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 2016 have also been applied in 2017.

2. Notes to the profit and loss statement

2.1 Personnel expenses and average number of personnel 2017 2016
Salaries –5,558,198.78 –5,002,121.09
Fees and remuneration of the Managing Director and the Board of Directors –310,365.70 –294,259.00
Pension expenses –1,071,733.06 –963,027.72
Other indirect personnel expenses –232,761.71 –282,866.37
Personnel expenses, total –7,173,059.25 –6,542,274.18
Total monetary value of fringe benefits –84,561.16 –84,892.03
Number of employees
At the end of the financial period 94 75
Average during the financial period 83 73
2.2 Depreciation
Planned depreciation during the financial period
Intangible assets
Software licenses –17,576.35 –18,921.70
Tangible assets
Machinery and equipment –34,784.88 –19,834.48
Depreciation during the financial period, total –52,361.23 –38,756.18
2.3 Other operating expenses
Administrative expenses –1,651,327.06 –1,104,813.88
Facility expenses –619,955.57 –608,131.24
Telephone, IT, and office expenses –640,291.55 –504,985.74
Marketing expenses –50,942.65 –54,140.81
Travel expenses –79,181.91 –85,843.31
Representation expenses –3,011.86 –85,819.50
Other operating expenses –140,963.30 –157,520.72
Other operating expenses, total –3,185,673.90 –2,601,255.20
2.4 Financial income and expenses
Financial income
Interest income 129.48 1,315.57
Exchange rate gains 820.17 0.10
Other income from securities 17,063.65 74,101.06
Financial income, total 18,013.30 75,416.73
Financial expenses
Interest expenses –470.87 –713.64
Exchange rate losses –0.09 –1,590.99
Other expenses from investments 0.00 –14,174.11
Financial expenses, total –470.96 –16,478.74
2.5 Auditors’ fees
Audit fees –8,657.32 –7,911.31
Other fees –36,150.79 –32,738.06
Auditors’ fees, total –44,808.11 –40,649.37
3. Notes to assets of the balance sheet 2017 2016
3.1 Changes in non-current assets
Intangible assets
Acquisition cost 1 Jan 449,193.46 387,410.21
Procured during financial period 33,936.76 61,783.25
Acquisition cost 31 Dec 483,130.22 449,193.46
Accumulated depreciation 1 Jan –395,589.11 –376,667.41
Depreciation during the financial period –17,576.35 –18,921.70
Accumulated depreciation 31 Dec –413,165.46 –395,589.11
Balance sheet value 31 Dec 69,964.76 53,604.35
Tangible assets
Acquisition cost 1 Jan 809,899.92 798,100.51
Procured during financial period 79,636.16 11,799.41
Acquisition cost 31 Dec 889,536.08 809,899.92
Accumulated depreciation 1 Jan –750,396.02 –730,561.54
Depreciation during the financial period –34,784.88 –19,834.48
Accumulated depreciation 31 Dec –785,180.90 –750,396.02
Balance sheet value 31 Dec 104,355.18 59,503.90
The company does not have a depreciation difference.
3.3 Receivables
Travel advances 16,902.08 5,546.57
Other receivables, total 16,902.08 5,546.57
3.4 Prepayments and accrued income
Deferred expense 136,646.12 125,641.46
Pension insurance payment receivables 0.00 23,540.00
Prepayments and accrued income, total 136,646.12 149,181.46
3.5 Investments Book value Book value
Other shares and similar rights of ownership
Fund units 2,124,346.76 2,074,760.46
Investments, total 2,124,346.76 2,074,760.46
Market value Market value
Fund units 2,310,964.70 2,307,547.43
4. Notes to equity and liabilities of the balance sheet 2017 2016
4.1 Equity
Restricted equity
Share capital 1 Jan 12,500,000.00 12,500,000.00
Share capital 31 Dec 12,500,000.00 12,500,000.00
Restricted equity, total 12,500,000.00 12,500,000.00
Non-restricted equity
Retained earnings 1 Jan 3,557,033.83 3,150,595.73
Retained earnings 31 Dec 3,557,033.83 3,150,595.73
Profit/loss for the financial period 184,290.53 406,438.10
Non-restricted equity, total 3,741,324.36 3,557,033.83
Equity, total 31 Dec 16,241,324.36 16,057,033.83
4.2 Current liabilities
Accruals and deferred income
Annual leave salaries and related social security payments 889,841.77 817,580.00
Salary liabilities and related social security payments 751,803.00 670,000.00
Pension insurance payment liabilities 9,294.00 0.00
Mandatory employer insurance payments 2,464.73 993.00
Other accrued expense 27,860.40 51,255.85
Accruals and deferred income, total 1,681,263.90 1,539,828.85
5. Notes on collateral and contingent liabilities
5.1 Transactions by related parties
Of the company’s turnover, €1,509,167.18 (14.5%) comes from the sales of expert services to the government or organisations outside the government but tied to it.
5.2 Commitments
Other own commitments
Rental liabilities, less than one year 723,852.48 702,769.32
Rental liabilities, more than one year 0.00 732,852.40
Leasing liabilities, less than one year 130,033.74 111,823.06
Leasing liabilities, more than one year 201,556.08 41,354.14
Commitments, total 1,055,442.30 1,588,798.92
Electricity derivatives
Market value –3,025,636.20 –13,639,161.74
Value of hedged volume (underlying security) 59,200,588.86 76,255,673.32

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 the 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 in the balance sheet.

The monitoring group for electricity procurement, set up by the Ministry of Finance, supervises government electricity procurement and, if necessary, suggests 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 term of office of the current group ends on 31 December 2018.

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 competitive tendering will decide on individual hedges and their scheduling. Hedges have been made accordingly until 2021.

5.3 Pending legal proceedings

At the end of 2017, Hansel was involved in one case in the Supreme Administrative Court and one in the Market Court. The Supreme Administrative Court gave Hansel one ruling in 2017, dismissing the complaint. The company also received three rulings from the Market Court, all dismissing the complaint. In addition, the company received rulings from the Market Court on two framework agreement tendering processes, which remained as was. In early 2018, the company received a ruling from the Market Court, dismissing the complaint. This case has been taken to the Supreme Administrative Court. By the company’s estimate, the likelihood of financial ramifications from the court proceedings is low. However, any financial ramifications that come true will amount to significant sums.