Elenia Verkko Oyj
		Report of the Board of Directors and
		Financial Statements
		1 January 2021 - 31 December 2021
		Business ID 3001882-6
		Unofficial translation from Finnish to English

 

 

	Table of contents
	REPORT OF THE BOARD OF DIRECTORS 2021								2
	CONSOLIDATED FINANCIAL STATEMENTS
	Consolidated statement of profit or loss								13
	Consolidated statement of comprehensive income								13
	Consolidated statement of financial position								14
	Consolidated statement of cash flows								15
	Consolidated statement of changes in equity								16
	Notes to the consolidated financial statements								17
	PARENT COMPANY FINANCIAL STATEMENTS								52
	Income statement								53
	Balance sheet								54
	Cashflow statement								56
	Notes to the parent company financial statements								57
	Signatures to the financial statements								69

 

 

	Name of reporting Entity	Elenia Verkko Oyj
	Change in name
	Domicile of entity	Tampere
	Legal form of entity	limited liability company
	Country of incorporation	Finland
	Adress of registered office	Patamäenkatu 7, Tampere,  Finland
	Principal place of business	Tampere.
	Description of nature Of principals operations	Elenia Networks Group is the owner and operator of an electricity distribution network.
	Name of parent entity	Elenia Verkko Oyj’s parent company is Elenia Oy, a company duly incorporated
	Name of ultimate parent	The ultimate parent of the Group is Elton Investments S.à r.l., domiciled in Luxembourg.

 

 

	Elenia Verkko Oyj Group, Report of the Board of Directors 2021
	Elenia Verkko Oyj Group’s Business Operations
	Elenia Verkko Oyj Group (”Elenia  or ”Elenia Verkko Oyj”) consisted of Elenia Verkko Oyj (the parent company) and its fully-owned subsidiary Elenia Innovations Oy. Elenia Innovations had no business in 2021. Elenia Verkko Oyj is a fully-owned subsidiary of Elenia Oy.
	Business Review and financial Performance
	Elenia Verkko Oyj is Finland’s second-largest electricity distribution system operator (DSO) with a 12% market share in terms of total number of customers. The company has a regional monopoly position and it serves all customers in the geographical areas defined in the licence granted by the Energy Authority (EA). The licence holder has the exclusive right to build and operate an electricity distribution network in its geographical area of responsibility. With an electricity network of approximately 76,000 kilometres, Elenia Verkko Oyj supplies electricity to over 435,000 end users. In addition to residential customers, key customer segments include industrial, service, construction and public sectors. The company has operations in more than 100 cities and municipalities spanning a geographical area of nearly 600 km in length across central Finland, from Southern Häme to Northern Ostrobothnia. During the financial year, Elenia’s network business distributed 6,643 GWh of electricity, compared to 6,032 GWh in the previous year. The distribution volume in 2021 was the highest in Elenia’s history. The total volume increased by 10.1% year-on-year. Revenue from the network business came to EUR 322.1 million (2020: EUR 301.5 million). Revenue grew by EUR 20.7 million (6.9%). The growth in revenue was driven by the cold weather at the start of the year and the end of the year, which was reflected in higher distribution volumes, but also the exceptionally warm weather in the comparison year 2020. Additional factors behind the growth in volume included the passing of the temporary drop in volume caused by COVID-19, the substantial increase in the number of connections and the general electrification of society, which was reflected in a higher distribution volume per customer. The EBITDA of the network business was EUR 213.8 million (2020: EUR 196. million). EBITDA increased by EUR 17.8 million (9.1%). The positive development of EBITDA was mainly due to revenue growth. In addition, the numbers of storms was low in 2021, which was reflected in lower fault repair costs, lower mandatory and voluntary outage compensations, especially compared to 2020, when the number of storm days was exceptionally high.
	There were two Class 3 storms during the year: Vieno on 15 June 2021 and the Midsummer week storm front during the period 21–25 June 2021. During Vieno, the number of customers without electricity peaked at 26,700, with the longest outage lasting 30 hours. The total number of fault repair assignments was 460. During the week of thunderstorms, the number of customers without electricity peaked at 15,400, with electricity restored for customers within two days. The total number of fault repair assignments was 544.  Elenia prepared for storms a total of 7 times during the year (12 times in 2020).
	The costs of Class 2–4 storms[2]  came to EUR 3.5 million (2020: EUR 9.7 million), consisting mainly of fault repair costs (2021: EUR 2.7 million, 2020: EUR 5.8 million), mandatory compensation (2021: EUR 0.5 million, 2020: EUR 3.3 million) and voluntary outage compensation paid by Elenia (2021: EUR 0.3 million, 2020: EUR 0.6 million). SAIDI (System Average Interruption Duration Index), a measure of the duration of outages, was 111 minutes during the year (217 minutes in 2020). SAIDI excluding the impact of Class 3 and 4 storms was 67 minutes (70 minutes in 2019). The SAIDI figures show the positive underlying trend in outages driven by the increased underground cabling, but also the need to continue to improve security of supply in the coming years by replacing old overhead lines at the end of their useful life with new underground cables. Elenia Verkko Oyj continued to invest in the electricity network in accordance with its development plan during the financial year. The investment plan of Elenia’s network business is designed to improve the security of supply via underground cabling. Since 2009, Elenia has built only weatherproof distribution lines. At the end of the year, 58.5% of Elenia’s network was underground, compared to 54.4% at the end of 2020.
	The Electricity Market Act states that 100% of customers must be within the scope of the quality requirements by the end of 2036[3] . Elenia has sought to achieve this target by increasing the underground cabling rate to 75% by the end of 2028. At the end of the year, 78% of the customers of Elenia’s network business were within the scope of the quality requirements stipulated by the Electricity Market Act. The corresponding figure at the end of 2020 was 73%. 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 battery pack was successfully deployed in the Kuru area to provide electricity to local households in case of an outage. The battery pack was used in 2021.    Elenia invested EUR 172.2 million in developing electricity networks during the financial year. In 2020, the corresponding investments amounted to EUR 165.0 million. Investments in the electricity network will continue in 2022, but Elenia will invest EUR 40 million less than previously planned. The significant reduction in investments is due to changes in regulatory methods implemented by the Energy Authority , especially the significant reduction in the reasonable rate of return, which presents challenges to the financing of the investments.
	Elenia Verkko Oyj continued to develop its asset management system according to the PAS 55-1:2008 standard and the international standard ISO 55001:2014. The requirements of both PAS 55 and ISO 55001 guide the construction, 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 operations. The asset management system of Elenia’s network business was recertified in November 2019 and, due to COVID-19, Lloyd’s Register conducted the 2020 audit virtually, with the first part taking place in spring 2020 and the second part in May 2021. The Energy Authority oversees the operations of Finnish distribution system operators. The regulation is based on four-year regulatory periods. The past year was the second year of the fifth regulatory period (2020–2023). The reasonable rate of return declined from 5.73% in 2020 to 5.35% in 2021 due to a change in the risk-free rate. For 2022, the Energy Authority has confirmed that the reasonable rate of return is 3.97%. The substantial reduction is due to a change in the calculation of the reasonable rate of return effective from the beginning of 2022.
	[2] Also includes costs of preparing for storms that did not ultimately materialise to the expected extent. [3] Pursuant to the Electricity Market Act, which was amended in 2021, by the end of 2036, all customers (100%) must be connected to a secure network where outages cannot last more than 6 hours in zoned areas and not more than 36 hours in other areas. For Elenia, 75% of customers must be connected to a secure network by the end of 2023, and 100% by the end of 2036. The previous deadline for the quality requirements was the end of 2028, which still applies to some network companies (whose underground cabling rate was over 60% at the end of 2018).
	Financing
	Elenia Group’s financing activities are centralised into Elenia Verkko Oyj. In 2021, Elenia Verkko Oyj did not issue any new bonds (EUR 500 million issued in 2020). The Group’s solvency and liquidity remain very strong after the bond issue carried out in 2020. At the end of the financial year, cash and cash equivalents amounted to EUR 72 million (EUR 114 million at the end of 2020). The Group’s credit facilities consist of a EUR 350 million Capex Facility, a EUR 60 million Working Capital Facility and a EUR 60 million Liquidity Facility. The first two mature in June 2024 and the seven-year Liquidity Facility matures in June 2028. All of the credit facilities were entirely undrawn (as was the case at the end of 2020). In addition, the facility of EUR 100 million agreed upon with the European Investment Bank was entirely undrawn at the end of the year. The bonds issued by Elenia Verkko Oyj are rated by S&P Global Ratings (“S&P”). In October 2021, S&P placed the credit rating on CreditWatch negative after the Energy Authority announced changes to the financial regulation of DSOs in the middle of the current fifth regulatory period. S&P downgraded the credit rating to BBB at the end of January. Elenia sold its district heating business in 2019. In relation to this, EUR 70 million in equity repayment was paid in 2021.   Elenia Group 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 Adjustment period”[4] ), 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 2021, the ICR and LR were 5.52 and 8.22 respectively. At end of 2020, the corresponding levels were 4.68 and 8.84. Elenia Group is in compliance with the financial covenants.  Elenia retains adequate headroom to both financial covenants on a historical and forward-looking basis.
	Employees
	In Elenia Verkko Oyj there were no change in the number of employees in 2021.
		31 Dec 2021 FTE	31 Dec 2020
			FTE
	Elenia Verkko Oyj Group	83	83
	Close cooperation with local contracting partners is an integral part of the Group’s operations. The total employment effect of the Group and its external subcontractor’s operations related to Elenia is approximately 1,000 people.
	Elenia has coped well with the COVID-19 pandemic by investing in well-being at work. The employees have largely worked remotely for the past two years, to the extent that their duties allow it. The transition to remote work was successful, and employees will also be offered extensive and flexible remote work opportunities going forward, taking job-specific differences into account.  The employees’ coping with remote work has been assessed by means of the usual workplace atmosphere surveys and also by psychosocial stress surveys conducted at the end of 2020 and 2021 in cooperation with the occupational health service provider. An extensive well-being at work project was carried out in the first half of 2021. The project included lectures and consultations with an occupational psychologist. The project was well received by the employees.
	[4] Elenia’s financing is based on three core financial documents and all financiers are parties to these agreements. These documents are the Common Terms Agreement (CTA), the Security Trust and Intercreditor Deed (STID) and the Master Definitions Agreement (MDA).  In 2018, the trigger event and event of default levels for both ICR and LR were amended in accordance with the requirements of the Common Terms Agreement (CTA)[1] to mitigate the impact of the IFRS 15 standard, which became effective on 1 January 2018 obliging Elenia to change the revenue recognition of connection charges.   The change affected only figures such as EBITDA that are reported in accordance with IFRS, it had no impact on FAS, taxes, cash flows or regulatory accounting.
	Acquisitions and Divestments
	There were no acquisitions or divestments during the financial year.
	Corporate Governance
	Elenia Verkko Oyj’s Board of Directors has six members: Tapani Liuhala (Chairman), Jorma Myllymäki, Ville Sihvola, Jarkko Kohtala, Tommi Valento and Anne-Marie Malmberg. The only change in the composition of the Board of Directors took place when Anne-Marie Malmberg replaced Aili Sepänen. The Board of Directors met 6 times during the financial year.
	Auditor
	Elenia Verkko Oyj’s auditor is Ernst & Young Oy, with Miikka Hietala, Authorised Public Accountant, as the auditor with principal 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.
	Responsibility
	Elenia’s sustainability programme is aligned with the UN’s Sustainable Development Goals (SDGs) and Elenia has selected six goals that have strong links to Elenia’s business and operations. The goals are related to:
	·       Affordable and clean energy to all (SDG 7)
	·       Decent work and economic growth (SDG 8)
	·       Industry, innovation and infrastructure (SDG 9)
	·       Sustainable cities and communities (SDG 11)
	·       Climate action (SDG 13)
	·       Partnerships for the goals (SDG 17)
	For each of the six goals, the management has set specific goals and the related KPIs are monitored and reported on a monthly basis. Elenia continued the development of its sustainability programme in 2021. Reporting is based on the GRI (Global Reporting Initiative) standards and, going forward, also the SASB (Sustainability Accounting Standards Board) standards. The Group’s fourth sustainability report, which is also the most comprehensive the Group has ever published, will be released in early 2021.
	In 2021, Elenia participated for the fourth time in the Global Real Estate Sustainability Benchmark (“GRESB”) Infrastructure Assessment. GRESB is a sustainability-focused research and benchmarking organisation tailored to real estate and infrastructure companies. It works to promote operational responsibility and to gather valuable international data to compare the operations and performance of companies. The GRESB assessment looks at the Environmental, Social and Governance (ESG) performance of a company and how it has performed in the three areas. In 2021, a total of 549 infrastructure companies took part in the GRESB Infrastructure Assessment around the world (2020: 406 companies). Elenia ranked 34th in the overall results and third among DSOs. Elenia scored a full five stars in the assessment and was awarded a total score of 95 (2020: 96), which is well above the average of the infrastructure companies that took part in the assessment. Elenia utilises the GRESB Assessment results in developing and executing its own ESG development programme as well as in following the development of the industry. Elenia conducted a sustainability audit of two strategic suppliers of materials in 2021. The sustainability audits focused on five areas: human rights, labour rights, health and safety, the environment and governance. Approximately 10% of the supplier’s workforce was interviewed during the audits. Elenia’s Code of Conduct and Partner Code of Conduct were updated as part of the preparation for the sustainability audits. Elenia’s Partner Code of Conduct is incorporated into all significant agreements. Sustainability audits of the partner network will continue in 2022. Elenia has monitored the direct (Scope 1) and indirect (Scope 2 and Scope 3) climate impacts of its operations in accordance with the GHG Protocol. Elenia aims to identify and effectively manage the climate impacts of the organisation, products and services. In 2020, Elenia’s fossil carbon footprint was 189,364 tCO2e (2019: 190,457 tCO2e). Elenia’s direct emissions amounted to 351 tCO2e (2019: 576 tCO2e) and represented 0.0% of the total carbon footprint. Of the carbon footprint, 47% (2019: 45%) arose from Scope 3 fixed assets, including materials associated with electricity network investments, fibre network investments, earthworks and other investments. Of the carbon footprint, 36% (2019: 36%) arose from Scope 2 purchased electricity related to network losses. The measurement and verification of the carbon footprint for 2021 is still ongoing.
	In 2021, Elenia set targets for reducing the greenhouse gas emissions of its own operations in accordance with the Paris Climate Agreement, and the Science Based Targets initiative has accepted Elenia’s commitment. Acceptance of the commitment will require Elenia to reduce its greenhouse gas emissions by 42% by 2030, including Elenia’s own emissions and those of the energy it procures (Scope 1 and 2). The target set by Elenia itself is even more ambitious in this respect, namely a 75% reduction in emissions compared to 2020. In addition, Elenia is committed to setting Net Zero targets that cover not only the emissions from Elenia's own operations, but also the emissions from the entire value chain (Scope 1, 2 and 3). The Net Zero targets must be met by 2050 and overall this means a reduction of around 90% in emissions for the entire value chain of the company. Elenia’s objective is for its employees and partners to work in a safe and motivating environment. In addition to highly competent and professional employees, Elenia’s efforts to promote safety are based on safe equipment, processes and operating models as well as visible safety management. Remote work, which began in March 2020, continued to a significant extent in 2021. Consequently, the efforts to promote overall well-being were focused on resilience, ergonomics, the use of digital channels to ensure interaction and participation and, based on measurements, maintaining and developing psychosocial well-being.   Elenia provides its employees with general information on topical occupational safety and environmental issues and an opportunity to participate in training that facilitates the improvement of their professional skills and competence. Supervisors and employees working on sites are required to successfully complete Occupational Safety Card training and ensure that their statutory qualifications are up to date. Compliance with regulations is monitored on a regular basis. Elenia Group has an externally certified occupational health and safety management system in place, since 2009 in accordance with OHSAS 18001 and since May 2018 in accordance with the new international ISO 45001:2018 standard. An external audit of the system was conducted in spring 2021.
	Elenia operates in accordance with the principle of continuous improvement with the aim of being a leader in occupational safety. Elenia Group and its extensive partner network have a target of zero occupational accidents and zero defects in all stages of construction. At the end of 2021, the lost time injury frequency[6]  of Elenia and its partners was 9.5 (10.0 at the end of 2020). The target for 2022 is 3.0. Elenia has had a strong focus on occupational safety during the past few years. The actions taken have increased safety awareness among employees and partners, but they are not yet reflected in the LTIF. Elenia will continue its determined development of new safety improvement initiatives and concepts until the target is achieved. Elenia has a certified environmental management system. The Group’s various companies have had ISO 14001 certification since 2008. Elenia’s environmental management system was recertified in 2016 in accordance with the ISO 14001:2015 standard. In addition, external subcontractors are required to have environmental management systems that support their environmental work and are in line with the ISO 14001 standard. An external audit was conducted in 2021. In addition, Scope 1 and Scope 2 greenhouse gas emissions were verified by an independent party. Elenia also holds a WWF Green Office certificate.
	Elenia Group’s activities involve the following five identified environmental aspects:
	1)    energy consumption and climate change,
	2)    environmental deviations,
	3)    efficient use of materials and the circular economy,
	4)    sustainable procurement and supply chains, and
	5)    sustainable construction and land use
	Risk Management
	The comprehensive management of risks and opportunities is an integral part of all of Elenia’s overall management and daily operations. The foundation for identifying, influencing and managing risks and opportunities is laid down by Elenia’s risk management policy, risk management procedures, risk register, regular measures determined by the annual risk management plan and management systems. Elenia’s management is responsible for incorporating risk management into strategic and operative management and business processes. The Legal and Risk Management team is responsible for comprehensive risk management, reporting and monitoring related to the planned measures. Business units and processes are responsible for risk identification and assessment as well as for planning, implementing and monitoring risk management measures. At the Board of Directors level, the Audit Committee, in particular, focuses on Elenia’s risks and their management.
	Elenia’s risk management is based on a risk register that covers all identified risks and opportunities. For each risk, the risk register includes a description of the risk and its impacts, the probability of the risk and its impact should the risk materialise and, as a combination of these, a risk score. The risk register also includes information on the risk owner and the responsible persons as well as the measures planned for managing the risk, including schedules and responsible persons. All of the Group’s risks are reviewed twice a year in workshops of varying scope. The workshop participants include business area management and key personnel, risk managers and, and twice a year, the management team. A report describing the Group’s main risks is prepared based on the above-mentioned activities and the report is reviewed by the Audit Committee of the Board of Directors. In 2021, climate risks were integrated into Elenia’s enterprise risk management. Going forward, they will be identified, assessed, managed and monitored in the same manner as all other risks. Elenia Group conducted a maturity study based on enterprise risk management (ERM) in 2019. The Group is currently developing its risk management according to best practices in line with the roadmap drawn up in 2019.  The risk register was migrated to a new system in 2021 and mandatory online training on risk management was introduced for all employees.
	[6] Lost Time Injury Frequency (LTIF): the number of lost time injuries occurring in all Elenia’s activities per one million internal and external hours worked. Lost time injuries include all on-the-job injuries that lead to a person being absent from work for more than one day. Total LTIF = (∑LTI*1,000,000 h) / (cumulative internal and external hours)
	Cyber Security
	Elenia has continued to reinforce cyber security awareness as a crucial part of the business internally and in cooperation with partners. Elenia’s information security management system has been ISO 27001 certified since 2020. The next external audit will be conducted in 2022. One of the focus areas in 2021 was to increase information security awareness in Elenia. In 2021, all of the Group’s employees participated in information security roadshow events that focused on themes related to information security and data protection.
	Events after the Balance Sheet Date
	Like other DSOs, Elenia received a new regulatory decision in December 2021 regarding changes in regulatory methods that entered into effect on 1 January 2022 and will remain in effect for only two years, namely 2022 and 2023. The changes were in line with the previous information communicated by the Energy Authority. They included updated unit prices, changes to WACC calculation methods and eliminating the security of supply incentive from the regulatory methods. The change in unit prices led to a considerable decline in Elenia’s Regulatory Asset Base (RAB). According to the Energy Authority, the change was 7–22 per cent and the weighted average was 17 per cent. The change was the most drastic with regard to underground cables, which meant that its impact on Elenia was among the most significant. In practice, it meant that Elenia’s RAB fell to the level it was at in 2018. The calculation of the risk-free interest rate component as part of the determination of the WACC is based on the yield on a 10-year Finnish government bond. It was previously based on a method where the higher of the current interest rate (based on the previous year) and the historical 10-year average interest rate was applied. The latter calculation method was eliminated from the regulatory method effective from the beginning of 2022. Consequently, the WACC for 2022 is 3.97%, which is approximately one percentage point lower than it would have been without the change in the calculation method (4.96%). Like several other Finnish DSOs, Elenia has appealed to the Market Court to repeal the decision of the Energy Authority with regard to the key aspects of the decision. On 28 January 2022, S&P downgraded the credit rating of Elenia Verkko Oyj’s senior secured debt from BBB+ to BBB. In connection with this, S&P changed Elenia’s credit rating outlook to stable. The rating action stemmed from the changes in regulatory methods implemented by the Energy Authority. Elenia’s key credit ratios figures have not changed and they are not expected to change going forward. Elenia’s significant reduction in investments for 2022 to strengthen cash flow was not, in S&P’s view, sufficient to maintain the previous credit rating. There was a change in Elenia’s management team in February 2022, when Harri Happonen replaced Jenni Heinisuo as Elenia’s Chief Information Officer.
	Outlook
	While the global COVID-19 pandemic again had a significant impact on the business environment in 2021, its effect on Elenia Group’s operations has been minimal. The most significant impact of the pandemic has involved Elenia Verkko Oyj’s employees in the form of a transition to remote work that began in March 2020. Customers’ electricity consumption has not changed substantially during the pandemic. The slightly higher consumption among private customers has partially compensated for the slight decrease in the volumes of corporate customers. Distribution volumes returned to a moderate growth trend in 2021, driven by the electrification of society. The electrification of transport and industry, in particular, will increase electricity consumption in the coming years. We do not expect the pandemic to have a significant impact on Elenia’s operations in 2022. In December 2021, the Energy Authority started a process to develop regulatory methods for the upcoming sixth (2024–2027) and seventh (2028–2031) regulatory periods. Elenia is actively involved in the process. The Energy Authority has stated that the new regulatory methods will be a continuation of the current methods, and any future changes are expected to be relatively minor. Unit prices are expected to be updated again for the sixth regulatory period, which is expected to have a positive impact in view of the recent increase in raw material prices, which is also reflected in the prices of network components. Elenia strongly believes that regulatory methods will continue to support DSOs and compensate for long-term investments in the security of supply in the upcoming sixth and seventh regulatory periods.
	The Board of Directors’ Dividend Proposal
	The Board of Directors proposes that no dividend be distributed.

 

 

	Consolidated Statement of Profit or Loss									Consolidated Statement of Comprehensive Income
	for the year ended		31 December 2021							for the year ended		31 December 2021
				Note	1.1.-31.12.2021		1.1.-31.12.2020							1.1.-31.12.2021		1.1.-31.12.2020
	EUR 1,000									EUR 1,000
	Revenue			2.1.1	320 185		299 564			Profit for the year				72 282		57 566
	Other operating income			2.2.1	1 996		2 836			Other comprehensive income
	Materials and services				-83 337		-74 842
	Employee benefit expenses			2.3.3	-3 698		-3 239			Other comprehensive income not to be reclassified to profit or loss in subsequent years:
	Depreciation, amortisation and impairment			3	-86 348		-80 869
	Other operating expenses			2.3.1	-21 344		-28 276			Re-measurement gains on defined benefit plans				-137		127
	Operating profit				127 455		115 173			Income tax effect				27		-25
										Other comprehensive income / (loss) for the year after tax				-110		101
	Finance income				938		3 167			Total comprehensive profit for the year				72 172		57 667
	Finance costs				-40 579		-44 874
	Finance income and costs			4.1	-39 641		-41 707
	Profit before tax				87 814		73 465			The accompanying notes are an integral part of these consolidated financial statements.
	Income tax			6.1.1	-15 532		-15 900
	Profit for the year				72 282		57 566

 

 

	Consolidated Statement of Financial Position
	as at 31 December 2021
		Note	31.12.2021	31.12.2020			Note	31.12.2021	31.12.2020
	EUR 1,000					EUR 1,000
	Assets					Equity and liabilities
	Non-current assets					Equity
	Property, plant and equipment	3.1	1 558 910	1 478 974		Share capital	4.4	80	80
	Goodwill	3.2	417 823	417 823		Unrestricted equity	4.4	-548 843	-548 843
	Intangible assets	3.2	25 487	18 259		Retained earnings	4.4	371 990	299 818
	Right-of-use assets	3.1, 3.3	1 466	3 955		Total equity		-176 773	-248 945
	Other non-current financial assets		194	194
	Other interest bearing receivables	6.3	0	274 695		Non-current liabilities
	Deferred tax assets	6.1.2	6 473	5 137		Loans from financial institutions	4.2	150 000	150 000
	Total non-current assets		2 010 354	2 199 038		Bonds and notes	4.2	1 682 046	1 681 082
						Lease liabilities	3.3	395	1 233
	Current assets					Employee benefit liability	6.2	453	328
	Trade receivables	2.1.4	23 546	21 616		Provisions	2.3.4	7 665	8 168
	Other current receivables	2.1.4	44 129	50 376		Liabilities related to contracts with customers	2.1.3	29 893	22 166
	Cash and cash equivalents		71 841	113 780		Deferred tax liabilities	6.1.2	138 763	127 272
	Total current assets		139 517	185 772		Total non-current liabilities		2 009 214	1 990 249
	Total assets		2 149 870	2 384 810		Current liabilities
						Lease liabilities	2.3.2, 3.3	1 531	3 943
						Trade payables	2.3.2	16 460	7 244
						Liabilities related to contracts with customers	2.1.3	1 110	810
						Other current liabilities	2.3.2, 6.3	298 328	631 508
						Total current liabilities		317 429	643 506
						Total equity and liabilities		2 149 870	2 384 810
						The accompanying notes are an integral part of these consolidated financial statements.

 

 

	Consolidated Statement of Cash Flows
	for the year ended 31 December 2021
		1.1.-31.12.2021		1.1.-31.12.2020
	EUR 1,000
	Operating activities
	Profit for the year	72 282		57 566		The accompanying notes are an integral part of these consolidated financial statements.
	Adjustments to reconcile profit to net cash flows
	Depreciation, amortisation and impairment	86 348		80 869		Loans granted and repayments of loan receivables are presented in financing cash flow instead of cash flow from investing activities.
	Finance income	-938		-3 167
	Finance costs	40 579		44 874
	Taxes	15 532		15 900
	Other adjustments	-18		-963
	Other short-term and low value rental expenses	37		37
	Working capital adjustments
	Increase (+) / decrease (-) in trade and other current liabilities	30 872		20 763
	Increase (-) / decrease (+) in trade and other current receivables	-4 710		-2 535
	Increase (+) / decrease (-) in provisions	-504		261
	Interests received	79		146
	Interest and other financial expenses paid	-38 673		-40 688
	Interest paid on lease liabilities	-801		-1 033
	Taxes paid	-5 351		-5 351
	Net cash flows from operating activities	194 733		166 678
	Investing activities
	Capital expenditure	-172 892		-171 042
	Changes in loans	-		4 000
	Changes in investments	267		9
	Net cash flows used in investing activities	-172 625		-167 033
	Financing activities
	Owners' equity investment	-		14 800
	Repayment of short-term borrowings	-		-89 024
	Proceeds from long-term borrowings	-		600 000
	Repayment of long-term borrowings	-		-320 000
	Equity repayment	-70 000		-
	Payment of debt arrangement costs	-		-4 515
	Repayment of  lease liabilities	-3 117		-3 910
	Loans granted	-		-113 000
	Group contributions received and paid	9 071		431
	Net cash flows from financing activities	-64 046		84 782
	Net increase in cash and cash equivalents	-41 938		84 427
	Cash and cash equivalents at 1 January	113 780		0
	Change in cash and cash equivalents	-41 938		84 427
	Cash and cash equivalents at 31 December	71 841		113 780
	Cash and cash equivalents, restructurings	-		29 352
	Cash and cash equivalents comprises of cash balance at bank accounts.

 

 

	Consolidated Statement of Changes in Equity
	for the year ended 31 December 2020			Unrestricted equity
	EUR 1,000		Share capital	Reserve for invested unrestricted equity	Common control reserve	Retained earnings	Total equity
	Equity at 1 January 2020		80	0	0	0	80
	Profit for the year		0	0	0	57 566	57 566
	Other components of comprehensive income (adjusted by tax effect)						0
	Change in defined benefit plans		0	0	0	101	101
	Total comprehensive income for the year		0	0	0	57 667	57 667
	Transactions with shareholders
	Issue of share capital
	Increase		0	2 207 400	0	23 298	2 230 698
	Restructurings changes			0	-2 206 243	218 853	-1 987 391
	Equity repayment		0	-550 000	0	0	-550 000
	Total transactions with shareholders		0	1 657 400	-2 206 243	242 151	-306 692
	Equity at 31 December 2020		80	1 657 400	-2 206 243	299 818	-248 945
	for the year ended 31 December 2021			Unrestricted equity
	EUR 1,000		Share capital	Reserve for invested unrestricted equity	Common control reserve	Retained earnings	Total equity
	Equity at 1 January 2021		80	1 657 400	-2 206 243	299 818	-248 945
	Profit for the year		0	0	0	72 282	72 282
	Other components of comprehensive income (adjusted by tax effect)
	Change in defined benefit plans		0	0	0	-110	-110
	Total comprehensive income for the year		0	0	0	72 172	72 172
	Equity at 31 December 2021		80	1 657 400	-2 206 243	371 990	-176 773
	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.

 

 

	1 Group accounting policies
	1.1 General information    Elenia Verkko Oyj is a Finnish limited liability company domiciled in Tampere. Address is Patamäenkatu 7, Tampere,  Finland.  Elenia Verkko Oyj’s parent company is Elenia Oy, having its registered office at Patamäenkatu 7, Tampere. The ultimate parent of the Group is Elton Investments S.à r.l., domiciled in Luxembourg.     The consolidated financial statements of Elenia Verkko Oyj ("Elenia Networks Group") are consolidated in the financial statements of Elenia Oy ("Elenia Group"), available at the following 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 services (Elenia Oy, ’Elenia Services’). Elenia Networks Group is the owner and operator of an electricity distribution network. The group was formed on 2.1.2020. In the Elenia Group and the Elenia Verkko Group, changes have taken place in the Group structures as a result of legal reorganizations during 2020. More on structural changes in Notes 1.4.1 and 1.4.3. The Board of Directors approved the consolidated financial statements on 27 May 2021. The shareholders have the right either to approve, reject or change the consolidated financial statements in the Annual General Meeting. 1.2 Basis of preparation   The consolidated financial statements for the year ended 31 December 2020 have been prepared in accordance with the International Financial Reporting Standards (IFRS) and their interpretations (IFRIC) approved for application within the European Union (EU). The consolidated financial statements are compliant with the provisions of the Finnish Accounting Act and other regulations governing the preparation of financial statements in Finland. 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 thousands of euros. There may be rounding discrepancies in the sum totals due to the presentation method used. 1.3 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 2021. The nature of each new standard and amendment adopted by the Group has been described in the relevant 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, uncertainty 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 significant accounting judgements, estimates and assumptions are described either below or in the relevant notes.   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 management 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 2021 of EUR 87 814 thousands (2020:EUR 73 465 thousands) and has a net equity of EUR -176 773 thousands as at 31 December 2021 (2020:-248 945 thousands). 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 based on the following: - The Group has issued bonds under the EUR 3 billion EMTN programme. As at 31 December 2021, the Group has utilized 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 demand 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 570 million from a syndicate of international banks and European Investment Bank (as fully described in Note 4.2.9).
	As part of the reorganization of the Group, on 28 November 2019 Elenia Finance Oyj announced that the Security Trustee had received the requisite votes from the Secured Creditors in favour of the proposed reorganisation of Group to be implemented as it was published on 4 November 2019. The purpose of the reorganization was to i) simplify the existing structure, ii) cure the negative equity of Network business company (former Elenia Oy and current Elenia Verkko Oyj business ID 3001882-6) and iii) ensure the operating assets of the regulated network business are within the same entity as interest costs. This was a common control reorganization (i.e. ultimate ownership of the Group didn't change) and the operations of the Group remain same. More about restructurings under common control in Note 1.4.3. As part of the reorganization, the following steps were taken in 2019 and in  2020: - During 2019, Elenia Palvelut Oy (current parent company of Elenia Group, renamed as Elenia Oy subsequently, business ID 2658611-8) incorporated Elenia Newco Oyj (renamed as Elenia Verkko Oyj subsequently) as its direct subsidiary - During 2019 also in upper group Lakeside Network Investments S.à r.l. incorporated a new company Elenia Investment S.à r.l. as its direct subsidiary. - In January 2020, Elenia Oy (the former parent company of Elenia Group, business ID 2445423-4) sold 100% of the shares in Elenia Palvelut Oy to Elenia Investment S.à r.l. -In January 2020, the shares in Lakeside Network Investments Holding B.V. have been transferred by series of share-for-share exchanges from Lakeside Network Investments S.à r.l. first to Elenia Group's parent company Elenia Oy and forward ta the same day to to Elenia Verkko Oyj. - These steps in January 2020 caused that the parent company of Elenia Group changed from Elenia Oy (business ID 2445423-4) to Elenia Palvelut Oy (renamed as Elenia Oy subsequently, business ID 2658611-8) and new Elenia Verkko-subgroup formed. - In July 2020, Elenia Oy (the former parent company of Elenia Group, business ID 2445423-4) merged upstream into Elenia Verkko Oyj, with Elenia Verkko Oyj was the surviving company. - In July 2020, Elenia Finance Oyj (business ID 2584057-5) merged into Elenia Verkko Oyj, with Elenia Verkko Oyj is the surviving company. - In July 2020, Elenia Finance (SPPS) S.à r.l. (business ID B181775) merged into Elenia Holdings S.à r.l. (business ID B181773) with Elenia Holdings S.à r.l. is the surviving company. - In July 2020, Elenia Holdings S.à r.l. and Lakeside Network Investments Holding B.V. (business ID 53150309) merged into Elenia Verkko Oyj, with Elenia Verkko Oyj is the surviving company. - After all the above mergers Elenia Palvelut Oy (current parent of Elenia Group, business ID 2658611-8) was renamed as Elenia Oy. - In December 2020 new holding entity Elenia Innovations Oy was established as subsidiary of Elenia Verkko Oyj. As at 31 December 2020 Elenia Verkko- subgroup consists of Elenia Verkko Oyj (business ID 3001882-6) and Elenia Innovations Oy (business ID 3173274-8) and operational Elenia Group consists of parent company Elenia Oy (business ID 2658611-8) and Verkko- subgroup. After taking over the above steps for the reorganization of the Verkko Group, Elenia Verkko Oyj's immediate parent company is Elenia Oy, and above that there is Elenia Investments S.à r.l.. Elenia Group Oy will be the ultimate Finnish parent company of Elenia Oy. Considering the reorganization steps that was taken in 2020, former Elenia Group's parent Elenia Oy was merged into Elenia Verkko Oyj and assets and liabilities were therefore transferred to Elenia Verkko Oyj. Given that the Secured Creditors approved the reorganizations and as the mergers are universal succession, the reorganization has no adverse impact on the creditors and their rights. Furthermore, as mergers were universal succession, therefore, the Board of Directors prepares the annual accounts on a going concern basis.		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 experience and expectations of future events that are considered probable on the reporting date. However, actual results and timing may differ from these estimates. The Group’s significant accounting estimates have been described in the relevant note. 1.4.3 Restructurings under common control The restructuring of the group structure has been carried out in accordance with the principle of common control in which the the ultimate controlling parties have not changed. Currently, there is no specific guidance on accounting for common control transactions under IFRSs. The IASB has a project on this topic with a view to examing the definition of common control and the methods of accounting for business combinations under common control in the acquirer's consolidated and separate financial statements. At the time of preparation of these consolidated financial statements, this project is still under study by the IASB. Comments on the puplished discussion paper were received by 1 September 2021 and IASB is currently reviewing them. Elenia Group accounts for restructurings (share-for-share exchange and business combinations) under common control using pooling of interest method. Under this method, the assets and liabilities of the acquired subsidiaries are recognised at their previous carrying amounts. No adjustments are made to reflect fair values and no new assets and liabilities of the acquired subsidiaries are recognised in these consolidated financial statements. As a result no new goodwill is recognised in these consolidated financial statements. Any difference between the consideration paid / transferred and the shares acquired is reflected within the equity. 1.4.4. Segment reporting The Group consists of only one segment, the networks business.

 

 

	2 Operating profit
	2.1 Revenue and trade and other current receivables
	2.1.1 Contracts with customers: revenue recognition and payment terms (Accounting policy)   Revenue from the distribution of electricity is recognised at the time of delivery. Revenue from 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 are recognised as revenue in the consolidated statement of profit or loss. 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 the end of 2017 revenue 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 demolition 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 future refunds. The Group pays to the customers voluntary outage compensations due to interruption of over 6 hours in the electricity distribution. 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 Market 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.						2.1.2 Disaggregation of revenue Group revenue consists of revenue from the distribution of electricity, connection fees paid by the customers for joining an electricity network and other revenues. Other revenues consist mainly contracting income.
							Revenue by type of service
							EUR 1,000		2021		2020
							Distribution of electricity		317 330		297 185
							Connection fees		967		699
							Other revenues		1 889		1 680
							Total		320 185		299 564
							Timing of revenue recognition
							EUR 1,000		2021		2020
							Transferrred at a point in time		319 218		298 865
							Transferred over time		967		699
							Total		320 185		299 564
							2.1.3 Liabilities related to contracts with customers
							EUR 1,000		2021		2020
							Non-current liabilities related to contracts with customers		29 893		22 166
							Current liabilities related to contracts with customers		1 110		810
							Total		31 003		22 976
							Liabilities related to contracts with customers include the unrecognised part of new connection revenue for the electricity network. Revenue will be recognised over a period of next 30 years. The amount reported as current liabilities will be recognized during the next 12 months.

 

 

	2.1.4 Trade and other current receivables
	2.1.4.1 Trade receivables (Accounting policy) Trade receivables are recorded on the balance sheet at their fair value.  Impairment is recorded on trade receivables 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 incurred as a result of transactions subject to IFRS15. The impairment 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.												Impairment of trade receivables Group records lifetime expected credit losses from all trade receivables incurred as a result of transactions subject to IFRS15. Trade receivables do not contain any significant financing component. 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 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 receivables are booked to separate book-keeping account in Group reporting. The calculation of the amount of credit loss reserve is based on the persentages calculated from historically realized credit losses. The customers are segmented to private 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 monthly basis based on customers' credit rating level and payment history
	Trade and other current receivables
	EUR 1,000							2021		2020
	Trade receivables							23 546		21 616
	Accrued income and prepaid expenses							43 887		37 961
	Other current receivables							242		12 416
	Total trade and other receivables							67 675		71 993
	Break-down of accrued income and prepaid expenses												Breakdown and impairment of trade receivables by age (IFRS)
	EUR 1,000							2021		2020			EUR 1,000				Trade receivables
													31 Dec 2021				Undue	1-90 days	91-180 days	Over 180 days	Total
	Sales accruals							43 406		36 546			Trade receivables by age				19 021	4 299	246	417	23 983
	Accrued financial items (prepayments)							280		858
	Other accrued income and receivables							201		557			Expected credit loss rate, private customers				0,1 %	3,7 %	29,6 %	16,3 %
								43 887		37 961			Expected credit loss, private customers				-15	-161	-73	-68	-317
													Expected credit loss rate, company customers				0,0 %	0,9 %	1,1 %	18,1 %
	2.1.4.2 Financial risk management Credit risk Due to electricity distribution companies having regional monopolies based on electricity distribution system licenses, customers do not have the option of choosing which distribution company's network they connect to. As a result, the local distribution company always provides electricity distribution services, with the exception of electricity generation customers who, pursuant to the Finnish Electricity Market Act, have the right to choose which electricity distribution company's network to connect to. 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 collection letters. Also the wide fragmentation of the customer base reduces the credit risk. The global Covid-19 pandemic had a significant impact on the business environment during 2020 and 2021, but its impact on Elenia Group’s credit risk has been very small. Trade receivables   The Group's trade receivables at the end of 2021 were EUR 23.5 million (2020: EUR 21.6 million). EUR 31,8 thousand collateral securities were received for trade receivables (2020: EUR 48.7 thousand).												Expected credit loss, company customers				-4	-38	-3	-75	-120
													Total expected credit losses				-19	-199	-75	-143	-437
													Total trade receivables				19 002	4 100	171	273	23 546
													Breakdown and impairment of trade receivables by age (IFRS)
													EUR 1,000				Trade receivables
													31 Dec 2020				Undue	1-90 days	91-180 days	Over 180 days	Total
													Trade receivables by age				17 798	3 336	282	869	22 285
													Expected credit loss rate, private customers				0,1 %	4,1 %	35,9 %	11,4 %
													Expected credit loss, private customers				-16	-135	-101	-99	-351
													Expected credit loss rate, company customers				0,0 %	0,5 %	2,5 %	33,3 %
													Expected credit loss, company customers				-4	-17	-7	-289	-318
													Total expected credit losses				-20	-153	-108	-388	-669
													Total trade receivables				17 778	3 184	174	481	21 616
													The fair value of trade and other receivables does not materially differ from the values on the consolidated statement of financial position. All trade receivables are denominated in euros.
	Volume and price risks Electricity distribution operations do not involve particular volume or price risks due to being subject to reasonable return under electricity distribution license.												Change in expected credit losses				2021		2020
													Expected credit loss 1 Jan				669		0
													Additions				276		1375
													Credit losses				-508		-706
													Expected credit loss 31 Dec				437		669

 

 

	2.2 Other operating income
	2.2.1 Other operating income (Accounting policy)   Other operating income includes income from non-operating activities, such as income from trade receivables collection and from sales of used fixed assets, insurance compensation and rental income. Also possible gains from the sales of emission rights are included in other operating income. Government grants relating to the other purpose than the purchase of property, plant and equipment are recognised 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	2021		2020
	Indemnities	729		746
	Income from the trade receivables collection	1 060		1 097
	Income from the sales of obsolete materials and used fixed assets	4		0
	Other operating income	202		438
	Total	1 996		2 281

 

 

	2.3 Other operating expenses and related liabilities
	2.3.1 Other operating expenses (Accounting policy) Outage compensations Outage compensations in accordance with the Electricity Market Act, which are paid to the customers due to interruption 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 compensations due to interruption of over 6 hours in the electricity distribution. These compensations are recognised as a reduction 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 asset 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 expenditure as an asset, the asset is carried at cost less any accumulated 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 period of development, the asset is tested for impairment annually. The Group has not recognised any development expenditures as an intangible asset.					Other operating expenses
						EUR 1,000	2021		2020
						Lease expenses	-298		-768
						External services	-1 510		-3 297
						IT and communication expenses	-2 220		-2 175
						Research and development costs	-645		-1 806
						Marketing and communications	-139		-164
						Insurances	-220		-212
						Other personnel expenses	-120		-184
						Travelling expenses	-42		-51
						Outage compensation costs	-594		-3 470
						Elenia service expenses	-13 810		-13 398
						Other expenses	-1 747		-2 750
						Total	####		####
						Research and development costs mainly include costs of research projects that do not meet the criteria for capitalisation.
						Audit fees
						EUR 1,000	2021		2020
						Auditing fees	-48		-296
						Fees for tax services	-11		-33
						Fees for other services	-69		-49
						Total	-128		-378
						Ernst & Young was appointed as the auditor until the Annual General Meeting held in the 2022 reporting period.
						Auditing fees   Auditing fees include fees for auditing the consolidated financial statements and closing 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.

 

 

	2.3.2 Trade and other current payables
	EUR 1,000					2021		2020
	Short-term financial lease liabilities					1 531		3 943
	Trade payables					16 460		7 244
	Accrued expenses
		Employee benefits expenses				1 625		1 466
		Interest expenses				13 364		14 153
		Other accrued expenses				44 687		34 625
	Liabilities related to contracts with customers					1 110		810
	Other liabilities
		VAT liability				12 448		12 392
		Energy taxes				9 569		8 955
		Tax liability for the period				0		1
		Prepayments received				8 767		6 234
		Equity repayment liability				204 447		550 000
		Other liabilities				3 422		3 681
	Total					317 429		643 506
	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 deferred financing items.

 

 

	2.3.3 Employee benefits expenses
									Elenia Group applies two incentive plans. All employees of the Elenia Group are included within the scope of the short-term annual 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 remuneration paid by the Group to its employees consists of salaries, fringe benefits and short-term performance bonuses. All employees of the Group are included within the scope of the performance bonus scheme. The annual performance bonuses (i.e. short-term annual performance bonus plan) are based for example on the Group profitability, 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 in 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 improve 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 2021, the remunerations related to the 2016-2018, 2017-2019 and 2018-2020 programmes were paid. During 2021 there were three programmes on-going: 2019-2021, 2020-2022 and 2021-2023. During 2021 EUR 59 thousand (2020: EUR 62 thousand) were paid out related to the long-term incentive plan in Elenia Networks Group.   The key members of the management have no share or option based incentive schemes. Five of the key management persons 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 approximately 0.3% of Elton Investment S.à r.l. after the arrangement. There is also a shareholder loan between Manco Investment Oy and Elton Investment S.à r.l. The original loan amount was 0.3 million euros. The equity investment has been made at fair market values and it therefore is not a compensation plan. The equity ownership 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.
	EUR 1,000				2021		2020
	Salaries and remuneration				-3 164		-2 785
	Pensions
	Defined contribution plans				-473		-520
	Defined benefit plans				10		0
	Social security costs				-72		65
	Total				-3 698		-3 239
	The total remuneration paid by Elenia Group to its employees consists of salaries,
	fringe benefits and short-term performance bonuses.
	EUR 1,000				2021		2020
	Salaries and remuneration paid to other key members of the management
	Salaries and other short-term employee benefits				222		206
	Other long-term employee benefits				59		62
	Pension expenses related to salaries and employee benefits				51		48
	Salaries and remuneration were not paid to CEO in 2021 and 2020.

 

 

	2.3.4 Provisions
	Provisions (Accounting policy) Provisions are recognised when the Group has a present legal 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. Provisions (Accounting estimates) 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. 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 networks has been calculated by discounting estimated future 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 account while compiling the calculations and the discount rates applied correspond to the rates used in impairment testing of goodwill for network.				Provisions
					2021
					EUR 1,000	Provision for refunds of connection fees	Total
					Provisions at 1 January	8 168	8 168
					Increase	-232	-232
					Use of provisions	-271	-271
					Provisions at 31 December	7 665	7 665
					Provisions
					2020
					EUR 1,000	Provision for refunds of connection fees	Total
					Provisions at 1 January	7 907	7 907
					Increase	659	659
					Use of provisions	-398	-398
					Provisions at 31 December	8 168	8 168

 

 

	3 Investments and Lease commitments
	3.1 Property, plant and equipment (Accounting policy) Property, plant and equipment comprise mainly electricity distribution networks, machinery, equipment and buildings. Property, plant and equipment are stated at original acquisition cost less accumulated depreciation and accumulated impairment losses, if any (see Note 3.2 Accounting policy for Impairment of non-financial assets). The original acquisition cost includes expenditure that is directly attributable to the acquisition of an item. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the acquisition cost of the item can be reliably 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 expense 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 capitalized 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 financial period in which they are incurred. Land and water areas are not depreciated since they have indefinite useful lives.  Depreciation on other assets is calculated on a straight-line basis over the estimated useful lives of the assets as follows: Buildings and structures15-50 years Electricity transmission network25-40 years Electricity distribution network10-30 years Machinery and equipment3-30 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 estimated useful life of the asset. Leases of buildings and vehicles 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 asset’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 selling price and carrying value and recognised in the consolidated statement of profit or loss under other operating income 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 borrowing 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.									Land and water areas	Buildings	Networks	Machinery and equip-ment	Other tangible assets	Prepay-ments	Total
								2021
								EUR 1,000
								Cost at 1 January		2 105	6 077	2 400 810	155 279	56	23 091	2 587 419
								Additions		0	19	158 529	5 891	0	84	164 524
								Additions through revaluations		0	387	0	0	0	0	387
								Disposals		0	-83	-14 609	-566	0	0	-15 259
								Transfers between balance sheet items		0	0	276	0	0	-1 755	-1 479
								Cost at 31 December		2 105	6 400	2 545 006	160 604	56	21 421	2 735 592
								Accumulated depreciation, amortisation and impairment at 1 January		0	-5 542	-958 127	-140 767	-54	0	-1 104 489
								Depreciation and amortisation for the year		0	-219	-74 285	-4 559	-1	0	-79 064
								Accumulated depreciation and amortisation on disposals		0	0	13 726	0	0	0	13 726
								Impairment for the year *		0	0	-5 389	0	0	0	-5 389
								Accumulated depreciation, amortisation and impairment at 31 December		0	-5 761	-1 024 075	-145 326	-55	0	-1 175 216
								Book value at 31 December	2021	2 105	639	1 520 932	15 278	1	21 421	1 560 376
								Book value at 31 December	2020	2 105	535	1 442 684	14 512	2	23 091	1 482 930
										Land and water areas	Buildings	Networks	Machinery and equip-ment	Other tangible assets	Prepay-ments	Total
								2020
								EUR 1,000
								Cost at 1 January		2 081	6 633	2 253 988	156 171	56	20 298	2 439 227
								Additions		25	0	161 463	1 469	0	2 846	165 802
								Disposals		0	-556	-14 640	-2 413	0	0	-17 609
								Transfers between balance sheet items		0	0	0	52	0	-52	0
								Cost at 31 December		2 105	6 077	2 400 810	155 279	56	23 091	2 587 419
								Accumulated depreciation, amortisation and impairment at 1 January
										0	-5 329	-899 924	-136 430	-54	0	-1 041 737
								Depreciation and amortisation for the year		0	-213	-66 935	-6 214	-1	0	-73 363
								Accumulated depreciation and amortisation on disposals		0	0	14 640	1 878	0	0	16 518
								Impairment for the Comparative_Year *		0	0	-5 908	0	0	0	-5 908
								Accumulated depreciation, amortisation and impairment at 31 December		0	-5 542	-958 127	-140 767	-54	0	-1 104 489
								Book value at 31 December	2020	2 105	535	1 442 684	14 512	2	23 091	1 482 930
								* Networks' impairment for the year relates to the demolition of electricity networks.

 

 

	3 Investments and Lease commitments
	3.2 Intangible assets (Accounting policy) 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 implementation of the software. These costs are amortised over their estimated useful lives (three to five years). Costs associated with developing or maintaining computer software are recognised as an expense as incurred.   IFRS interpretations 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 according 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. Otherwise the license is considered to be a service contract and costs are expensed when incurred.  Concerning the implementation costs of a cloud based software only customization related costs can be capitalized if they create and asset 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. Agenda decision has an impact on how implementation costs in Elenia's ongoing ERP project are accounted for. According to FAS accounting these costs incurred in 2021 are activated as intangible assets but in the groups consolidated IFRS financial statements they are expensed. Compensation paid to landowners 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. One-time compensation payments paid to landowners for inconvenience and damage caused by the network company’s overhead lines, cables and equipment are capitalised. 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 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. Recurring annual compensation payments are recognised 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 intangible 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 licences3-5 years Customer relationships20 years Compensation paid to landowners10-30 years The assets’ useful lives are reviewed and adjusted, if appropriate, 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 indication of impairment. When considering the need for impairment, 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 recoverable 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 equipment and intangible assets other than goodwill is reversed in the event of a change in circumstances that results in the asset’s recoverable amount changing from the time the impairment 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 individually 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 December and when circumstances indicate that the carrying value may be impaired. In assessing value in use, the estimated future cash flows expected to be derived from a cash-generating unit are discounted to their present value. The financial projections used in the calculations are based on business plans approved by management. Testing goodwill for impairment  (Accounting estimates) The Group tests goodwill annually for impairment. The recoverable amounts of cash-generating units are based on estimated future cash flows. Preparation of these estimates requires management to make assumptions relating to future cash flows. The main variables in determining cash flows are the discount rate and the assumptions and estimates used. The Group has conducted a sensitivity analysis of the effects of the key assumptions underlying the impairment testing on the test results.
	3.2 Intangible assets
									Impairment testing of goodwill   Goodwill has been allocated to the cash generating unit, Network 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. Elenia performed its annual impairment test in December 2021. Due to the regulated and stable nature of the electricity distribution business, the basis for cash flow projections is the long-term business plan covering the period 2022-2055 which has been approved by the Board of Directors. A volume growth of approximately 0.5% p.a. has been incorporated for the forecast period. The discount rate applied for Network segment is 5.0% based on the prevailing return and risk assumptions in the business (the applied pre-tax discount rate in 2020 was 4.8%). In 2021, the Electricity Market Act was amended by the Act 730/2021 that came into force on August 1, 2021. Based on the updates in the legislation, the Finnish Energy Authority updated the regulatory methods, which govern electricity distribution tariffs, for the remainder of the current regulatory period (years 2022-2023). The changes, which have the most significant impact on Elenia’s projected cash flows include updating of the unit prices underlying the regulatory asset base, updating of the reasonable rate of return (regulatory WACC), and removal of the security of supply incentive. The changes in the regulatory methods had also other, indirect impacts in Elenia’s business drivers. Long term capital expenditure plans have been prepared to meet the security of supply requirements in line with the Electricity Market Act (588/2013) and have not been updated for potential implications of the amendments to the Electricity Market Act, including prolongation of the deadline to comply with the security of supply requirements from 2028 to 2036. The projected cash flows reflect the amendments to the regulatory methods in effect for 2022-2023 with the expectation of the regulatory framework remaining relatively stable subsequently. The most significant regulatory changes listed above had a negative impact on the estimated market value of Elenia. Despite the negative impact on the fair value, there is significant headroom for the book value. Sensitivity to changes in assumptions in discount rate Discount rate of the projected cash flow is based on Elenia’s view of the WACC parameters. The discount rate (pre-tax) increasing by 4.4%-points would cause the recoverable value of the assets to be equal to its book value.
	2021		Goodwill	Intangible rights	Other long-term expenditure	Total
	EUR 1,000
	Cost at 1 January		417 823	21 863	30 559	470 245
	Additions		0	64	7 580	7 644
	Transfer between balance sheet items		0	641	838	1 479
	Cost at 31 December		417 823	22 568	38 977	479 368
	Accumulated depreciation, amortisation and impairment at 1 January		0	-13 697	-20 465	-34 163
	Depreciation and amortisation for the year		0	-547	-1 348	-1 895
	Accumulated depreciation, amortisation and impairment at 31.12.2021		0	-14 244	-21 813	-36 057
	Book value at 31 December 2021		417 823	8 324	17 164	443 310
	Book value at 31 December 2020		417 823	8 165	10 094	436 082
	2020		Goodwill	Intangible rights	Other long-term expenditure	Total
	EUR 1,000
	Cost at 1 January		417 823	21 598	26 653	466 074
	Additions		0	265	4 028	4 293
	Disposals		0	0	-122	-122
	Cost at 31 December		417 823	21 863	30 559	470 245
	Accumulated depreciation, amortisation and impairment at 1 January		0	-13 184	-19 448	-32 632
	Depreciation and amortisation for the year		0	-513	-1 085	-1 599
	Accumulated depreciation and amortisation on decrease		0	0	68	68
	Accumulated depreciation, amortisation and impairment at 31.12.2020		0	-13 697	-20 465	-34 163
	Book value at 31 December 2020		417 823	8 165	10 094	436 082
	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 euros, since 97,8 million euros was allocated to heating business which was sold in 2019.

 

 

	3.3 Lease commitments
	3.3.1 Leases (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 recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets concerning 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-contracts. 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 effect of these costs on the income statement in 2021 was approximately EUR 37 thousand (2020: EUR 37 thousand) . The Group’s management has estimated that lease contracts related to indoor secondary substations, primary substations and certain office premises are immaterial contracts (referring to IAS 1 which defines the materiality of the information presented in the financial statements) and therefore IFRS 16 has not been applied to these contracts. The definition of contracts as “immaterial” is based on the low value of leases paid under these contracts which causes the lease liabilities 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 consolidated statement of profit or loss as other operating expenses over the lease term. The effect of these costs on the income statement in 2021 was approximately EUR 79 thousand (2020: EUR 60 thousand).						One-time subsurface rights compensations are paid to landowners based on perpetual contracts. Compensations are capitalized to the networks assets in the consolidated statement 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 contracts under IFRS 16. Right-of-use assets The Group recognises 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 accumulated 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 recognised, initial direct costs incurred, and lease payments made at or before the commencement 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 between 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 purchase option, depreciation is calculate using the estimated useful life of the asset. The right-of-use assets are also subject to impairment (see accounting policies in Notes 3.1 and 3.2). At the transition date the right-of-use assets were recognised based on the amount equal to the lease liabilities, adjusted for any related prepaid and accrued lease payments previously recognised because the Group has adopted the IFRS 16 standard by using the modified retrospective method. Lease liabilities At the commencement date of the lease, the Group recognises 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 terminate. 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 interest 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.
	3.3 Lease commitments
	In addition, the carrying amount of lease liabilities is remeasured if there is a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine 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.   At the transition date lease liabilities were recognised based on the present value of the remaining lease payments, discounted using as interest rate an estimated average medium-term financing cost at the date of initial application because the Group has chosen to adopt the IFRS 16 standard by using the modified retrospective method.							Amounts recognised in profit or loss
								EUR 1,000		2021		2020
								Depreciation expense of right-of-use assets		-2 320		-3 888
								Interest expense on lease liabilities		-90		-278
								Expense related to short-term leases (incl. in other operating expenses)		-37		-37
								Total amount recognised in profit or loss		-2 446		-4 203
								During 2021 the Group had total cash outflows for leases of EUR 3 918 thousand(2020: EUR 3,836 thousand).
	Set out below are the carrying amounts of right-of-use assets recognised and the movements
	during the period:
	2021	Buildings	Machinery and equipment		Total			The Group has not lease contracts that contains variable payments, but all lease contracts contains fixed rent.
	EUR 1,000
	As at 1 January	253	3 702		3 955
	Additions	19	74		93			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).
	Revaluations	387	0		387
	Disposals	-83	-566		-649
	Depreciations	-208	-2 112		-2 320
	As at 31 December	368	1 098		1 466
	2020	Buildings	Machinery and equipment		Total
	EUR 1,000							The lease contract concerning the main premises of the group will change from a fixed term to valid untill further notice on 31.3.2022. Management has assessed in December 2021 that the coming lease period will be at least 2 years. The lease contract has been revaluated based on this assesment and the resulting addition to lease liabilities is 387 thousand euros.
	As at 1 January	1 011	7 377		8 388
	Additions	0	17		17
	Disposals	-556	-18		-575
	Depreciations	-202	-3 672		-3 874
	As at 31 December	253	3 702		3 955
								According to management's assumption, the Group estimates that it will not use termination options of car's and electricity meters' leases
	Set out below are the carrying amounts of lease liabilities and the movements during the period:
	Lease liabilities		2021		2020
	EUR 1,000
	As at 1 January		5 176		10 228
	Disposals		-80		-6 701
	Payments		-3 080		1 927
	Interest expenses		-90		-278
	As at 31 December		1 927		5 176
	Non-current		395		1 233
	Current		1 531		3 943
	The maturity analysis of lease liabilities are disclosed in Note 4.2.6.

 

 

	4 Capital structure and financial items
	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 is capital-intensive, the Group must ensure it has adequate capital to meet its operating requirements. Business planning includes assessing the adequacy of available capital in relation to the risks arising from business operations and the operating environment.									The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition 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 consolidated statement of profit or loss are also recognised in other comprehensive income or statement of profit or loss, respectively). Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to 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 reporting date. 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						2021		2020
										Interest expenses
											Loans from financial institutions					-446		-709
											Bonds and notes					-35 925		-38 391
											Other long-term loans					0		0
											Interest expenses related to lease liabilities					-90		-277,9
											Other interest expenses					-419		-1 186
	4.1 Finance income and costs									Total interest						#####		####
										Other finance costs						-3 697		-4 302
	Translation differences (Accounting policy) 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 income 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 attributable to exchange differences on those monetary items are also recorded in other comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange 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.									Exchange rate losses
											Loans and receivables					-1		-9
										Total finance costs						-40 579		####
										Interest income
											Other interest income					937		3 163
										Dividend income						0		0
										Exchange rate gains
											Loans and receivables					0		3
										Other finance income						1		1
										Total finance income						938		3 167
										Finance costs (net)						-39 641		####
										Finance income and costs
										Interest expenses include interest expenses on interest-bearing loans. Other interest expenses mainly consist of deposit fees amounting to EUR 0.4 million.

 

 

	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 instruments and to which the fair value option is not applied are measured following initial recognition either at amortised 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 recognised through other comprehensive income will no longer be recognised 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 income.   With regard to financial liabilities, the main amendment is that when applying the fair value option, the effect of changes in the entity’s own credit risk on the fair value of the financial liability will be recognised through other comprehensive income. These changes in value recognised through other comprehensive income will no longer be recognised in the consolidated statement of profit or loss.   The impairment requirements introduced in IFRS 9 are based on an expected 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. Overall, 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 approach and recorded lifetime expected losses on all trade receivables.		Financial instruments – initial recognition and subsequent measurement (Accounting policy)   Classification of current and non-current assets and liabilities An asset or a liability is classified as current when it is expected to be realised 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 current 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 financial assets carried at amoritsed 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 recognised initially at fair value plus transaction costs, except in the case of financial assets recorded at fair value through profit or loss. Purchases or sales of financial assets are recognised on the trade date. The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial  asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS15. Refer to the accounting policies in Note 2.1.1 Revenue from contracts with customers. Subsequent measurement The subsequent measurement of financial assets depends on their classification as described below:

 

 

	4.2 Financial assets and liabilities
	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 assests carried at amortised cost also include trade receivables and other receivables. Loans are carried at amortised cost using the effective interest rate method less accumulated impairment. Amortised 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 operating expenses for receivables. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present 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 allowance account and the loss is recognised in the consolidated statement of profit or loss. Interest income continues to be accrued 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 recorded 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 recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to finance costs in the consolidated statement of profit or loss. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for selling or repurchasing in the near term. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments as defined by IFRS 9.		Financial assets at fair value through profit or loss are carried 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 recognition 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 losses from fair value measurement are treated as determined by the purpose of the derivatives. The effects on results of changes in the value of derivatives that are eligible for hedge accounting and that are effective hedging instruments are presented 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 recognised directly in other comprehensive income. Any ineffective portion is recognised immediately in the consolidated 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 derecognised 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 either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

 

 

	4.2 Financial assets and liabilities
	4.2.3 Impairment of financial assets The Group recognises 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, discounted at an approximation of the original effective interest rate. ECL' are recognised 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 applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-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 financial 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 attributable transaction costs. The Group’s financial liabilities include trade and other payables, loans and borrowings and derivative financial instruments. Subsequent measurement The measurement of financial liabilities depends on their classification as described below:		Loans and borrowings After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the consolidated statement of profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process. Amortised 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 as finance costs in the consolidated 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 designated 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 entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Gains or losses on liabilities held for trading are recognised in the consolidated statement of profit or loss. Derecognition of Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the consolidated 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 recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

 

 

	4.2.6 Carrying amounts by category and maturity profile of financial assets and liabilities
							Cash at banks and on hand Elenia had short-term bank deposits amounting to EUR 71.8 million (2020: 113.8 million).  All bank deposits were denominated in euros. Bonds and notes The fair value of the bonds have been calculated based on the required rate of return estimated using the EUR-denominated swap rate yield curve and the estimated risk premium calculated based on the using the market quotes of Elenia Verkko Oyj's bonds at the balance sheet date. Financial liabilities Interest-bearing liabilities at the balance sheet date totalled EUR 1,835 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.
	Carrying amounts of financial assets and liabilities by category
	Values at 31 December 2020
	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	23 546	23 546	23 546
	Available-for-sale financial assets	4.2.8	-	0	0
	Cash and cash equivalents		71 841	71 841	71 841
	Total Current assets		95 387	95 387	95 387
	Carrying amount by category		95 387	95 387	95 387
							The table below summarizes the maturity profile of the Group's financial liabilities based on contractual payments.
	Non-current financial liabilities
	Bonds and notes	4.2.8-9	-1 682 046	-1 682 046	-1 895 066		31 December 2021			Effective interest rate %	Maturity
	Loans from financial institutions	4.2.8-9	-150 000	-150 000	-150 000		EUR 1,000				Within 1 year	1-5 years	Over 5 years	Total
	Other long-term loans	4.2.8-9	-	-	-
	Interest-bearing non-current liabilities						Loans from financial institutions			0,28 %	0	0	150 000	150 000
	- Leases	3.3	-395	-395	-395		Bonds			1,89 %	0	140 000	1 031 000	1 171 000
	Total interest-bearing non-current liabilities		-1 832 441	-1 832 441	-2 045 461		Notes			2,71 %	0	0	518 500	518 500
	Current financial liabilities						Lease liabilities				0	395	0	395
	Bonds and notes	4.2.8-9	-	0	-		Other long-term loans				-	-	-	-
	Loans from financial institutions	4.2.8-9	-	-	-
	Other current interest-bearing liabilities						Total interest-bearing non-current liabilities							1 839 895
	- Leases	3.3	-1 531	-1 531	-1 531		Lease liabilities				1 531	0	0	1 531
	Trade payables	2.3.2	-16 460	-16 460	-16 460		Total current interest-bearing liabilities							1 531
	Total current financial liabilities		-17 991	-17 991	-17 991		Trade payables				16 460	0	0	16 460
	Carrying amount by category		-1 850 433	-1 850 433	-2 063 452		Total current financial liabilities							16 460
							Total				17 991	140 395	1 699 500	1 857 887
	Values at 31 December 2020
	Balance sheet item, EUR 1,000	Note	Amortised cost	Carrying value of balance sheet items	Fair value		31 December 2020			Effective interest rate %	Maturity
	Current financial assets						EUR 1,000				Within 1 year	1-5 years	Over 5 years	Total
	Trade receivables and other non-interest-bearing receivables	2.1.4	21 616	21 616	21 616		Loans from financial institutions			0,39 %	0	0	150 000	150 000
	Available-for-sale financial assets	4.2.8	-	-	-		Bonds			1,87 %	0	0	1 171 000	1 171 000
	Cash and cash equivalents		113 780	113 780	113 780		Notes			2,71 %	0	0	518 500	518 500
	Total Current assets		135 396	135 396	135 396		Lease liabilities				0	1 233	0	1 233
	Carrying amount by category		135 396	135 396	135 396		Total interest-bearing non-current liabilities							1 840 733
							Lease liabilities				3 943	0	0	3 943
							Total current interest-bearing liabilities							3 943
							Trade payables				7 244	0	0	7 244
	Non-current financial liabilities						Total current financial liabilities							7 244
	Bonds and notes	4.2.8-9	-1 681 082	-1 681 082	-1 962 038		Total				11 187	1 233	1 839 500	1 851 920
	Loans from financial institutions	4.2.8-9	-150 000	-150 000	-150 000
	Other long-term loans
	Interest-bearing non-current liabilities
	- Leases	3.3	-1 233	-1 233	-1 233
	Total interest-bearing non-current liabilities		-1 832 315	-1 832 315	-2 113 270
	Current financial liabilities
	Bonds and notes	4.2.8-9	-	-	-
	Loans from financial institutions	4.2.8-9	-	-	-
	Other current interest-bearing liabilities
	- Leases	3.3	-3 943	-3 943	-3 943
	Trade payables	2.3.2	-7 244	-7 244	-7 244
	Total current financial liabilities		-11 187	-11 187	-11 187
	Carrying amount by category		-1 843 502	-1 843 502	-2 124 458
	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 2021 and 2020.

 

 

	4.2.7 Changes in financial liabilities arising from financing activities
	Changes in liabilities arising from financing activities
	EUR 1,000	1 Jan 2021	Cash flows	Other changes	31 Dec 2021
	Current interest-bearing loans and borrowings (excl. items listed below)	0	0	0	0
	Current obligations under lease liabilities	3 943	-3 080	668	1 531
	Non-current interest-bearing loans and borrowings (excl. items listed below)	1 831 082	0	964	1 832 046
	Non-current obligations under lease liabilities	1 233	0	-837	395
	EUR 1,000	1 Jan 2020	Cash flows	Other changes	31 Dec 2020
	Current interest-bearing loans and borrowings (excl. items listed below)	88 920	-89 024	104	0
	Current obligations under lease liabilities	4 181	-3 873	3 635	3 943
	Non-current interest-bearing loans and borrowings (excl. items listed below)	1 553 897	280 000	-2 814	1 831 082
	Non-current obligations under lease liabilities	5 411	0	-4 179	1 233
	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 transaction costs of bonds and notes using the effective interest rate method. The Group classifies interest paid as cash flows from operating activities.

 

 

	4.2.8 Fair value hierarchy of financial assets and liabilities
	Fair value measurement of financial instruments (Accounting policy) Fair value related to disclosures for financial instruments 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 hierarchy Note 4.2.8 -  Financial instruments (including those carried at amortised 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 between 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 advantageous market for the asset or liability The principal or the most advantageous market must be accessible 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 participants act in their economic best interest. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value. The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations, without any deduction for transaction costs. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. 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 models For assets and liabilities that are recognised in the consolidated financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between 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 hierarchy 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.									Fair value hierarchy All assets and liabilities for which fair value is measured or disclosed 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 measurement as a whole: Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
										As at 31 December 2021, the Group held the following financial instruments carried at amortised cost in the consolidated statement of financial position:
										Financial assets and liabilities	Level 1		Level 2		Level 3		Total
										EUR 1,000	2021	2020	2021	2020	##	2020	2021	2020
										Financial instruments, non-current liabilities
										Bonds and notes	0	0	-1 895 066	######	0	0	-1 895 066	######
										Loans from financial institutions	-150 000	-150 000	0	0	0	0	-150 000	-150 000
										Total non-current financial liabilities	####	####	######	#####	0	0	######	#####
										Total financial liabilities	####	####	######	#####	0	0	######	#####

 

 

	4.2.9 Risk management
	Liquidity risk Liquidity risk refers to the risk of the Group not having adequate 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 liquidity 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 adequacy of long-term liquidity is assessed by 12-month forecasts conducted monthly.								Refinancing risk Elenia Verkko Oyj issues bonds and notes. Bonds are issued under the EUR 3 billion EMTN programme and listed at the London Stock Exchange. Notes are unlisted private placements targeted mostly to the North American investors through private placements. The Group has financial covenants relating to interest cover and leverage. The covenants are typical in such arrangements. There were no covenant breaches in 2021. 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 end of 2021 Group had no borrowings from the Capex Facility nor from the Working Capital Facility.  A the end of 2021 Elenia Verkko Oyj had a drawn loan facility with the European Investment Bank (EIB) EUR 50 million maturing in 2028 and EUR 100 million maturing in 2030. Elenia Verkko Oyj has agreed another EUR 100.0 million credit facility with the At the end of 2021 there were no drawdowns from the credit facility.
	Cash and cash equivalents and committed unutilized credit facilities
	31 Dec 2021
	EUR 1,000			Facility amount	In use	Available amount	Maturity
	Capex facility			350 000	0	350 000	1-5 years		Interest rate risk Elenia is exposed to interest rate risk mainly through its interest-bearing net debt. The objective of the Group's interest rate risk management is to limit volatility of interest expenses in the income statement. The Group's interest rate risk management is handled by Group Treasury. The interest rate risk is managed by entering into interest rate swaps and by drawdown of loans with fixed interest. At the balance sheet date 91% (2019: N/A) of the loans were fixed rate loans. A parallel shift of +/- 1.0 percentage points in the interest rate curve at the balance sheet date would have EUR +/- 1.7 million (2020: +/- 1.7 million) effect on the interests relating to floating rate loans.
	Working Capital facility			60 000	0	60 000	1-5 years
	Liquidity facility			60 000	0	60 000	Over 5 years
	EIB credit facility			250 000	150 000	100 000	Over 5 years
	Cash and cash equivalents					71 841
	Total			720 000	150 000	641 841
	Currency risk Elenia operates in Finland and uses the Euro as its primary operating currency. Elenia's currency risk is based on purchases of raw materials and services denominated in currencies 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 currency risk as part of the purchasing policy for network operations approved by the Executive Board. According to the guidelines, currency risks that have an impact on profit or loss are hedged either operationally through contractual currency rate clauses or, if that is not possible, through forward contracts concluded by the Treasury unit. Operating profit includes EUR 1.2 thousand (2020:EUR 0.9 thousand) exchange rate differences and finance costs include EUR -1.0 thousand (2020:9.3 thousand) exchange rate differences. At the balance sheet date there were no liabilities or receivables in other currencies than in EUR.
									Commodity price risk Changes in commodity prices affect mainly electricity purchases used for distribution losses and purchases of electricity network components. The majority of electricity purchases are hedged to mitigate the impact of short term price fluctuations. The regulatory methods governing electricity distribution operations provide protection against changes in commodity prices over the medium term.
	Counterparty and credit risk Accepted financial counterparties are counterparties approved in existing financing agreements and other counterparties separately approved by the Board of Directors. Cash and cash equivalents consit solely of short-term bank deposits.

 

 

	4.3 Other commitments and contingencies
	Other commitments
	EUR 1,000					2021		2020
	Registered floating charges:
	Provided on behalf of own and Group liabilities					9 000 000		9 000 000
	Mortgages					206 600		206 600
	Refundable connection fees					283 293		282 789
	Loan commitment to Elenia Group Oy					0		151 305
	Group bank accounts have been pledged as security for loans from financial institutions and bonds.

 

 

4.4 Equity

Share capital

Retained earnings

Reorganisations were done in legal structure during 2020 which are explained in more details in Notes 1.4.1 and 1.4.3. After the changes, Elenia Network Group was formed.

During 2021 there were no changes in retained earnings. Increase of EUR 23,298 thousand in retained earnings in 2020 comprises of EUR 9,071 thousand group contribution received from Elenia Oy and EUR 14,228 thousand of the sale of shares of Elenia Palvelut Oy (renamed to Elenia Oy). More about sale of shares in Note 1.4.3.

The shares are issued and fully paid.

Reserve for invested non-restricted equity

Earnings per share

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.

Earnings per share are calculated by dividing the profit or loss attributable to equity holders of the parent by the average number of shares during the reporting period:

Equity repayment

2021

2020

The meeting of Elenia Verkko Oyj's shareholders decided on 15.12.2020 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 transferred to short-term payables in December 2020.

Profit attributable to equity holders of the parent, EUR

######

######

Average number of shares, pcs

90

90

Earnings/share, EUR - basic = diluted

801 911

#####

Equity investment and common control reserve

In January 2020, the shares in Lakeside Network Investments Holding B.V. have been transferred by series of share-for-share exchanges from Lakeside Network Investments S.à r.l. first to Elenia Group's parent company Elenia Oy and forward ta the same day (2.1.2020) to to Elenia Verkko Oyj. Equity investment of EUR 2,207.4 million to the invested unrestricted equity fund were posted to Elenia Verkko Oyj. The increase is presented in Note 4.4. Equity investment and other items related to restructurings total of 2,207.6 million is eliminated in Elenia Networks Group. More about restructurings in Notes 1.4.1 and 1.4.3.

2021

2020

Unrestricted equity 1 Jan

-548 843

0

Equity investment

-

2 207 400

Common control reserve

######

Equity repayment

-

-550 000

Unrestricted equity 31 Dec

#####

#####

 

 

	5 Consolidation
	5.1 Basis of consolidation (Accounting policy) The consolidated financial statements comprise the parent company Elenia Verkko Oyj 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 investee. The consolidated financial statements also include, as associated companies, any companies over which the Group has significant 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 statements 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 statement 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 eliminated 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 2021, the subsidiaries do not have non-controlling interests. 5.2 Business combinations and goodwill (Accounting policy) 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 acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interest in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed 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 previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in the statement 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 Financial 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 settlement is accounted for within equity. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. 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-generating units that are expected to benefit from the combination, irrespective 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 2021 or 2020 there were no business disposals. In 2021 or 2020 there were no acquistions to be accounted for as business combinations. There have been changes in the Group legal structure as a result of the Group's internal corporate reorganisations during 2020. Structural changes and their accounting treatment are opened in sections 1.4.1 and 1.4.4.

 

 

	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 2020. The nature of each new standard and amendment adopted by the Group has been described in the relevant note. New standards and amendments not material for the Group have been described below: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark Reform - phase 2 The amended standards will be effective for annual periods beginning on or after 1 January 2021 with early adoption permitted. The EU has not endorsed the amendments. The amendments in this final phase relate to: - changes to contractual cash flows: a company will not have to derecognise or adjust the carrying amount of financial instruments for changes required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate; - hedge accounting: a company will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and - disclosures: a company will be required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates. The amendments do not have a material effect on the consolidated financial statements. Amendment to IFRS 16 Leases Covid-19 Related Rent Concessions The amended standards will be effective for annual periods beginning on or after 1 January 2020 with early adoption permitted. The EU has endorsed the amendments. The Amendment permits lessees, as a practical expedient, not to assess whether particular COVID-19-related rent concessions are lease modifications. Therefore, if meeting the conditions, lessees that apply the practical expedient would recognise the amount of rent forgiven on or before 30 June 2021 in income in the year of the concession. In the absence of the practical expedient, it would have been recognised in income over the duration of the contract. The amendments do not have a material effect on the consolidated financial statements.		5.4.2 New and amended standards and interpretations issued but not yet effective Certain new and amended standards and interpretations are issued but not yet effective up to the date of issuance of the consolidated 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 to IFRS 4 Insurance Contracts - deferral of IFRS 9   The amended standard is effective for annual periods beginning on or after 1 January 2021, early application is permitted. The EU has not endorsed the standard.   Currently the temporary exemption from applying IFRS 9 included in IFRS 4 Insurance Contracts, is further extended to 1 January 2023. This is to align with the effective date of IFRS 17 Insurance Contracts which will replace IFRS 4.   The amendment is not applicable to the Group. IFRS 17 Insurance Contracts   The new standard is effective for annual periods beginning on or after 1 January 2023, early application is permitted. The EU has not endorsed the standard. IFRS 17 is a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. The new standard applies to all types of insurance contracts as well as to certain guarantees and financial instruments with discretionary participation features.     The new standard is not applicable to the Group.
	Amendments to IFRS 3 Business Combination, IAS 16 Property, Plant and Equipment, IAS 37 Provisions and Annual Improvements 2018-2020     The amended standards will be effective for annual periods beginning on or after 1 January 2022 with early adoption permitted. The EU has not endorsed the amendments.   The package of amendments includes narrow-scope amendments to three Standards as well as the Board’s Annual Improvements, which are changes that clarify the wording or correct minor consequences, oversights or conflicts between requirements in the Standards. Amendments to IFRS 3 Business Combinations update a reference in IFRS 3 to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations. Amendments to IAS 16 Property, Plant and Equipment prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss. Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets specify which costs a company includes when assessing whether a contract will be loss-making. Annual Improvements make minor amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples accompanying IFRS 16 Leases. The amendments do not have a material effect on the consolidated financial statements. 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 will be effective for annual periods beginning on or after 1 January 2023 with early adoption permitted. The EU has not endorsed the amendments.   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 after the reporting period. The amendments do not have a material effect on the consolidated financial statements.		Amendments to IAS 8 Definition of accounting estimates The amended standards will be effective for annual periods beginning on or after 1 January 2023 with early adoption permitted. The EU has not endorsed the amendments. The amendments clarify the definitions of accounting estimates.  After implementing the changes the standard more cleary distiguish between accounting estimates, changes in accounting policies and correction of errors. The amendments do not have a material effect on the consolidated financial statements. Amendments on IAS 12 Deferred tax related to assets and liabilities arising from a single transaction The amended standards will be effective for annual periods beginning on or after 1 January 2023 with early adoption permitted. The amendments clarify the recognition of deferred tax when an entity accounts for transactions, such as leases or decommissioning obligations, by recognizing both an asset and a liability. Group is evaluating the impact of these changes on deferred tax postings and notes on deferred taxes. Amendments on IAS 1 Disclosure of accounting policies The amended standards will be effective for annual periods beginning on or after 1 January 2023 with early adoption permitted. The amendments include a requirement for entities to disclose their material accounting policies rather that their significant accouting policies. Also guidance and examples have been added to support the recognistion of material accounting policies. Group is evaluating the impacts of the changes to the accounting policies disclosed. Regulatory Assets and Regulatory Liabilities:Possible new standard The International Accounting Standards Board published in January 2021 an exposure draft on Regulatory Assets and Regulatory 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.

 

 

	6 Other notes
	6.1 Taxes 6.1.1 Current income tax Current income tax (Accounting policy) Current income tax assets and liabilities for the current period 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 enacted 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 evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.   Current income taxes (Accounting judgements) 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 agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to the tax estimation. The Group companies establish provisions based on reasonable estimates. In the case that the final taxes are different 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 reasonable estimate of the Group's tax position.
							Income tax rate
							Tax on profit before tax deviates from the nominal tax calculated
							according to the tax rate as follows:
							EUR 1,000		2021	2020
							Profit before tax		87 814	73 465
							Theoretical income tax using the nominal tax rate of 20.0%		-17 563	-14 693
							- tax-free income items		-54	-80
							- expenses that are non-deductible in taxation		67	-1 081
							- non-deductible interests from previous years		2 024	-
							- previous years' losses used		0	56
							- adjustment of taxes based on previous periods		-6	-
							- unrecognized deferred tax assets from taxation losses		0	-102
							Income tax in the income statement,		-15 532	-15 900
							Effective tax rate was 18% (2020: 22%)
	The major components of income tax expense for the years ended 31 December 2021 and 2020 are:
	Consolidated statement of profit or loss,
	EUR 1,000			2021	2020
	Current income tax charge			-5 344	-5 357
	Deferred taxes			-10 182	-10 543
	Income tax expense reported in the consolidated statement of profit or loss			-15 532	-15 900
	Consolidated statement of OCI,
	EUR 1,000			2021	2020
	Deferred tax related to items recognised in OCI during the year:
	Remeasurement gains (losses) on defined benefit plans			27	-25
	Deferred tax charged to OCI			27	-25

 

 

	6.1.2 Deferred tax
	Deferred tax (Accounting policy) Deferred tax is provided using the liability method on temporary 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 temporary differences, except: When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction 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 foreseeable future.   Deferred tax assets are recognised for all deductible temporary 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 available 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 neither 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 differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences 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. Unrecognised deferred tax assets are reassessed at each reporting 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 (Accounting policy) 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 statement 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 income or directly in equity. The Group offsets deferred tax assets and deferred tax liabilities 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 taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. Deferred tax (Accounting judgements) The Group recognizes deferred tax assets by taking into account their recoverability, based on the existence of deferred 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 received could differ from the estimates made by the Group as a result of unforeseen future legal changes in estimates. Deferred tax (Accounting estimates) 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 future tax consequences attributable to differences between the carrying amounts of assets and liabilities as recorded in the financial statements and their tax basis.
	6.1.2 Deferred tax
	Change in deferred tax assets and liabilities in	2021								Change in deferred tax assets and liabilities in	2020
	Deferred tax assets		Balance sheet 1 Jan 2021	Recognised in the statement of profit or loss		Recognised in other comprehensive income	Balance sheet 31 Dec 2021			Deferred tax assets	Balance sheet 1 Jan 2020	Recognised in the statement of profit or loss	Recognised in other comprehensive income	Balance sheet 31 Dec 2020
	EUR 1,000									EUR 1,000
	Defined benefit plans		66	-2		27	91			Defined benefit plans	92	-1	-25	66
	Liabilities related to contracts with customers		4 595	1 605		0	6 201			Liabilities related to contracts with customers	3 285	1 311	0	4 595
	Finance leases		476	-294		0	181			Finance leases	623	-148		476
	Total		5 136	1 308		27	6 473			Total	4 000	1 162	-25	5 136
	Deferred tax assets		5 136				6 473			Deferred tax assets	4 000			5 136
	Deferred tax liabilities		Balance sheet 1 Jan 2021	Recognised in the statement of profit or loss		Recognised in other comprehensive income	Balance sheet 31 Dec 2021			Deferred tax liabilities	Balance sheet 1 Jan 2020	Recognised in the statement of profit or loss	Recognised in other comprehensive income	Balance sheet 31 Dec 2020
	EUR 1,000									EUR 1,000
	Interest-bearing liabilities		1 567	-261		0	1 306			Interest-bearing liabilities	1 304	263	0	1 567
	Depreciation differences		63 002	16 080		0	79 081			Depreciation differences	46 874	16 128	0	63 002
	Measurement of assets at fair value in acquisition		62 703	-4 328		0	58 375			Measurement of assets at fair value in acquisition	67 389	-4 686	0	62 703
	Total		127 272	11 490		0	138 763			Total	115 567	11 705	0	127 272
	Deferred tax liabilities		127 272				138 763			Deferred tax liabilities	115 567			127 272

 

 

	6.2 Pensions and other post-employment benefits
	Pension obligations (Accounting policy) 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 payments. This category includes the Finnish Statutory Employment Pension Scheme (TyEL). Payments relating to defined contribution pension plans are recognised in the consolidated 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 actuarial 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 expected return on plan assets is calculated using the same discount rate as applied for discounting the benefit obligation to its present value.  Current and past service costs as well as net interest on net defined benefit liability is recorded 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 defined contribution (DC) parts as defined in IAS 19. In the following tables, figures are presented for DB part of the plan.						EUR 1,000	2021		2020
							Items recognised on the consolidated statement of financial position at 31 December
							Current value of funded obligations	2 659		3 069
							Fair value of assets	-2 206		-2 741
							Deficit	453		328
							Value of the obligation on the consolidated statement of financial position	453		328
							The obligations of defined benefit pension plans have changed as follows:
							Obligation at the beginning of the year	3 069		3 514
							Business combinations			0
							Current service costs	0		0
							Interest expenses	15		14
							Actuarial losses	-163		-247
							Settlements	-61		0
							Benefits paid	-202		-211
							Obligation at the end of the year	2 659		3 069
							The fair value of the assets of defined benefit pension plans has developed as follows:
							Fair value of plan assets at the beginning of the year	2 741		3 053
							Business combinations			0
							Expected income from assets	13		12
							Actuarial gains	-300		-121
							Settlements	-50		0
							Payments by the employer	3		8
							Benefits paid	-202		-211
							Fair value of plan assets at the end of the year	2 206		2 741
							The obligation in the consolidated statement of financial position consists of the following items:
							Obligation at the beginning of the year	328		460
							Business combinations			0
							Net cost recognised in the statement of profit or loss	-9		2
							Payments by the employer	-3		-8
							Profits and losses recognised in other comprehensive income	137		-127
							Value of the obligation at year end	453		328
							Items recognised in the consolidated statement of profit or loss
							Expenses based on service in the reporting year	-10		0
							Interest income	-13		-12
							Interest expenses	15		14
							Total	-9		2
							Items recognised in the consolidated statement of other comprehensive income for the year
							Actuarial gains/(losses) on assets	300		121
							Actuarial gains/(losses) on obligations	-163		-247
							Total	137		-127

 

 

	6.2 Pensions and other post-employment benefits
	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.
	2021
	Assumption EUR 1,000	Change in assumption	Defined benefit obligations		Fair value of Plan assets		Net Liability			Net interest
	Discount rate 0.7 %		2 659		2 206		453			3
	Discount rate 1.3 %	+0,50 %	2 502		2 093		409			5
	Discount rate 0.2 %	-0,50 %	2 833		2 330		503			1
	2020
	Assumption EUR 1,000	Change in assumption	Defined benefit obligations		Fair value of Plan assets		Net Liability			Net interest
	Discount rate 0.5 %		3 069		2 741		328			2
	Discount rate 1.1 %	+0,50 %	2 892		3 597		295			3
	Discount rate 0.0 %	-0,50 %	3 266		2 901		365			0
	As the defined benefit plans are managed by an external insurance company, it is not possible to present a division of the fair
	values of the plan assets.
	Expected contributions for 2022 are estimated to be EUR 3 thousand.
	The weighted average duration of defined benefit obligation is 13 years.
	The following table shows the maturity profile of the future benefit payments
			2021		2020
	EUR 1,000
	Under 1 year		206		212
	1-10 years		1 169		1 372
	10-20 years		820		927
	20-30 years		478		507
	Over 30 years		248		247
	Total		2 920		3 266
	Actuarial assumptions used in calculations		2021		2020
	Discount rate		0,7 %		0,5 %
	Estimate of salary increases		2,9 %		2,0 %
	Inflation		1,9 %		1,0 %

 

 

6.3 Related Party Disclosures

Shareholders

Business transactions

All of the shares in Elenia Verkko Oyj are owned by a Finnish company, Elenia Oy.

All transactions with related parties take place in an arm's length manner.

Elenia's ultimate parent Elton Investments S.à r.l. is majority owned by a consortium of infrastructure investors: Société Foncière Européenne B.V.(SFE) and Allianz Infrastructure Luxembourg I S.à r.l. (AIL), Lynx Elton S.à r.l. (Lynx Elton), Allianz European 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 Infrastructure Fund SCSp. Manco Investment Oy is owned by five Elenia's key management persons.

Group companies have not 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 2021 other long-term receivables (2020: EUR 274.7 million) from the company's ultimate owners through intermediary holding entities were netted against the payable related to equite repayment. The following table includes the specification of other long-term receivables and related accrued interests.

Loan receivables amount

Loan receivables amount

Interest income 1 Jan - 31 Dec 2021

Interest income

EUR 1,000

31 Dec 2020

1 Jan - 31 Dec 2020

31 Dec 2021

Subsidiaries and associates

Elenia Group Oy

274 695

3 017

0

858

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. Prior to the July 2020 mergers, the Elenia Network Group also had subsidiaries Elenia Oy, Elenia Finance Oyj, Elenia Finance SPPS S.à r.l., Elenia Holdings S.à r.l. and Lakeside Network Investments Holding B.V. More on structural changes in Notes 1.4.1 and 1.4.3.

Total

274 695

3 017

0

858

The meeting of Elenia Verkko Oyj's shareholders decided on 15.12.2020 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 transferred to short-term payables in December 2020.  The following table includes the specification of other short-term payables.

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 Networks Group has not had any business transactions with persons included in its senior management and Elenia Networks Group has not granted loans to these persons.

Unrestricted equity repayment liability 31 Dec 2020

Decrease during 2021

Unrestricted equity repayment liability 31 Dec 2021

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 approximately 0.3% of Elton Investment S.à r.l. after the arrangement. The equity investment has been made at fair market values. There is a also shareholder loan between Manco Investment Oy and Elton Investment S.à r.l. The original loan amount was 0.3 million euros.

EUR 1,000

Elenia Oy

550 000

345 553

204 447

Total

550 000

345 553

204 447

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 disclosed in note 2.3.3.

 

 

	6.4 Events after the reporting period
	Like other DSOs, Elenia received a new regulatory decision in December 2021 regarding changes in regulatory methods that entered into effect on 1 January 2022 and will remain in effect for only two years, namely 2022 and 2023. The changes were in line with the previous information communicated by the Energy Authority. They included updated unit prices, changes to WACC calculation methods and eliminating the security of supply incentive from the regulatory methods. The change in unit prices led to a considerable decline in Elenia’s Regulatory Asset Base (RAB). According to the Energy Authority, the change was 7–22 per cent and the weighted average was 17 per cent. The change was the most drastic with regard to underground cables, which meant that its impact on Elenia was among the most significant. In practice, it meant that Elenia’s RAB fell to the level it was at in 2018. The calculation of the risk-free interest rate component as part of the determination of the WACC is based on the yield on a 10-year Finnish government bond. It was previously based on a method where the higher of the current interest rate (based on the previous year) and the historical 10-year average interest rate was applied. The latter calculation method was eliminated from the regulatory method effective from the beginning of 2022. Consequently, the WACC for 2022 is 3.97%, which is approximately one percentage point lower than it would have been without the change in the calculation method (4.96%). Like several other Finnish DSOs, Elenia has appealed to the Market Court to repeal the decision of the Energy Authority with regard to the key aspects of the decision. On 28 January 2022, S&P downgraded the credit rating of Elenia Verkko Oyj’s senior secured debt from BBB+ to BBB. In connection with this, S&P changed Elenia’s credit rating outlook to stable. The rating action stemmed from the changes in regulatory methods implemented by the Energy Authority. Elenia’s key credit ratios figures have not changed and they are not expected to change going forward. Elenia’s significant reduction in investments for 2022 to strengthen cash flow was not, in S&P’s view, sufficient to maintain the previous credit rating. There was a change in Elenia’s management team in February 2022, when Harri Happonen replaced Jenni Heinisuo as Elenia’s Chief Information Officer.

 

 

	6.5 Consolidated statement of profit or loss (adjusted for comparability)
	Comparability with previous year figures (Accounting policy) Items affecting comparability may include costs relating to exceptionally severe storms, and other items which are considerable in amount and do not relate to the actual operative business of the Group. Such items may arise for example as a result of mergers, acquisitions, divestments, corporate or organisational restructurings, major information system projects as well as certain financial transactions. These items have been specified in the notes of the consolidated financial statements.								The purpose of the above table is to illustrate the underlying profitability of the business without any Exceptional Items (defined in the finance documentation as “exceptional, one off, non-recurring or extraordinary items”). The financial covenants related to Group’s financing are calculated excluding Exceptional Items. In 2021 in total EUR 330 thousand was recognised as an exceptional item.  This amount relates to damage compensation of 200 thousand euros paid to a single customer due to a metering error during previous years and consultancy fees of 130 thousand euros that relate to legal actions taken due to requlatory changes. In 2020 there were no operational expenses classified as exceptional items. In 2020, EUR 725  thousand is recognized as non-recurring items. This amount consists of compensation from the bankruptcy estate of EUR 413 thousand recognized in other operating income and EUR 1 138 thousand of group restructuring costs recognized in operating expenses. In 2021 there were no operational expenses classified as exceptional items.
				Note	1.1.-31.12.2021		1.1.-31.12.2020
	EUR 1,000
	Revenue			2.1.1	320 185		299 564
	Exceptional items included in revenue				0		0
	Other operating income			2.2.1	1 996		2 836
	Non-recurring items included in other operating income						413
	Materials and services				-83 337		-74 842
	Employee benefit expenses			2.3.3	-3 698		-3 239
	Other operating expenses			2.3.1	-21 344		-28 276
	Operating expenses Total				-108 379		-106 358
	Exceptional items included in operating expenses				-330		0
	Non-recurring items included in operating expenses				0		-1 138
	EBITDA				213 803		196 042
	EBITDA before exceptional and non-recurring items				214 132		196 767
	Depreciation and amortisation			3	-86 348		-80 869
	Operating profit				127 455		115 173
	Operating profit before exceptional and non-recurring items				127 785		115 898

 

 

				Elenia Verkko Oyj
				PARENT COMPANY FINANCIAL STATEMENTS
				1 January 2021 - 31 December 2021

 

 

Elenia Verkko Oyj								Financial Statements
Business ID: 3001882-6								31 December 2021
Income Statement					Note	1 Jan - 31 Dec 2021		1 Jan - 31 Dec 2020
EUR
Revenue					1.1	328 482 460,76		147 660 595,95
Other operating income					1.2	1 996 464,69		1 105 778,45
Materials and services					1.3	-83 336 895,76		-37 009 550,01
Personnel expenses					1.4	-3 712 173,72		-1 855 010,70
Depreciation, amortisation and impairment					1.5	-153 196 276,87		-73 413 034,36
Other operating expenses					1.6	-25 728 101,74		-34 076 038,28
Operating profit						64 505 477,36		2 412 741,05
Finance income and expenses					1.7	-38 243 574,20		-19 423 812,00
Profit / loss before appropriations and taxes						26 261 903,16		-17 011 070,95
Appropriations					1.8
Change in accelerated depreciations						-80 397 695,34		-20 665 736,09
Group contributions						0,00		9 070 500,00
Income taxes					1.9	-1 092 472,04		-3 217 985,13
Profit / loss for the year						-55 228 264,22		-31 824 292,17

 

 

Elenia Verkko Oyj										Financial Statements
Business ID: 3001882-6										31 December 2021
Balance Sheet					Note		31 Dec 2021			31 Dec 2020
EUR
ASSETS
Non-current assets
Intangible assets					2.1
	Intangible rights					22 650 499,47			21 435 237,07
	Goodwill					2 155 828 379,90			2 211 823 922,30
	Other capitalized long term expenditure					17 163 564,97	2 195 642 444,34		10 093 687,76	2 243 352 847,13
Tangible assets					2.2
	Land and water areas					2 105 357,69			2 105 207,69
	Buildings and constructions					270 754,88			282 109,76
	Electricity network					2 050 244 415,18			1 986 226 245,24
	Machinery and equipments					14 179 703,65			10 809 855,16
	Other tangible assets					1 368,08			1 940,72
	Advance payments and construction in progress					21 420 743,90	2 088 222 343,38		23 091 349,54	2 022 516 708,11
Investments					2.3
	Other shares and holdings					194 229,69	194 229,69		194 229,69	194 229,69
Total non current assets							4 284 059 017,41			4 266 063 784,93
Current assets
Long-term receivables					2.4
	Long-term other receivables					967 174,68			1 202 520,51
	Loan receivables					0,00	967 174,68		274 694 581,67	275 897 102,18
Short-term receivables					2.4
	Trade receivables					23 546 313,75			21 616 472,30
	Receivables from group companies					8 310,00			12 189 253,05
	Other receivables					477 832,28			470 792,45
	Prepayments and accrued income					43 607 332,19	67 639 788,22		37 103 005,10	71 379 522,90
Cash and cash equivalents					2.4		71 841 122,48			113 779 555,18
Total current assets							140 448 085,38			461 056 180,26
TOTAL ASSETS							4 424 507 102,79			4 727 119 965,19

 

 

Elenia Verkko Oyj										Financial Statements
Business ID: 3001882-6										31 December 2021
Balance Sheet					Note		31 Dec 2021			31 Dec 2020
EUR
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					-31 825 561,92			-1 269,75
	Loss for the financial year					-55 228 264,22	1 570 426 173,86		-31 824 292,17	1 625 654 438,08
	Cumulative accelerated depreciations				3.2		395 406 509,67			315 008 814,33
	Liabilities				3.3
	Non-current liabilitites
		Connection fees				202 636 448,85			202 907 741,32
		Bonds and notes				1 689 500 000,00			1 689 500 000,00
		Loans from financial institutions				150 000 000,00			150 000 000,00
		Deferred tax liabilities				102 195 777,61	2 144 332 226,46		106 453 935,01	2 148 861 676,33
	Current liabilities
		Trade payables				16 459 977,39			7 244 048,15
		Liabilities to group companies				232 610 268,56			570 368 606,71
		Other short-term liabilities				25 438 657,65			25 028 463,32
		Accruals and deferred income				39 833 289,20	314 342 192,80		34 953 918,27	637 595 036,45
Total liabilities							2 458 674 419,26			2 786 456 712,78
TOTAL EQUITY AND LIABILITIES							4 424 507 102,79			4 727 119 965,19

 

 

Elenia Verkko Oyj						Financial Statements
Business ID: 3001882-6						31 December 2021
Cash Flow Statement				1 Jan - 31 Dec 2021		1 Jan - 31 Dec 2020
EUR
Cash flow fron operating activities
	Loss before appropriations and taxes			26 261 903,16		-17 011 070,95
	Adjustments
		Depreciation, amortisation and impairment		153 196 276,87		73 413 034,36
		Finance income and expenses		38 243 574,20		19 423 812,00
		Other adjustments		-4 442,07		16 299 763,76
	Cash flow before change in working capital			217 697 312,16		92 125 539,17
	Change in working capital
		Increase (-) / decrease (+) in non-interest bearing receivables		-4 711 311,44		-17 645 788,08
		Increase (+) / decrease (-) in non-interest bearing liabilities		22 302 996,59		18 663 411,24
	Operating cash flow before financial items and taxes			235 288 997,31		93 143 162,33
	Interest payments			-36 867 207,98		-24 181 472,07
	Interests received			79 299,58		47 885,44
	Payments for other finance items			-1 805 117,42		-859 908,95
	Connection fee refunds			271 292,47		151 769,25
	Taxes paid			-5 351 225,97		-2 679 004,01
Cash flow from operating activities				191 616 037,99		65 622 431,99
Cash flow from investing activities
	Capital expenditures			-172 892 394,58		-77 626 228,16
	Proceeds from disposals of other investments			267 423,89		9 076,95
Cash flow from investing activities				-172 624 970,69		-77 617 151,21
Cash flow from financing activities
	Re-payment of short-term borrowings			0,00		-89 024 000,00
	Equity repayment			-70 000 000,00		0,00
	Group contributions received and paid			9 070 500,00		431 000,00
	Loans granted			0,00		-63 000 000,00
Cash flow from financing activities				-60 929 500,00		-151 593 000,00
Change in cash and cash equivalents				-41 938 432,70		-163 587 719,22
Cash and cash equivalents 1 Jan				113 779 555,18		0,00
Cash and cash equivalents 1 Jan + change				-41 938 432,70		-163 587 719,22
Cash and cash equivalents 31 Dec				71 841 122,48		113 779 555,18
Cash and cash equivalents, restructurings				-		277 367 274,40
Cash and cash equivalents comprise of bank deposits. Cash from restructurings consists of cash and bank receivables transferred in mergers.
Loans granted and repayments of loan receivables are presented in financing cash flow instead of cash flow from investing activities.

 

 

Elenia Verkko Oyj									Financial Statements
Business ID: 3001882-6									31 December 2021
Notes to the Financial Statements
Accounting principles
	The financial statements of Elenia Verkko Oyj have been prepared in accordance with the Finnish Accounting Standards (FAS).
	For tangible and intangible assets have been used direct acquisition prices which have been deducted
	with planned depreciations. 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 constructions			15-50	years
			Transmission network			25-40	years
			Distribution network			10-30	years
			Machinery and equipments			3-30	years
	Connection fees are non-refundable and therefore they have been booked as revenue in the profit and loss account.
	Transactions denominated in foreign currencies and derivative agreements
	Transactions denominated in foreign currencies are recognised at the rate prevailing
	at the time of the transaction. At the balance 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 possible currency exchange rate differences are recognised in
	finance income or costs or other operating costs in accordance with the underlying item.
	Deferred tax liabilities and receivables
	Deferred tax liabilities or assets have been calculated for temporary 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 liability in its entirety and the deferred tax asset in the amount of the estimated probable receivable.
1.1	Revenue						2021		2020
	EUR 1,000
		Distribution income					317 330		142 705
		Contracting income					2 083		1 312
		Connection fee income					8 993		3 670
		Other sales income					443		437
		Outage compensation					-367		-464
		Total					328 482		147 661
1.2	Other operating income
	EUR 1,000
		Revenue from collection of trade receivables					1 060		523
		Other operating income					936		582
		Total					1 996		1 106
1.3	Materials and services
	EUR 1,000
		Grid costs					-41 924		-17 784
		Network losses					-16 528		-5 257
		External services					-23 189		-13 019
		Materials					-1 696		-949
		Total					-83 337		-37 010
							2021		2020
1.4	Personnel expenses
		Average number of personnel during the financial year					83		83
	EUR 1,000
		Salaries					-3 164		-1 580
		Pension expenses					-477		-239
		Other employee expenses					-72		-36
		Total					-3 712		-1 855
		Salaries and remuneration were not paid to CEO in 2020 or 2021.
1.5	Depreciations according to the plan
	EUR 1,000
		Impairment					-5 389		-1 247
		Intangible fixed assets					-1 052		-588
		Goodwill					-55 996		-27 998
		Other capitalized long-term expenditure					-1 348		-577
		Buildings and constructions					-12		-6
		Electricity network					-86 952		-41 756
		Machinery and equipments					-2 447		-1 241
		Total					-153 196		-73 413
1.6	Other operating expenses
	EUR 1,000
		Lease expenses					-4 178		-2 859
		Other external services					-18 119		-9 873
		Merger loss					0		-16 309
		Other operating expenses					-3 431		-5 035
		Total					-25 728		-34 076
	Audit charges EUR 1,000
		Auditing fees					-48		-149
		Fees for tax services					-11		-5
		Fees for other services					-69		-46
		Total					-128		-200
1.7	Financial income and expenses
	EUR 1,000
		Interest and other financial income
			Other financial income				938		1 782
			Total				938		1 782
		Interest and other financial expenses
			Interest expenses				-36 789		-20 205
			Other financial expenses				-2 393		-1 001
			Total				-39 182		-21 206
	Total financial income and expenses						-38 244		-19 424
							2021		2020
1.8	Appropriations
	EUR 1,000
			Change in accelerated depreciations				-80 398		-20 666
			Group contribution received				-		9 071
			Total				-80 398		-11 595
1.9	Income taxes
	EUR 1,000
			Income taxes for the financial period				-5 344		-5 347
			Change in deferred taxes				4 258		2 129
			Total				-1 092		-3 218
2.1	Intangible fixed assets
		Intangible rights
		EUR 1,000
			Cost 1 Jan				36 174		0
			Merger				-		29 895
			Investments				2 268		6 279
			Cost 31 Dec				38 441		36 174
			Accumulated depreciation 1 Jan				-14 738		0
			Merger				-		-14 150
			Depreciation according to the plan				-1 052		-588
			Book value 31 Dec				22 650		21 435
		Goodwill
		EUR 1,000
			Acquisition cost 1.1.				2 259 730		0
			Merger				-		450 086
			Merger loss				-		1 809 644
			Cost 31 Dec				2 259 730		2 259 730
			Accumulated depreciation 1.1.				-47 906		0
			Merger				-		-19 908
			Depreciation according to the plan				-55 996		-27 998
			Book value 31.12.				2 155 828		2 211 824
		Other capitalized long-term expenditure
		EUR 1,000
			Cost 1 Jan				322 046		0
			Merger				-		319 248
			Investments				8 418		2 798
			Cost 31 Dec				330 464		322 046
			Accumulated depreciation 1 Jan				-311 952		0
			Merger				-		-311 375
			Depreciation according to the plan				-1 348		-577
			Book value 31 Dec				17 164		10 094
2.2	Tangible fixed assets
		Land and water areas
		EUR 1,000
			Cost 1 Jan				2 105		0
			Merger				-		2 083
			Investments				-		22
			Cost 31 Dec				2 105		2 105
			Book value 31 Dec				2 105		2 105
		Buildings and constructions
		EUR 1,000
			Cost 1 Jan				3 119		0
			Merger				-		3 119
			Cost 31 Dec				3 119		3 119
			Accumulated depreciation 1 Jan				-2 837		0
			Merger				-		-2 832
			Depreciation according to the plan				-11		-6
			Book value 31 Dec				271		282
							2021		2020
		Electricity network
		EUR 1,000
			Cost 1 Jan				2 954 228		0
			Merger				-		2 288 481
			Investments				157 243		665 747
			Disposals				-14 609		0
			Cost 31 Dec				3 096 862		2 954 228
			Accumulated depreciation 1 Jan				-968 002		0
			Merger				-		-927 717
			Impairment				-5 389		0
			Disposals				13 726		0
			Depreciation according to the plan				-86 952		-40 285
			Book value 31 Dec				2 050 244		1 986 226
		Machinery and equipments
		EUR 1,000
			Cost 1 Jan				63 894		0
			Merger				-		62 796
			Investments				5 817		1 098
			Cost 31 Dec				69 711		63 894
			Accumulated depreciation 1 Jan				-53 084		0
			Merger				-		-51 843
			Depreciation according to the plan				-2 447		-1 241
			Book value 31 Dec				14 180		10 810
		Other tangible assets
		EUR 1,000
			Cost 1 Jan				56		0
			Merger				-		56
			Cost 31 Dec				56		56
			Accumulated depreciation 1 Jan				-54		0
			Merger				-		-54
			Depreciation according to the plan				-1		0
			Book value 31 Dec				1		2
		Advance payments and construction in progress
		EUR 1,000
			Cost 1 Jan				23 091		0
			Merger				-		79 624
			Increase				84		74 101
			Decrease				-1 755		-130 633
			Book value 31 Dec				21 421		23 091
2.3	Investments
		Holdings in group companies
		EUR 1,000
			Cost 1 Jan				0		0
			Merger / increases				0		222 879
			Investments				0		2 207 400
			Merger / disposals				0		-2 430 279
			Cost 31 Dec				0		0
			Book value 31 Dec				0		0
		Other shares and holdings
		EUR 1,000
			Cost 1 Jan				194		0
			Merger				-		194
			Disposals				-		0
			Cost 31 Dec				194		194
			Book value 31 Dec				194		194
							2021		2020
2.4	Receivables
	Long term receivables
		EUR 1,000
			External other long-term recievables				0		274 695
			External loan receivables				967		1 203
			Loan receivables from group companies				-		0
	Long term receivables total						967		275 897
	Short term receivables
		Receivables from group companies
		EUR 1,000
			Accrued income				8		8
			Other short-term receivables				-		3 110
			Group contribution receivables				-		9 071
		Receivables from group companies total					8		12 189
		External receivables
		EUR 1,000
			Trade receivables				23 546		21 616
			Other short-term receivables				478		471
			Accrued income				43 607		37 103
		External receivables total					67 631		59 190
		Accrued income
		EUR 1,000
			Sales accruals				43 406		36 546
			Other accrued income and receivables				201		557
			Accrued income total				43 607		37 103
	Short term receivables total						67 640		71 380
	Total receivables						68 607		347 277
	Cash and cash equivalents						71 841		113 780
3.1	Capital and reserves
	EUR 1,000
			Subscribed capital 1 Jan				80		0
			Change (+-)				0		80
			Subscribed capital 31 Dec				80		80
			Non restricted equity 1 Jan				1 657 400		0
			Increase (+)				-		2 207 400
			Equity repayment (-)				-		-550 000
			Non restricted equity 31 Dec				1 657 400		1 657 400
			Retained earnings (loss) 1 Jan				-31 826		-1
			Loss for the the financial year				-55 228		-31 824
	Total capital and reserves						1 570 426		1 625 654
	Distributable equity						1 570 346		1 625 574
3.2	Cumulative accelerated depreciations
	EUR 1,000						395 407		315 009
	Accelerated depreciations include deferred tax liability of 79 081 301,93 euros.
							2021		2020
3.3	Liabilities
		Non-current liabilities
		EUR 1,000
			Connection fee liability 1 Jan				202 908		0
			Business combination increase				0		203 060
			Connection fee refunds				-271		-152
			Connection fee liability 31 Dec				202 636		202 908
			Bonds and notes				1 689 500		1 689 500
			Loans from financial institutions				150 000		150 000
			Deferred tax liabilities				102 196		106 454
		Elenia Verkko Oyj has recognized a deferred tax liability for the merger loss allocated to the electricity network.
		Total non-current liabilities					2 144 332		2 148 862
	Maturity breakdown of financial liabilities
	31 December 2021					Effective interest rate %
							Maturity
	EUR 1,000						Over 5 years		Total
	Bonds					1,89 %	1 031 000		1 171 000
	Notes					2,71 %	518 500		518 500
	Loans from financial institutions					0,28 %	150 000		150 000
	Total interest-bearing non-current liabilities								1 839 500
	Maturity breakdown of financial liabilities
	31 December 2020					Effective interest rate %
							Maturity
	EUR 1,000						Over 5 years		Total
	Bonds					1,87 %	1 171 000		1 171 000
	Notes					2,71 %	518 500		518 500
	Loans from financial institutions					0,39 %	150 000		150 000
	Total interest-bearing non-current liabilities								1 839 500
		Current liabilities
		EUR 1,000
			Trade payables				16 460		7 244
			Other short term liabilities				25 439		25 028
			Accrued expenses
			Salaries and social expenses				1 625		1 466
			Accrued interest expenses				12 918		12 996
			Other accrued expenses				25 291		20 492
							39 833		34 954
			Liabilities to group companies
			Group account				26 262		17 966
			Accrued expenses				1 901		2 403
			Equity repayment liability				204 447		550 000
							232 610		570 369
		Total current liabilities					314 342		637 595
	Total liabilities						2 458 674		2 786 457
3.5	Liabilities and quarantees for debts
	EUR 1,000
	Provided on behalf of own and group liabilities
	Floating charges						9 000 000		9 000 000
	Mortgages						206 600		206 600
	Leasing agreements
		Within one year					1 706		3 617
		After one year but not more than five years					290		2 017
		Total					1 997		5 634
	Other own liabilities
		Connection fees not included in the balance sheet values					85 114		85 114
		Lainasitoumus Elenia Group Oy:lle					0		151 305
	Group bank accounts have been pledged as security for loans from financial institutions and bonds.

 

 

Elenia Verkko Oyj									Financial Statements
Business ID: 3001882-6									31 December 2021
Shares and Holdings
				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
								194	194

 

 

Elenia Verkko Oyj								Financial statements
Business ID: 3001882-6								31 December 2021
Differentiated Profit and Loss Account						1 Jan - 31 Dec 2021		1 July - 31 Dec 2020
EUR 1,000
Revenue						328 434		147 568
Other operating income						1 982		1 081
Materials and services
	Materials and goods
		Purchace during the financial period
			Network losses			-16 522		-5 252
			Other materials			-1 694		-948
	Services
		Grid costs				-41 919		-17 762
		Other external services				-23 182		-12 967
Personnel expenses						-3 685		-1 837
Depreciation, amortisation and impairment
		Merger loss				-90 988		-45 494
		Network assets				-61 060		-27 400
		Other assets				-1 144		-495
Other operating expenses
		Lease expenses				-289		-167
		Network rents and network leasing expenses				-3 882		-2 729
		Other operating expenses				-21 484		-14 383
Operating profit						64 568		19 216
Financial income and expenses
	Income from other fixed investment
	Interest and other financial income
		From group companies				-		0
		From other companies				938		1 782
	Interest and other financial expenses
		From other companies				-39 182		-21 180
Profit / loss before appropriations and taxes						26 324		-182
Appropriations
	Change in accelerated depreciations
		Network assets				-79 193		-20 363
		Other assets				-1 360		-325
	Group contributions
		Group contribution received				-		9 071
Income taxes						-5 351		-5 347
Loss for the year						-59 579		-17 147

 

 

Elenia Verkko Oyj										Financial statements
Business ID: 3001882-6										31 December 2021
Differentiated Balance Sheet							31 Dec 2021			31 Dec 2020
EUR 1,000
ASSETS
Non-current assets
Intangible assets
	Intangilble rights					25 975			22 285
	Goodwill					2 155 828			2 211 824
	Other capitalized long term expenditure					13 839	2 195 642		9 243	2 243 353
Tangible assets
	Land and water areas					190			190
	Buildings and constructions					271			282
	Electricity network					1 225 966			1 123 257
	Merger losses					839 817			874 810
	Machinery and equipments					556			613
	Other tangible assets					1			2
	Advance payments and construction in progress					21 421	2 088 222		23 091	2 022 245
Total non current assets							4 283 865			4 265 598
Current assets
Long-term receivables
	Loan receivables					-			274 695
	Other long-term receivables					967	967		1 203	275 897
Short-term receivables
	Trade receivables					23 546			21 616
	Receivables from group companies					8			9 079
	Other receivables					231			234
	Prepayments and accrued income					43 607	67 393		37 103	68 032
Cash and cash equivalents							45 579			95 814
Total current assets							113 939			439 743
TOTAL ASSETS							4 397 804			4 705 341

 

 

Elenia Verkko Oyj									Financial statements
Business ID: 3001882-6									31 December 2021
Differentiated Balance Sheet						31 Dec 2021			31 Dec 2020
EUR 1,000
EQUITY AND LIABILITIES
	Capital and reserves
	Subscribed capital				80			80
	Non restricted equity				1 968 431			2 296 031
	Retained earnings				-31 826			-1
	Loss for the financial year				-59 579	1 877 106		-17 147	2 278 962
	Cumulative accelerated depreciations					394 953			314 400
	Liabilities
	Non-current liabilitites
		Connection fees			202 636			202 908
		Loans from financial institutions and other long-term loans			1 839 500	2 042 136		1 839 500	2 042 408
	Current liabilities
		Trade payables			16 446			7 186
		Liabilities to group companies			1 901			2 403
		Other short-term liabilities			34 205			31 263
		Accruals and deferred income			31 057	83 609		28 720	69 572
Total liabilities						2 125 745			2 111 979
TOTAL EQUITY AND LIABILITIES						4 397 804			4 705 341

 

 

Elenia Verkko Oyj									Financial statements
Business ID: 3001882-6									31 December 2021
Notes for differentiated financial statements
	According to the Electricity Market Act, a company operating on electricity market must differentiate 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 business 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 Streetlightning Network business as well as
	Elenia group's financing and administrative related services and items. In January 2021 Elenia Verkko Oyj divested its
	Streetlightning Network business.
	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 depreciations rules which
		have been presentes in the beginning of parent company notes.
		Changes in the financial statements of Elenia Verkko Oyj for the financial year 2020 approved on 27 May 2021 compared to
		financial statements for the financial year 2020 approved on 3 March 2021 were the following:
			Debt of 550 million euros related to equity repayment due to the sale of heating business was allocated to other
			than network business. Deferred tax liability (106.5 million euros) and change in deferred taxes during the year
			(2.1 million euros) resulting from group restructurings were allocated to other than network business.
			Due to these changes listed above network business's unrestricted equity increased by 658.6 million euros.
	Electricity Network business' key figures						1 Jan - 31 Dec 2021		1 July - 31 Dec 2020
		EUR 1,000
		Investments
			Intangble assets
				Intangble rights			5 041		1 714
				Other capitalized long term expenditures
					Connection fees		4 800		1 800
					Other capitalized long-term expenditures		844		451
			Tangible assets of electricity network business
				Land and water areas			0		22
				Electricity network			151 489		124 101
				Demolition costs			5 753		1 448
				Meters			5 791		989
				Other tangible assets			26		108
		Other key figures
			Refundable connection fees				202 636		202 908
			Mandatory outage compensations				594		3 337
			R&D expenses in the profit and loss account during the financial year				433		537
			Operative expenses included in security of supply incentive during the financial year				478		113
			Average number of personnel in the network business				83		84

 

 

Elenia Verkko Oyj
	Signatures to the financial statements
	Dates and signatures
	Tampere, _____/_______ 2021		2022
	Tapani Liuhala				Jarkko Kohtala
	Chairman of the Board of Directors
	Jorma Myllymäki				Anne-Marie Malmberg
	Ville Sihvola				Tommi Valento
	AUDITOR’S NOTE
	A report on the audit carried out has been issued today.
	Tampere, _____/_______ 2022
	Ernst & Young Oy
	Authorized Public Accountant Firm
	Miikka Hietala
	Authorized Public Accountant

 

 

	AUDITOR’S REPORT (Translation of the Finnish original)
	To the Annual General Meeting of Elenia Verkko Oyj
	Report on the Audit of the Financial Statements
	Opinion
	We have audited the financial statements of Elenia Verkko Oyj (business identity code 3001882-6) for the year ended 31 December, 2021. 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 a summary of significant accounting policies, 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 as well as its financial performance and its cash flows in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. •the financial statements give a true and fair view of the parent company’s financial performance and financial position in accordance with the laws and regulations governing the preparation of financial statements in Finland and comply with statutory requirements. Our opinion is consistent with the additional report submitted 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 section of our report. We are independent of the parent company and of the group companies in accordance with the ethical requirements 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 prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. The non-audit services 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 sufficient 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 financial statements of the current period. These matters were addressed 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 Auditor’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 procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed 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.
	Key Audit Matter	How our audit addressed the Key Audit Matter
	Valuation of Goodwill
	We refer to the note 3.2.	Our audit procedures to address the risk of material misstatement regarding the valuation of goodwill included:
	Valuation of Goodwill was a key audit matter because the assessment process is judgmental, it is based on assumptions relating 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 2021, the value of goodwill amounted to 418 million euro representing 19 % of the total assets and -236 % of the total equity. The valuation of goodwill is based on management’s estimate about the value-in-use calculations. There are number of underlying assumptions used to determine the value-in-use, including the revenue growth, EBITDA and discount rate applied on net cash-flows. Estimated 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. This matter is a significant risk of material misstatement referred to in EU Regulation No 537/2014, point (c) of Article 10(2).	•Our audit procedures included involving EY valuation specialists to assist us in evaluating underlying assumptions and methodologies especially related to the following assumptions: revenue growth, EBITDA and discount rate applied to cash-flows. •We focused on the sensitivity in the available headroom by cash generating unit and whether any reasonably possible change in assumptions could cause the carrying amount to exceed its recoverable amount. •We evaluated the effect of regulation change to the management’s estimates and parameters. •We considered the appropriateness of the Group’s disclosures in respect of impairment testing.
	Revenue Recognition
	We refer to the Group’s accounting policies and the note 2.1.
	Revenue from the distribution of electricity is recognized at the time of delivery. Revenue from customer service operations and other revenue is recognized in the period in which such services are rendered. The Group focuses on revenue as a key performance measure which could create an incentive for revenue to be recognized before the risks and rewards have been transferred. This matter is a significant risk of material misstatement referred to in EU Regulation No 537/2014, point (c) of Article 10(2).	Our audit procedures to address the risk of material misstatement relating to revenue recognition included, among others: •We assessed the reasonableness of the Group’s accounting policies over revenue recognition and compliance with applicable accounting standards. •We assessed the process and methods for revenue recognition •We tested the recorded sales transactions during the year against underlying documents on a sample basis. •We tested the sales accruals. •We obtained confirmations of open accounts receivable balances at year end from customers and analyzed credit invoices issued after the balance sheet date. •We performed data-analytics procedures on revenues. •We considered the appropriateness of the Group’s disclosures in respect 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 responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International 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 control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the parent company’s and the group’s ability to continue as going concern, 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 accounting unless there is an intention to liquidate the parent company or the group or cease operations, or there is no realistic alternative 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. Reasonable assurance is a high level of assurance, but is not a guarantee 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 practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: •Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, 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 appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the parent company’s or the group’s internal 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 Directors’ and the Managing Director’s use of the going concern basis of accounting and based on the audit evidence obtained, 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 disclosures are inadequate, to modify our opinion. Our conclusions 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 continue 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 financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
	We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant 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 requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, 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 current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation 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 adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
	Other Reporting Requirements
	Information on our audit engagement We were first appointed as auditors on 13.5.2019, and our appointment represents a total period of uninterrupted engagement of 3 years. Elenia Verkko Oyj has been a public interest entity since 1.7.2020. Other information The Board of Directors and the Managing Director are responsible for the other information. The other information comprises 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 auditor’s report, and the Annual Report is expected to be made available 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 materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. With respect to report of the Board of Directors, our responsibility also includes considering whether the report 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 information 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 nothing to report in this regard.
	Helsinki 9.3.2022 Ernst & Young Oy Authorized Public Accountant Firm Miikka Hietala Authorized Public Accountant

 

 

	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 743700XGU4ZB5G4RPK50-2021-12-31-eng.zip of Elenia Verkko Oyj for the financial year 1.1. – 31.12.2021 to ensure that the financial statements are tagged with iXBRL mark ups in accordance with the requirements of Article 4 of EU Commission Delegated Regulation (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 financial statements (ESEF financial statements) that comply with the ESEF RTS. This responsibility includes: •preparation of ESEF financial statements in accordance with Article 3 of ESEF RTS •Tagging the consolidated financial statements included within the ESEF financial statements by using the iXBRL mark ups in accordance with Article 4 of ESEF RTS •Ensuring consistency between ESEF financial statements and audited financial statements The Board of Directors and Managing Director are also responsible for such internal control as they determine is necessary to enable the preparation of ESEF financial statements in accordance the requirements of ESEF RTS.   Auditor’s Independence and Quality Control We are independent of the company in accordance with the ethical 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 requirements. The auditor applies International Standard on Quality Control (ISQC) 1 and therefore maintains a comprehensive quality control system including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Auditor’s Responsibilities In accordance with the Engagement Letter we will express an opinion on whether the electronic tagging of the consolidated financial statements complies in all material respects with the Article 4 of ESEF RTS. We have conducted a reasonable assurance engagement in accordance with International Standard on Assurance 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 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 depend 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 consolidated financial statement included in the ESEF financial statements of Elenia Verkko Oyj for the year ended 31.12.2021 complies in all material respects with the requirements of ESEF RTS. Our audit opinion on the consolidated financial statements of Elenia Verkko Oyj for the year ended 31.12.2021 is included in our Independent Auditor’s Report dated 9.3.2022. In this report, we do not express an audit opinion or any other assurance on the consolidated financial statements. Tampere 14.3.2022 Ernst & Young Oy Authorized Public Accountant Firm Miikka Hietala Authorized Public Accountant

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