![doc1p1i0]() 2 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### ELENIA VERKKO OYJ GROUP - REPORT OF THE BOARD OF DIRECTORS 2023 Elenia Verkko Oyj Group’s BusinessOperations Elenia Verkko Oyj Group (”Eleniaor ”Elenia Verkko Oyj”) con- sisted of Elenia Verkko Oyj (the parent company) and its fully- owned subsidiary Elenia Innovations Oy. Elenia Innovations had no business in 2023. Elenia Verkko Oyj is a fully-owned subsidi- ary of Elenia Oy. Business Review and financial performance Elenia Verkko Oyj is Finland’s second-largest electricity distribu- tion system operator (DSO) with a 18 % market share in terms of total length of the network and 12% market share in terms of the number of customers. The company has a regional monopoly po- sition, and it serves all customers in the geographical areas de- fined in the licence granted by the Energy Authority (EA). The li- cence holder has the exclusive right to build and operate an elec- tricity distribution network in its geographical area of responsi- bility. With an electricity network of approximately 76,600 kilome- tres, Elenia Verkko Oyj supplies electricity to 440,000 end users. In addition to residential customers, key customer segments in- clude industrial, service, construction and public sectors. The company has operations in more than 100 cities and municipali- ties spanning a geographical area of nearly 600 km in length across central Finland, from Southern Häme to Northern Ostro- bothnia. During the financial year, Elenia’s network business distrib- uted 6,037 GWh of electricity, compared to 6,260 GWh in the previous year. The distribution volume declined by 223 GWh (3.6%). The decline is mostly attributable to the energy saving measures undertaking by Elenia’s customers originally in re- sponse to the exceptionally high electricity prices and national concern over electricity shortage. Elenia was well prepared for an electricity shortage and did significant stakeholder and media cooperation, guiding its customers to prepare and save electric- ity. With warm and windy beginning for 2023 along with the cus- tomers’ energy saving measures, the electricity shortage did not materialize. While the volumes partially recovered during Q4/2023, the impact was not significant enough to offset the volume decline during Q1-Q3/2023. Revenue from the network business came to EUR 318.1 mil- lion (EUR 310.8 million in 2022).Revenue increased by EUR 7.2 million (2.3%). The EBITDA of the network business was EUR 213.2 million (EUR 203.1 million in 2022). EBITDA increased by EUR 10.1 million (5.0%). The positive revenue and EBITDA de- velopment was driven by the said tariff increase. Additionally, the TSO rebates contributed to the positive EBITDA perfor- mance. Furthermore, the weather was characterised as benign with no major power disruptions i.e. snow loads or storms (class 3 or 4). The first half of the year was calm but in the latter half of the year, four major low-pressure storms occurred, Sylvia in August, Varpu in September, and Pirjo and Otso in October (all class 2 storms). The largest number of customers without electricity at the same time was during the Otso storm, a total of approxi- mately 19,000. The longest outages lasted almost two days in the Varpu and Pirjo storms due to difficult weather conditions that prevented fault repairing for a considerable time. However, electricity was restored to most of customers within a few hours. Depending on the storm, the number of fault repair tasks varied between 320 and 550 single tasks. Elenia raised its preparedness nine times during in 2023. Six times the preparation was at the yellow level (the lowest level of preparedness of the whole major power disruption organization) and once at the orange level (the second highest level). The costs caused by the storms was approximately EUR 3.3 million during 2023. Of these, almost EUR 2.8 million was caused by the four storms mentioned above. The SAIDI (System Average Interruption Duration Index) was 95 minutes due to the storms (70 minutes in 2022). Exclud- ing the influence of these storms, the result was 44 minutes, which can be considered excellent. System Average Interruption Frequency Index SAIFI was the at all-time low with 2.5 interrup- tions per customer. The number of short interruptions (less than 3 minutes) per customer was also the at the lowest recorded level at 3.4. The Electricity Market Act (“EMA”) states that 100% of cus- tomers must be within the scope of the quality requirements by the end of 2036 . Elenia has sought to achieve this target by in- creasing the underground cabling rate to 75% by the end of 2028. The investment plan of Elenia’s network business is de- signed to improve the security of supply via underground ca- bling. Since 2009, Elenia has built only weatherproof distribution lines. At the end of the year, 63.8% of Elenia’s network was un- derground, compared to 61.7% at the end of 2022. At the end of the year, 82% of the customers of Elenia’s net- work business were within the scope of the quality requirements stipulated by the EMA. The corresponding figure at the end of 2022 was 80%. 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 bat- tery pack was successfully deployed in the Kuru area to provide electricity to local households in case of an outage. Elenia is in- vesting into two additional battery packs, one of which was par- tially commissioned in 2023. Elenia invested EUR 140.5 million in developing electricity networks during the financial year. In 2022, the corresponding investments amounted to EUR 175.8 million. Elenia Verkko Oyj cut its investments significantly in 2023 as the result of the sud- den mid-period change to the regulatory methods by the EA. In June 2024 Elenia will submit to the EA its statutory net- work development plan. In the previous plan published in June 2022, Elenia’s capex requirements to replace aging overhead lines and improve the security of supply exceeded EUR 1,500 million by 2036. Additionally, green transition related capex in- cluding e.g. deployment of smart meters and increasing network capacity to enable connection of wind power, was expected to amount to approximately EUR 500 million by 2031. Given the changes into the regulatory methods, Elenia will need to revise its network development plan. 3 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) As part of the 2022 network development plan, Elenia was required for the first time to organise a public hearing for its cus- tomers and stakeholders on the network development plan. One of the findings of the hearing was that 85% of the customers think that 12 hours is the maximum acceptable outage length, which is significantly shorter than the 36-hour limit set in EMA for 2036. In 2023, 300 MW of new wind power capacity (254.8 MW in 2022) and 4,865 new small-scale solar panel installations (4,457 in 2022) were connected to Elenia's distribution grid. There is a clear increase among our corporate customers in industrial elec- trification solutions and interest in battery solutions. For the consumer customers there is a clear increase in the solar panel installations and electric vehicle charging, and the interest to- wards real-time electricity consumption data, our online services and Elenia Aina application. For corporate customers the inter- est is driven by the green transition and the need to move away from fossil-fuel based solutions (such as natural gas) and for con- sumer customers the interest is driven additionally by the very highelectricity prices. Elenia Verkko Oyj continued to develop its asset manage- ment system according to the international standard ISO 55001:2014. The requirements ISO 55001 guide the construc- tion, 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 opera- tions. The asset management system of Elenia’s network busi- ness was recertified in November 2022 by Lloyd’s Register and first surveillance visit was in 2023. The EA oversees the operations of Finnish distribution sys- tem operators. The regulation is based on four-year regulatory periods. The past year was the fourth year of the fifth regulatory period (2020–2023) and second year with the regulatory meth- ods that were suddenly amended mid-period for 2022–2023. Elenia received a new regulatory decision on 29 December 2023 regarding the regulatory methods that are in force for two consecutive regulatory periods: sixth regulatory period from 1 January 2024 until 31 December 2027 and seventh regulatory period from 1 January 2028 until 31 December 2031. There are numerous changes in the new regulatory methods compared to the previously applied methods. The key changes to the previous methods include freezing of the asset base to 2022 construction costs, calculation of industry wide unit prices and calculation of WACC methodology. The changes compared to the previous methods were significant and in Elenia’s view un- necessary, sudden and unjustified. In 2023 the reasonable rate of return increased from 3.97% in 2022 to 6.08% mainly due the sharp rise in the interest rates in 2022. For 2024, the EA has confirmed that the reasonable rate of return is 7.37%. The WACC increased due to higher interest rates in 2023 compared to 2022. Financing Elenia’s financing activities are centralised into Elenia Verkko Oyj. In 2023, Elenia Verkko Oyj did not issue any new bonds (no new bonds were issued in 2022). The Group’s solvency and li- quidity remain very strong after the bond issue carried out in 2020 and due to the lower-than-expected capex in 2022 and 2023. At the end of the financial year, cash and cash equivalents amounted to EUR 60 million (EUR 52 million at the end of 2022). The Group’s credit facilities consist of a EUR 250 million Capex Facility, a EUR 50 million Working Capital Facility and a EUR 70 million Liquidity Facility that were renewed in 2023. The first two mature in May 2028 and they both have two one-year extension options. These facilities also for the first time have a sustainability linkage. Elenia’s performance on LTIF, SAIDI and CO2 emissions will in the future determine the margin that Elenia pays on these facilities. The five-year Liquidity Facility ma- tures in May 2028 and it is renewed annually. All the credit facili- ties were entirely undrawn at year end (as was the case at the end of 2022). During the year Elenia drew in its entirety the EUR 100 million European Investment Bank facility. Elenia 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 Adjust- ment period”), 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 2023, the ICR and LR were 4.56 and 8.68, respectively. At end of 2022, the corresponding levels were 5.21 and 8.69. Elenia Group is in compliance with the financial cove- nants.Elenia retains adequate headroom to both financial cove- nants on a historical and forward-looking basis. Employees Elenia Verkko Oyj number of employees increased moderately in 2023. 31 Dec 2023 FTE 31 Dec 2022 FTE Elenia Verkko Oyj 77 73 The year-end, the total FTE of Elenia Verkko Oyj was 77 (73 in 2022). However, the total employment effect of the Group and its external subcontractor’s operations related to Elenia is ap- proximately 1,000 people. In 2023, we continued the safety TUISKU project, which was launched in 2022 to promote and improve the safety culture in cooperation with our partners. At the end of the year, we launched the Safety Academy, which aims to further strengthen and deepen the safety behaviour and activities of our staff and partners. We continued to systematically develop staff skills and train- ing as the ongoing energy transition changes the demands of the job. At the end of the year, we launched the second Expert Acad- emy training programme with Aalto University. The first Expert Academy took place in 2022 and it was developed from the Team Lead Academy organised in 2020 with for expert skill de- velopment in mind. In addition, we have produced topical Elenia Academy presentations for staff on topics such as equality, resili- ence, recovery and cybersecurity. For several weeks in the au- tumn, we focused on maintaining our own wellbeing and health through a multidisciplinary programme. In our recruitment, we are taking diversity into account, and in our collaboration with educational institutions, we are emphasising the use of the latest technology in our business. We offer internships and thesis op- portunities to students throughout the year. We renovated our premises to reflect the current hybrid working model with better facilities for external meetings from the perspective of data se- curity and privacy. For more information on Elenia’s personnel, please see our sustainability report at www.elenia.com. 4 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) Acquisitions and Divestments There were no acquisitions or divestments during fiscal years 2022 and 2023. Corporate governance Elenia Verkko Oyj’s Board of Directors has six members: Tapani Liuhala (Chairman), Jorma Myllymäki, Ville Sihvola, Jarkko Koh- tala, Tommi Valento and Anne-Marie Malmberg. There were no changes to the board during the fiscal year. The Board of Direc- tors made 9 written resolutions during the financial year and no meetings were held. Auditor Elenia Verkko Oyj’s auditor is Ernst & Young Oy, with Miikka Hi- etala, Authorised Public Accountant, as the auditor with princi- pal 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. Corporate Responsibility and Sustainability Please see Elenia’s sustainability report at www.elenia.com. Risk Management Please see Elenia’s sustainability report at www.elenia.com. Cybersecurity and IT In 2023, geopolitical situation in the Europe highlighted the im- portance of preparedness against cyber threats within critical in- frastructure. Elenia was active both in internal cyber security de- velopment and in national forums and events such as the Nordic Pine, a joint exercise with NATO dedicated to deeper under- standing of the energy-hybrid threats and infrastructural resili- ence. From the operational development viewpoint, preparedness for reliable demand flexibility was one of the key themes in Elenia’s digital development. Elenia was the first Finnish DSO to launch an easy-to-use digital service to enable customers to opti- mize their electricity consumption based on electricity market price. This development was based on Elenia’s renewal of Auto- matic Meter Reading technology, providing fast bi-directional connectivity and near real-time communication. Events after the Balance Sheet Date The bonds issued by Elenia Verkko Oyj are rated by S&P Global Ratings (“S&P”). S&P downgraded the rating to BBB (stable) at the end of January 2022 as a result of the changes in the regula- tory methods in the middle of the regulatory period. After the new methods became effective from 1 January 2024, S&P placed Elenia on a negative credit watch on 10 January 2024. The out- come of S&P’s assessment of Elenia is still uncertain at the time of this report. In January, Elenia appealed to the Market Court to repeal the decision of the Energy Authority with regard to the key aspects of the regulatory methods for 2024-2027 and 2028-2031. The outcome of the appeal is expected in the next 2-4 years. Concur- rently, Elenia has also the previous Market Court appeal in pro- cess with regards to sudden mid-period regulatory changes for 2022 and 2023, and the ruling is expected to be received within the next 12-18 months. Jorma Myllymäki has been nominated as CEO of Elenia Oy, ef- fective from 1 April 2024. Tapani Liuhala has been elected as the Chairman of the Board of Elenia Oy, effective from 1 April 2024. Tommi Valento has been nominated as member of the Board of Elenia Oy, effective from 1 April 2024. Outlook The electricity prices in Finland surged during 2022 as a result of the Russian war in Ukraine. Elenia is a major electricity pur- chaser due to the distribution losses (which are 3-4% of the dis- tribution volumes) that Elenia needs to cover, which makes Elenia susceptible to the electricity price changes despite the company’s four-year hedging policy and program. The prices have declined significantly in 2023, but are still higher than his- torically and the market is still experiencing significant volatility, as evidenced by the record high prices on 5 January 2024. The volatility is expected to continue in 2024 and have an impact on Elenia’s financial performance. TSO Fingrid has informed DSOs that it will not charge trans- mission grid fees from DSOs for six months in 2024 as its conges- tion income has soared due to the very high local electricity prices in 2022-2023. The fees will not be charged for 6 months in 2024, i.e. January, February and June and additional three months that have not yet been defined. In 2023, the fees were not charged for January, February, June, July, November and December. Elenia estimates that the net cost savings from trans- mission grid fees to be EUR 19.2 million, which will entirely be treated as exceptional for covenant calculation purposes. The high electricity prices and TSO rebates partially offset each other. The high electricity price is, however, affecting Elenia also otherwise. Electricity consumption, which has increased steadily over the last few years driven by electrification, declined as customers saved electricity in response to the surging elec- tricity prices. The 2023 figures from January to September illus- trate that customers (especially consumer customers) can re- duce their electricity consumption by 10-15%, depending on the outside temperature. However, during October to December 2023, the volumes partially recovered. Hence in 2024, if the win- ter is warm, the volumes can decline compared to winter of 2023. However, the full-year impact of the approximately 5.8% post-tax tariff increase in May 2023 will be reflected in 2024 fig- ures. From the regulatory perspective, both distribution losses as well as the grid costs are considered as pass-through items and Elenia can recoup them in the coming years. Additionally, the regulation is also volume neutral, which offers protection against declining volumes. Investments in the electricity network will continue in 2024, but Elenia will invest significantly less than previously planned. The significant reduction in investments is due to changes in regula- tory methods implemented by the EA, especially the significant changes in the calculation of the of industry wide unit prices and the definition of the regulatory asset base for which the reasona- ble return is based on. Elenia is still analysing the impact of the new regulatory methods on its business and operations, and the potential actions it will take to mitigate the impact and protect the credit rating. The Board of Directors’ Proposal ConcerningDistribution of Profits The Board of Directors proposes that no dividend be distributed. 5 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) # CONSOLIDATED FINANCIAL STATEMENTS 2023 ### CONSOLIDATED STATEMENT OF PROFIT OR LOSS for the year ended 31 December2023 Consolidated statement of profit or loss EUR 1,000 Note 1 Jan - 31 Dec 2023 1 Jan - 31 Dec 2022 Revenue 2.1.1 316,606 308,552 Other operating income 2.2.1 1,504 2,328 Materials and services -73,792 -82,267 Employee benefit expenses 2.3.3 -3,809 -3,526 Depreciation, amortisation and impairment 3 -92,854 -88,627 Other operating expenses 2.3.1 -27,292 -21,977 Operating profit 120,363 114,482 Finance income 2,331 258 Finance costs -48,495 -39,990 Finance income andcosts 4.1 -46,164 -39,731 Profit before tax 74,199 74,751 Income tax 6.1.1 -18,534 -18,877 Profit for the year 55,664 55,874 ### CONSOLIDATED STATEMENT ### OF COMPREHENSIVE INCOME for the year ended 31 December2023 EUR 1,000 1 Jan - 31 Dec 2023 1 Jan - 31 Dec 2022 Profitfor the year 55,664 55,874 Other comprehensive income Other comprehensive income notto be reclassified to profit or loss in subsequent years: Re-measurement gains on defined benefitplans -13 193 Income tax effect 3 -39 Other comprehensive income / (loss)for the year after tax -10 155 Total comprehensive profitfor the year 55,654 56,029 The accompanying notes are an integral partof these con- solidated financial statements. 6 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### CONSOLIDATED STATEMENT ### OF FINANCIAL POSITION as at 31 December 2023 Consolidated statement of financial position EUR 1,000 Note 31 Dec 2023 31 Dec 2022 Assets Non-current assets Property, plant and equipment 3.1 1,689,002 1,642,733 Goodwill 3.2 417,823 417,823 Intangible assets 3.2 27,426 26,704 Right-of-use assets 3.1, 3.3 638 552 Other non-current financial assets 194 194 Other non-current receivables 1,877 0 Deferred tax assets 6.1.2 9,966 8,187 Total non-current assets 2,146,926 2,096,193 Current assets Trade receivables 2.1.4 19,330 17,987 Other current receivables 2.1.4 60,706 59,634 Cash and cash equivalents 60,161 51,154 Total current assets 140,197 128,774 Total assets 2,287,123 2,224,967 EUR 1,000 Note 31 Dec 2023 31 Dec 2022 Equity and liabilities Equity Share capital 4.4 80 80 Unrestricted equity 4.4 -548,843 -548,843 Retained earnings 4.4 521,713 448,723 Total equity -27,051 -100,041 Non-current liabilities Loans from financial institutions 4.2 250,000 150,000 Bonds and notes 4.2 1,684,021 1,683,025 Lease liabilities 3.3 548 311 Employee benefit liability 6.2 192 244 Provisions 2.3.4 6,521 6,119 Liabilities related to contracts withcustom- ers 2.1.3 47,663 38,954 Deferred tax liabilities 6.1.2 174,695 156,888 Total non-currentliabilities 2,163,641 2,035,541 Current liabilities Lease liabilities 2.3.2, 3.3 111 425 Trade payables 2.3.2 4,380 5,639 Liabilities related to contracts withcustom- ers 2.1.3 1,825 1,467 Other current liabilities 2.3.2 144,218 281,935 Total current liabilities 150,533 289,467 Total equity and liabilities 2,287,123 2,224,967 The accompanying notes are an integral partof these consolidated financial statements. 7 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December2023 Consolidated statement of cash flows 1 000 EUR 1 Jan - 31 Dec 2023 1 Jan - 31 Dec 2022 Operating activities Profit for the year 55,664 55,874 Adjustments to reconcile profit tonet cash flows Depreciation, amortisation and impairment 92,854 88,627 Gains and losses on the disposal of non-current assets 0 -359 Finance income -2,331 -258 Finance costs 48,495 39,990 Taxes 18,534 18,877 Other adjustments 0 -18 Other short-term and low value rentalexpenses 35 35 Working capital adjustments Increase (+) / decrease (-)in trade and other current liabilities 874 11,983 Increase (-) / decrease (+)in trade and other current receiva- bles -8,349 12,708 Increase (+) / decrease (-)in provisions 350 -1,546 Interests received 2,318 257 Interest and financial expensespaid -46,436 -38,724 Interest paid on lease liabilities -13 -307 Taxes paid 347 -5,354 Net cash flows fromoperating activities 162,343 181,785 1 000 EUR 1 Jan - 31 Dec 2023 1 Jan - 31 Dec 2022 Investing activities Capital expenditure -139,631 -178,127 Changes in investments 7 4,221 Net cash flows used in investingactivities -139,625 -173,906 Financing activities Proceeds from long-term borrowings 100,000 0 Equity repayment -134,000 -27,000 Repayment oflease liabilities -414 -1,566 Group contributions received/paid 20,704 0 Net cash flows fromfinancing activities -13,711 -28,566 Net increase in cashand cash equivalents 9,008 -20,688 Cash and cash equivalents at 1 January 51,154 71,841 Cash and cash equivalentsat 31 December 60,161 51,154 Cash and cash equivalents comprisesof cash balance at bank accounts. The accompanying notes are an integral partof these consolidated financial state- ments. 8 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Consolidated statement of changes in equity for the year ended31 December 2023 Unrestricted equity EUR 1,000 Share capital Reserve for invested unre- stricted equity Common control reserve Retained earnings Total equity Equity at 1 January2023 80 1,657,400 -2,206,243 448,723 -100,041 Profit for the year 55,664 55,664 Other components of comprehensiveincome (adjusted by tax effect) Change in defined benefitplans -10 -10 Total comprehensive incomefor the year 0 0 0 55,654 55,654 Transactions with shareholders Group contributions 17,336 17,336 Total transactions withshareholders 17,336 17,336 Equity at 31 December2023 80 1,657,400 -2,206,243 521,713 -27,051 for the year ended31 December 2022 Unrestricted equity EUR 1,000 Share capital Reserve for invested unre- stricted equity Common control reserve Retained earnings Total equity Equity at 1 January2022 80 1,657,400 -2,206,243 371,990 -176,773 Profit for the year 55,874 55,874 Other components of comprehensiveincome (adjusted by tax effect) Change in defined benefitplans 155 155 Total comprehensive incomefor the year 0 0 0 56,029 56,029 Transactions with shareholders Group contributions 20,704 20,704 Total transactions withshareholders 20,704 20,704 Equity at 31 December2022 80 1,657,400 -2,206,243 448,723 -100,041 The accompanying notes are an integral partof these consolidated financial statements. Changes in the equity are explained in moredetails in Note 4.4. 9 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### 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 par- ent of the Group is Elton Investments S.à r.l., domiciled in Luxem- bourg. 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 follow- ing 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 ser- vices (Elenia Oy, ’Elenia Services’). Elenia Networks Group is the owner and operator of an elec- tricity distribution network. The group was formed on 1.1.2020. The Board of Directors approved the consolidated financial statements on 5 March 2024. The shareholders have the right ei- ther to approve, reject or change the consolidated financial Accounting policies have been described in the relevant note and can be recognized from char- acter: Significant judgements, estimates and assump- tions made by the Group management have been presented in the relevant note and can be recognized from character: Risk management principles have been de- scribed in the relevant note and can be recog- nized from character: statements in the Annual General Meeting. 1.2 BASIS OF PREPARATION The consolidated financial statements for the year ended 31 De- cember 2023 have been prepared in accordance with the Inter- national Financial Reporting Standards (IFRS) and their interpre- tations (IFRIC) approved for application within the European Un- ion (EU). The consolidated financial statements are compliant with the provisions of the Finnish Accounting Act and other reg- ulations governing the preparation of financial statements in Fin- land. 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 thou- sands of euros. There may be rounding discrepancies in the sum totals due to the presentation method used. 1.3 CHANGES IN ACCOUNTING POLICIES ANDDISCLO- SURES The Group applied for the first-time certain standards and amendments which are effective for annual periods beginning on or after 1 January 2023.The nature of each new standard and amendment adopted by the Group has been described in the rel- evant note. New standards, amendments and interpretations not material for the Group have been described in Note 5. ![doc1p9i2]() ![doc1p9i1]()![doc1p9i0]() 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, uncer- tainty 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 sig- nificant accounting judgements, estimates and assumptions are described either below or in the relevant notes. 10 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 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 man- agement 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 2023 of EUR 74 199 thousands and has a net equity of EUR -27 051 thousands as at 31 Decem- ber2023. 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 ba- sed on the following: • The Group has issued bonds under the EUR 3 billion EMTN programme. As at 31 December 2023, the Group has uti- lized 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 de- mand 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 370 million from a syn- dicate of international banks (as fully described in Note 4.2.9). CLIMATE CHANGE In accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), Elenia's manage- ment has assessed the financial risks and opportunities related to climate change to Elenia's business. The main risks are related to extreme weather events and the opportunities are related to the green transition. The impact of extreme weather events on Elenia's business is mitigated by Elenia's significant investment in a weatherproof underground network between 2012 and 2023. These investments will continue until at least 2036, for ex- ample increasing the level of underground cabling to around 90%, which will further reduce the impact of extreme weather events. In addition, the electricity network regulation mitigates the economic impact of both risks and opportunities for Elenia. For these reasons, the impact of climate change risks on Elenia's financial statements is not material. 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 ex- perience and expectations of future events that are considered probable on the reporting date. However, actual results and tim- ing may differ from these estimates. The Group’s significant ac- counting estimates have been described in the relevant note. 11 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### 2 OPERATING PROFIT 2.1 REVENUE AND TRADE AND OTHERCURRENT RECEIVABLES ![doc1p11i0]() 2.1.1 Contracts with customers: revenuerecognition and payment terms REVENUE BY TYPE OF SERVICE EUR 1,000 2023 2022 Distribution of electricity 313,128 305,758 Connection fees 1,657 1,304 Other revenues 1,821 1,490 Total 316,606 308,552 TIMING OF REVENUE RECOGNISION EUR 1,000 2023 2022 Transferrred at a point in time 314,949 307,248 Transferred over time 1,657 1,304 Total 316,606 308,552 Revenue from the distribution of electricity is recognised at the time of delivery. Revenue from customer service operations and 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 or fibre network are recognised as revenue in the con- solidated statement of profit or loss. Until the end of 2017 reve- nue 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 demoli- tion 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 fu- ture refunds. The Group pays to the customers voluntary outage compen- sations due to interruption of over 6 hours in the electricity dis- tribution. 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 Mar- ket 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. ACCOUNTING POLICY 2.1.2 Disaggregation of revenue Group revenue consists of revenue fromthe distribution of elec- tricity, connection fees paid by the customers for joining an elec- tricity network and other revenues. Other revenues consist mainly contracting income. 2.1.3 Liabilities related to contracts withcustomers EUR 1,000 2023 2022 Non-current liabilities related tocontracts with customers 47,663 38,954 Current liabilities related to contracts withcus- tomers 1,825 1,467 Total 49,488 40,421 Liabilities related to contracts with customers include the unrec- ognised part of new connection revenue for the electricity net- work and fibre network connections. Revenue will be recognised over a period of next 30 years for the electricity network con- nections. The amount reported as current liabilities will be rec- ognized during the next 12 months. ![doc1p11i0]() ![doc1p11i0]() 12 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 2.1.4 Trade and other current receivables TRADE RECEIVABLES Trade receivables are recorded on the balance sheet at their transaction price.Impairment is recorded on trade receiva- bles 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 in- curred as a result of transactions subject to IFRS15. The im- pairment 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. ACCOUNTING POLICY CREDIT RISK 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 collec- tion letters. Also the wide fragmentation of the customer base reduces the credit risk. DISTRIBUTION VOLUME AND PRICE RISKS Electricity distribution operations do not involve particular volume or price risks in the medium term due to being sub- ject to reasonable return under electricity distribution li- cense. In the short term changes in distribution volumes and electricity prices has an impact on revenues and operating expenses respectively. RISK MANAGEMENT TRADE AND OTHER CURRENT RECEIVABLES EUR 1,000 2023 2022 Trade receivables 19,331 17,987 Accrued income and prepaid expenses 43,137 35,842 Group contribution receivable 17,336 20,704 Other current receivables 232 3,088 Total trade and other receivables 80,036 77,620 BREAK-DOWN OF ACCRUED INCOMEAND PREPAID EXPENSES EUR 1,000 2023 2022 Sales accruals 42,474 35,539 Accrued financial items (prepayments) 564 0 Other accrued income and receivables 99 303 Total accrued income 43,137 35,842 TRADE RECEIVABLES The Group's trade receivables at the end of 2023 were EUR 19.3 million (2022:EUR 18.0 million). EUR 0,0 million collateral secu- rities were received for trade receivables (2022: EUR 0.0 mil- lion). Change in expected credit losses EUR 1,000 2023 2022 Expected credit loss 1 Jan 662 437 Additions 764 1,059 Realized credit losses -771 -834 Expected credit loss 31 Dec 655 662 IMPAIRMENT OF TRADE RECEIVABLES Group records lifetime expected credit losses from all trade re- ceivables incurred as a result of transactions subject to IFRS15. Trade receivables do not contain any significant financing com- ponent. 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 ap- plied 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 receiva- bles are booked to separate book-keeping account in Group re- porting. The calculation of the amount of credit loss reserve is based on the relative proportion of credit losses calculated from historically realized level. The customers are segmented to pri- vate 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 a monthly basis based on customers' credit rating level and payment history. 13 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) BREAKDOWN AND IMPAIRMENTOF TRADE RECEIVABLES BYAGE 31 Dec 2023 Trade receivables EUR 1,000 Undue 1-90 days 91-180 days Over 180 days Total Trade receivables by age 14,596 4,267 400 722 19,985 Expected credit loss rate, privatecustomers 0.1 % 6.5 % 34.4 % 51.8 % Expected credit loss, private customers -13 -177 -109 -126 -425 Expected credit loss rate, company customers 0.1 % 2.4 % 23.3 % 35.7 % Expected credit loss, company customers -3 -37 -20 -171 -231 Total expected creditlosses -16 -214 -128 -297 -655 Total trade receivables 14,580 4,053 272 425 19,331 31 Dec 2022 Trade receivables EUR 1,000 Undue 1-90 days 91-180 days Over 180 days Total Trade receivables by age 14,643 3,169 244 594 18,649 Expected credit loss rate, privatecustomers 0.2 % 10.3 % 52.8 % 78.9 % Expected credit loss, private customers -17 -204 -114 -142 -476 Expected credit loss rate, company customers 0.1 % 1.6 % 32.0 % 37.5 % Expected credit loss, company customers -3 -18 -9 -155 -186 Total expected creditlosses -21 -222 -123 -297 -662 Total trade receivables 14,622 2,946 121 297 17,987 ![doc1p11i0]() 14 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 2.2 OTHER OPERATING I NCOME ACCOUNTING POLICY 2.2.1 Other operating income Other operating income includes income from non-operat- ing activities, such as income from trade receivables collec- tion and from sales of used fixed assets, insurance compen- sation and rental income. Government grants relating to the other purpose than the purchase of property, plant and equipment are recog- nised 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 2023 2022 Indemnities 433 713 Income from the trade receivablescollection 943 1,041 Gains on sales of fixed assets 0 360 Other operating income 127 214 Total 1,504 2,328 ![doc1p11i0]() 2.3 OTHER OPERATING EXPENSES AND RELATED LIABILITIES 2.3.1 Other operating expenses Outage compensations Outage compensations in accordance with the Electricity Market Act, which are paid to the customers due to inter- ruption 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 compensa- tions due to interruption of over 6 hours in the electricity distribution. These compensations are recognised as a re- duction 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 as- set 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 ex- penditure as an asset, the asset is carried at cost less any ac- cumulated 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 pe- riod of development, the asset is tested for impairment an- nually. The Group has not recognised any developmentex- penditures as an intangible asset. ACCOUNTING POLICY OTHER OPERATING EXPENSES EUR 1,000 2023 2022 Lease expenses -489 -387 External services -3,134 -1,765 IT and communication expenses -3,768 -3,330 Research and development costs 234 -353 Marketing and communications -81 -124 Insurances -252 -232 Mailing expenses -173 -4 Other personnel expenses -238 -167 Travelling expenses -84 -58 Outage compensation costs -726 -225 Elenia service expenses -15,752 -14,236 Other expenses -2,830 -1,097 Total -27,292 -21,977 Research and development costs mainly include costs of re- search projects that do not meet the criteria for capitalization. 15 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) AUDIT FEES EUR 1,000 2023 2022 Auditing fees -160 -101 Fees for tax services -6 -7 Fees for other services -15 -6 Total -181 -114 Ernst & Young was appointed as the auditor until the Annual General Meeting held in the 2024 reporting period.. AUDITING FEES Auditing fees include fees for auditing the consolidated financial statements and interim 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. TRADE AND OTHER CURRENT PAYABLES EUR 1,000 2023 2022 Short-term financial lease liabilities 111 425 Trade payables 4,380 5,639 Accrued expenses Employee benefits expenses 1,688 1,570 Interest expenses 16,694 13,359 Other accrued expenses 42,049 54,865 Liabilities related to contracts withcustomers 1,825 1,467 Other liabilities VAT liability 15,509 8,937 Energy taxes 19,069 16,321 Prepayments received 3,880 6,783 Equity repayment liability 43,447 177,447 Other liabilities 1,881 2,655 Total 150,533 289,467 2.3.2 Trade and other current payables 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 de- ferred financing items. 2.3.3 Employee benefits expense The total remuneration paid by Elenia Verkko to its employees consists of salaries, fringe benefits and short-term performance bonuses. EMPLOYEE BENEFIT EXPENSES EUR 1,000 2023 2022 Salaries and remuneration -3,166 -2,958 Pensions Defined contribution plans -568 -503 Defined benefit plans 0 5 Social security costs -75 -70 Total -3,809 -3,526 EUR 1,000 2023 2022 Salaries and remunerationpaid to other key members of the management Salaries and other short-term employee benefits 261 236 Other long-term employee benefits 36 49 Pension expenses related to salariesand employee benefits 53 51 Total 351 336 Salaries and remuneration were not paid to CEO in 2023 and 2022. Elenia Group applies two incentive plans. All employees of the Elenia Group are included within the scope of the short-term an- nual 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 remu- neration paid by the Group to its employees consists of salaries, ![doc1p9i2]() 16 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) fringe benefits and short-term performance bonuses. All em- ployees of the Group are included within the scope of the perfor- mance bonus scheme. The annual performance bonuses (i.e. short-term annual per- formance bonus plan) are based for example on the Group profit- ability, 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 of 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 im- prove 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 2023, the remunerations related to the 2018- 2020, 2019-2021 and 2020-2022 programmes were paid. Dur- ing 2023 there were three programmes on-going: 2021-2023, 2022-2024 and 2023-2025. During 2023 EUR 43 thousand (2022: EUR 61 thousand) was paid out related to the long-term incentive plan in Elenia Verkko Oyj. The key members of the management have no share or op- tion based incentive schemes. Five of the key management per- sons 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 ap- proximately 0.3% of Elton Investment S.à r.l. after the arrange- ment. The equity investment has been made at fair market val- ues and it therefore is not a compensation plan. The equity own- ership 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. ![doc1p11i0]() 2.3.4 Provisions ACCOUNTING POLICY PROVISIONS Provisions are recognised when the Group has a present le- gal 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. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS PROVISIONS 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 network has been calculated by discounting estimated fu- ture 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 ac- count while compiling the calculations and the discount rates applied correspond to the rates used in impairment testing of goodwill for network and heat businesses. PROVISIONS 2023 EUR 1,000 Provision for refunds of con- nection fees Provisions at 1 January 6,119 Increase 994 Use of provisions -592 Provisions at 31 December 6,521 PROVISIONS 2022 EUR 1,000 Provision for refunds of con- nection fees Provisions at 1 January 7,665 Decrease -1,243 Use of provisions -302 Provisions at 31 December 6,119 17 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 3 ### INVESTMENTS AND LEASE COMMITMENTS 3.1 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment comprise mainly electricity distribution networks, machinery, equipment and buildings. Property, plant and equipment are stated at original ac- quisition cost less accumulated depreciation and accumu- lated impairment losses, if any (see Note 3.2 Accounting pol- icy for Impairment of non-financial assets). The original ac- quisition cost includes expenditure that is directly attributa- ble to the acquisition of an item. Subsequent costs are in- cluded in the asset’s carrying amount or recognised as a sep- arate asset, as appropriate, only when it is probable that fu- ture economic benefits associated with the item will flow to the Group and the acquisition cost of the item can be relia- bly 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 ex- pense 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 capi- talized 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 finan- cial period in which they are incurred. Land and water areas are not depreciated since they have indefinite useful lives. Depreciation on other assets is calcu- lated on a straight-line basis over the estimated useful lives of the assets as follows: Buildings and structures 15-50 years Electricity distribution network 10-30 years Electricity transmission network 25-40 years Machinery and equipment3 3-30 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 esti- mated useful life of the asset. Leases of buildings and vehi- cles 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 as set’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 sell- ing price and carrying value and recognised in the consoli- dated statement of profit or loss under other operating in- come 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 borrow- ing 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. ![doc1p11i0]() ACCOUNTING POLICY 18 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) PROPERTY PLANT AND EQUIPMENT Land and wa- ter areas Buildings Networks Machinery and equipment Other tangible assets Prepayments Total EUR 1,000 Cost at 1 January 2023 2,145 6,632 2,692,192 175,228 56 20,146 2,896,399 Additions 33 7 112,896 23,952 0 -472 136,415 Additions due to revaluations 0 205 0 0 0 0 205 Disposals 0 -7 -5,519 -36 0 0 -5,561 Transfers between balance sheet items -3 0 0 0 0 -410 -412 Cost at 31 December2023 2,175 6,837 2,799,569 199,145 56 19,264 3,027,046 Accumulated depreciation, amortisationand impairment at 1 January 2023 0 -5,960 -1,097,460 -149,637 -55 -1,253,113 Depreciation and amortisation for theyear 0 -167 -82,428 -4,867 -1 -87,462 Accumulated depreciation and amortisationon disposals 0 0 5,519 0 0 5,519 Impairment for the year\* -1 0 -2,350 0 0 -2,351 Accumulated depreciation,amortisation and impairmentat 31 December 2023 -1 -6,127 -1,176,719 -154,504 -56 -1,337,407 Book value at 31 December2023 2,174 710 1,622,850 44,641 0 19,264 1,689,639 Book value at 31 December2022 2,144 671 1,594,732 25,591 1 20,146 1,643,285 \*Networks' impairment for the year relatesto the demolition of electricity networks. Land and wa- ter areas Buildings Networks Machinery and equipment Other tangible assets Prepayments Total EUR 1,000 Cost at 1 January 2022 2105 6,400 2,545,006 160,604 56 21,421 2,735,592 Additions 11 0 157,334 14,638 0 448 172,430 Additions due to revaluations 0 435 0 0 0 0 435 Disposals -1 -203 -11,286 -14 0 0 -11,503 Transfers between balance sheet items 30 0 1,137 0 0 -1,723 -555 Cost at 31 December2022 2,145 6,632 2,692,192 175,228 56 20,146 2,896,399 Accumulated depreciation, amortisationand impairment at 1 January 2022 0 -5,761 -1,024,075 -145,326 -55 -1,175,216 Depreciation and amortisation for theyear 0 -200 -78,322 -4,311 -1 -82,833 Accumulated depreciation and amortisationon disposals 0 0 8,045 0 0 8,045 Impairment for the year\* -1 0 -3,109 0 0 -3,110 Accumulated depreciation,amortisation and impairmentat 31 December 2022 -1 -5,960 -1,097,460 -149,637 -55 -1,253,114 Book value at 31 December2022 2,144 671 1,594,732 25,591 1 20,146 1,643,285 Book value at 31 December2021 2,105 639 1,520,932 15,278 1 21,421 1,560,376 ![doc1p11i0]() 19 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 3.2 INTANGIBLE ASSETS 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 im- plementation of the software. These costs are amortised over their estimated useful lives (three to five years). Costs associated with developing or maintaining computer soft- ware are recognised as an expense as incurred. IFRS inter- pretations 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 accord- ing 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. Oth- erwise, the license is consideer to be a service contract and costs are expensed when incurred.Concerning the imple- mentation costs of a cloud-based software only customiza- tion related costs can be capitalized if they create and as- set 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. Compensation paid to landowners One-time compensation payments paid to landowners for inconvenience and damage caused by the network com- pany’s overhead lines,cables and equipment are capital- ized. 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 capital- ized in property, plant and equipment as networks as of Jan- uary 1, 2019. According to the estimate of the Group's man- agement, they are not treated as lease contracts under IFRS 16. Recurring annual compensation payments are recog- nised 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 intan- gible 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 licences 3-5 years Customer relationships 20 years Compensation paid to landowners 10-30 years The assets’ useful lives are reviewed and adjusted, if appro- priate, 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 indi- cation of impairment. When considering the need for im- pairment, 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 recov- erable 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 equip- ment and intangible assets other than goodwill is reversed in the event of a change in circumstances that results in the as- set’s recoverable amount changing from the time the impair- ment 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 individu- ally 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 De- cember and when circumstances indicate that the carrying value may be impaired. In assessing value in use, the esti- mated future cash flows expected to be derived from a cash- generating unit are discounted to their present value. The fi- nancial projections used in the calculations are based on business plans approved by management. ACCOUNTING POLICY 20 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) IMPAIRMENT TESTING OF GOODWILL Goodwill has been allocated to the cash generating unit, Net- work 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. The company performed its annual impairment test in Janu- ary 2024. Due to the regulated and stable nature of the electric- ity distribution business, the basis for cash flow projections is the long-term business plan covering the period 2024-2055 which has been approved by the Board of Directors. A volume growth of approximately 0.5% p.a. has been incorporated for the fore- cast period. The discount rate applied is 5.7% (pre-tax), calcu- lated based on relevant studies and the Energy Authority's com- munication regarding the required rate of return in the distribu- tion business (in 2022 the applied discount rate was 5.9%). Long term capital expenditure plans have been prepared to meet the security of supply requirements in line with the Electricity Mar- ket Act as well as the expected requirements of electrification as per the government’s national net zero emission commitment of 2035. The projected cash flows reflect the regulatory methods con- firmed by the Energy Authority for the period 2024-2031, but based on the current understanding of the company senior man- agement and the Board of Directors as well as public communi- cation by other system operators and stakeholders, the current regulatory methods do not enable the execution of the invest- ments required by the electrification of the society, nor the secu- rity of supply investments required by the Electricity Market Act (588/2013) within the required period by the end of 2036. Therefore, Elenia and other DSOs have appealed the confirmed regulatory methods to the market court. As a result, the impair- ment test calculation has been performed using scenarios taking into account the impacts of the alternative outcomes of the court process on the company’s business plan. One scenario as- sumes a ruling in favor of the industry with regards to the defini- tion of the asset base, and the other scenario, a ruling against the industry resulting in cash flow projections based on the regula- tory methods confirmed by the Energy Authority on December 29, 2023 with no changes. The value in use has been calculated based on these outcomes, weighting them equally (50%/50%). This reflects the view of the senior management and the Board of Directors on the company’s recoverable value Based on the analysis in January 2024 there is a headroom of 1 793 million eu- ros. SENSITIVITYTOCHANGESINASSUMPTIONS INDISCOUNT RATE Discount rate of the projected cashflows is based on the actual risk-free interest rates of the valuation timing and the parame- ters based on the Energy Authority's communication regarding the required rate of return in the distribution business. The dis- count rate (pre-tax) increasing by 3.1% (307 bps) would cause the recoverable value of the assets to be equal to its book value. SIGNIFICANT ACCOUNTING JUDGEMENTS GOODWILL IMPAIRMENT TESTING The Group tests goodwill annually for impairment. The re- coverable amounts of cash-generating units are based on es- timated future cash flows. Preparation of these estimates requires management to make assumptions relating to fu- ture cash flows. The main variables in determining cash flows are the discount rate and the assumptions and esti- mates used. The Group has conducted a sensitivity analysis of the ef- fects of the key assumptions underlying the impairment testing on the test results. ing business which was sold in 2019. GOODWILL IMPAIRMENT TESTING The Group tests goodwill annually for impairment. The re- coverable amounts of cash-generating units are based on es- timated future cash flows. Preparation of these estimates requires management to make assumptions relating to fu- ture cash flows. The main variables in determining cash flows are the discount rate and the assumptions and esti- mates used. The Group has conducted a sensitivity analysis of the ef- fects of the key assumptions underlying the impairment testing on the test results. ![doc1p11i0]() E STIMATES AND ASSUMPTIONS 21 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) INTANGIBLE ASSETS EUR 1,000 Goodwill Intangible rights Other long-term expenditure Total Cost at 1 January 2023 417,823 22,583 42,862 483,269 Additions 0 123 4,007 4,130 Disposals 0 0 -366 -366 Cost at 31 December2023 417,823 22,707 46,503 487,033 Accumulated depreciation, amortisationand impairment at 1 January 0 -14,802 -23,940 -38,742 Depreciation and amortisation for theyear 0 -537 -2,505 -3,042 Accumulated depreciation,amortisation and impairmentat 31 De- cember 2023 0 -15,338 -26,445 -41,783 Book value at 31 December2023 417,823 7,368 20,058 445,249 Book value at 31 December2022 417,823 7,782 18,922 444,527 Goodwill Intangible rights Other long-term expenditure Total EUR 1,000 Cost at 1 January 2022 417,823 22,568 38,977 479,368 Additions 0 15 3,331 3,346 Transfer between balance sheet items 0 0 555 555 Cost at 31 December2022 417,823 22,583 42,862 483,269 Accumulated depreciation, amortisationand impairment at 1 January 2022 0 -14,244 -21,813 -36,057 Depreciation and amortisation for theyear 0 -557 -2,127 -2,684 Accumulated depreciation,amortisation and impairmentat 31 De- cember 2022 0 -14,802 -23,940 -38,742 Book value at 31 December2022 417,823 7,782 18,922 444,527 Book value at 31 December2021 417,823 8,324 17,164 443,310 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 e uros, since 97,8 million euros was allocated to heating business which was sold in 2019. . ![doc1p11i0]() 22 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) The Group’s management has estimated that lease con- tracts related to indoor secondary substations, primary sub- stations and certain office premises are immaterial contracts (referring to IAS 1 which defines the materiality of the infor- mation presented in the financial statements) and therefore IFRS 16 has not been applied to these contracts. The defini- tion of contracts as “immaterial” is based on the low value of leases paid under these contracts which causes the lease lia- bilities 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 consoli- dated statement of profit or loss as other operating expenses over the lease term. The effect of these costs on the income statement in 2023 was approximately EUR 117 thousand (2022:EUR 78 thousand). One-time subsurface rights compensations are paid to landowners based on perpetual contracts. Compensations are capitalized to the networks assets in the consolidated state- ment 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 con- tracts under IFRS 16. 3.3 LEASE COMMITMENTS ACCOUNTING POLICY 3.3.1LEASES (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 recog- nises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets con- cerning 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-con- tracts. 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 impact of these costs on the income statement in 2023 was approximately EUR 35 thousand (2022:EUR 35 thousand). Right-of-use assets The Group recognizes 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 accumu- lated 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 recognized, initial direct costs incurred, and lease payments made at or before the com- mencement 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 be- tween 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 pur- chase option, depreciation is calculate using the estimated useful life of the asset. The right-of-use assets are also subject to im- pairment (see accounting policies in Notes 3.1 and 3.2). Lease liabilities At the commencement date of the lease, the Group recognizes 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 termi- nate.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 in- terest 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. In addition, the carrying amount of lease liabilities is remeasured if there is a change in the lease 23 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) Set out below are the carrying amountsof right-of-use assetsrecognised and the move- ments during the period EUR 1,000 Buildings Machinery and equip- ment Total As at 1 January 2023 412 140 552 Additions 0 159 159 Revaluations 205 0 205 Disposals 0 -36 -36 Depreciations -155 -88 -243 As at 31 December2023 462 176 638 Machinery and equip- ment EUR 1,000 Buildings Total As at 1 January 2022 368 1098 1466 Additions 0 122 122 Revaluations 435 0 435 Disposals -203 -14 -216 Depreciations -188 -1066 -1254 As at 31 December2022 412 140 552 term, a change in the lease payments (e.g., changes to future pay- ments resulting from a change in an index or rate used to deter- mine 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. Set out below are the carrying amountsof lease liabilities and the movementsduring the period LEASE LIABILITIES EUR 1,000 2023 2022 As at 1 January 735 1927 Additions 765 556 Disposals -414 -209 Payments -414 -1,531 Interest expenses -13 -7 As at 31 December 659 735 The maturity analysis of lease liabilitiesare disclosed in Note 4.2.6. During 2023 the Group had total cash outflows for leases of EUR 566 thousand (2022: EUR 1 873 thousand). 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). The lease contract concerning the main premises of the group changed from a valid un- till further notice to a two year fixed term contract in March 2023. The lease contract has been revaluated based on this change and the resulting addition to lease liabilities in 2023 is 352 thousand euros. According to management's assumption, the Group estimates that it will not use termi- nation options of car's leases. Amounts recognised in profit or loss EUR 1,000 2023 2022 Depreciation expense of right-of-useassets -243 -1,254 Interest expense on lease liabilities -13 -7 Expense related to short-term leases (incl. in other operating expenses) -35 -35 Total amount recognisedin profit or loss -291 -1,297 ![doc1p9i1]() 24 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ![doc1p9i1]() ### 4 CAPITAL STRUCTURE AND FINANCIAL ITEMS 4.1 FINANCE INCOME AND COSTS FINANCIAL 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 business is a capital-intensive, the Group must ensure it has adequate capital to meet its operating requirements. Business planning includes as- sessing the adequacy of available capital in relation to the risks arising from business operations and the operating en- vironment. ACCOUNTING POLICY TRANSLATION DIFFERENCES 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 in- come 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 attribut- able to exchange differences on those monetary items are also recorded in other comprehensive income. Non-monetary items that are measured in terms of his- torical cost in a foreign currency are translated using the ex- change 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. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recog- nition 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 consoli- dated statement of profit or loss are also recognised in other comprehensive income or statement of profit or loss, re- spectively). Any goodwill arising on the acquisition of a foreign oper- ation and any fair value adjustments on 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 sport 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 2023 2022 Interest expenses Loans from financial institutions -8,674 -729 Bonds and notes -36,836 -36,050 Interest expenses related to lease lia- bilities -13 -7 Other interest expenses -10 -240 Total interest -45,533 -37,026 Other finance costs -2,961 -2,963 Exchange rate losses Loans and receivables -1 0 Total finance costs -48,495 -39,990 Interest income Other interest income 2,330 257 Exchange rate gains Other finance income 1 1 Total finance income 2,331 258 Finance costs (net) -46,164 -39,731 25 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 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 in- struments and to which the fair value option is not applied are measured following initial recognition either at amortized 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 recognized through other comprehensive income will no longer be recognized 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 in- come. The impairment requirements in IFRS 9 are based on an ex- pected 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. Over- all, 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 ap- proach and recorded lifetime expected losses on all trade receiv- ables. 26 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) FINANCIALINSTRUMENTS–INITIALRECOGNITIONAND SUBSEQUENT MEASUREMENT Classification of current and non-current assets and liabilities An asset or a liability is classified as current when it is expected to be realized 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 cur- rent 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 fi- nancial assets carried at amortized 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 recognized initially at fair value plus transaction costs, except in the case of financial assets rec- orded at fair value through profit or loss. Purchases or sales of financial assets are recognized on the trade date. The classification of financial assets at initial recognition de- pends on the financial asset's contractual cash flow character- istics and the Group's business model for managing them. The group does not have any financial assets measured at fair value in 2022. Trade receivables that do not contain a significant fi- nancing component or for which the Group has applied the practical expedient are measured at the transaction price de- termined under IFRS15. Refer to the accounting policies in Note 2.1.1 Revenue from contracts with customers. If, in a subsequent year, the amount of the estimated impair- ment loss increases or decreases because of an event occur- ring after the impairment was recognised, the previously rec- ognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the re- covery is credited to finance costs in the consolidated state- ment of profit or loss. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include fi- nancial assets held for trading and financial as-sets designated upon initial recognition at fair value through profit or loss. Fi- nancial assets are classified as held for trading if they are ac- quired for selling or repurchasing in the near term. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are desig- nated as effective hedging instruments as defined by IFRS 9.Financial assets at fair value through profit or loss are car- ried 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 recogni- tion 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 los- ses from fair value measurement are treated as determined by the purpose of the derivatives. The effects on results of chan- ges in the value of derivatives that are eligible for hedge ac- counting and that are effective hedging instruments are pre- sented 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 recog- nized directly in other comprehensive income. Subsequent measurement Thesubsequent measurementoffinancial assetsdepends on their classification as described below: 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 assets carried at amortised cost also include trade receivables and other re- ceivables. Loans are carried at amortised cost using the effec- tive interest rate method less accumulated impairment. Amor- tised 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 operat- ing expenses for receivables. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the dif- ference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future ex- pected credit losses that have not yet been incurred). The pre- sent 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 al- lowance account and the loss is recognised in the consolidated statement of profit or loss. Interest income continues to be ac- crued 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 rec- orded 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 re- covery and all collateral has been realised or has been trans- ferred to the Group. ![doc1p11i0]() ACCOUNTING POLICY 27 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) Any ineffective portion is recognized immediately in the con- solidated 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 derecognized 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 ei- ther (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has nei- ther transferred nor retained substantially all the risks and reward s of the asset, but has transferred control of the asset. 4.2.3 Impairment of financial assets The Group recognizes 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, dis- counted at an approximation of the original effective interest rate. ECL' are recognized 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 ap- plies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recog- nizes a loss allowance based on lifetime ECLs at each report- ing date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for for- ward-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 fi- nancial 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 at- tributable transaction costs. The Group’s financial liabilities include trade and other pay- ables, loans and borrowings and derivative financial instru- ments. Subsequent measurement The measurement of financial liabilities depends on their classi- fication as described below: Loans and borrowings After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effec- tive interest rate method. Gains and losses are recognized in the consolidated statement of profit or loss when the liabilities are derecognized as well as through the effective interest rate amortization process. Amortized cost is calculated by taking into account any dis- count or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective inter- est rate amortization is included as finance costs in the consoli- dated 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 des- ignated 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 en- tered into by the Group that are not designated as hedging in- struments in hedge relationships as defined by IFRS 9. Gains or losses on liabilities held for trading are recognized in the consolidated statement of profit or loss. Derecognition of Financial liabilities A financial liability is derecognized when the obligation under the liability is discharged or cancelled, or expires. When an ex- isting financial liability is replaced by another from the same lender on substantially different terms, or the terms of an ex- isting liability are substantially modified, such an exchange or modification is treated as the derecognition of the original lia- bility and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the consoli- dated 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 recognized amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilitiessim- ultaneously. 28 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 4.2.6 Carrying amounts by category andmaturity profile of financialassets and liabilities CARRYING AMOUNTS OF FINANCIAL ASSETSAND LIABILITIES BY CATEGORY VALUES at 31 DECEMBER 2023 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 19,330 19,330 19,330 Cash and cash equivalents 60,161 60,161 60,161 Total Current assets 79,491 79,491 79,491 Carrying amount by category 79,491 79,491 79,491 Non-current financial liabilities Bonds and notes 4.2.8-9 -1,684,021 -1,684,021 -1,585,123 Loans from financial institutions 4.2.8-9 -250,000 -250,000 -250,000 Interest-bearing non-current liabilities - Leases 3.3 -548 -548 -548 Total interest-bearing non-currentliabilities -1,934,569 -1,934,569 -1,835,671 Bonds and notes Other current interest-bearing liabilities - Leases 3.3 -111 -111 -111 Trade payables 2.3.2 -4,380 -4,380 -4,380 Total current financialliabilities -4,491 -4,491 -4,491 Carrying amount by category -1,939,060 -1,939,060 -1,840,162 VALUES at 31 DECEMBER 2022 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 17,987 17,987 17,987 Cash and cash equivalents 51,154 51,154 51,154 Total Current assets 69,140 69,140 69,140 Carrying amount by category 69,140 69,140 69,140 Non-current financial liabilities Bonds and notes 4.2.8-9 -1,683,025 -1,683,025 -1,480,588 Loans from financial institutions 4.2.8-9 -150,000 -150,000 -150,000 Interest-bearing non-current liabilities - Leases 3.3 -311 -311 -311 Total interest-bearing non-currentliabilities -1,833,336 -1,833,336 -1,630,899 Bonds and notes 4.2.8-9 Other current interest-bearing liabilities - Leases 3.3 -425 -425 -425 Trade payables 2.3.2 -5,639 -5,639 -5,639 Total current financialliabilities -6,064 -6,064 -6,064 Carrying amount by category -1,839,400 -1,839,400 -1,636,963 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 2023 and 2022. 29 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) The table below summarizes the maturity profile of the Group's financial liabilities based on contractual payments. CASH AT BANKS AND ON HAND Elenia had short-term bank deposits amounting to EUR 60,2 mil- lion (2022: EUR 51,2 million).All bank deposits were denomi- nated in euros. BONDS AND NOTES The fair value of the bonds have been calculated based on the re- quired rate of return estimated using the EUR-denominated swap rate yield curve and the estimated risk premium calculated based on the market quotes of Elenia Verkko Oyj's bonds at the balance sheet date. FINANCIAL LIABILITIES Interest-bearing liabilities increased by EUR 99.9 million (2022: EUR 0 million) during the year and interest-bearing liabilities at the balance sheet date totaled EUR 1,944.5 million (2022: EUR 1,835.1 million). The fair value of short-term trade receivables and payables, other non-interest-bearing receivables, finance leases and cash andcash equivalents corresponds essentially the carrying amount. 31 December 2023 Effec- tive in- terest rate % Maturity EUR 1,000 Within 1 year 1-5 years Over 5 years Total Loans from financial institutions 4.84% 0 50,000 200,000 250,000 Bonds 1.98% 0 640,000 531,000 1,171,000 Notes 2.71% 0 79,000 439,500 518,500 Lease liabilities 0 548 0 548 Total interest-bearing non-currentliabilities 0 769,548 1,170,500 1,940,048 Lease liabilities 111 0 0 111 Total current interest-bearing liabilities 111 0 0 111 Trade payables 4,380 0 0 4,380 Total current financialliabilities 4,491 0 0 4,491 Total 4,602 769,548 1,170,500 1,944,650 31 December 2022 Effec- tive in- terest rate % Maturity EUR 1,000 Within 1 year 1-5 years Over 5 years Total Loans from financial institutions 1.93% 0 0 150,000 150,000 Bonds 1.91% 0 640,000 531,000 1,171,000 Notes 2.71% 0 0 518,500 518,500 Lease liabilities 0 311 0 311 Total interest-bearing non-currentliabilities 0 640,311 1,199,500 1,839,811 Lease liabilities 425 0 0 425 Total current interest-bearing liabilities 425 0 0 425 Trade payables 5,639 0 0 5,639 Total current financialliabilities 6,064 0 0 6,064 Total 6,064 640,311 1,199,500 1,845,875 30 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 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 trans- action costs of bonds and notes using the effective interest rate method. The Group classifies interest paid as cash flows from operating activities. EUR 1,000 1 January 2023 Cash flows New leases IFRS 16 Other changes 31 December 2023 Current obligations under leaseliabilities 425 -414 0 100 111 Non-current interest-bearing loans andborrowings (excl. items listed below) 1,833,025 100,000 0 995 1,934,021 Non-current obligations under leaseliabilities 311 0 556 -319 548 EUR 1,000 1 January 2022 Cash flows New leases IFRS 16 Other changes 31 December 2022 Current obligations under leaseliabilities 1,531 -1,531 0 425 425 Non-current interest-bearing loans andborrowings (excl. items listed below) 1,832,046 0 0 979 1,833,025 Non-current obligations under leaseliabilities 395 0 0 -85 311 4.2.7 Changes in financial liabilities arisingfrom financing activities CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES ![doc1p11i0]() 4.2.8 Fair value hierarchy of financial assetsand liabilities ACCOUNTING POLICY FAIR VALUE MEASUREMENT OFFINANCIAL INSTRUMENTS Fair value related to disclosures for financial instru- ments and non-financialassets 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 hier- archy Note 4.2.8 ◾ Financial instruments (including those carried at amor- tised 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 be- tween 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 advan- tageous market for the asset or liability The principal or the most advantageous market must be ac- cessible 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 partici- pants act in their economic best interest. The Group uses valuation techniques that are appropriate in the circum- stances and for which sufficient data are available to meas- ure fair value. The fair value of financial instruments that are traded in active markets at each reporting date is determined by ref- erence to quoted market prices or dealer price quotations, without any deduction for transaction costs. 31 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) FAIR VALUE HIERARCHY All assets and liabilities for which fair value is measured or dis- closed 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 meas- urement as a whole: Level 1Quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or in- directly observable Level 3Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For financial instruments not traded in an active market, the fair value is determined using appropriate valuation tech- niques. 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 mod- els For assets and liabilities that are recognised in the consoli- dated financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred be- tween 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 hierar- chy 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. As at 31 December 2023, the Group held the following financial instruments carried at amortised cost in the con- solidated statement of financial position: FINANCIAL ASSETS AND LIABILITIES Level 1 Level 2 Level 3 Total EUR 1,000 2023 2022 2023 2022 2023 2022 2023 2022 Financial instruments, non-currentlia- bilities Bonds and notes 0 0 -1,585,123 -1,480,588 0 0 -1,585,123 -1,480,588 Loans from financial institutions -250,000 -150,000 0 0 0 0 -250,000 -150,000 Total non-current financialliabilities -250,000 -150,000 -1,585,123 -1,480,588 0 0 -1,835,123 -1,630,588 Total financial liabilities 32 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ![doc1p9i1]() 4.2.9 Risk management FINANCIAL RISK MANAGEMENT COMMODITY PRICE RISK Changes in commodity prices affect mainly electricity pur- chases used for distribution losses and purchases of electric- ity network components. The Group has a hedging policy covering electricity purchases for at least the following 2-3 years to mitigate the impact of short-term price fluctua- tions. The majority of electricity purchases are hedged for the following year, with a declining hedging profile for the subsequent years. The regulatory methods governing elec- tricity distribution operations provide protection against changes in commodity prices over the medium term. Changes in raw material prices such as oil, aluminum and copper affecting purchases of network components, causes fluctuations primarily in capital expenditure. COUNTERPARTY AND CREDIT RISK Accepted financial counterparties are counterparties ap- proved in existing financing agreements and other counter- parties separately approved by the Board of Directors. Cash and cash equivalents consist solely of short-term bank de- posits. The Group has financial covenants relating to interest cover and leverage. The covenants are typical in. such arrange- ments. There were no covenant breaches in 2023. 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 balance sheet date, the company had no draw downs on the Capex credit limit (2022: no drawings) nor the working capital limit (2022: no drawings) granted by inter- national banks. At the balance sheet date, Elenia Verkko Oyj had a EUR 250 million credit limit from the European Invest- ment Bank (EIB). The loans mature between 2028 and 2033. INTEREST RATE RISK Elenia is exposed to interest rate risk mainly through its in- terest-bearing net debt. The objective of the Group's inter- est rate risk management is to limit volatility of interest ex- penses in the income statement. The Group's interest rate risk management is handled by Group Treasury. The interest rate risk is managed primarily by entering into loans with fixed interest. At the balance sheet date 87% (2022: 91%) of the loans were fixed rate loans. A parallel shift of +/-1.0 percentage points in the inter- est rate curve at the balance sheet date would have EUR +/- 2.7 million (2022: EUR +/-1.7 million) effect on the interests relating to floating rate loans. LIQUIDITY RISK Liquidity risk refers to the risk of the Group not having ade- quate 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 li- quidity 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 ade- quacy of long-term liquidity is assessed by 12-month fore- casts conducted monthly. CURRENCY RISK Elenia operates in Finland and uses the Euro as its primary operating currency. Elenia's currency risk is based on pur- chases of raw materials and services denominated in curren- cies 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 cur- rency risk as part of the purchasing policy for network oper- ations approved by the Management team . Currency risks that have an impact on profit or loss are primarily hedged operationally through contractual currency rate clauses. Operating profit or finance costs does not include mate- rial exchange rate differences in 2023. At the end of 2023 there were no outstanding receivables or payables in for- eign currencies. REFINANCING RISK Elenia Verkko Oyj issues bonds and notes. Bonds are issued under the EMTN programme and listed at the London Stock Exchange. Notes are unlisted private placements targeted mostly to the North American investors through private placements. CASH AND CASH EQUIVALENTSAND COMMITTED UNU- TILIZED CREDIT FACILITIES 31 December 2023 EUR 1,000 Facility amount In use Available amount Maturity Capex facility 250,000 0 250,000 1 - 5 years Working Capital facility 50,000 0 50,000 1 - 5 years Liquidity facility 70,000 0 70,000 1 - 5 years EIB credit facility 250,000 250,000 0 Over 5 years Cash and cash equivalents 60,161 Total 620,000 250,000 430,161 33 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 4.3 OTHER COMMITMENTS ANDCONTINGENCIES OTHER COMMITMENTS EUR 1,000 2023 2022 Registered floating charges: Provided on behalf of own and Group liabili- ties 9,000,000 9,000,000 Mortgages 202,000 202,000 Refundable connection fees 284,437 283,337 Group bank accounts have been pledgedas security for loans from fi- nancial institutions and bonds. 4.4 EQUITY Share capital The share are issued and fully paid. Reserve for invested unrestricted equity 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. Equity repayment The meeting of Elenia Verkko Oyj's shareholders decided on De- cember 15, 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 trans- ferred to short-term payables in December 2020. Equity investment and common controlreserve In 2022 or 2023 there were no restructurings. EUR 1,000 2023 2022 Unrestricted equity 1 Jan -548,843 -548,843 Unrestricted equity31 Dec -548,843 -548,843 Retained earnings The change in retained earnings of 17 336 thousand euros for the fiscal year 2023 is due to group contribution received from Elenia Oy. The change in retained earnings of 20 704 thousand euros for the fiscal year 2022 consists of the group contribution received from Elenia Oy. Earnings per share Earnings per share are calculated by dividing the profit or loss at- tributable to equity holders of the parent by the average number of shares during the reporting period: EUR 2023 2022 Profit attributable to equity holders of the parent, EUR 55,654,083 56,029,046 Average number of shares, pcs 90 90 Earnings/share, EUR - basic= diluted 618,379 622,545 34 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### 5 CONSOLIDATION 5.1 BASIS OF CONSOLIDATION The consolidated financial statements comprise the parent com- pany Elenia Oy 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 inves- tee. The consolidated financial statements also include, as asso- ciated companies, any companies over which the Group has sig- nificant 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 state- ments 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 state- ment 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 elimi- nated 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 2023, the subsidiaries do not have non- controlling interests. 5.2 BUSINESS COMBINATIONS AND GOODWILL 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 acquisi- tion date fair value and the amount of any non-controlling inter- est in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interest in the ac- quiree at fair value or at the proportionate share of the ac- quiree’s identifiable net assets. Acquisition-related costs are ex- pensed 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 previ- ously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in the state- ment 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 Fi- nancial Instruments, is measured at fair value with changes in fair value recognised either inthe 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 set- tlement is accounted for within equity. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount rec- ognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities as- sumed. 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 theamounts 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-generat- ing units that are expected to benefit from the combination, irre- spective 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 2023 or 2022 there were no business disposals. In 2023 and 2022 there were no acquisitions to be accounted for as business combinations. 35 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 5.4 OTHER CHANGES IN ACCOUNTING POLICIESAND DISCLOSURES / NEW AND AMENDEDSTANDARDS AND INTERPRETATIONS ISSUED BUT NOTYET 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 2023. The nature of each new standard and amendment adopted by the Group has been described in the rel- evant note. New standards and amendments not material for the Group have been described below: 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 has been effective for annual periods be- ginning on or after 1 January 2023, early application was permit- ted. 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 af- ter the reporting period. The amendments do not have a material impact on the con- solidated financial statements. AMENDMENTS TO IAS 8 DEFINITION OF ACCOUNTING ESTI- MATES The amended standard has been effective for annual periods be- ginning on or after 1 January 2023, early application was permit- ted. The amendments clarify the definitions of accounting esti- mates.After implementing the changes the standard more clearly distinguish between accounting estimates, changes in ac- counting policies and correction of errors. The amendments do not have a material impact on the con- solidated financial statements. AMENDMENTS ON IAS 1 DISCLOSURE OF ACCOUNTING POLICIES The amended standard has been effective for annual periods be- ginning on or after 1 January 2023, early application was permit- ted. The amendments include a requirement for entities to dis- close their material accounting policies rather that their signifi- cant accounting policies. Also guidance and examples have been added to support the recognition of material accounting policies. The amendments do not have a material impact on the con- solidated financial statements. AMENDMENTS ON IAS 12 DEFERRED TAX RELATED TO AS- SETS AND LIABILITIES ARISING FROM A SINGLE TRANSAC- TION The amended standard has been effective for annual periods be- ginning on or after 1 January 2023, early application was permit- ted. The amendments clarify the recognition of deferred tax when an entity accounts for transactions, such as leases or de- commissioning obligations, by recognizing both an asset and a li- ability. The amendments do not have a material impact on the con- solidated financial statements. 5.4.2 New and amended standards and interpretationsis- sued but not yet effective Certain new and amended standards and interpretations are is- sued but not yet effective up to the date of issuance of the con- solidated 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 ON IFRS 16: LEASE LIABILITY IN SALEA AND LEASEBACK The amended standards will be effective for annual periods be- ginning on or after 1 January 2024 with early adoption permit- ted. The changes affect how the seller-lessee handles the variable rental payments arising in a sale and leaseback transaction. With the changes, a new variable payment accounting model will be introduced, which requires that seller-lessees reevaluate and possibly correct sales and leaseback transactions made since 2019. The amendments do not have a material impact on the con- solidated financial statements. AMENDMENTS ON IAS 1: CLASSIFICATION OF LIABILITIES AS CURRENT OR NON-CURRENT LIABLITIES WITH COVENANTS The amended standards will be effective for annual periods be- ginning on or after 1 January 2024 with early adoption permit- ted. The amendments clarify the financial statement information that entities provide in a situation where the right to postpone the payment of the debt requires fulfilling the covenant condi- tions during the twelve months following the reporting date. En- tities must present information that enables the user of the fi- nancial statements to understand the risk that the debt may be settled within twelve months from the end of the reporting pe- riod. The amendments do not have a material impact on the con- solidated financial statements. REGULATORY ASSETS AND REGULATORY LIABILITIES:POS- SIBLE NEW STANDARD The International Accounting Standards Board published in Jan- uary 2021 an exposure draft on Regulatory Assets and Regula- tory 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. 36 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ![doc1p11i0]() ![doc1p9i2]() ### 6 OTHER NOTES 6.1 TAXES 6.1.1 Income taxes ACCOUNTING POLICY INCOME TAXES Current income tax assets and liabilities for the current pe- riod 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 en- acted 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 evalu- ates positions taken in the tax returns with respect to situa- tions in which applicable tax regulations are subject to inter- pretation and establishes provisions where appropriate. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS INCOME TAXES 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 agree- ments, differences arising between the actual results and the assumptions made, or future changes to such assump- tions, could necessitate future adjustments to the tax esti- mation. The Group companies establish provisions based on rea- sonable estimates. In the case that the final taxes are differ- ent 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 reasona- ble estimate of the Group's tax position. The major components of income tax expense for the years ended 31 December 2023 and 2022 are: CONSOLIDATED STATEMENTOF PROFIT AND LOSS EUR 1,000 2023 2022 Current income tax charge -2,504 -2,501 Adjustments in respect of current incometax of previous periods 1 -3 Deferred taxes -16,031 -16,373 Income tax expensereported in the consoli- dated statement ofprofit or loss -18,534 -18,877 CONSOLIDATED STATEMENTOF OCI EUR 1,000 2023 2022 Deferred tax related toitems recognised in OCI during the year: Remeasurement gains (losses)on defined benefit plans 3 -39 Deferred tax chargedto OCI 3 -39 INCOME TAX RATE Tax on profit before tax deviatesfrom the nominal tax calculatedac- cording to the tax rate as follows: EUR 1,000 2023 2022 Profit before tax 74,199 74,751 Theoretical income tax using the nominaltax rate of 20.0% (2022: 20.0%) -14,840 -14,950 - tax-free income items 0 -60 - expenses that are non-deductible intaxation -229 278 - adjustment of taxes based on previous peri- ods 1 -3 - deductible expenses not recorded in profit and loss (group contribution) -3,466 -4,141 Income tax in the incomestatement -18,534 -18,877 Effective tax rate was 25% (2022: 25%) 37 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ![doc1p9i2]() 6.1.2Deferred tax ACCOUNTING POLICY DEFERRED TAX Deferred tax is provided using the liability method on tempo- rary 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 tempo- rary differences, except: ◾ When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transac- tion 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 fore- seeable future. Deferred tax assets are recognised for all deductible tempo- rary 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 availa- ble 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 nei- ther 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 differ- ences will reverse in the foreseeable future and taxable profit will be available against which the temporary differ- ences 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. Un- recognised deferred tax assets are reassessed at each report- ing 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 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 state- ment 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 in- come or directly in equity. The Group offsets deferred tax assets and deferred tax lia- bilities 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 taxa- ble entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to real- ise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax lia- bilities or assets are expected to be settled or recovered., ![doc1p11i0]()![doc1p9i2]() ACCOUNTING JUDGEMENTS DEFERRED TAX The Group recognizes deferred tax assets by taking into ac- count their recoverability, based on the existence of de- ferred 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 re- ceived could differ from the estimates made by the Group as a result of unforeseen future legal changes in estimates. ACCOUNTING ESTIMATES DEFERRED TAX 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 fu- ture tax consequences attributable to differences between the carrying amounts of assets and liabilities as recorded in the financial statements and their tax basis. 38 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) CHANGE IN DEFERRED TAX ASSETSAND LIABILITIES IN 2023 Deferred tax assets Balance sheet 1 Jan 2023 Recognised in the statement of profit or loss Recognised in other compre- hensive income Balance sheet 31 Dec 2023 EUR 1,000 Defined benefit plans 49 -10 0 39 Liabilities related to contracts withcus- tomers 8,086 1,813 0 9,899 Finance leases 53 -42 0 11 Cloud computing arrangements 0 18 0 18 Total 8,188 1,779 0 9,967 Deferred tax assets 8,188 9,967 Deferred tax liabilities Balance sheet 1 Jan 2023 Recognised in the statement of profit or loss Recognised in other compre- hensive income Balance sheet 31 Dec 2023 EUR 1,000 Interest-bearing liabilities 1,101 -152 0 949 Depreciation differences 101,711 22,272 0 123,983 Measurement of assets at fair value in acquisition 54,076 -4,314 0 49,762 Total 156,888 17,806 0 174,694 Deferred tax liabilities 156,888 174,694 CHANGE IN DEFERRED TAX ASSETSAND LIABILITITES IN 2022 Deferred tax assets Balance sheet 1 Jan 2022 Recognised in the statement of profit or loss Recognised in other compre- hensive income Balance sheet 31 Dec2022 EUR 1,000 Defined benefit plans 91 -3 -39 49 Liabilities related to contracts withcus- tomers 6,201 1,884 0 8,086 Finance leases 181 -128 0 53 Total 6,473 1,753 -39 8,188 Deferred tax assets 6,473 8,188 Deferred tax liabilities Balance sheet 1 Jan 2022 Recognised in the statement of profit or loss Recognised in other compre- hensive income Balance sheet 31 Dec2022 EUR 1,000 Interest-bearing liabilities 1,306 -205 0 1,101 Depreciation differences 79,081 22,629 0 101,711 Measurement of assets at fair value in acquisition 58,375 -4,299 0 54,076 Total 138,762 18,125 0 156,888 Deferred tax liabilities 138,762 156,888 ![doc1p11i0]() 39 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 6.2 PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS ACCOUNTING POLICY PENSION OBLIGATIONS 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 pay- ments. This category includes the Finnish Statutory Employ- ment Pension Scheme (TyEL). Payments relating to defined contribution pension plans are recognised in the consoli- dated 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 actu- arial 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 ex- pected return on plan assets is calculated using the same discount rate as applied for discounting the benefit obliga- tion to its present value.Current and past service costs as well as net interest on net defined benefit liability is rec- orded 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 de- fined contribution (DC) parts as defined in IAS 19. In the fol- lowing tables, figures are presented for DB part of the plan. Items recognised on the consolidated statement of financial po- sition at 31 December: EUR 1,000 2023 2022 Items recognised on theconsolidated statement of financial positionat 31 December Current value of funded obligations 1,557 1,625 Fair value of assets -1,365 -1,381 Deficit 192 244 Value of the obligationon the consolidated statement of financial position 192 244 The obligations of defined benefit pension plans have changed as follows: EUR 1,000 2023 2022 Obligation at the beginning of the year 1,625 2,659 Interest expenses 60 18 Actuarial losses 48 -597 Settlements 0 -270 Benefits paid -175 -184 Obligation at the endof the year 1,557 1,625 The fair value of the assets of defined benefit pension plans has developed as follows: EUR 1,000 2023 2022 Fair value of plan assets at the beginningof the year 1,381 2,206 Expected income from assets 50 15 Actuarial gains 35 -404 Settlements 0 -264 Payments by the employer 74 13 Benefits paid -175 -184 Fair value of plan assetsat the end of the year 1,365 1,381 The obligation in the consolidated statement of financial position consists of the following items: EUR 1,000 2023 2022 Obligation at the beginning of the year 244 453 Net cost recognised in the statementof profit or loss 9 -2 Payments by the employer -74 -13 Profits and losses recognised in othercompre- hensive income 13 -193 Value of the obligationat year end 192 244 Items recognised in the consolidated statement of profit or loss: EUR 1,000 2023 2022 Expenses based on service in the reportingyear 0 -5 Interest income -50 -15 Interest expenses 60 18 Total 9 -2 Items recognised in the consolidated statement of other compre- hensive income for the year: EUR 1,000 2023 2022 Actuarial gains/(losses)on assets -35 404 Actuarial gains/(losses)on obligations 48 -597 Total 13 -193 40 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 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. 2023 Assumption EUR 1,000 Defined bene- fit obligations Fair value of Plan assets Net Liability Net interest Discount rate 4.1% 1,557 1,365 192 6 0.5% increase 1,488 1,310 178 6 0.5% decrease 1,633 1,424 209 6 2022 Assumption EUR 1,000 Defined bene- fit obligations Fair value of Plan assets Net Liability Net interest Discount rate 3,9 % 1,625 1,381 244 9 0.5% increase 1,553 1,327 226 10 0.5% decrease 1,704 1,440 265 9 41 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) As the defined benefit plans are managed by an external insur- ance company, it is not possible to present a division of the fair values of the plan assets. Expected contributions for 2024are estimated to be EUR 78 thousand. The weighted average duration of defined benefit obligation is 10-13 years. The following table shows the maturity profile of the future benefit payments. EUR 1,000 2023 2022 Under 1 year 185 197 1-10 years 959 997 10-20 years 697 686 20-30 years 410 412 Over 30 years 235 246 Total 2,486 2,537 ACTURIAL ASSUMPTIONS USEDIN CALCULATIONS % 2023 2022 Discount rate 4.1 % 3.9 % Estimate of salary increases 2.7 % 2.6 % Inflation 2.5 % 2.4 % 6.3 RELATED PARTY DISCLOSURES In accordance with IAS 24, related parties include the board of directors, CEO and other members of the Elenia Oy group's man- agement team, the head of the Elenia Oy group's procurement and development unit, their close family members, and entities in which the above-mentioned persons directly or indirectly exer- cise control. In addition, related parties include Elenia's signifi- cant shareholders who own more than 20 percent of the compa- ny's shares or the combined number of votes of all shares. The company maintains lists of related parties. The company has guidelines for identifying related party transactions of enti- ties identified in the related party register, and they are obliged to notify the company in advance of their planned contracts and legal actions with companies belonging to the group, if the value of the transaction exceeds EUR 5,000.00. In addition, they are asked annually to confirm the related party activities that have been carried out. Related party transactions that are not part of the company's normal business or are made outside of the usual commercial terms are handled in the company in accordance with the applicable related party administration guidelines. Shareholders All of the shares in Elenia Verkko Oyj are owned by a Finnish company, Elenia Oy. 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 Lux- embourg I S.à r.l. (AIL), Lynx Elton S.à r.l. (Lynx Elton), Allianz Eu- ropean 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 fundmanaged 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 Infrastruc- ture Fund SCSp. Manco Investment Oy is owned by five Elenia's key management persons. SUBSIDIARIES AND ASSOCIATES 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. 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 Group has not had any business transactions with persons included in its senior management and Elenia Group has not granted loans to these persons. 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 ap- proximately 0.3% of Elton Investment S.à r.l. after the arrange- ment. The equity investment has been made at fair market val- ues. 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 dis- closed in note 2.3.3 42 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) BUSINESS TRANSACTIONS All transactions with related parties take place in an arm's length manner. Group companies have no 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 the fiscal year 2023, the group did not have any long- term loans with related parties. The meeting of Elenia Oy's shareholders decided on 13 No- vember 2020 the equity repayment of €550.0m based on the in- terim financial statements as of September 30, 2020 to its sole shareholder Elenia Investment S.à r.l. during 2020-2023.During financial year 2023 the payment period was extended until end of 2025. 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 equity repay- ments from 2021 to 2023. Unrestricted eq- uity repayment li- ability 1 Jan 2021 Decrease during 2021-2023 Unrestricted eq- uity repayment li- ability 31 Dec 2023 EUR 1,000 Elenia Oy 550,000 506,553 43,447 Total 43 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 6.4 EVENTS AFTER THE REPORTINGPERIOD The bonds issued by Elenia Verkko Oyj are rated by S&P Global Ratings (“S&P”). S&P downgraded the rating to BBB (stable) at the end of January 2022 as a result of the changes in the regulatory methods in the middle of the regulatory period. After the new methods became effective from 1 Ja- nuary 2024, S&P placed Elenia on a negative credit watch on 10 January 2024. The outcome of S&P’s assessment of Elenia is still uncertain at the time of this report. In January, Elenia appealed to the Market Court to repeal the decision of the Energy Authority with regard to the key aspects of the regulatory methods for 2024-2027 and 2028-2031. The out- come of the appeal is expected in the next 2-4 years. Concurrently, Elenia has also the previous Mar- ket Court appeal in process with regards to sudden mid-period regulatory changes for 2022 and 2023, and the ruling is expected to be received within the next 12-18 months. Jorma Myllymäki has been nominated as CEO of Elenia Oy, effective from 1 April 2024. Tapani Liuhala has been elected as the Chairman of the Board of Elenia Oy, effective from 1 April 2024. Tommi Valento has been nominated as member of the Board of Elenia Oy, effective from 1 April 2024. ![doc1p9i2]() 44 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 6.5 CONSOLIDATED STATEMENT OF PROFITOR LOSS (ADJUSTED FOR COMPARABILITY) ACCOUNTING POLICY COMPARABILITY WITH PREVIOUS YEAR FIGURES Items affecting comparability include items whose adjustment substantially improves the comparability of figures from different years. Typically, they are exceptional either due to their size or nature, one-off or otherwise items that do not relate to the actual operative business of the Group. Such items may arise for example from unusually strong storms, legal costs, corporate and struc- tural arrangements or financial arrangements.These items have been specified in the notes of the consolidated financial statements . EUR 1,000 Note 1 Jan - 31 Dec 2023 1 Jan - 31 Dec 2022 Revenue 2.1.1 316,606 308,552 Items affecting comparabilityincluded in revenue -3,295 -626 Other operating income 2.2.1 1,504 2,328 Items affecting comparabilityincluded in other operatingincome 0 347 Materials and services -73,792 -82,267 Employee benefitexpenses 2.3.3 -3,809 -3,526 Other operating expenses 2.3.1 -27,292 -21,977 Operating expensesTotal -104,893 -107,770 Items affecting comparabilityincluded in operatingexpenses 1,587 -1,206 EBITDA 213,216 203,110 EBITDA before Items affectingcomparability 214,925 204,594 Depreciation and amortisation 3 -92,854 -88,627 Operating profit 120,363 114,482 Operating profit beforeItems affecting comparability 122,071 115,967 The purpose of the table is to illustrate the underlying profitabil- ity of the business without any items affecting comparability (de- fined in the finance documentation as “exceptional, one off, non- recurring or extraordinary items”). The financial covenants re- lated to Group’s financing are calculated excluding Exceptional Items. In 2023 in total EUR 1 709 thousand was recognised as items affecting comparability. This amount consists of exceptional net- work losses of EUR 17 328 thousand, costs that relate to legal actions due to regulatory changes of EUR 225 thousand, tempo- rary rebate to customers of EUR 19 431 thousand, temporary network upstream cost rebate of EUR 3 295 thousand and in- creased costs of electricity used in substations EUR 292 thou- sand. The maximum monthly average electricity price in Finland during the previous 10-year period was 57 €/MWh as per June 2021. On this basis, costs from network losses exceeding 60 €/MWh on a monthly basis are treated as exceptional. Finland’s transmission system operator, Fingrid did not invoice grid ser- vice fees from distribution system operators from December 2022. Based on the company’s announcement in October 2022, the rebate, which will be granted also for 3-6 months in 2023, is the result of significantly higher than expected congestion in- come caused by electricity price differences at Finland’s board- ers. Rebate was granted for six months in 2023. Elenia’s distribu- tion revenue decreased correspondingly by the proportion of grid service fees invoiced directly from customers connected to Elenia’s high voltage network. In 2022 in total EUR 1 485 thousand was recognised as items affecting comparability. This amount consists of exceptional net- work losses of EUR 7 005 thousand, costs that relate to legal ac- tions due to regulatory changes of EUR 229 thousand, tempo- rary rebate to customers of EUR 626 thousand, temporary net- work upstream cost rebate of EUR 4 482 thousand, compensa- tion related to a bankruptcy of EUR 347 thousand and decrease in connection fee related provision due do increase in market rates of EUR 1 546 thousand. 45 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) # PARENT COMPANY # FINANCIAL STATEMENTS (FAS) 46 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### PARENT COMPANY INCOME STATEMENT EUR Notes 1 Jan - 31 Dec 2023 1 Jan - 31 Dec 2022 Revenue 1.1 326,264,136.09 318,272,620.67 Other operating income 1.2 1,503,792.93 2,328,466.75 Materials and services 1.3 -73,792,084.56 -82,266,814.13 Personnel expenses 1.4 -3,882,588.08 -3,544,567.02 Depreciation, amortisation and impairment 1.5 -161,851,539.70 -156,686,092.64 Other operating expenses 1.6 -27,267,977.19 -25,424,487.29 Operating profit 60,973,739.49 52,679,126.34 Finance income and expenses 1.7 -45,382,189.46 -38,696,748.50 Profit / loss before appropriationsand taxes 15,591,550.03 13,982,377.84 Appropriations 1.8 Change in accelerated depreciations -111,362,112.43 -113,147,000.00 Group contributions 17,336,000.00 20,703,500.00 Income taxes 1.9 1,754,757.66 1,754,168.02 Profit / loss for the year -76,679,804.74 -76,706,954.14 47 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### PARENT COMPANY BALANCE SHEET EUR Notes 31 Dec 2023 31 Dec 2022 ASSETS Non-current assets Intangible assets 2.1 Intangible rights 22,449,136.77 22,778,056.98 Goodwill 2,043,837,295.10 2,099,832,837.50 Other capitalized long term expenditure 20,058,141.34 18,922,324.39 2,086,344,573.21 2,141,533,218.87 Tangible assets 2.2 Land and water areas 2,174,123.88 2,144,088.88 Buildings and constructions 248,129.97 259,400.00 Network 2,124,845,487.04 2,110,056,870.27 Machinery and equipments 44,465,200.35 25,451,078.83 Other tangible assets 222.80 795.44 Advance payments and construction inprogress 19,352,342.95 20,145,983.33 2,191,085,506.99 2,158,058,216.75 Investments 2.3 Other shares and holdings 194,229.69 194,229.69 194,229.69 194,229.69 Total non-current assets 4,277,624,309.89 4,299,785,665.31 EUR Notes 31 Dec 2023 31 Dec 2022 Current assets Long-term receivables 2.4 Loan receivables 2,373,707.39 731,828.84 2,373,707.39 731,828.84 Short-term receivables 2.4 Trade receivables 19,330,013.96 17,986,726.25 Receivables from group companies 17,394,771.35 20,903,451.51 Other receivables 468,211.08 474,497.55 Prepayments and accrued income 43,087,772.63 38,500,127.14 80,280,769.02 77,864,802.45 Cash and cash equivalents 2.4 60,161,110.56 51,153,571.67 Total current assets 142,815,586.97 129,750,202.96 TOTAL ASSETS 4,420,439,896.86 4,429,535,868.27 48 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### PARENT COMPANY BALANCE SHEET EUR Notes 31 Dec 2023 31 Dec 2022 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 -163,760,780.28 -87,053,826.14 Profit / Loss for the financial year -76,679,804.74 -76,706,954.14 1,417,039,414.98 1,493,719,219.72 Cumulative accelerateddepreciations 3.2 619,915,622.10 508,553,509.67 Liabilities 3.3 Non-current liabilitites Connection fees 201,742,349.81 202,334,106.49 Bonds and notes 1,689,500,000.00 1,689,500,000.00 Loans from financial institutions 250,000,000.00 150,000,000.00 Deferred tax liabilities 93,679,462.81 97,937,620.21 2,234,921,812.62 2,139,771,726.70 Current liabilities Trade payables 4,379,866.44 5,639,368.07 Liabilities to group companies 79,575,498.84 226,558,894.55 Other short-term liabilities 36,459,360.79 27,912,796.46 Accruals and deferred income 28,148,321.09 27,380,353.10 148,563,047.16 287,491,412.18 Total liabilities 2,383,484,859.78 2,427,263,138.88 TOTAL EQUITY AND LIABILITIES 4,420,439,896.86 4,429,535,868.27 49 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### PARENT COMPANY CASH FLOW STATEMENT EUR 1 Jan - 31 Dec 2023 1 Jan - 31 Dec 2022 Cash flow fron operating activities Profit / Loss before appropriations andtaxes 15,591,550.03 13,982,377.84 Adjustments Depreciation, amortisation and impairment 161,851,539.70 156,686,092.64 Finance income and expenses 45,382,189.46 38,696,748.50 Other adjustments 0.00 -358,774.74 Cash flow before change inworking capital 222,825,279.19 209,006,444.24 Change in working capital: Increase (-) / decrease (+)in non-interest bearing re- ceivables -9,946,677.72 12,707,850.87 Increase (+) / decrease (-)in non-interest bearing liabili- ties -9,376,252.30 1,959,787.67 Operating cash flow beforefinancial items and taxes 203,502,349.17 223,674,082.78 Interest payments -42,186,123.18 -36,657,987.57 Interests received 2,318,479.19 257,357.14 Payments for other finance items -2,555,981.04 -2,002,888.85 Connection fee refunds 591,756.68 302,342.36 Taxes paid 346,587.02 -5,353,976.14 Cash flow from operating activities 162,017,067.84 180,218,929.72 EUR 1 Jan - 31 Dec 2023 1 Jan - 31 Dec 2022 Cash flow from investing activities Capital expenditures -139,719,533.25 -178,126,982.19 Proceeds from disposals of investments 6,504.30 4,220,501.66 Cash flow from investing activities -139,713,028.95 -173,906,480.53 Cash flow from financing activities Proceeds from long-term borrowings 100,000,000.00 0.00 Equity repayment -134,000,000.00 -27,000,000.00 Group contributions received andpaid 20,703,500.00 0.00 Cash flow from financing activities -13,296,500.00 -27,000,000.00 Change in cash and cashequivalents 9,007,538.89 -20,687,550.81 Cash and cash equivalents 1 Jan 51,153,571.67 71,841,122.48 Cash and cash equivalents31 Dec 60,161,110.56 51,153,571.67 Cash and cash equivalents compriseof bank deposits. In the balance sheet, the group bank accountis presented as receivablesfrom group companies, and in thecash flow statement as liquid assets. 50 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS ACCOUNTING PRINCIPLES The financial statements of Elenia Oy have been prepared in ac- cordance with the Finnish Accounting Standards (FAS). Transactions denominated in foreigncurrencies and deriva- tive agreements Transactions denominated in foreign currencies are recognised at the rate prevailing at the time of the transaction. At the bal- ance 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 pos- sible currency exchange rate differences are recognised in fi- nance income or costs or other operating costs in accordance with the underlying item. Presentation of bank balances The company's group bank account is presented as eitheran asset or liability from/to entities within the same group. Deferred tax liabilities and receivables Deferred tax liabilities or assets have been calculated for tempo- rary 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 lia- bility in its entirety and the deferred tax asset in the amount of the estimated probable receivable Intangible and tangible assets For tangible and intangible assets have been used direct acquisi- tion prices which have been deducted with planned deprecia- tions. 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 construction 15–50 years Transmission network 25–40 years Distribution network 10–30 years Machinery and equipment 3–30 years Connection fees are non-refundable and therefore they have been booked as revenue in the profit and loss account. 1 NOTES TO INCOME STATEMENT 1.1 Revenue EUR 1,000 2023 2022 Distribution income 313,149 305,818 Contracting income 2,375 1,569 Connection fee income 10,724 10,723 Other sales income 319 285 Outage compensation -302 -122 Total 326,264 318,273 1.2 Other operating income EUR 1,000 2023 2022 Revenue from collection of trade receiva- bles 943 1,041 Other operating income 561 1,287 Total 1,504 2,328 51 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 1.3 Materials and services EUR 1,000 2023 2022 Grid costs -16,210 -35,074 Network losses -32,862 -24,507 External services -22,985 -20,844 Materials -1,735 -1,841 Total -73,792 -82,267 1.4 Personnel expenses EUR 1,000 2023 2022 Salaries -3,166 -2,958 Pension expenses -642 -516 Other employee expenses -75 -70 Total -3,883 -3,545 Salaries and remuneration were not paidto CEO in 2023 or 2022. Average number of personnel duringthe fi- nancial year 75 75 1.5 Depreciations according tothe plan EUR 1,000 2023 2022 Impairment -2,351 -3,110 Intangible fixed assets -1,119 -1,109 Goodwill -55,996 -55,996 Other capitalized long term expenditure -2,505 -2,127 Buildings and constructions -12 -12 Network -95,091 -91,088 Machinery and equipments -4,779 -3,245 Total -161,852 -156,686 1.6 Other operating expenses EUR 1,000 2023 2022 Lease expenses -955 -2,289 Other external services -21,795 -19,547 Other operating expenses -4,518 -3,589 Total -27,268 -25,424 AUDIT CHARGES EUR 1,000 2023 2022 Auditing fees -160 -101 Fees for tax services -6 -7 Fees for other services -15 -6 Total -181 -114 1.7 Financial income and expenses EUR 1,000 2023 2022 Interest and other financial income From group companies 0 6 Other interest and financial income 2,331 253 Total 2,331 258 Interest and other financial expenses Interest expenses -45,511 -37,016 Other financial expenses -2,202 -1,939 Total -47,713 -38,955 Total financial incomeand expenses -45,382 -38,697 1.8 Appropriations EUR 1,000 2023 2022 Change in accelerated depreciations -111,362 -113,147 Group contribution received 17,336 20,704 Total -94,026 -92,443 1.9 Income taxes EUR 1,000 2023 2022 Income taxes for the financial period -2,504 -2,501 Adjustment in income taxes for theprevi- ous periods 1 -3 Change in deferred taxes 4,258 4,258 Total 1,755 1,754 52 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 2 NOTES TO THE BALANCE SHEET ASSETS 2.1 Intangible assets INTANGIBLE RIGHTS EUR 1,000 2023 2022 Cost 1 Jan 39,678 38,441 Investments 790 1,237 Cost 31 Dec 40,469 39,678 Accumulated depreciation 1 Jan -16,900 -15,791 Depreciation according to the plan -1,119 -1,109 Book value 31 Dec 22,449 22,778 GOODWILL EUR 1,000 2023 2022 Cost 1 Jan 2,259,730 2,259,730 Cost 31 Dec 2,259,730 2,259,730 Accumulated depreciation 1 Jan -159,897 -103,902 Depreciation according to the plan -55,996 -55,996 Book value 31 Dec 2,043,837 2,099,833 OTHER CAPITALIZED LONG-TERM EX- PENDITURE EUR 1,000 2023 2022 Cost 1 Jan 334,349 330,464 Investments 4,007 3,886 Disposals -366 0 Cost 31 Dec 337,990 334,349 Accumulated depreciation 1 Jan -315,427 -313,300 Depreciation according to the plan -2,505 -2,127 Book value 31 Dec 20,058 18,922 2.2 Tangible assets LAND AND WATER AREAS EUR 1,000 2023 2022 Cost 1 Jan 2,145 2,105 Investments 30 41 Disposals 0 -1 Cost 31 Dec 2,175 2,145 Impairment -1 -1 Book value 31 Dec 2,174 2,144 BUILDINGS AND CONSTRUCTIONS EUR 1,000 2023 2022 Cost 1 Jan 3,119 3,119 Investments 7 0 Disposals -7 0 Cost 31 Dec 3,119 3,119 Accumulated depreciation 1 Jan -2,860 -2,849 Depreciation according to the plan -11 -11 Book value 31 Dec 248 259 NETWORK EUR 1,000 2023 2022 Cost 1 Jan 3,242,825 3,096,862 Investments 112,229 157,249 Disposals -5,519 -11,286 Cost 31 Dec 3,349,535 3,242,825 Accumulated depreciation 1 Jan -1,132,768 -1,046,617 Impairment -2,350 -3,109 Disposals 5,519 8,045 Depreciation according to the plan -95,091 -91,088 Book value 31 Dec 2,124,845 2,110,057 MACHINERY AND EQUIPMENT EUR 1,000 2023 2022 Cost 1 Jan 84,227 69,711 Investments 23,793 14,516 Cost 31 Dec 108,020 84,227 Accumulated depreciation 1 Jan -58,776 -55,531 Depreciation according to the plan -4,779 -3,245 Book value 31 Dec 44,465 25,451 OTHER TANGIBLE ASSETS EUR 1,000 2023 2022 Cost 1 Jan 56 56 Cost 31 Dec 56 56 Accumulated depreciation 1 Jan -55 -55 Depreciation according to the plan -1 -1 Book value 31 Dec 0 1 ADVANCE PAYMENTS AND CONSTRUCTIONIN PRO- GRESS EUR 1,000 2023 2022 Cost 1 Jan 20,146 21,421 Increase -384 448 Decrease -410 -1,723 Book value 31 Dec 19,352 20,146 53 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 2.3 Investments OTHER SHARES AND HOLDINGS EUR 1,000 2023 2022 Cost 1 Jan 194 194 Book value 31 Dec 194 194 2.4 Receivables LONG-TERM RECEIVABLES EUR 1,000 2023 2022 Other receivables 2,374 732 Long-term receivablestotal 2,374 732 SHORT-TERM RECEIVABLES Receivables from group companies EUR 1,000 2023 2022 Accrued income 58 200 Group contribution receivables 17,336 20,704 Group bank account Receivables from group companiestotal 17,395 20,903 External receivables EUR 1,000 2023 2022 Trade receivables 19,330 17,987 Other short-term receivables 468 474 Accrued income 43,088 38,500 External receivables total 62,886 56,961 External accrued income EUR 1,000 2023 2022 Sales accruals 42,474 35,539 Other accrued income and receivables 50 112 Income tax accruals 0 2,850 External accrued incometotal 43,088 38,500 Short term receivablestotal 80,281 77,865 Total receivables 82,654 78,597 Cash and cash equivalents 60,161 51,154 54 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) 3 NOTES TO THE BALANCE SHEETS EQUITYAND LIABILI- TIES 3.1 Capital and reserves EUR 1,000 2023 2022 Subscribed capital 80 80 Non restricted equity 1 Jan 1,657,400 1,657,400 Non restricted equity 31 Dec 1,657,400 1,657,400 Retained earnings 1 Jan -163,761 -87,054 Profit / Loss for the the financialyear -76,680 -76,707 Total capital and reserves 1,417,039 1,493,719 Distributable equity 1,416,959 1,493,639 3.2 Cumulative accelerated depreci- ations EUR 1,000 2023 2022 Cumulative accelerated depreciations 619,916 508,554 Accelerated depreciations includedeferred tax liability of EUR 123 983 thousand. 3.3 Liabilities NON-CURRENT LIABILITIES EUR 1,000 2023 2022 Connection fee liability 1 Jan 202,334 202,636 Connection fee refunds -592 -302 Connection fee liability 31 Dec 201,742 202,334 Bonds and notes 1,689,500 1,689,500 Loans from financial institutions 250,000 150,000 Deferred tax liabilities 93,679 97,938 Total non-current liabilities 2,234,922 2,139,772 Elenia Verkko Oyj has recognizeda deferred tax liability for the merger loss allocated to the electricity network. 55 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) Maturity breakdown offinancial liabilities 31 December 2023 1,000 EUR Effective interest rate 1-5 years Maturity over 5 years Total Bonds 4.84% 640,000 531,000 1,171,000 Notes 1.98% 79,000 439,500 518,500 Loans from financial institutions 2.71% 50,000 200,000 250,000 Total interest-bearing non-current liabilities 769,000 1,170,500 1,939,500 Maturity breakdown offinancial liabilities 31 December 2022 1,000 EUR Effective interest rate 1-5 years Maturity over 5 years Total Bonds 1.91% 640,000 531,000 1,171,000 Notes 2.71% 0 518,500 518,500 Loans from financial institutions 1.93% 0 150,000 150,000 Total interest-bearing non-current liabilities 640,000 1,199,500 1,839,500 56 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) CURRENT LIABILITIES EUR 1,000 2023 2022 Trade payables 4,380 5,639 Other short term liabilities 36,459 27,913 Accrued expenses Salaries and social expenses 1,688 1,570 Accrued interest expenses 16,660 13,275 Other accrued expenses 9,801 12,535 Total 28,148 27,380 Liabilities to group companies Accrued expenses 2,925 3,258 Equity repayment liability 43,447 177,447 Group bank account 33,203 45,854 Total 79,575 226,559 Total current liabilities 148,563 287,491 Total liabilities 2,383,485 2,427,263 3.4 Liabilities and quarantees for debts EUR 1,000 2023 2022 Provided on behalf of own and group liabili- ties Guarantees Floating charges 9,000,000 9,000,000 Mortgages 202,000 202,000 Leasing agreements Within one year 142 305 After one year but not more than five years 143 0 More than five years 0 95 Total 284 400 Other own liabilities Connection fees not included in thebal- ance sheet values 85,114 85,114 Group bank accounts have been pledgedas security for loans from financial institutions and bonds. 57 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) Shares and Holdings a a a a a 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 58 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### ELECTRICITY NETWORK BUSINESS DIFFERENTIATED ### STATEMENT OF PROFIT AND LOSS EUR 1,000 1 Jan - 31 Dec 2023 1 Jan - 31 Dec 2022 Revenue 326,093 318,249 Other operating income 1,456 2,299 Materials and services Materials and goods Purchace during the financial period Network losses -32,862 -24,507 Other materials -1,689 -1,841 Services Grid costs -16,210 -35,074 Other external services -22,921 -20,844 Personnel expenses Salaries -3,119 -2,939 Other personnel related costs -702 -581 Depreciation, amortisationand impairment Merger loss -90,988 -90,988 Network assets -69,191 -64,304 Other assets -1,673 -1,395 Other operating expenses Lease expenses -359 -293 Network rents and network leasing expenses -574 -1,973 Other operating expenses -26,319 -23,113 Operating profit 60,941 52,695 EUR 1,000 1 Jan - 31 Dec 2023 1 Jan - 31 Dec 2022 Finance income andexpenses Interest and other financial income From group companies 0 6 From other companies 2,331 253 Interest and other financial expenses From other companies -47,713 -38,955 Profit / loss before appropriationsand taxes 15,559 13,999 Appropriations Change in accelerated depreciations Network assets -110,159 -111,985 Other assets -1,289 -1,276 Group contributions Group contribution received 17,336 20,704 Income taxes -2,503 -2,504 Loss for the year -81,056 -81,062 59 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### ELECTRICITY NETWORK BUSINESS DIFFERENTIATED ### BALANCE SHEET EUR 1,000 31 Dec 2023 31 Dec 2022 ASSETS Non-current assets Intangible assets Intangible rights 25,258 26,053 Goodwill 2,043,837 2,099,833 Other capitalized long term expenditure 17,249 15,647 2,086,345 2,141,533 Tangible assets Land and water areas 190 190 Buildings and constructions 248 259 Electricity network 1,400,476 1,332,143 Merger losses 769,832 804,825 Machinery and equipments 986 494 Other tangible assets 0 1 Advance payments and construction inprogress 19,352 20,146 2,191,086 2,158,058 Total non-current assets 4,277,430 4,299,591 EUR 1,000 31 Dec 2023 31 Dec 2022 Current assets Long-term receivables Other long-term receivables 2,374 732 2,374 732 Short-term receivables Trade receivables 19,330 17,987 Receivables from group companies 17,395 20,903 Other receivables 231 232 Prepayments and accrued income 43,088 38,500 80,044 77,623 Cash and cash equivalents 26,958 5,300 Total current assets 109,376 83,654 TOTAL ASSETS 4,386,806 4,383,246 60 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### ELECTRICITY NETWORK BUSINESS DIFFERENTIATED ### BALANCE SHEET EUR 1,000 31 Dec 2023 31 Dec 2022 EQUITY AND LIABILITIES Capital and reserves Subscribed capital 80 80 Non restricted equity 1,792,761 1,926,730 Retained earnings -157,790 -76,728 Profit / Loss for the financial year -81,056 -81,062 1,553,995 1,769,020 Cumulative accelerateddepreciations Cumulative accelerated depreciations,network assets 614,893 504,732 Cumulative accelerated depreciations,other assets 4,767 3,482 619,660 508,213 Liabilities Non-current liabilitites Non-current liabilities, interest-free Connection fees 201,742 202,334 Non-current liabilities, interest-bearing Loans from financial institutions andother long-term loans 1,939,500 1,839,500 2,141,242 2,041,834 Current liabilities Current liabilities, interest-free Trade payables 4,374 5,637 Liabilities to group companies 2,925 3,258 Other short-term liabilities 36,459 27,913 Accruals and deferred income 28,148 27,371 71,907 64,179 Total liabilities 2,213,150 2,106,013 TOTAL EQUITY AND LIABILITIES 4,386,806 4,383,246 61 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### NOTES TO DIFFERENTIATED FINANCIAL STATEMENTS According to the Electricity Market Act, a company operating on electricity market must differenti- ate 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 busi- ness 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 Elenia group's financing and administrative related services and items. 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 usingan allocation key. Depreciation principles for intangible and tangible assets are based on Elenia Verkko Oyj's de- preciations rules which have been presented in the beginning of parent company notes. Electricity Network business' key figures EUR 1,000 2023 2022 INVESTMENTS Intangible assets Intangible rights 1,248 2,006 Other capitalized long term expenditures Connection fees 2,400 2,257 Other capitalized long-term expenditures 783 860 Tangible assets of electricity networkbusiness Land and water areas 30 41 Electricity network 109,570 150,908 Demolition costs 2,659 6,341 Meters 23,221 14,504 Other tangible assets 572 12 OTHER KEY FIGURES Refundable connection fees 201,742 202,334 Capital gain on the sales of a power lineincluded in the other operating income 0 360 Mandatory outage compensations 726 225 R&D expenses in the profit and lossaccount during the financial year 431 407 Demolition costs in the balance sheet atthe end of the financial year 41,062 39,975 Return On Equity, network business(%) 0.64% 0.53% Average number of personnel in the networkbusiness 75 75 62 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### SIGNATURES TO THE FINANCIAL ### STATEMENTS Tampere, 5 March 2024 Tapani Liuhala Chairman of the Board of Directors Jarkko Kohtala Jorma Myllymäki Anne-Marie Malmberg Ville Sihvola Tommi Valento AUDITORS NOTE A report on the audit carried out has been issued today. Tampere, 7 March 2024 Ernst & Young Oy Authorized Public Accountant Firm Miikka Hietala KHT 63 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) ### AUDITOR’S REPORT (TRANSLATION OF THE FINNISH ORIGINAL) To the Annual General Meeting of Elenia Verkko Oyj Opinion We have audited thefinancial statementsof Elenia Verkko Oyj (business identitycode 3001882-6)for the year ended 31 December, 2023.The financial statementscomprise the consolidated balancesheet, income statement,statement of comprehensive income,statement of changes inequity, statement of cash flowsand notes, includingmaterial ac- counting policy information,as well as theparent company’s balance sheet, incomestatement, statementof cash flows and notes. In our opinion ● the consolidated financialstatements givea true and fair view of the group’s financialposition, financial performance and cashflows in accordancewith IFRS Accounting Standardsas adopted by the EU. ● the financial statementsgive a true and fairview of the parent company’s financialperformance and fi- nancial position in accordancewith the laws and reg- ulations governing thepreparation of financialstate- ments in Finland and complywith statutory require- ments. Our opinion is consistentwith the additionalreport sub- mitted to the Boardof Directors. Basis for Opinion We conducted our auditin accordance withgood auditing practice in Finland. Ourresponsibilitiesunder good auditing practice are further describedin the Auditor’s Responsibilities for the Audit of FinancialStatements section of our report. We are independentof the parent companyand of the group companies in accordancewith the ethical require- ments that are applicablein Finland and are relevantto our audit, and we have fulfilledour other ethical responsibilities in accordance with theserequirements. In our best knowledgeand understanding,the non-audit services that we haveprovided to the parentcompany and group companies arein compliance withlaws and regulations applicable in Finlandregarding these services,and we have not provided any prohibited non-audit servicesreferredto in Article 5(1) of regulation(EU) 537/2014.The non-audit ser- vices that we haveprovided have beendisclosed in note 2.3.1. to the consolidatedfinancial statements. We believe that the audit evidence we have obtained is suffi- cient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters arethose matters that,in our professional judgment, wereof most significance inour audit of the finan- cial statements of thecurrent period.These matters were ad- dressed in the contextof our audit of thefinancial statements as a whole, and in formingour opinion thereon,and we do not provide a separateopinion on thesematters. We have fulfilledthe responsibilitiesdescribed in the Au- ditor’s responsibilitiesfor the audit of thefinancial statements section of our report,including in relation tothese matters. Accordingly, our auditincluded the performanceof proce- dures designed to respondto our assessmentof the risks of material misstatementof the financialstatements. The re- sults of our audit procedures,including the proceduresper- formed to address thematters below, providethe basis for our audit opinion on theaccompanying financialstatements. We have also addressedthe risk of managementoverride of internal controls.This includes considerationof whether there was evidence ofmanagement bias thatrepresented a risk of material misstatementdue to fraud. There are no significantrisks of materialmisstatement re- ferred to in EU regulationNo 537/2014,point (c) of Article 10(2) relating to theconsolidated financialstatements or the parent company’s financialstatements. Key Audit Matter How our audit ad- dressed the Key Audit Mat- ter Valuation of Goodwill We refer to the notes to the consolidated financial statements 3.2. Our audit procedures to the valuation of goodwill included: 64 ELENIA VERKKO OYJ GROUP FINANCIALSTATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) Valuation of Goodwill was a key audit matterbe- cause the assessmentpro- cess is judgmental, itis based on assumptions relat- ing to market or economic conditions extending to the future, and becauseof the significance of the goodwill to the financial statements. As of balance sheet date31 December 2023, thevalue of goodwill amountedto 418 million euro represent- ing 18 % of the totalassets. The valuation of goodwillis based on management’ses- timate about the value-in- use calculations. Thereare number of underlyingas- sumptions used to deter- mine the value-in-use,in- cluding the revenue growth, EBITDA, future invest- ments, discount rate applied on net cash-flows and changing regulation. Esti- mated value-in-usemay vary significantly whenthe underlying assumptionsare changed and the changesin above-mentioned individual assumptions may resultin an impairment of goodwill. Our audit procedures included involving EYvalu- ation specialists to assistus in evaluating underlying as- sumptions and methodolo- gies especially relatedto the following assumptions: revenue growth, EBITDA and discount rate applied to cash-flows. We focused on thesen- sitivity in the available headroom by cash generat- ing unit and whetherany reasonably possiblechange in assumptions couldcause the carrying amount to ex- ceed its recoverable amount. We evaluated the effectof regulation changes to the management’s estimates and parameters. We consideredthe ap- propriateness of the Group’s disclosures in re- spect of impairmenttest- ing. Revenue Recognition We refer to the Group’s ac- counting policies and the notes to the consolidatedfi- nancial statements 2.1. Revenue from the distri- bution of electricity is recog- nized at the time of delivery. Our audit procedures included, among others: We assessed the rea- sonableness of the Group’s accounting policiesover revenue recognitionand Revenue from customer ser- vice operations and other revenue is recognized in the period in which such services are rendered. The Group focuses on revenue as a key perfor- mance measure whichcould create an incentive forreve- nue to be recognizedbefore the risks and rewardshave been transferred. compliance with applicable accounting standards. We assessed the IT-sys- tems, processes, andmeth- ods for revenue recogni- tion. We examined the rec- orded sales transactions during the year againstun- derlying documents. We examined the sales accruals. We obtained confirma- tions of open accountsre- ceivable balances at year end from customers and analyzed credit invoices is- sued after the balance sheet date. We performed data-an- alytics procedures onreve- nues. We considered the ap- propriateness of the Group’s disclosures in re- spect of revenues. Responsibilities of the Board of Directorsand the Managing Director for the Financial Statements The Board of Directorsand the Managing Directorare re- sponsible for the preparationof consolidatedfinancial state- ments that give a trueand fair view in accordancewith Inter- national Financial ReportingStandards (IFRS)as adopted by the EU, and of financialstatements thatgive a true and fair view in accordance withthe laws and regulationsgoverning the preparation of financialstatements in Finlandand comply with statutory requirements.The Board of Directorsand the Managing Director arealso responsiblefor such internal con- trol as they determineis necessary to enablethe preparation of financial statements thatare free frommaterial misstate- ment, whether due to fraudor error. In preparing the financial statements, the Board of Directors and the Managing Director are responsible for assessing the par- ent company’s and the group’s ability to continue as going con- cern, disclosing, as applicable, matters relating to going concern andusing the going concern basis of accounting. The financial statements are prepared using the going concern basis of ac- counting unless there is an intention to liquidate the parent com- pany or the group or cease operations, or there is no realistic al- ternative but to do so. Auditor’s Responsibilities for the Auditof the Financial Statements Our objectives areto obtain reasonableassurance on whether the financialstatements as a wholeare free from material misstatement,whether due to fraudor error, and to issue an auditor’s reportthat includes our opinion.Reasona- ble assurance is ahigh level of assurance,but is not a guaran- tee that an auditconducted in accordancewith good auditing practice will always detecta material misstatementwhen it exists. Misstatementscan arise from fraudor error and are considered materialif, individually or inaggregate, they could reasonably be expectedto influence the economicdecisions of users taken on the basisof the financial statements. As part of an auditin accordance withgood auditing prac- tice, we exerciseprofessional judgment andmaintain profes- sional skepticism throughoutthe audit.We also: Identify and assess therisks of materialmisstatement of the financial statements,whether due to fraudor error, 65 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) design and perform auditprocedures responsiveto those risks, and obtain auditevidence that is sufficientand appro- priate to provide a basisfor our opinion.The risk of not de- tecting a material misstatementresulting from fraudis higher than for one resulting fromerror, as fraudmay involve collu- sion, forgery, intentionalomissions, misrepresentations,or the overrideof internal control. Obtain an understandingof internal control relevantto the audit in orderto design audit proceduresthat are appro- priate in the circumstances,but not for thepurpose of ex- pressing an opinionon the effectivenessof the parent com- pany’s or the group’s internal control. Evaluate the appropriatenessof accountingpolicies used and the reasonablenessof accounting estimatesand related disclosures made bymanagement. Conclude on the appropriatenessof the Board of Direc- tors’ and the ManagingDirector’s use of thegoing concern basis of accountingand based on theaudit evidence ob- tained, whether amaterial uncertaintyexists related to events or conditions thatmay cast significant doubton the parent company’sor the group’s ability tocontinue as a going concern. If we concludethat a materialuncertainty exists,we are requiredto draw attention in our auditor’sreport to the related disclosures in thefinancial statementsor, if such dis- closures are inadequate,to modify our opinion.Our conclu- sions are based on the auditevidence obtainedup to the date of our auditor’s report.However, futureevents or conditions may cause the parentcompany or thegroup to cease tocon- tinue as a going concern. Evaluate the overall presentation,structure and content of the financial statements,including the disclosures,and whether the financialstatements representthe underlying transactions and eventsso that the financialstatements give a true and fair view. Obtain sufficient appropriateaudit evidence regarding the financial informationof the entitiesor business activities within the group to expressan opinion on the consolidatedfi- nancial statements.We are responsiblefor the direction,su- pervision and performanceof the group audit.We remain solely responsible forour audit opinion. We communicate with thosecharged with governancere- garding, among othermatters, the plannedscope and timing of the audit and significantaudit findings, includingany signif- icant deficiencies in internalcontrol that we identifyduring our audit. We also providethose charged withgovernance with a statement that wehave complied withrelevant ethical re- quirements regardingindependence, andcommunicate with them all relationshipsand other mattersthat may reasonably be thought to bearon our independence,and where applica- ble, relatedsafeguards. From the matters communicatedwith those chargedwith governance, we determinethose matters thatwere of most significance in theaudit of the financialstatements of thecur- rent period and aretherefore the key auditmatters. We de- scribe these mattersin our auditor’s reportunless law or reg- ulation precludes publicdisclosure about thematter or when, in extremely rare circumstances,we determine thata matter should not be communicatedin our report becausethe ad- verse consequencesof doing so would reasonablybe ex- pected to outweigh thepublic interest benefitsof such com- munication. Other Reporting Requirements Information on our audit engagement We were firstappointed as auditors on 13.5.2019, and our ap- pointment represents a total period of uninterrupted engage- ment of 5 years. Elenia Verkko Oyj has been a public interest en- tity since 1.7.2020. Other information The Board of Directors and the Managing Director are re- sponsible for the other information. The other information com- prises 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 audi- tor’s report, and the Annual Report is expected to be made avail- able 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 mate- rially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be ma- terially misstated. With respect to report of the Board of Direc- tors, our responsibility also includes considering whether the re- port 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 infor- mation 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 noth- ing to report in this regard. Tampere March 7 th , 2024 Ernst & Young Oy Authorized Public Accountant Firm Miikka Hietala Authorized Public Accountant 66 ELENIA VERKKO OYJ GROUPFINANCIAL STATEMENT 2023 ## CONTENTS [REPORT OF THE BOARD OF DIRECTORS](#a31) [2](#a31) [CONSOLIDATED FINANCIAL](#a1071) [STATEMENTS](#a1071) [Consolidated statement](#a1097) [of profit or](#a1097) [loss](#a1097) [5](#a1097) [consolidated statement](#a1086) [of compr](#a1086) [ehensive income](#a1086) [5](#a1097) [Consolidated statement](#a1495) [of](#a1495) [financial position](#a1495) [6](#a1495) [Consolidated statement](#a2006) [of cash flows](#a2006) [7](#a2006) [Consolidated statement](#a2450) [of changes in equity](#a2450) [8](#a2450) Notes to the consolidated financial statements [9](#a2984) 1 [Group accounting policies](#a2984) [9](#a2984) 2 [Operating profit](#a3524) [11](#a3524) 3 [Investments and lease commitments](#a5968) [17](#a5968) 4 [Capital structure and financial items](#a8875) [24](#a8875) 5 [Consolidation](#a12635) [34](#a12635) 6 [Other notes](#a13413) [36](#a13413) [PARENT COMPANY](#a16564) [FINANCIAL STATEMENTS](#a16564) [45](#a16564) [signatures to the financial statements](#a23190) [62](#a23190) [auditor’s report](#a23397) [63](#a23397) #### 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 743700XGU4ZB5G4RPK50-2023-12-31- en.zip of Elenia Verkko Oyj (business identity code: 3001882–6) for the financial year 1.1.-31.12.2023 to ensure that the financial statements are marked/tagged with iXBRL in accordance with the requirements of Article 4 of EU Commission Delegated Reg- ulation (EU) 2018/815 (ESEF RTS). Responsibilities of the Board of Directorsand Managing Director The Board of Directors and Managing Director are responsible for the preparation of the Report of Board of Directors and fi- nancial statements (ESEF financial statements) that comply with the ESESF RTS. This responsibility includes: Preparation of ESEF-financial statements in accordance with Article 3 of ESEF RTS Tagging the primary financial statements, notes to the finan- cial statements and the entity identifier information in the con- solidated financial statements included within the ESEF-financial statements by using the iXBRL mark ups in accordance with Arti- cle 4 of ESEF RTS Ensuring consistency between ESEF financial statements and audited financial statements. The Board of Directors and Managing Director are also re- sponsible for such internal control as they determine is neces- sary to enable the preparation of ESEF financial statements in accordance the requirements of ESEF RTS. Auditor’s Independence and Quality Management We are independent of the company in accordance with the ethi- cal 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 require- ments. The firm applies International Standard on Quality Manage- ment (ISQM) 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory re- quirements. Auditor’s Responsibilities In accordance with the Engagement Letter we will express an opinion on whether the electronic tagging of the consolidated fi- nancial statements complies in all material respects with the Ar- ticle 4 of ESEF RTS. We have conducted a reasonable assurance engagement in accordance with International Standard on As- surance 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 re- spects with Article 4 of the ESEF RTS whether the tagging of the notes to the financial statements and the entity identifier information 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 de- pend 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 primary financial statements, notes to the financial statements and the entity identifier infor- mation in the consolidated financial statements included in the ESEF financial statements 743700XGU4ZB5G4RPK50-2023- 12-31-en.zip of Elenia Verkko Oyj for the year ended 1.1.- 31.12.2023 complies in all material respects with the require- ments of ESEF RTS. Our audit opinion on the consolidated financial statements of Elenia Verkko Oyj for the year ended 1.1.-31.12.2023 is included in our Independent Auditor’s Report dated 7.3.2024. In this re- port, we do not express an audit opinion any other assurance on the consolidated financial statements. Helsinki 11.3.2024 Ernst & Young Oy Authorized Public Accountant Firm Miikka Hietala Authorized Public Accountant