Notes to the financial statements

1. Basis of preparation for the financial statements

1.1 Valuation principles

Fixed assets are entered in the balance sheet at cost less planned depreciation. 25 per cent reducing balance depreciation is applied to machinery and equipment. Software licenses are amortised on a straight-line basis over five years. Other long-term expenses are amortised on a straight-line basis over five years.

Foreign currency items

Foreign currency denominated assets and liabilities are recognised at the European Central Bank average exchange rate on the closing date of the financial period.

1.2 Comparability of accounts

The accounting principles that were applied in 2017 were also applied in 2018.

2. Notes to the profit and loss statement

 

2.1 Personnel expenses and average number of personnel	2018	2017
Salaries	-6,279,828.41	-5,558,198.78
Fees and remuneration of the Managing Director and the Board of Directors	-310,253.25	-310,365.70
Pension expenses	-1,192,440.90	-1,071,733.06
Other indirect personnel expenses	-227,103.46	-232,761.71
Personnel expenses total	-8,009,626.02	-7,173,059.25
Total monetary value of fringe benefits	-84,123.39	-84,561.16
Number of employees
At the end of the financial period	95	94
On average during the financial period	90	83
2.2 Depreciation
Depreciation according to plan during the financial period
Intangible assets
Software licenses	-19,144.00	-17,576.35
Tangible assets
Machinery and equipment	-69,765.60	-34,784.88
Depreciation during the financial period total	-88,909.60	-52,361.23
2.3 Other operating expenses
Subsidies received	282,871.85	0.00
Other operating expenses	105,520.28	179,100.00
	388,392.13	179,100.00
2.4 Financial expenses
Administration expenses	-2,140,346.41	-1,651,327.06
Expenses from facilities	-575,204.18	-619,955.57
Telephone, data communications and office expenses	-842,169.36	-640,291.55
Marketing expenses	-96,132.75	-50,942.65
Travel expenses	-100,414.06	-79,181.91
PR expenses	-1,786.15	-3,011.86
Other operating expenses	-141,543.34	-140,963.30
Other operating expenses total	-3,897,596.25	-3,185,673.90
2.5 Financial income and expenses
Financial income
Interest income	651.47	129.48
Exchange rate gains	0.00	820.17
Other income from securities	14,928.69	17,063.65
Financial income total	15,580.16	18,013.30
Financial expenses
Interest expenses	-10.29	-470.87
Exchange rate losses	-449.52	-0.09
Other expenses from investments	-1,424.15	0.00
Financial expenses total	-1,883.96	-470.96
2.5 Auditors’ fees
Audit fees	-11,138.96	-8,657.32
Other fees	-119,142.18	-36,150.79
Auditors’ fees total	-130,281.14	-44,808.11
3. Notes to assets on the balance sheet	2018	2017
3.1 Changes in non-current assets
Intangible assets
Acquisition cost 1 Jan	483,130.22	449,193.46
Procured during financial period	0.00	33,936.76
Acquisition cost 31 Dec	483,130.22	483,130.22
Accumulated depreciation 1 Jan	-413,165.46	-395,589.11
Depreciation during the financial period	-19,144.00	-17,576.35
Accumulated depreciation 31 Dec	-432,309.46	-413,165.46
Balance sheet value 31 Dec	50,820.76	69,964.76
Tangible assets
Acquisition cost 1 Jan	889,536.08	809,899.92
Procured during financial period	174,707.76	79,636.16
Acquisition cost 31 Dec	1,064,243.84	889,536.08
Accumulated depreciation 1 Jan	-785,180.90	-750,396.02
Depreciation during the financial period	-69,765.60	-34,784.88
Accumulated depreciation 31 Dec	-854,946.50	-785,180.90
Balance sheet value 31 Dec	209,297.34	104,355.18
The company does not have any depreciation difference.
3.3 Receivables
Travel advances	12,078.72	16,902.08
Other receivables total	12,078.72	16,902.08
3.4 Prepayments and accrued income
Deferred expenses	1,400,273.46	136,646.12
Pension insurance payment receivables	53,451.00	0.00
Deferred expenses total	1,453,724.46	136,646.12
3.5 Financial securities	Book value	Book value
Other shares and similar rights of ownership
Fund units	2,130,415.21	2,124,346.76
	2,130,415.21	2,124,346.76
	Market value	Market value
	2,264,887.28	2,310,964.70
	2,264,87.28	2,310,964.70
4. Notes to equity and liabilities of the balance sheet	2018	2017
4.1 Equity
Restricted equity
Share capital 1 Jan	12,500,000.00	12,500,000.00
Reduction of share capital	7,500,000.00	0.00
Share capital 31 Dec	5,000,000.00	12,500,000.00
Restricted equity total	5,000,000.00	12,500,000.00
Unrestricted equity
Unrestricted equity reserve 1 Jan	0.00	0.00
Addition to unrestricted equity reserve	7,500,000.00	0.00
Unrestricted equity reserve 31 Dec	7,500,000.00	0.00
Retained profit/loss 1 Jan	3,741,324.36	3,557,033.83
Retained profit/loss 31 Dec	3,741,324.36	3,557,033.83
Profit/loss for the financial period	-671,752.61	184,290.53
Unrestricted equity total	10,569,571.75	3,741,324.36
Equity total 31 Dec	15,569,571.75	16,241,324.36
Calculated distributable assets 31 Dec
4.2 Current liabilities
Accruals and deferred income
Annual holiday pay and related social security contributions	1,007,486.56	889,841.77
Salary liabilities and related social security contributions	893,110.60	751,803.00
Pension insurance contributions	0.00	9,294.00
Mandatory employer’s insurance payments	0.00	2,464.73
Other accrued expenses	16,544.42	27,860.40
Accruals and deferred income total	1,917,141.58	1,681,263.90
5. Notes on collateral and contingent liabilities
5.1 Transactions by related parties
Of the company’s net sales, €1,682,383.18 (15.4%) comes from the sales of expert services to the government or organisations outside the government but tied to it.
5.2 Commitments and liabilities
Other own commitments
Rental liabilities, less than one year	745,568.04	723,852.48
Rental liabilities, more than one year	3,212,753.94	0.00
Leasing liabilities, less than one year	147,327.51	130,033.74
Leasing liabilities, more than one year	116,080.31	201,556.08
Commitments and liabilities total	4,221,729.80	1,055,442.30
Electricity derivatives
Market value	27,024,410.71	-3,025,636.20
Value of hedged volume (underlying security)	61,136,425.43	59,200,588.86

Government electricity procurement is handled centrally through Hansel’s framework agreement and involves derivatives that hedge against changes in electricity prices, in accordance with the Government’s electricity hedging strategy. Hansel is responsible for the management of this portfolio and is the counterparty to the derivative agreements on behalf of its customers. The counterparties used by Hansel are large operators in the field, and to reduce risks, Hansel distributes the portfolio between various counterparties. At present, Hansel has six potential counterparties. For Hansel, electricity derivatives trading is a pass-through item, and the related expenses and income are charged for in full from the Hansel portfolio customers. The market values of derivatives are not recorded on the balance sheet.

A monitoring group for electricity procurement, set up by the Ministry of Finance, supervises government electricity procurement and, if necessary, proposes improvements to the Ministry of Finance. The chair of the monitoring group is a representative of the Ministry of Finance, and the group reports to the management of the Ministry of Finance, as necessary. The two-year term of the group ended on 31 December 2018. The Ministry of Finance will soon appoint a new monitoring group for the next two years.

The Ministry of Finance decides on the Government’s hedging strategy for electricity procurement. According to this strategy, a portfolio manager chosen by Hansel through tendering decides on individual hedges and their scheduling. Hedges have been made accordingly until 2022.

5.3 Pending legal proceedings

At the end of 2018, Hansel had seven complaints regarding three tendering processes pending in the Market Court. Three of the complaints pending in the Market Court involve a procurement decision deleted because of a correction of a procurement process. At the end of 2018, Hansel had two complaints pending in the Supreme Administrative Court. Hansel is also involved in ongoing legal proceedings regarding the publicity of documents in the Administrative Court. In 2018, Hansel received two decisions of the Market Court where the related complaints were rejected.