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 2015 have also been applied in 2016.

2. Notes to the profit and loss statement

2.1 Personnel expenses and average number of personnel 2016 2015
Salaries -5,002,121.09 -4,746,296.63
Fees and remuneration of the Managing Director and the Board of Directors -294,259.00 -290,352.17
Pension expenses -963,027.72 -916,310.85
Other indirect personnel expenses -282,866.37 -248,337.11
Personnel expenses, total -6,542,274.18 -6,201,296.76
Total monetary value of fringe benefits -84,892.03 -79,952.81
Number of employees
At the end of the financial period 72 74
Average during the financial period 73 73
2.2 Depreciation
Planned depreciation during the financial period
Intangible assets
Software licenses -18,921.70 -17,097.90
Tangible assets
Machinery and equipment -19,834.48 -22,512.83
Depreciation during the financial period, total -38,756.18 -39,610.73
2.3 Other operating expenses
Administrative expenses -1,104,813.88 -1,216,262.49
Facility expenses -608,131.24 -591,857.94
Telephone, IT and office expenses -504,985.74 -447,870.13
Marketing expenses -54,140.81 -53,540.03
Travel expenses -85,843.31 -78,047.56
Representation expenses -85,819.50 -3,697.65
Other operating expenses -157,520.72 -148,978.27
Other operating expenses, total -2,601,255.20 -2,540,254.07
2.4 Financial income and expenses
Financial income
Interest income 1,315.57 3,810.80
Exchange rate gains 0.10 0.00
Other income from securities 74,101.06 81,436.58
Financial income, total 75,416.73 85,247.38
Financial expenses
Interest expenses -713.64 -2,152.62
Exchange rate losses -1,590.99 -187.54
Other expenses from investments -14,174.11 -20,304.98
Financial expenses, total -16,478.74 -22,645.14
2.5 Auditors’ fees
Audit fees -7,911.31 -7,883.57
Other fees -32,738.06 -41,716.02
Auditors’ fees, total -40,649.37 -49,599.59
3. Notes to assets of the balance sheet 2016 2015
3.1 Changes in non-current assets
Intangible assets
Acquisition cost 1.1. 387,410.21 387,410.21
Procured during financial period 61,783.25 0.00
Sold during financial period 0.00 0.00
Acquisition cost 31.12. 449,193.46 387,410.21
Accumulated depreciation 1.1. -376,667.41 -359,569.51
Depreciation during the financial period -18,921.7 -17,097.90
Accumulated depreciation 31.12. -395,589.11 -376,667.41
Balance sheet value 31.12. 53,604.35 10,742.80
Tangible assets
Acquisition cost 1.1. 798,100.51 796,875.63
Procured during financial period 11,799.41 1,224.88
Sold during financial period 0.00 0.00
Acquisition cost 31.12. 809,899.92 798,100.51
Accumulated depreciation 1.1. -730,561.54 -708,048.71
Depreciation during the financial period -19,834.48 -22,512.83
Accumulated depreciation 31.12. -750,396.02 -730,561.54
Balance sheet value 31.12. 59,503.90 67,538.97
The company does not have a depreciation difference.
3.2 Long-term receivables
Other receivables
Guarantee deposits 0.00 819,835.95
Long-term receivables, total 0.00 819,835.95
3.3 Receivables
Travel advances 5,546.57 11,441.57
Other receivables, total 5,546.57 11,441.57
3.4 Prepayments and accrued income
Deferred expense 125,641.46 108,131.32
Pension insurance payment receivables 23,540.00 47,690.00
Prepayments and accrued income, total 149,181.46 155,821.32
3.5 Investments Book value Book value
Other shares and similar rights of ownership
Fund units 2,074,760.46 2,067,625.89
Investments, total 2,074,760.46 2,067,625.89
Market value Market value
Fund units 2,307,547.43 2,202,485.44
4. Notes to equity and liabilities of the balance sheet 2016 2015
4.1 Equity
Restricted equity
Share capital 1.1. 12,500,000.00 12,500,000.00
Share capital 31.12. 12,500,000.00 12,500,000.00
Restricted equity, total 12,500,000.00 12,500,000.00
Non-restricted equity
Retained earnings 1.1. 3,150,595.73 2,783,612.63
Retained earnings 31.12. 3,150,595.73 2,783,612.63
Profit/loss for the financial period 406,438.10 366,983.10
Non-restricted equity, total 3,557,033.83 3,150,595.73
Equity, total 31.12. 16,057,033.83 15,650,595.73
4.2 Current liabilities
Accruals and deferred income
Annual leave salaries and related social security payments 817,580.00 772,888.84
Salary liabilities and related social security payments 670,000.00 600,000.00
Mandatory employer insurance payments 993.00 940.04
Other accrued expense 51,255.85 43,153.26
Accruals and deferred income, total 1,539,828.85 1,416,982.14
5. Notes on collateral and contingent liabilities
5.1 Commitments
Other own commitments
Rental liabilities, less than one year 702,769.32 682,299.84
Rental liabilities, more than one year 732,852.40 1,426,620.74
Guarantee deposits to Nasdaq OMX Stockholm Ab 0.00 819,835.95
Leasing liabilities, less than one year 111,823.06 140,392.81
Leasing liabilities, more than one year 41,354.14 93,841.37
Commitments, total 1,588,798.92 3,162,990.71
Electricity derivatives
Market value 13,839,819.36 45,558,690.00
Value of hedged volume (underlying security) 76,255,673.61 110,963,192.73

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. For Hansel, electricity derivatives trading is a pass-through item and the related expenses and income are charged for in full from Hansel portfolio customers. The market values of derivatives are not recorded in the balance sheet.

Due to stricter regulatory requirements, Hansel switched from its direct Nasdaq account to bilateral derivatives agreements in 2015. At the same time, the counterparty risk was spread out by selecting multiple counterparties. At present, Hansel has a total of six potential counterparties. All of these counterparties are large actors in the sector. A Board meeting held on 16 June 2016 decided to discontinue the Nasdaq account, as the new operating model had proven effective, and the Nasdaq account was no longer considered necessary. Actors that did not require collateral from Hansel were selected as bilateral counterparties. The last collateral held by Nasdaq was returned to Hansel in September 2016.

The monitoring group for government electricity procurement’s term of office runs from 1 January 2015–31 December 2016 and its task is to take responsibility for supervising government electricity procurement and, if necessary, suggest improvements to the Ministry of Finance. Once a year, the monitoring group provides an update on the current status of government electricity procurement to the State Procurement Advisory Board and, if necessary, also to the management of the Ministry of Finance. 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 2020. A monitoring group for government electricity procurement will also be appointed for the 1 January 2017–31 December 2018 period by the Ministry of Finance. The round of appointments is currently in progress.

5.3 Pending legal proceedings

At the end of 2016, Hansel had one case pending in the Supreme Administrative Court and four complaints in the Market Court, all of which concerned the same procurement decision. The Supreme Administrative Court gave Hansel one ruling in 2016, dismissing the complaint in question. The Market Court gave Hansel three decisions in 2016. One complaint was rejected and two remained as was. The company expects that the pending legal proceedings will not have significant financial consequences.