cash
flow statement as liquid assets.
50
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
ACCOUNTING PRINCIPLES
The financial statements of Elenia Oy have been prepared in ac-
cordance with the Finnish Accounting Standards (FAS).
Transactions denominated in foreign currencies and deriva-
tive agreements
Transactions denominated in foreign currencies are recognised
at the rate prevailing at the time of the transaction. At the bal-
ance sheet date the receivables and liabilities in balance sheet
denominated in foreign currencies are converted to Euro using
the exchange rate prevailing at the balance sheet date. The pos-
sible currency exchange rate differences are recognised in fi-
nance income or costs or other operating costs in accordance
with the underlying item.
Presentation of bank balances
The company's group bank account is presented as either an
asset or liability from/to entities within the same group.
Deferred tax liabilities and receivables
Deferred tax liabilities or assets have been calculated for tempo-
rary differences between taxation and the financial statements
using the tax rate established at the balance sheet date for the
following years. The balance sheet includes the deferred tax lia-
bility in its entirety and the deferred tax asset in the amount of
the estimated probable receivable
Intangible and tangible assets
For tangible and intangible assets have been used direct acquisi-
tion prices which have been deducted with planned deprecia-
tions. Depreciations according to the plan are linear and are
based on the following assets economical lifetimes:
Intangible fixed assets
3–30 years
Goodwill
5–15 years
Other capitalized long term expenditures
5–25 years
Buildings and construction
15–50 years
Transmission network
25–40 years
Distribution network
10–30 years
Machinery and equipment
3–30 years
Connection fees are non-refundable and therefore they have
been booked as revenue in the profit and loss account.
1 NOTES TO INCOME STATEMENT
1.1 Revenue
EUR 1,000
2023
2022
Distribution income
313,149
305,818
Contracting income
2,375
1,569
Connection fee income
10,724
10,723
Other sales income
319
285
Outage compensation
-302
-122
Total
326,264
318,273
1.2 Other operating income
EUR 1,000
2023
2022
Revenue from collection of trade receiva-
bles
943
1,041
Other operating income
561
1,287
Total
1,504
2,328
51
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
1.3 Materials and services
EUR 1,000
2023
2022
Grid costs
-16,210
-35,074
Network losses
-32,862
-24,507
External services
-22,985
-20,844
Materials
-1,735
-1,841
Total
-73,792
-82,267
1.4 Personnel expenses
EUR 1,000
2023
2022
Salaries
-3,166
-2,958
Pension expenses
-642
-516
Other employee expenses
-75
-70
Total
-3,883
-3,545
Salaries and remuneration were not paid to CEO in 2023 or 2022.
Average number of personnel during the fi-
nancial year
75
75
1.5 Depreciations according to the
plan
EUR 1,000
2023
2022
Impairment
-2,351
-3,110
Intangible fixed assets
-1,119
-1,109
Goodwill
-55,996
-55,996
Other capitalized long term expenditure
-2,505
-2,127
Buildings and constructions
-12
-12
Network
-95,091
-91,088
Machinery and equipments
-4,779
-3,245
Total
-161,852
-156,686
1.6 Other operating expenses
EUR 1,000
2023
2022
Lease expenses
-955
-2,289
Other external services
-21,795
-19,547
Other operating expenses
-4,518
-3,589
Total
-27,268
-25,424
AUDIT CHARGES
EUR 1,000
2023
2022
Auditing fees
-160
-101
Fees for tax services
-6
-7
Fees for other services
-15
-6
Total
-181
-114
1.7 Financial income and expenses
EUR 1,000
2023
2022
Interest and other financial income
From group companies
0
6
Other interest and financial income
2,331
253
Total
2,331
258
Interest and other financial expenses
Interest expenses
-45,511
-37,016
Other financial expenses
-2,202
-1,939
Total
-47,713
-38,955
Total financial income and expenses
-45,382
-38,697
1.8 Appropriations
EUR 1,000
2023
2022
Change in accelerated depreciations
-111,362
-113,147
Group contribution received
17,336
20,704
Total
-94,026
-92,443
1.9 Income taxes
EUR 1,000
2023
2022
Income taxes for the financial period
-2,504
-2,501
Adjustment in income taxes for the previ-
ous periods
1
-3
Change in deferred taxes
4,258
4,258
Total
1,755
1,754
52
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
2 NOTES TO THE BALANCE SHEET ASSETS
2.1 Intangible assets
INTANGIBLE RIGHTS
EUR 1,000
2023
2022
Cost 1 Jan
39,678
38,441
Investments
790
1,237
Cost 31 Dec
40,469
39,678
Accumulated depreciation 1 Jan
-16,900
-15,791
Depreciation according to the plan
-1,119
-1,109
Book value 31 Dec
22,449
22,778
GOODWILL
EUR 1,000
2023
2022
Cost 1 Jan
2,259,730
2,259,730
Cost 31 Dec
2,259,730
2,259,730
Accumulated depreciation 1 Jan
-159,897
-103,902
Depreciation according to the plan
-55,996
-55,996
Book value 31 Dec
2,043,837
2,099,833
OTHER CAPITALIZED LONG-TERM EX-
PENDITURE
EUR 1,000
2023
2022
Cost 1 Jan
334,349
330,464
Investments
4,007
3,886
Disposals
-366
0
Cost 31 Dec
337,990
334,349
Accumulated depreciation 1 Jan
-315,427
-313,300
Depreciation according to the plan
-2,505
-2,127
Book value 31 Dec
20,058
18,922
2.2 Tangible assets
LAND AND WATER AREAS
EUR 1,000
2023
2022
Cost 1 Jan
2,145
2,105
Investments
30
41
Disposals
0
-1
Cost 31 Dec
2,175
2,145
Impairment
-1
-1
Book value 31 Dec
2,174
2,144
BUILDINGS AND CONSTRUCTIONS
EUR 1,000
2023
2022
Cost 1 Jan
3,119
3,119
Investments
7
0
Disposals
-7
0
Cost 31 Dec
3,119
3,119
Accumulated depreciation 1 Jan
-2,860
-2,849
Depreciation according to the plan
-11
-11
Book value 31 Dec
248
259
NETWORK
EUR 1,000
2023
2022
Cost 1 Jan
3,242,825
3,096,862
Investments
112,229
157,249
Disposals
-5,519
-11,286
Cost 31 Dec
3,349,535
3,242,825
Accumulated depreciation 1 Jan
-1,132,768
-1,046,617
Impairment
-2,350
-3,109
Disposals
5,519
8,045
Depreciation according to the plan
-95,091
-91,088
Book value 31 Dec
2,124,845
2,110,057
MACHINERY AND EQUIPMENT
EUR 1,000
2023
2022
Cost 1 Jan
84,227
69,711
Investments
23,793
14,516
Cost 31 Dec
108,020
84,227
Accumulated depreciation 1 Jan
-58,776
-55,531
Depreciation according to the plan
-4,779
-3,245
Book value 31 Dec
44,465
25,451
OTHER TANGIBLE ASSETS
EUR 1,000
2023
2022
Cost 1 Jan
56
56
Cost 31 Dec
56
56
Accumulated depreciation 1 Jan
-55
-55
Depreciation according to the plan
-1
-1
Book value 31 Dec
0
1
ADVANCE PAYMENTS AND CONSTRUCTION IN PRO-
GRESS
EUR 1,000
2023
2022
Cost 1 Jan
20,146
21,421
Increase
-384
448
Decrease
-410
-1,723
Book value 31 Dec
19,352
20,146
53
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
2.3 Investments
OTHER SHARES AND HOLDINGS
EUR 1,000
2023
2022
Cost 1 Jan
194
194
Book value 31 Dec
194
194
2.4 Receivables
LONG-TERM RECEIVABLES
EUR 1,000
2023
2022
Other receivables
2,374
732
Long-term receivables total
2,374
732
SHORT-TERM RECEIVABLES
Receivables from group companies
EUR 1,000
2023
2022
Accrued income
58
200
Group contribution receivables
17,336
20,704
Group bank account
Receivables from group companies total
17,395
20,903
External receivables
EUR 1,000
2023
2022
Trade receivables
19,330
17,987
Other short-term receivables
468
474
Accrued income
43,088
38,500
External receivables total
62,886
56,961
External accrued income
EUR 1,000
2023
2022
Sales accruals
42,474
35,539
Other accrued income and receivables
50
112
Income tax accruals
0
2,850
External accrued income total
43,088
38,500
Short term receivables total
80,281
77,865
Total receivables
82,654
78,597
Cash and cash equivalents
60,161
51,154
54
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
3 NOTES TO THE BALANCE SHEETS EQUITY AND LIABILI-
TIES
3.1 Capital and reserves
EUR 1,000
2023
2022
Subscribed capital
80
80
Non restricted equity 1 Jan
1,657,400
1,657,400
Non restricted equity 31 Dec
1,657,400
1,657,400
Retained earnings 1 Jan
-163,761
-87,054
Profit / Loss for the the financial year
-76,680
-76,707
Total capital and reserves
1,417,039
1,493,719
Distributable equity
1,416,959
1,493,639
3.2 Cumulative accelerated depreci-
ations
EUR 1,000
2023
2022
Cumulative accelerated depreciations
619,916
508,554
Accelerated depreciations include deferred tax liability
of EUR 123 983 thousand.
3.3 Liabilities
NON-CURRENT LIABILITIES
EUR 1,000
2023
2022
Connection fee liability 1 Jan
202,334
202,636
Connection fee refunds
-592
-302
Connection fee liability 31 Dec
201,742
202,334
Bonds and notes
1,689,500
1,689,500
Loans from financial institutions
250,000
150,000
Deferred tax liabilities
93,679
97,938
Total non-current liabilities
2,234,922
2,139,772
Elenia Verkko Oyj has recognized a deferred tax liability for the merger
loss allocated to the electricity network.
55
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
Maturity breakdown of financial liabilities
31 December 2023
1,000 EUR
Effective interest
rate
1-5 years
Maturity over 5
years
Total
Bonds
4.84%
640,000
531,000
1,171,000
Notes
1.98%
79,000
439,500
518,500
Loans from financial institutions
2.71%
50,000
200,000
250,000
Total interest-bearing non-current liabilities
769,000
1,170,500
1,939,500
Maturity breakdown of financial liabilities
31 December 2022
1,000 EUR
Effective interest
rate
1-5 years
Maturity over 5
years
Total
Bonds
1.91%
640,000
531,000
1,171,000
Notes
2.71%
0
518,500
518,500
Loans from financial institutions
1.93%
0
150,000
150,000
Total interest-bearing non-current liabilities
640,000
1,199,500
1,839,500
56
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
CURRENT LIABILITIES
EUR 1,000
2023
2022
Trade payables
4,380
5,639
Other short term liabilities
36,459
27,913
Accrued expenses
Salaries and social expenses
1,688
1,570
Accrued interest expenses
16,660
13,275
Other accrued expenses
9,801
12,535
Total
28,148
27,380
Liabilities to group companies
Accrued expenses
2,925
3,258
Equity repayment liability
43,447
177,447
Group bank account
33,203
45,854
Total
79,575
226,559
Total current liabilities
148,563
287,491
Total liabilities
2,383,485
2,427,263
3.4 Liabilities and quarantees for
debts
EUR 1,000
2023
2022
Provided on behalf of own and group liabili-
ties
Guarantees
Floating charges
9,000,000
9,000,000
Mortgages
202,000
202,000
Leasing agreements
Within one year
142
305
After one year but not more than five
years
143
0
More than five years
0
95
Total
284
400
Other own liabilities
Connection fees not included in the bal-
ance sheet values
85,114
85,114
Group bank accounts have been pledged as
security for loans from financial institutions
and bonds.
57
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
Shares and Holdings
a
a
a
a
a
Domicile
Share
Vote share
Share of
ownership
Nominal value
EUR 1,000
Book value
EUR 1,000
Subsidiary
Elenia Innovations Oy
Tampere
100%
100%
100%
0
0
Other shares and holdings
194
194
58
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
ELECTRICITY NETWORK BUSINESS DIFFERENTIATED
STATEMENT OF PROFIT AND LOSS
EUR 1,000
1 Jan - 31 Dec
2023
1 Jan - 31 Dec
2022
Revenue
326,093
318,249
Other operating income
1,456
2,299
Materials and services
Materials and goods
Purchace during the financial period
Network losses
-32,862
-24,507
Other materials
-1,689
-1,841
Services
Grid costs
-16,210
-35,074
Other external services
-22,921
-20,844
Personnel expenses
Salaries
-3,119
-2,939
Other personnel related costs
-702
-581
Depreciation, amortisation and impairment
Merger loss
-90,988
-90,988
Network assets
-69,191
-64,304
Other assets
-1,673
-1,395
Other operating expenses
Lease expenses
-359
-293
Network rents and network leasing expenses
-574
-1,973
Other operating expenses
-26,319
-23,113
Operating profit
60,941
52,695
EUR 1,000
1 Jan - 31 Dec
2023
1 Jan - 31 Dec
2022
Finance income and expenses
Interest and other financial income
From group companies
0
6
From other companies
2,331
253
Interest and other financial expenses
From other companies
-47,713
-38,955
Profit / loss before appropriations and taxes
15,559
13,999
Appropriations
Change in accelerated depreciations
Network assets
-110,159
-111,985
Other assets
-1,289
-1,276
Group contributions
Group contribution received
17,336
20,704
Income taxes
-2,503
-2,504
Loss for the year
-81,056
-81,062
59
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
ELECTRICITY NETWORK BUSINESS DIFFERENTIATED
BALANCE SHEET
EUR 1,000
31 Dec 2023
31 Dec 2022
ASSETS
Non-current assets
Intangible assets
Intangible rights
25,258
26,053
Goodwill
2,043,837
2,099,833
Other capitalized long term expenditure
17,249
15,647
2,086,345
2,141,533
Tangible assets
Land and water areas
190
190
Buildings and constructions
248
259
Electricity network
1,400,476
1,332,143
Merger losses
769,832
804,825
Machinery and equipments
986
494
Other tangible assets
0
1
Advance payments and construction in progress
19,352
20,146
2,191,086
2,158,058
Total non-current assets
4,277,430
4,299,591
EUR 1,000
31 Dec 2023
31 Dec 2022
Current assets
Long-term receivables
Other long-term receivables
2,374
732
2,374
732
Short-term receivables
Trade receivables
19,330
17,987
Receivables from group companies
17,395
20,903
Other receivables
231
232
Prepayments and accrued income
43,088
38,500
80,044
77,623
Cash and cash equivalents
26,958
5,300
Total current assets
109,376
83,654
TOTAL ASSETS
4,386,806
4,383,246
60
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
ELECTRICITY NETWORK BUSINESS DIFFERENTIATED
BALANCE SHEET
EUR 1,000
31 Dec 2023
31 Dec 2022
EQUITY AND LIABILITIES
Capital and reserves
Subscribed capital
80
80
Non restricted equity
1,792,761
1,926,730
Retained earnings
-157,790
-76,728
Profit / Loss for the financial year
-81,056
-81,062
1,553,995
1,769,020
Cumulative accelerated depreciations
Cumulative accelerated depreciations, network assets
614,893
504,732
Cumulative accelerated depreciations, other assets
4,767
3,482
619,660
508,213
Liabilities
Non-current liabilitites
Non-current liabilities, interest -free
Connection fees
201,742
202,334
Non-current liabilities, interest -bearing
Loans from financial institutions and other long-term loans
1,939,500
1,839,500
2,141,242
2,041,834
Current liabilities
Current liabilities, interest -free
Trade payables
4,374
5,637
Liabilities to group companies
2,925
3,258
Other short-term liabilities
36,459
27,913
Accruals and deferred income
28,148
27,371
71,907
64,179
Total liabilities
2,213,150
2,106,013
TOTAL EQUITY AND LIABILITIES
4,386,806
4,383,246
61
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
NOTES TO DIFFERENTIATED FINANCIAL STATEMENTS
According to the Electricity Market Act, a company operating on electricity market must differenti-
ate its electricity network business from other business activities. This differentiation requirement
also applies to legally separated network operator. Only items that are relevant for network busi-
ness operations are included in the differentiated financial statements. The differentiated financial
statements of electricity business should be published and attached to company's official financial
statements.
Differentiated financial statements include income statement and balance sheet, which should
be derived from the accounting.
In addition to Electricity Network business Elenia Verkko Oyj contains Elenia group's financing
and administrative related services and items.
Differentiation principles
Income statement items have been allocated into the differentiated business directly on the basis of
accounting.
Balance sheet items have been allocated to the differentiated business directly on the basis of
accounting or using an allocation key.
Depreciation principles for intangible and tangible assets are based on Elenia Verkko Oyj's de-
preciations rules which have been presented in the beginning of parent company notes.
Electricity Network business' key figures
EUR 1,000
2023
2022
INVESTMENTS
Intangible assets
Intangible rights
1,248
2,006
Other capitalized long term expenditures
Connection fees
2,400
2,257
Other capitalized long-term expenditures
783
860
Tangible assets of electricity network business
Land and water areas
30
41
Electricity network
109,570
150,908
Demolition costs
2,659
6,341
Meters
23,221
14,504
Other tangible assets
572
12
OTHER KEY FIGURES
Refundable connection fees
201,742
202,334
Capital gain on the sales of a power line included in the other operating income
0
360
Mandatory outage compensations
726
225
R&D expenses in the profit and loss account during the financial year
431
407
Demolition costs in the balance sheet at the end of the financial year
41,062
39,975
Return On Equity, network business (%)
0.64%
0.53%
Average number of personnel in the network business
75
75
62
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
SIGNATURES TO THE FINANCIAL
STATEMENTS
Tampere, 5 March 2024
Tapani Liuhala
Chairman of the Board of Directors
Jarkko Kohtala
Jorma Myllymäki
Anne-Marie Malmberg
Ville Sihvola
Tommi Valento
AUDITORS NOTE
A report on the audit carried out has been issued today.
Tampere, 7 March 2024
Ernst & Young Oy
Authorized Public Accountant Firm
Miikka Hietala
KHT
63
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
AUDITOR’S REPORT
(TRANSLATION OF THE
FINNISH ORIGINAL)
To the Annual General Meeting of Elenia Verkko Oyj
Opinion
We have audited the financial statements of Elenia Verkko
Oyj (business identity code 3001882-6) for the year ended
31 December, 2023. The financial statements comprise the
consolidated balance sheet, income statement, statement of
comprehensive income, statement of changes in equity,
statement of cash flows and notes, including material ac-
counting policy information, as well as the parent company’s
balance sheet, income statement, statement of cash flows
and notes.
In our opinion
●
the consolidated financial statements give a true and
fair view of the group’s financial position, financial
performance and cash flows in accordance with IFRS
Accounting Standards as adopted by the EU.
●
the financial statements give a true and fair view of
the parent company’s financial performance and fi-
nancial position in accordance with the laws and reg-
ulations governing the preparation of financial state-
ments in Finland and comply with statutory require-
ments.
Our opinion is consistent with the additional report sub-
mitted to the Board of Directors.
Basis for Opinion
We conducted our audit in accordance with good auditing
practice in Finland. Our responsibilities under good auditing
practice are further described in the
Auditor’s Responsibilities
for the Audit of Financial Statements
We are independent of the parent company and of the
group companies in accordance with the ethical require-
ments that are applicable in Finland and are relevant to our
audit, and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
In our best knowledge and understanding, the non-audit
services that we have provided to the parent company and
group companies are in compliance with laws and regulations
applicable in Finland regarding these services, and we have
not provided any prohibi ted non-audit services referred to in
Article 5(1) of regulation (EU) 537/2014. The non-audit ser-
vices that we have provided have been disclosed in note
2.3.1. to the consolidated financial statements.
We believe that the audit evidence we have obtained is suffi-
cient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the finan-
cial statements of the current period. These matters were ad-
dressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
We have fulfilled the responsibilities described in the
Au-
ditor’s responsibilities for the audit of the financial statements
section of our report, including in relation to these matters.
Accordingly, our audit included the performance of proce-
dures designed to respond to our assessment of the risks of
material misstatement of the financial statements. The re-
sults of our audit procedures, including the procedures per-
formed to address the matters below, provide the basis for
our audit opinion on the accompanying financial statements.
We have also addressed the risk of management override
of internal controls. This includes consideration of whether
there was evidence of management bias that represented a
risk of material misstatement due to fraud.
There are no significant risks of material misstatement re-
ferred to in EU regulation No 537/2014, point (c) of Article
10(2) relating to the consolidated financial statements or the
parent company’s financial statements.
Key Audit Matter
How our audit ad-
dressed the Key Audit Mat-
ter
Valuation of Goodwill
We refer to the notes to
the consolidated financial
statements 3.2.
Our audit procedures
to the valuation of goodwill
included:
64
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
Valuation of Goodwill
was a key audit matter be-
cause the assessment pro-
cess is judgmental, it is
based on assumptions relat-
ing to market or economic
conditions extending to the
future, and because of the
significance of the goodwill
to the financial statements.
As of balance sheet date 31
December 2023, the value
of goodwill amounted to
418 million euro represent-
ing 18 % of the total assets.
The valuation of goodwill is
based on management’s es-
timate about the value -in-
use calculations. There are
number of underlying as-
sumptions used to deter-
mine the value-in-use, in-
cluding the revenue growth,
EBITDA, future invest-
ments, discount rate applied
on net cash-flows and
changing regulation. Esti-
mated value-in-use may
vary significantly when the
underlying assumptions are
changed and the changes in
above-mentioned individual
assumptions may result in
an impairment of goodwill.
Our audit procedures
included involving EY valu-
ation specialists to assist us
in evaluating
underlying as-
sumptions and methodolo-
gies especially related to
the following assumptions:
revenue growth, EBITDA
and discount rate applied
to cash-flows.
We focused on the sen-
sitivity in the available
headroom by cash generat-
ing unit and whether any
reasonably possible change
in assumptions could cause
the carrying amount to ex-
ceed its recoverable
amount.
We evaluated the effect of
regulation changes to the
management’s estimates
and parameters.
We considered the ap-
propriateness of the
Group’s disclosures in re-
spect of impairment test-
ing.
Revenue Recognition
We refer to the Group’s ac-
counting policies and the
notes to the consolidated fi-
nancial statements 2.1.
Revenue from the distri-
bution of electricity is recog-
nized at the time of delivery.
Our audit procedures
included, among others:
We assessed the rea-
sonableness of the Group’s
accounting policies over
revenue recognition and
Revenue from customer ser-
vice operations and other
revenue is recognized in the
period in which such services
are rendered.
The Group focuses on
revenue as a key perfor-
mance measure which could
create an incentive for reve-
nue to be recognized before
the risks and rewards have
been transferred.
compliance with applicable
accounting standards.
We assessed the IT-sys-
tems, processes, and meth-
ods for revenue recogni-
tion.
We examined the rec-
orded sales transactions
during the year against un-
derlying documents.
We examined the sales
accruals.
We obtained confirma-
tions of open accounts re-
ceivable balances at year
end from customers and
analyzed credit invoices is-
sued after the balance
sheet date.
We performed data-an-
alytics procedures on reve-
nues.
We considered the ap-
propriateness of the
Group’s disclosures in re-
spect of revenues.
Responsibilities of the Board of Directors and the Managing
Director for the Financial Statements
The Board of Directors and the Managing Director are re-
sponsible for the preparation of consolidated financial state-
ments that give a true and fair view in accordance with Inter-
national Financial Reporting Standards (IFRS) as adopted by
the EU, and of financial statements that give a true and fair
view in accordance with the laws and regulations governing
the preparation of financial statements in Finland and comply
with statutory requirements. The Board of Directors and the
Managing Director are also responsible for such internal con-
trol as they determine is necessary to enable the preparation
of financial statements that are free from material misstate-
ment, whether due to fraud or error.
In preparing the financial statements, the Board of Directors
and the Managing Director are responsible for assessing the par-
ent company’s and the group’s ability to continue as going con-
cern, disclosing, as applicable, matters relating to going concern
and using the going concern basis of accounting. The financial
statements are prepared using the going concern basis of ac-
counting unless there is an intention to liquidate the parent com-
pany or the group or cease operations, or there is no realistic al-
ternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial
Statements
Our objectives are to obtain reasonable assurance on
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasona-
ble assurance is a high level of assurance, but is not a guaran-
tee that an audit conducted in accordance with good auditing
practice will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions
of users taken on the basis of the financial statements.
As part of an audit in accordance with good auditing prac-
tice, we exercise professional judgment and maintain profes-
sional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of
the financial statements, whether due to fraud or error,
65
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appro-
priate to provide a basis for our opinion. The risk of not de-
tecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collu-
sion, forgery, intentional omissions, misrepresentations, or
the override of internal control.
Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are appro-
priate in the circumstances, but not for the purpose of ex-
pressing an opinion on the effectiveness of the parent com-
pany’s or the group’s in ternal control.
Evaluate the appropriateness of accounting policies used
and the reasonableness of accounting estimates and related
disclosures made by management.
Conclude on the appropriateness of the Board of Direc-
tors’ and the Managing Director’s use of the going concern
basis of accounting and based on the audit evidence ob-
tained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the
parent company’s or the group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we
are required to draw attention in our auditor’s report to the
related disclosures in the financial statements or, if such dis-
closures are inadequate, to modify our opinion. Our conclu-
sions are based on the audit evidence obtained up to the date
of our auditor’s report. However, future events or conditions
may cause the parent company or the group to cease to con-
tinue as a going concern.
Evaluate the overall presentation, structure and content
of the financial statements, including the disclosures, and
whether the financial statements represent the underlying
transactions and events so that the financial statements give
a true and fair view.
Obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business activities
within the group to express an opinion on the consolidated fi-
nancial statements. We are responsible for the direction, su-
pervision and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance re-
garding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any signif-
icant deficiencies in internal control that we identify during
our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical re-
quirements regarding independence, and communicate with
them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applica-
ble, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements of the cur-
rent period and are therefore the key audit matters. We de-
scribe these matters in our auditor’s report unless law or reg-
ulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the ad-
verse consequences of doing so would reasonably be ex-
pected to outweigh the public interest benefits of such com-
munication.
Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors
on 13.5.2019, and our ap-
pointment represents a total period of uninterrupted engage-
ment of 5 years. Elenia Verkko Oyj has been a public interest en-
tity since 1.7.2020.
Other information
The Board of Directors and the Managing Director are re-
sponsible for the other information. The other information com-
prises the report of the Board of Directors and the information
included in the Annual Report, but does not include the financial
statements and our auditor’s report thereon. We have obtained
the report of the Board of Directors prior to the date of this audi-
tor’s report, and the Annual Report is expected to be made avail-
able to us after that date.
Our opinion on the financial statements does not cover the
other information.
In connection with our audit of the financial statements, our
responsibility is to read the other information identified above
and, in doing so, consider whether the other information is mate-
rially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be ma-
terially misstated. With respect to report of the Board of Direc-
tors, our responsibility also includes considering whether the re-
port of the Board of Directors has been prepared in accordance
with the applicable laws and regulations.
In our opinion, the information in the report of the Board of
Directors is consistent with the information in the financial
statements and the report of the Board of Directors has been
prepared in accordance with the applicable laws and regulations.
If, based on the work we have performed on the other infor-
mation that we obtained prior to the date of this auditor’s report,
we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have noth-
ing to report in this regard.
Tampere March 7
th
, 2024
Ernst & Young Oy
Authorized Public Accountant Firm
Miikka Hietala
Authorized Public Accountant
66
CONTENTS
Notes to the consolidated
financial statements
1
2
3
4
5
6
INDEPENDENT AUDITOR’S REPORT ON ELENIA
VERKKO OYJ’S ESEF-CONSOLIDATED
FINANCIAL STATEMENTS
(
TRANSLATION OF THE FINNISH
ORIGINAL
)
To the Board of Directors of Elenia Verkko Oyj
We have performed a reasonable assurance engagement on the
iXBRL tagging of the consolidated financial statements included
in the digital files 743700XGU4ZB5G4RPK50-2023-12-31-
en.zip of Elenia Verkko Oyj (business identity code: 3001882–6)
for the financial year 1.1.-31.12.2023 to ensure that the financial
statements are marked/tagged with iXBRL in accordance with
the requirements of Article 4 of EU Commission Delegated Reg-
ulation (EU) 2018/815 (ESEF RTS).
Responsibilities of the Board of Directors and
Managing Director
The Board of Directors and Managing Director are responsible
for the preparation of the Report of Board of Directors and fi-
nancial statements (ESEF financial statements) that comply with
the ESESF RTS. This responsibility includes:
Preparation of ESEF-financial statements in accordance with
Article 3 of ESEF RTS
Tagging the primary financial statements, notes to the finan-
cial statements and the entity identifier information in the con-
solidated financial statements included within the ESEF-financial
statements by using the iXBRL mark ups in accordance with Arti-
cle 4 of ESEF RTS
Ensuring consistency between ESEF financial statements and
audited financial statements.
The Board of Directors and Managing Director are also re-
sponsible for such internal control as they determine is neces-
sary to enable the preparation of ESEF financial statements in
accordance the requirements of ESEF RTS.
Auditor’s Independence and Quality Management
We are independent of the company in accordance with the ethi-
cal requirements that are applicable in Finland and are relevant
to the engagement we have performed, and we have fulfilled our
other ethical responsibilities in accordance with these require-
ments.
The firm applies International Standard on Quality Manage-
ment (ISQM) 1, which requires the firm to design, implement and
operate a system of quality management including policies or
procedures regarding compliance with ethical requirements,
professional standards and applicable legal and regulatory re-
quirements.
Auditor’s Responsibilities
In accordance with the Engagement Letter we will express an
opinion on whether the electronic tagging of the consolidated fi-
nancial statements complies in all material respects with the Ar-
ticle 4 of ESEF RTS. We have conducted a reasonable assurance
engagement in accordance with International Standard on As-
surance Engagements ISAE 3000.
The engagement includes procedures to obtain evidence on:
whether the tagging of the primary financial statements in
the consolidated financial statements complies in all material re-
spects with Article 4 of the ESEF RTS
whether the tagging of the notes to the financial statements
and the entity identifier information in the consolidated financial
statements complies in all material respects with Article 4 of the
ESEF RTS whether the ESEF-financial statements are consistent
with the audited financial statements.
The nature, timing and extent of the procedures selected de-
pend on the auditor’s judgement including the assessment of risk
of material departures from requirements sets out in the ESEF
RTS, whether due to fraud or error.
We believe that the evidence we have obtained is sufficient
and appropriate to provide a basis for our statement.
Opinion
In our opinion the tagging of the primary financial statements,
notes to the financial statements and the entity identifier infor-
mation in the consolidated financial statements included in the
ESEF financial statements 743700XGU4ZB5G4RPK50-2023-
12-31-en.zip of Elenia Verkko Oyj for the year ended 1.1.-
31.12.2023 complies in all material respects with the require-
ments of ESEF RTS.
Our audit opinion on the consolidated financial statements of
Elenia Verkko Oyj for the year ended 1.1.-31.12.2023 is included
in our Independent Auditor’s Report dated 7.3.2024. In this re-
port, we do not express an audit opinion any other assurance on
the consolidated financial statements.
Helsinki 11.3.2024
Ernst & Young Oy
Authorized Public Accountant Firm
Miikka Hietala
Authorized Public Accountant