We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Transcription

1 Deloitte & Touche Oy Porkkalankatu 24 P.O. Box 122 FI Helsinki Finland Tel: Fax: Business ID: Domicile: Helsinki VAT Registration no: FI AUDITOR'S REPORT (Unofficial Translation from Finnish original) To the Annual General Meeting of Fortum Sähkönsiirto Oy We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Fortum Sähkönsiirto Distribution Oy for the year ended 31 December, The financial statements comprise the balance sheet, the income statement, the cash flow statement and notes to the financial statements. Responsibility of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of financial statements and report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company s accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner. Auditor s Responsibility Our responsibility is to express an opinion on the financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors or the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act or the articles of association of the company. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation of financial statements and report of the Board of Directors that give a true and fair view 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 company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of the financial performance and financial position of the company in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements. Other opinions We support that the financial statements should be adopted. The proposal by the Board of Directors regarding the treatment of distributable funds is in compliance with the Limited Liability Companies Act. We support that the Board of Directors of the parent company and the Managing Director should be discharged from liability for the financial period audited by us. Espoo, February 25, 2014 Deloitte & Touche Oy Authorized Public Accountants Robert Kajander Authorized Public Accountant

2 Fortum Sähkönsiirto Oy BALANCE BOOK Fortum Sähkönsiirto Oy Company code: Registered office: Espoo To be preserved until

3 Fortum Sähkönsiirto Oy BALANCE BOOK Financial period Contents sivu Report of operations 1-3 Profit and loss statement 4 Balance sheet 5 Cash flow statement 6 Notes to the financial statements 7-14 Signatures 15 Auditor's note 15 List of ledgers 16 Auditor's report

4 4 Fortum Sähkönsiirto Oy PROFIT AND LOSS STATEMENT NOTE NET SALES , ,79 Work performed for own use , ,00 Other operating income , ,34 Materials and supplies , ,24 Personnel expenses , ,92 Amortization, depreciation and impairment , ,17 Other operating expenses , ,76 OPERATING PROFIT , ,04 Financial income and expenses , ,05 PROFIT BEFORE EXTRAORDINARY ITEMS , ,99 Extraordinary items ,00 - PROFIT BEFORE APPROPRIATIONS AND TAXES , ,99 Appropriations , ,99 Income taxes , ,24 LOSS (PROFIT) FOR THE PERIOD , ,76

5 5 Fortum Sähkönsiirto Oy BALANCE SHEET NOTE A s s e t s NON CURRENT ASSETS 13 Intangible assets , ,76 Tangible assets , ,22 Investments , ,42 TOTAL NON CURRENT ASSETS , ,40 CURRENT ASSETS Non current receivables , ,96 Current receivables , ,42 Cash and cash equivalents , ,00 TOTAL CURRENT ASSETS , ,38 T o t a l a s s e t s , ,78 E q u i t y a n d l i a b i l i t i e s EQUITY 16 Share capital , ,00 Other reserves , ,00 Retained earnings , ,08 Loss (Profit) for the financial year , ,76 TOTAL EQUITY , ,68 APPROPRIATIONS , ,64 PROVISIONS , ,39 LIABILITIES 19 Non current liabilities , ,37 Current liabilities , ,70 TOTAL LIABILITIES , ,07 T o t a l e q u i t y a n d l i a b i l i t i e s , ,78

6 6 Fortum Sähkönsiirto Oy CASH FLOW STATEMENT Cash flows from operating activities Profit before extraordinary items , ,99 Financial income and expenses , ,05 Adjustments to operating profit: Amortization, depreciation and impairment , ,17 Proceeds on sale of fixed assets and retirements , ,15 Other non-monetary adjustments , ,01 Changes in working capital , ,29 Interest and other financial expenses paid , ,28 Dividends received , ,80 Interest received , ,57 Income taxes paid , ,86 Cash flow from operating activities , ,01 Cash flow from investments Purchase of tangible and intangible items , ,75 Proceeds from sale of tangible and intangible assets 7 500, ,25 Investments in shares Investments in other shares ,00 - Divestments of shares in group companies ,00 - Divestments of shares in associated companies ,00 - Divestments of other shares ,00 - Proceeds from sale of other investments ,00 Change in cash pool account , ,34 Cash flow from investments , ,84 Cash flow from financing activities Return of equity ,85 Repayment of non current borrowings , ,00 Group contribution paid and received ,00 Cash flow from financing activities , ,85 Net increase/decrease in cash and cash equivalents ,00 Cash and cash equivalents as at ,00 - Cash and cash equivalents as at , ,00 Changes in working capital: Increase/decrease in trade and other current receivables , ,21 Increase/decrease in current liabilities , , , ,29

7 7 Fortum Sähkönsiirto Oy Notes to the financial statements 1. Accounting policies The financial statements of Fortum Sähkönsiirto Oy have been prepared in accordance with Finnish Accounting Standards and other regulation and legislation governing the preparing of financial statements. Revenue The revenue includes mainly income from transmission and distribution of electricity. The revenue from distribution of electricity is recognized at delivery. In Finland the Energy Authority regulates the price charged from customers for distribution of electricity. The over income decided by the regulatory body is treated as regulatory liability and is presented in the balance sheet at the end of the supervision period. Under income is by prudence not reported in assets. The over or under income is credited or charged during the following supervision period to the customer using the electricity connection at that time. The fees paid by customer when connected to the electricity network are recognised as revenue. Connection fees paid by customers when connected to the electricity network before 2003 are refundable in Finland if the customer would ever disconnect the initial connection. These connection fees have not been recognised in the income statement but are included in other liabilities in the balance sheet. Other income Proceeds from sales of assets and activities outside normal operations is reported in other income. This includes recurring items such as rental income. Foreign currency items and derivative contracts Transactions in foreign currencies are recorded at the exchange rates prevailing at the transaction dates. Foreign currency receivables and liabilities are converted into euros using the exchange rates prevailing on the balance sheet date. The exchange differences are recorded in the income statement. Accrued interest on forward contracts is amortised over the financial period. Fortum Sähkönsiirto Oy enters into derivative contracts mainly in order to hedge the price risk of loss energy and in order to manage exchange rate risk. Basis of measurement Property, plant and equipment is stated at cost, net of accumulated depreciation and/or accumulated impairment losses, and revaluation, if any. Both intangible and tangible assets are amortized/depreciated according to plan over the assets' useful life. The depreciation periods are as follows: Buildings Transmission and distribution network Other machinery and equipment Street cable compensation Intangible assets years years 3-12 years Not depreciated 5-10 years Research and development costs are recognised as expense in the year in which they are incurred. Income taxes Income taxes recognised in profit and loss statement include both taxes from reporting period and possible adjustment to prior periods. The deferred tax asset is calculated on temporary differences between the tax bases and the financial reporting, using the confirmed tax rate for the following financial year. 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. Pensions The pension coverage for employees is provided through insurance policies taken out with a pension institution. The statutory pension expenses are recognized as expenses in the year they are incurred. Share-based incentive schemes Expense arising from share-based incentive schemes granted to the management is recognized as an expense in the profit and loss statement and as a provision in the balance sheet during the vesting period. Provisions Provisions are recognised when Fortum Sähkönsiirto Oy has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are recognized as expense in the statement of profit or loss. Reasonableness of the pricing of network service Finnish Energy Authority confirms the principles for the pricing of transmission services and supervises reasonableness of the pricing of network service. The lenght of the supervision period is four years. The current supervision period started January 1, The authority evaluates the reasonableness of the company's revenue arising from network service and issues decisions regarding actions to be taken in accordance with Electricity Market Act 38 c. The decisions are issued after the end of each supervision period. 2. Group information Fortum Sähkönsiirto Oy is part of Fortum Group. The registered office of the group is in Espoo. Fortum Sähkönsiirto Oy is a company owned by Fortum Corporation (84.30%) and Fortum Power and Heat Oy:n (15.70%). Fortum Corporation's registered office is in Espoo. Fortum Corporation prepares the consolidated financial statements. A copy of the consolidated financial statements of the Fortum Group is available at the head office of the company, Keilaniementie 1, Espoo.

8 8 3. Net sales by geographical markets Finland , ,79 Total , ,79 4. Other operating income Proceeds from sale of intangible and tangible assets 3 384,84 - Proceeds form sale of group shares ,14 - Proceeds from sale of shares in associates ,36 - Proceeds from sale of other shares , ,48 Rental income , ,19 Other , ,67 Total , ,34 5. Materials and supplies Raw materials and consumables Purchases during the period , ,13 External services , ,11 Total , ,24 6. Personnel and other personnel related expenses Personnel expenses Wages and salaries , ,21 Indirect personnel expenses Pensions , ,40 Other personnel expenses , ,31 Total , ,92 Number of personnel Average number of personnel during the period Remuneration of the Executive Management Group Not applicable in accordance with Finnish Accounting Act 2:8 7. Amrotization, depreciation and impairment Amortization and depreciation according to plan , ,17 8. Other operating expenses Other operating expenses: Rents , ,69 Other expenses , ,07 Total , ,76 Auditor's fees Deloitte & Touche Oy, Authorized Public Accountant Firm Audit , ,99 Other services , ,00 Total , ,99 9. Financial income and expenses Dividend income From associates ,40 - From others 5 642, ,80 Total dividend , ,80 Interest income from non current investments From group companies 15, ,87 Other interest and financial income , ,70 Total interest income from non-current investments and other interest income , ,57 Interest and other financial expenses Group companies , ,59 Others , ,83 Total interest and other financial expenses , ,42 Total financial income and expenses , ,05

9 9 10. Extraordinary items Extraordinary expenses Group contribution to Fortum Corporation , Appropriations Difference between depreciation according to plan and tax depreciation , , Income taxes Income taxes on extraordinary items ,41 - Income taxes from ordinary activities , ,92 Change in deferred tax liabilities/receivables , ,68 Total , , Non current assets Intangible assets Intangible rights Other non current Total expenditure Acquisition cost , , ,51 Additions and transfers between items , , ,08 Disposals , ,69 Acquisition cost , , ,90 Accumulated amortization and impairment , , ,75 Accumulated amortization relating to disposals and transfers , ,05 Amortization for the period , , ,81 Accumulated amortization and impairment , , ,51 Carrying amount , , ,39 Carrying amount , , ,76 Tangible assets Land and water Buildings Machinery and Transmission and Other tangible Prepayments and Total equipment distribution assets construction in network progress Acquisition cost , , , , , , ,32 Additions and transfers between items , , , , , ,50 Disposals , , , ,22 Acquisition cost , , , , , , ,60 Accumulated depreciation and impairment , , , , ,03 Accumulated depreciation relating to disposals and transfers , , , ,12 Depreciation for the period , , , , ,65 Accumulated depreciation and impairment , , , , ,56 Revaluations , , , ,93 Revaluations , , , ,93 Carrying amount , , , , , , ,49 Carrying amount , , , , , , ,22 Carrying amount of machinery and equipment used for production , ,79 Investments Shares in group Shares in Other shares Total companies associated and interests companies Acquisition cost , , , ,42 Additions , ,00 Disposals , , , ,20 Acquisition cost , ,22 Carrying amount , ,22 Carrying amount , , , ,42

10 10 Other shares and interests Company name Registred office No of shares Carrying amount Asunto Oy Keskilohja Lohja ,73 Asunto Oy Laurintorni Lohja ,97 Asunto Oy Linnaistenkuja Lohja ,56 Asunto Oy Nummelan Juha Vihti ,23 Asunto Oy Nummelan Väinä Vihti ,06 Asunto Oy Suurlohjankatu 1 Lohja ,57 Kiinteistö Oy Asemanmäen Järvenpää 1 252,28 Kiinteistö Oy Ilmajoen tennis Ilmajoki 2 851,03 Kiinteistö Oy Jumpinpelto Merikarvia ,70 Kiinteistö Oy Kimitobacken Kemiö ,51 Kiinteistö Oy Suulivainio Merikarvia ,82 Kiinteistö Oy Tammitori Lohja ,75 Salon Golf ry Salo 1 370,01 Total ,22 Total non current assets , Non current receivables Other receivables Deferred tax assets , ,96 Total non current receivable , , Current receivables Accounts receivables , ,59 Receivables from group companies Accounts receivables , ,03 Other receivables ,64 Total , ,67 Other receivables 2 518, ,21 Prepayments and accrued income , ,95 Total current receivables , ,42 Specification of prepayments and accrued income Insurance prepayments , ,05 Income tax receivable , ,90 Other interest receivables 216,00 213,00 Other , ,00 Total , , Equity Restricted equity Share capital , ,00 Reduction of share capital ,00 Share capital , ,00 Share premium account ,85 Reduction of share premium ,85 Share premium account ,00 Total restricted equity , ,00 Unrestricted equity Reserve for invested unrestricted equity ,00 - Additions in reserve for invested unrestricted equity ,00 Reserve for invested unrestricted equity , ,00 Retained earnings , ,08 Retained earnings , ,08 Loss (Profit) for the period , ,76 Total unrestricted equity , ,68 Total equity , ,68 Distributable unrestricted equity Retained earnings , ,08 Loss (Profit) for the period , ,76 Total , , Provisions Other provisions , ,39 Total , ,39

11 Deferred tax liabilities Presented as notes to the financial statements: From appropriations , ,53 From merger differences , ,44 Total , ,97 In accordance with Fortum accounting principles, deferred tax liabilities are recognized only in group accounts. 19. Liabilities Non current liabilities Liabilities to group companies Cash pool account , ,55 Loans from pension insurance companies , ,00 Connection fees , ,66 Other liabilities ,16 Total , ,37 Cash pool account Liabilities to group companies includes cash pool account of EUR 13,050, The company's option to reclaim these resources is limited to other cash pool account balances by other group companies. Liabilities falling due later than in five years Loans from pension insurance companies , ,00 Current liabilities Loans from pension insurance companies , ,00 Accounts payable , ,81 Liabilities to group companies Accounts payable , ,16 Other liabilities , ,00 Accrued expense and deferred income , ,17 Total , ,33 Other current liabilities , ,09 Accrued expense and deferred income , ,47 Total , ,70 Non-interest bearing liabilities , ,52 Interest bearing liabilities , ,55 Specification of accrued expenses and deferred income Accrued employee expenses , ,68 Other accrued expenses and deferred revenue , ,96 Total , , Commitments and contingent liabilities Commitments and other contingent liabilities Operating lease liability Payable during the following period , ,77 Payable in later periods , ,92 Other commitments Payable during the following period , ,75 Payable in later periods , ,77 Other commitments Mortgages The company has made real estate investments defined in VAT legislation. Related review periods, VAT included in the investment, VAT deducted from the construction cost and amount subject to annual review are presented in the table below: 10 year review period Last review period Cost on real estate investment (net) , , , , , ,62 VAT on real estate investment , , , , , ,67 Net of VAT , , , , , ,67 Amount on annual review , , , , , ,17 Contingent liability subject to review , , , , , ,50 (Of which remains ) (4/10) (5/10) (6/10) (7/10) (8/10) (9/10) Contingent liability subject to review ,16 Contingent liability subject to review ,29

12 Derivative contracts as at December 31, Electricity derivatives Nominal value Fair value Nominal value Fair value GWh k GWh k Purchase agreements Sales agreements Interest and foreign exchange derivative contracts Nominal value Fair value Not recognised Nominal value Fair value Not recognised in profit or loss in profit or loss Foreign exchange forward contracts 1) ) Includes closed forward contracts 22. Related party transactions The group's related parties include subsidiaries, associated companies, joint ventures, board of directors, CEOs, members of the managements groups and family members of these all before mentioned. Transactions with associated companies are specified in the table below. There are no significant trasactions with persons included in the related paries Net sales , ,66 Purchases , , Formulas for key figures The formulas for key figures based on Equity have been changed starting from financial year In the new formulas, the connection fees and accumulated depreciation difference reported in the balance sheet have been included in Equity, less deferred tax liability. The comparison years have been adjusted. Operating profit % Operating profit x 100 Net sales Return on equity% (Loss before extraordinary items - taxes) x 100 Equity (average for the period) Equity ratio Equity x 100 Total assets

13 Information required by Electricity Market Act The company operates as a holder of a network as defined in Electricity Market Act. Differentiated operations The degree of the companys operations that are not related to network operations is so low, that since 2012 they have not been differentiated. Despite the low level of activity, operations not related to the network operations have been differentiated in comparison period. Below is presented profit and loss statement and balance sheet for network operations as required by the Electricity Market Act. Differentiation method Profit and loss statement The differentiation for the comparison period is based on internal accounting. Transactions have been allocated to the differentiated operations when recognised. Balance sheet The differentiated profit for network operations for the comparison period is included in group contributions. The differentiated operations have no balance sheet effects. PROFIT AND LOSS STATEMENT FOR NETWORK OPERATIONS (in thousands) NET SALES Work performed for own use Other operating income Materials and supplies Raw materials and consumables Purchases during the period Loss electricity Other purchases during the period External services Fees paid for grid and network services Other external services Personnel expenses Wages and salaries Social security expenses Pension expenses Other social security expenses Amortization, depreciation and impairment Amortization and depreciation according to plan Depreciation and amortization according to plan on electricity network assets Depreciation and amortization according to plan on other non current assets Other operating expenses Rental expenses Network rents Other operating expenses OPERATING PROFIT Financial income and expenses Income from Group companies - - Income from Associated companies 13 - Income from other investments held as non current assets 6 26 Other interest and financial income From group companies From others Interest and financial expenses To group companies To others PROFIT BEFORE EXTRAORDINARY ITEMS Extraordinary items Extraordinary income Proceeds from sale of investments Extraordinary expense Group contributions PROFIT BEFORE APPROPRIATIONS AND TAXES Appropriations Change in depreciation difference Change in depreciation difference on electricity network assets Change in depreciation difference on other non current assets Income taxes Other direct taxes PROFIT (LOSS) FOR THE PERIOD

14 14 BALANCE SHEET FOR NETWORK OPERATION (in thousands) A s s e t s NON CURRENT ASSETS Intangible assets Intangible assets of electricity network Other intangible assets Tangible assets Tangible assets of electricity network Other tangible assets Prepayments and construction in progress Investments TOTAL NON CURRENT ASSETS CURRENT ASSETS Receivables Non current receivables Receivables on cash pool account - - Deferred tax asset Current receivables Receivables from group companies Receivables from other Cash and cash equivalents TOTAL CURRENT ASSETS T o t a l a s s e t s E q u i t y a n d l i a b i l i t i e s EQUITY Share capital Share premium account - - Other reserves Retained earnings Profit (Loss) for the period TOTAL EQUITY APPROPRIATIONS Depreciation difference PROVISIONS LIABILITIES Non current liabilities Non current interest bearing liabilities To group companies To others Non current interest free liabilities Refundable connection fees To others Current liabilities Current interest bearing liabilities To group companies - 45 To others Current interest free liabilities To group companies To others TOTAL LIABILITIES T o t a l e q u i t y a n d l i a b i l i t i e s KEY FIGURES FOR NETWORK OPERATION Average number of personnel during the period Investments: Net investments of electricity network Intangible assets k Tangible assets k Other intangible assets k Other tangible assets k Return on investment % % 10,3 11,7 The key figure is calculated in accordance with the decision nr 79/ issued by the Ministry of Trade and Industry. The decision guides calculation of key figures regarding differentiated operations within the electricity business. Formula: (Profit before extraordinary items + interest income and other financial income) X 100 (there are no interest expenses) (Total assets - interest free liabilities + leases on electricity network) (average on beginning and end of the reporting period) The amount of interest included in the leasing payments and rents paid for electricity network is not available, therefore interest is not included in the interest expenses in the numerator.

15 15 Fortum Sähkönsiirto Oy SIGNATURES TO THE FINANCIAL STATEMENTS Espoo of 2014 Harri Pynnä Chairman of the Board Ari Koponen CEO Member of the Board Riikka Hirvisalo-Oja Member of the Board Timo Jutila Member of the Board Panu Kamaja Member of the Board Jim Mäkelä Member of the Board Tapio Tulonen Member of the Board AUDITOR'S NOTE An auditor's report based on the audit performed has been issued today. Espoo of 2014 Deloitte & Touche Oy Authorized Public Accountant Firm Robert Kajander APA

16 16 Fortum Sähkönsiirto Oy LIST OF LEDGERS, TYPES OF VOUCHERS AND THEIR ARCHIVING METHODS Financial statements Balance specifications to the financial statements Accounting documents Income statement and balance sheet General ledger Journal Supporting ledgers Trade debtors ledger Trade creditors ledger Payroll accounting Fixed Assets Commitments Voucher types Bank vouchers Adjusting journal entries Trade debtors ledger Trade creditors ledger Payroll vouchers Fixed assets Vouchers for travel expenses Method Bound book Paper Electronically Electronically Electronically Electronically Electronically Electronically Electronically Paper Paper Paper/electronically Paper/electronically Paper/electronically Paper Paper Paper/electronically