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Note 1 Accounting principles
Statnett SF (the parent company) is a Norwegian state-owned enterprise that was formed on 20 December 1991. The sole owner of Statnett SF is the Norwegian State, represented by the Ministry of Petroleum and Energy (MPE). Statnett has issued bond loans listed on the Oslo Stock Exchange. Statnett's registered head office is at Husebybakken 28B, 0379 Oslo, Norway.
BASIS FOR PREPARATION OF THE FINANCIAL STATEMENTS
The consolidated financial statements for the Statnett Group and the financial statements for the parent company, Statnett SF, have been prepared in compliance with the current International Financial Reporting Standards (IFRS), as approved by the EU.
All subsequent references to “IFRS” imply references to IFRS as approved by the EU.
The financial statements have been prepared on the basis of the historical cost principle, with the following exceptions:
- All derivatives, and all financial assets and liabilities classified as “fair value carried through profit or loss” or “available for sale”, are carried at fair value.
- The book value of hedged assets and liabilities is adjusted in order to register changes in fair value as a result of the hedging.
- Assets are measured at each reporting date with a view to impairment. If the recoverable amount of the asset is less than the book value, the asset is written down to the recoverable amount.
NEW ACCOUNTING STANDARDS
Below follows a list of new, revised and additional standards and interpretations that had been announced as at 31.12.2011, but that had not come into effect for the fiscal year 1 January - 31 December 2011. Only matters assumed to be relevant for Statnett have been included.
The Group management has established that all the compulsory and relevant interpretations and standards adopted by the EU will be implemented in the consolidated financial statements from the date they become effective, unless decided otherwise.
Below is a review of the implications these standards are expected to have for the consolidated financial statements of the Statnett Group:
Amendments to IAS 19 Employee Benefits - Pensions
The amended IAS 19 eliminates the use of the corridor approach when accounting for estimate deviations. Estimate deviations will now be recognised in their entirety under other revenues and costs in the income statement and in the period they arise. The amendment further entails that pension costs will be split between the operating result before tax and other revenues and costs. Projected yield on pension fund assets is calculated using the discount rate calculated based on gross pension liability. Accrued pension rights and net interest charges for the period are presented under ordinary result before tax whereas remeasurements, such as estimate deviations, are presented under other revenues and costs in the statement of comprehensive income. Furthermore, the amendments to the information requirements relating to defined-benefit pension plans have been amended. The amendments will be effective for fiscal years starting on 1 January 2013 or later. However, the amendments have still not been approved by the EU. Earlier application is permitted, provided that the EU approves the amendments. The Group expects to implement the amended standard as at 1 January 2013.
Following implementation of the amended IAS 19 as of 1 January 2013, estimate deviations as at 31 December 2012 will be recognised directly in equity (72 per cent) and in deferred tax (28 per cent). Unrecognised estimate deviations as at 31 December 2011 total NOK 771 million, cf. Note 5.
For amendments that are not considered to have any significant impact on the Group's application of accounting principles or notes to the accounts, cf. Note 20.
IMPORTANT ACCOUNTING ESTIMATES AND ASSUMPTIONS
The preparation of the financial statements in compliance with IFRS requires that the management carries out assessments and prepares estimates and assumptions that affect the application of accounting principles. This affects recognised amounts for assets and liabilities on the balance sheet date, reporting of contingent assets and liabilities, as well as the reported revenues and costs for the period.
Accounting estimates are used to determine some amounts that have an impact on Statnett's financial statements. This requires that Statnett prepares assumptions relating to values or uncertain conditions at the time of preparation. Key accounting estimates are estimates that are important to the Group’s financial performance and results, requiring the management’s subjective and complex assessment, often based on a need to prepare estimates on factors encumbered by uncertainty. Statnett assesses such estimates continuously on the basis of previous results and experiences, consultations with experts, trends, prognoses and other methods which Statnett deems appropriate in the individual case.
Provisions for liabilities relating to disputes and legal claims are recognised in the income statement when the Group has an existing liability, legal or self-imposed, as a result of an event that has taken place. Furthermore, it must be possible to measure the amount reliably and it must be demonstrated as probable that the liability will be settled. The provisions are measured to the best of the management's ability on the balance sheet date.
Insurance claims are considered a contingent asset and are not recognised as income until the income is all but certain. In connection with development projects where additional costs relating to the repair of damage constitute part of the facility’s cost price, and there is no basis for write-down, insurance claims are recognised as a reduction of the project’s acquisition costs. Such a reduction is contingent on the insurance company having acknowledged the damage and that the amount can be reliably estimated.
Significant items relating to Statnett's use of estimates:
(Amounts in NOK million) Group Item Note Estimate/assumptions Book value Tangible fixed assets 6 Recoverable amount and estimate of correct remaining useful life 17 396 Pension liabilities 5 Financial and demographic assumptions 353
Depreciation / Amortisation
Tangible fixed assets
Depreciation is based on the management’s assessment of the useful life of tangible fixed assets. The assessments may change owing, for example, to technological developments and historical experience. This may entail changes in the estimated useful life of the asset and thus the depreciation. It is difficult to predict technological developments, and Statnett’s view of how quickly changes will come may change over time. If expectations change significantly, the depreciation will be adjusted with effect for future periods. Please refer to the more detailed discussion under “Tangible fixed assets” below.
Goodwill and other intangible assets
Goodwill arising in a business combination is not amortised. Intangible assets with a fixed useful life are amortised over the asset's useful life which is assessed at least once a year. Intangible assets are amortised in a straight line as this best reflects the use of the asset.
Tangible fixed assets
Statnett has made significant investments in tangible fixed assets. The value of these assets is assessed when there is an indication of impairment in value. Tangible fixed assets in the parent company are regarded as one cash-generating unit and are assessed collectively since Statnett SF has one collective revenue cap. In subsidiaries, each fixed asset is assessed individually.
Statnett expects to make substantial investments in the future. These will largely take place in the form of projects under the company’s own direction and be recorded on the balance sheet as plants under construction until the fixed asset is ready to be put into operation. Projects under execution are valued individually on indications of impairment in value.
Estimates of the recoverable amounts for assets must be based in part on the management’s assessments, including the calculation of the assets’ revenue-generating capacity and the probability of licences being granted for development projects. Changes in circumstances and the management’s assumptions may result in write-downs for the relevant periods.
Goodwill is evaluated for write-down annually or more often if there are any indications of impairment in value, based on the cash-generating unit to which goodwill is allocated. If the recoverable amount (the higher of net sales and utility value) for the cash-generating unit is lower than the carrying value, the write-downs will first reduce the carrying value of any goodwill and then the carrying value of the unit's other assets, proportionally based on the carrying value of the individual assets in the unit. The carrying value of individual assets is not reduced below the recoverable amount or zero. Write-downs of goodwill cannot be reversed in a subsequent period if the fair value of the cash-generating unit increases. Impairment of value is included in the income statement as a part of write-downs.
Other intangible assets
On each reporting date, the Group considers whether there are any indications of impairment in value for intangible assets. If there are any indications of impairment in value, the Group will estimate the recoverable amount for the assets and consider potential write-down.
Pension costs, pension liabilities and pension assets
The calculation of pension costs and net pension liabilities (the difference between pension liabilities and pension assets) is performed on the basis of a number of estimates and assumptions. Changes in and variances from estimates and assumptions (estimate deviations) affect the fair value of the net pension liabilities, but are not recognised in the income statement until the cumulative estimated deviation exceeds 10 per cent of the higher of the pension liabilities or pension assets at the start of the fiscal year.
The consolidated financial statements comprise Statnett SF and subsidiaries in which Statnett SF has a controlling influence. These will normally be companies where Statnett SF owns more than 50 per cent of the voting shares, either directly or indirectly through subsidiaries.
The consolidated financial statements have been prepared using uniform accounting principles for equivalent transactions and other events under otherwise equal circumstances. The classification of items in the income statement and balance sheet has taken place in accordance with uniform definitions. The consolidated financial statements are prepared in accordance with the acquisition method of accounting and show the Group as if it was a single entity. Balances and internal transactions between companies within the Group are eliminated in the consolidated financial statements.
The cost price of shares in subsidiaries is offset against equity at the time of acquisition. Any excess value beyond the underlying equity of the subsidiaries is allocated to the asset and liability items to which the excess value can be attributed. The portion of the cost price that cannot be attributed to specific assets represents goodwill.
Statnett SF's Pension Fund is not part of the Statnett Group. Contributed equity in the pension fund is measured at fair value and classified as financial fixed assets.
Investments in joint ventures
Joint ventures are defined as entities in which there are contractual agreements that give joint control together with one or more parties. Result, assets and liabilities of joint ventures are recorded in the financial statements in accordance with the equity method. This means that the Group’s share of the result for the year after tax and amortisation of any excess value is reported on a separate line in the income statement between operating profit/loss and financial items. The accounts of joint ventures are restated in accordance with IFRS. Ownership interests in joint ventures are presented as fixed asset investments at original cost plus accumulated profit shares and less dividends in the consolidated balance sheet.
Investments in associates
Associates are entities where the Group has a significant, but not controlling influence over the financial and operational management. Normally these will be companies where the Group owns between 20 and 50 per cent of the voting shares. Earnings, assets and liabilities of associates are recorded in the financial statements in accordance with the equity method. This means that the Group’s share of the earnings for the year after tax and amortisation of any excess value is reported on a separate line in the income statement between operating profit/loss and financial items. The accounts of associates are restated in accordance with IFRS. Ownership interests in associates are carried as financial fixed assets at original cost plus accumulated profit shares and less dividends in the consolidated balance sheet.
Purchase/sale of subsidiaries, joint ventures and associates
In the case of acquisition or sale of subsidiaries, joint ventures and associates, they are included in the consolidated financial statements for the portion of the year they have been a part of or associated with the Group.
Investments in other companies
Investments in companies in which the Group owns less than 20 per cent of the voting capital are classified as “available for sale” and are carried at fair value in the balance sheet if they can be reliably measured. Value changes are recognised under other comprehensive income in the statement of comprehensive income.
Investments in subsidiaries, joint ventures and associates in Statnett SF (parent company accounts)
Investments in subsidiaries, joint ventures and associates are accounted for in accordance with the cost method in the parent company accounts. The group contribution paid (net after tax) is added to the cost price of investments in subsidiaries. Group contributions and dividends received are recorded in the income statement as financial income as long as the dividends and group contributions are within the earnings accrued during the period of ownership. Dividends in excess of earnings during the ownership period are accounted for as a reduction in the share investment.
Business combinations are recognised according to the acquisition method. Acquisition costs are the total of the fair value on the acquisition date of assets acquired, liabilities incurred or taken over as compensation for control of the acquired enterprise, plus costs which can be directly attributed to business combinations.
The acquired enterprise's identifiable assets, liabilities and contingent liabilities which satisfy the conditions for accounting according to IFRS 3, are recognised at fair value on the acquisition date,. Goodwill arising as a result of acquisitions is recognised as an asset measured as the excess of the total consideration transferred and the value of the minority interests in the acquired company beyond the net value of acquired identifiable assets and assumed liabilities. If the Group's share of the net fair value of the acquired enterprise's identifiable assets, liabilities and contingent liabilities exceeds the total consideration after re-assessment, the surplus amount is immediately recognised in the income statement.
The company has identified its reporting segment based on the risk and rate of return that affect the operations. Based on IFRS' definition, there is, according to the company's assessment, only one segment. The business is followed up as a single geographical segment. Subsidiaries do not qualify as separate business segments subject to reporting based on IFRS criteria. The parent company and the Group are reported as one a single business segment.
CASH FLOW STATEMENT
The cash flow statement has been prepared based on the indirect method. Cash includes cash in hand and bank deposits. Cash equivalents are short-term liquid investments that can be converted immediately to a known amount of cash, and that have a maximum term of three months.
REVENUE RECOGNITION PRINCIPLES
Operating revenues are measured at fair value and recognised when they are accrued on a net basis after government taxes. Operating revenues are reported on a gross basis except in cases where Statnett acts primarily as a settlement function in connection with common grids and power trading.
Interest income is recognised over time as it is accrued. Dividends from investments are recorded as income when the dividends are adopted.
Permitted revenue, tariffs and higher/lower revenue
Statnett is the operator of the main national grid and two common regional grids. As the operator, Statnett is responsible for setting the annual tariffs for each common grid. The main grid is a common grid. In a fiscal year, the actual revenues will deviate from the regulated revenues.
Revenue cap - monopoly-regulated activities
Statnett owns transmission grids, power lines and cables, which the users pay tariffs to access. These are monopoly-regulated operations. This means that the Norwegian Water Resources and Energy Directorate (NVE) sets an annual limit – a revenue cap – for the grid owner's maximum revenues.
The basis for calculating the revenue cap is expenditures, including capital expenditures, for a retrospective period of two years. In addition, property tax and transit costs are covered. A supplement for investment is also granted, which means that investments are reflected in the permitted revenue for the year the investment is put into operation.
There can be uncertainty attached to measuring the individual amounts included in the revenue cap.
Increased revenue as a result of conditions that require an application for adjustment of the revenue caps or interpretation of the regulations on the part of the Norwegian Water Resources and Energy Directorate (NVE), are only included in the accounts if it is considered all but certain that the revenue will be realised.
The revenue cap is recognised in the accounts at 1/12 per month. The revenue cap for Statnett is included as part of "Operating revenues regulated operations”.
Revenue cap transmission losses
Transmission losses in the regional and main grid are a part of Statnett's revenue cap. The reported revenue cap for transmission losses during the fiscal year consists of the actual measured loss in MWh for a retrospective period of two years valued at a regulated reference price based on the electricity spot market price in the fiscal year. The revenue cap has been included in the accounting line ”Operating revenues regulated operations”.
Discrepancies between the revenue cap for transmission losses and actual costs of purchases of transmission losses in the fiscal year are, in accordance with the guidelines, apportioned among the grid owners in each common grid where Statnett is the operator.
Transmission losses occur as a result of measured discrepancies between the input and outtake of power in the grid. The size of the loss will vary with the temperature, the load in the grid and the electricity price. Actual loss in the fiscal year is purchased externally at spot market price. Losses arising during transmission of power in the main national grid and the common regional grids are covered by the grid’s operator and are reported under "transmission losses".
Tariff-setting and higher/lower revenue for the year
As the operator of the main national grid and two common regional grids, Statnett is responsible for invoicing the users for the services they receive. The invoicing takes place on the basis of a tariff model, in accordance with guidelines provided by the NVE. The price system consists of fixed elements and variable elements; energy elements. Fixed elements are invoiced evenly throughout the year, while the energy element is invoiced concurrently with the customers' measured input or outtake of power from the grid.
The tariff for the year is set with a view to ensuring that the higher/ lower revenue is offset over time. Tariffs are set in September preceding the fiscal year. Statnett has established a strategy for adjustment of the tariff basis including offsetting of accumulated higher/lower revenue. Some quantities and parameters, including the price of energy, included in the calculation basis for the year's revenue cap, are based on estimates. Discrepancies will occur between tariff revenues and the revenue cap. This is indicated in Note 2.
Higher/lower revenue interest calculations
Interest is calculated on accumulated higher/lower revenue in accordance with the rules stipulated by the NVE, based on the site deposit rate set by the Central Bank of Norway. The amount of interest is included in the balance for higher/lower revenue and is expressed in the financial reporting through regulation of future tariffs. This is shown in Note 2.
Power purchases and sales
Statnett is the Transmission System Operator (TSO) and is responsible for the regulating power market system and balance settlement system. Responsibility for the balance settlement system means that Statnett subsequently compares the measured and agreed energy volumes, calculates any discrepancies, and carries out the financial settlement between the market participants. The settlement is based on the prices in the regulating power market. The purchase and sale of regulating power must be balanced. Statnett receives a fee covering Statnett's costs as responsible for the balance settlement. If the settlement is across national borders in the Nordic region, a marginal price difference will arise based on the average of the Norwegian and foreign regulating power price, which is passed on to or is charged to Statnett as the TSO.
Statnett has a separate licence as responsible for the balance settlement system. This activity is recorded in the financial statements through fee revenues and costs relating to the execution of the balance settlement responsibility. Power purchases and sales are recognised net and are therefore not expressed in the statement of comprehensive income. .
Power sales/purchases are recorded in the income statement when they are accrued/incurred, i.e. at the time of delivery.
Project revenue is recognised on a current basis based on the measurement of the estimated fair value. This means that revenue is recognised as the work is performed based on the degree of completion. The degree of completion is determined on the basis of the accrued costs of the executed work and estimated total project expenditure. Revenue is included in other operating revenues. Invoiced and accrued project revenues are included in trade accounts receivable.
Where projects are expected to make a loss, the entire expected loss is recognised as an expense.
Tax costs in the income statement encompass both the tax payable for the period and changes in the deferred tax liabilities/assets. Taxes payable are calculated on the basis of the taxable income for the year. Net deferred tax assets/liabilities are calculated on the basis of temporary differences between the accounting and tax values, and the tax loss carried forward.
Tax-increasing or tax-reducing temporary differences that are reversed or may be reversed are offset. Deferred tax assets are recorded when it is probable that the company will have a sufficient taxable profit to benefit from the tax asset. Deferred tax liabilities/assets that can be recorded in the balance sheet are carried at their nominal value on a net basis.
Property taxes are recorded in the income statement and paid during the fiscal year. They are classified as other operating expenses.
CLASSIFICATION OF ITEMS IN THE BALANCE SHEET
An asset is classified as short-term (current asset) when it is related to the flow of goods, receivables paid within one year, and “assets that are not intended for permanent ownership or use in the operations”. Other assets are fixed assets. The distinction between short-term and long-term loans is drawn one year before maturity. The first year’s instalments on long-term loans are reclassified as current liabilities.
PLANTS UNDER CONSTRUCTION
Plants under construction are recognised in the balance sheet at acquisition cost less any accumulated losses from impairments. Plants under construction are not depreciated.
Development projects start off with a feasibility and alternative study. The project is recognised in the balance sheet when the conclusion from the study is available, and the main development concept has been selected. At this point, a licence has not been granted and no final investment decision has been made. Statnett’s experience is that once a main concept has been selected for the development, it is highly likely that the project will be implemented.
Ongoing assessments are made of whether licensing conditions or other causes necessitate a full or partial write-down of the project expenses incurred. Write-downs are reversed when there is no longer any basis for the write-down.
INTEREST DURING THE CONSTRUCTION PERIOD
Construction loan costs related to the company’s own plants under construction are capitalised in the balance sheet. The interest is calculated based on the average borrowing interest rate and scope of the investment, as the funding is not identified specifically for individual projects.
TANGIBLE FIXED ASSETS
Tangible fixed assets are carried at cost less accumulated depreciation and write-downs. The depreciation reduces the carrying value of tangible fixed assets, excluding building lots, to the estimated residual value at the end of the expected useful life. Ordinary straight-line depreciation is implemented from the point in time when the asset was ready for operation, and is calculated based on the expected useful life of the asset. This applies correspondingly to fixed assets acquired from other grid owners. The cost price is decomposed when the fixed asset consists of components with differing useful lives.
The estimated useful life, depreciation method and residual value are assessed once a year. The value is assessed when there is an indication of impairment in value. Tangible fixed assets in the parent company are regarded as one cash-generating unit and are assessed collectively since Statnett SF has a collective revenue cap. In subsidiaries, each fixed asset is assessed individually. For most assets, the residual value is estimated at zero at the end of the useful life.
Gains or losses on the divestment or scrapping of tangible fixed assets are calculated as the difference between the sales proceeds and the fixed assets’ carrying value. Gains/losses on divestment are recorded in the income statement as other operating revenues/expenses. Losses on scrapping are recognised in the income statement as depreciation/write-downs.
Lump sum payments in connection with the acquisition of land etc. are included in the cost price of the fixed asset. Ongoing payments are minor amounts and are recognised in the income statement in the year in which the payment is disbursed.
Maintenance expenses are recognised in the income statement when they are incurred. No provisions are made for the periodic maintenance of the grid (transformer stations or power lines). Even though maintenance is periodic for the individual transformer station or power line, it is not considered to be periodic for the entire grid as the grid as a whole is regarded as a single cash-generating unit. If the fixed asset is replaced, any residual financial value will be recorded in the income statement as a loss on scrapping.
Expenses that significantly extend the life of the fixed asset and/or increase its capacity are capitalised.
Intangible assets bought separately are measured at acquisition cost on initial recognition. For intangible assets included in a business combination, acquisition cost is measured at fair value on the transaction date. In later periods, intangible assets are recognised at acquisition cost less accumulated amortisations and write-downs. Intangible assets with a fixed useful life are amortised over the asset's useful life which is assessed at least once a year. Intangible assets are amortised in a straight line as this best reflects the use of the asset.
Goodwill is not amortised. Goodwill does not generate cash flows independently of other assets or groups of assets, and is allocated to the cash-generating units expected to benefit from the synergy effects of the business combination that generated the goodwill. Cash-generating units allocated goodwill are evaluated for write-down annually, or more often if there are any indications of impairment in value. If the recoverable amount (the higher of the net sales and utility value) for the cash-generating unit is lower than the carrying value, the write-downs will first reduce the carrying value of any goodwill and then the carrying value of the unit's other assets, proportionally based on the carrying value of the individual assets in the unit. The carrying value of individual assets is not reduced below the recoverable amount or zero. Write-downs of goodwill cannot be reversed in a subsequent period if the fair value of the cash-generating unit increases. Impairment of value is included in the income statement as a part of write-downs.
WRITE-DOWN OF TANGIBLE FIXED ASSETS AND INTANGIBLE ASSETS OTHER THAN GOODWILL
On each reporting date, the Group considers whether there are any indications of impairment in value for tangible fixed assets and intangible assets. If there are any indications of impairment in value, the Group will estimate the recoverable amount for the assets and evaluate potential write-down.
The recoverable amount is the higher of the net sales and utility value. To assess the utility value, estimated future cash flows are discounted to present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and risks specific to the asset.
If the recoverable amount for a fixed asset (or cash-generating unit) is estimated to be lower than the carrying value, the carrying value of the fixed asset (or cash-generating unit) will be reduced to the recoverable amount. If an impairment in value is subsequently reversed, the carrying value of the fixed asset (cash-generating unit) will be increased to the revised estimate of the recoverable amount, but limited to the value that would be the carrying value if the fixed asset (or cash-generating unit) had not been written down in a prior year.
The Group as lessor
Financial lease agreements
Financial lease agreements are lease agreements where the lessee takes over the major part of the risk and return associated with the ownership of the asset. The Group presents leased assets as receivables equal to the net investment in the lease agreements. The Group’s financial income is determined so that a constant rate of return is achieved on the outstanding receivables over the term of the agreement. Direct expenses incurred in connection with the establishment of the lease agreement are included in the receivable.
The Group presents leased assets as fixed assets in the balance sheet. The lease revenue is recognised in a straight line over the term of the lease. Direct expenses incurred to establish the operating lease agreement are added to the leased asset’s carrying value and recognised as expenses during the term of the lease on the same basis as the lease revenue.
The Group as lessee
Financial lease agreements
Financial lease agreements are lease agreements where the Group takes over the major part of the risk and return associated with the ownership of the asset. At the beginning of the lease term, financial lease agreements are capitalised at an amount corresponding to the lower of fair value and the present value of the minimum rent, less accumulated depreciation and write-downs. When calculating the lease agreement’s present value, the implicit interest charge in the lease agreement is used if this can be estimated. Otherwise the company’s marginal borrowing rate is used. Direct expenses related to establishing the lease agreement are included in the asset’s cost price.
The same depreciation period is used as for the company’s other depreciable assets. If it is not reasonably certain that the company will acquire ownership at the end of the lease period, the asset will be depreciated over the shorter of the lease agreement’s duration and the asset’s useful life.
Operating leases where the major part of the risk and return associated with ownership of the asset is not transferred to the Group, are classified as operating leases. The rent payments are classified as operating expenses and are recorded in a straight line in the income statement over the duration of the agreement.
RESEARCH & DEVELOPMENT
Research expenses are recognised on a current basis. Research is an internal process that does not give rise to independent intangible assets that generate future economic benefits.
Expenses related to development activities are capitalised in the balance sheet if the product or process is technically and commercially feasible and the Group has adequate resources to complete the development. Expenses capitalised in the balance sheet include material expenses, direct wage costs and a percentage of directly attributable overhead expenses. Capitalised development expenses are recorded at acquisition cost, less any accumulated depreciation and write-downs.
Capitalised development expenses are depreciated in a straight line over the estimated useful life of the asset.
Trade accounts are recorded in the accounts at nominal value less any losses from impairment in value.
CONTINGENT ASSETS AND LIABILITIES
Contingent liabilities are not recorded in the annual financial statements. Significant contingent liabilities are disclosed unless the probability of the liability is low.
Contingent assets will not be recorded in the annual financial statements, but will be disclosed if there is a certain degree of probability that it will benefit the Group.
Higher/lower revenues are contingent liabilities/assets in accordance with IFRS and are not recorded in the balance sheet.
DIVIDEND (FROM THE PARENT COMPANY)
Dividends paid are recorded in the Group’s financial statements during the period in which they are approved by the General Meeting. If the approval and payment occur in different periods, the amount will be allocated to current liabilities until payment is made.
PENSIONS AND PENSION LIABILITIES
The Group's liability relating to pension schemes, defined as defined-benefit pension schemes, is recognised at the present value of the future retirement benefits accrued at the end of the reporting period. Pension assets are evaluated at fair value. The accumulated effect of estimate changes and changes in financial and actuarial assumptions, actuarial gains and losses, less than 10 per cent of the higher of the defined pension liabilities and pension assets at the start of the year, is not included. When the accumulated effect exceeds 10 per cent, the excess is included in the income statement over the estimated average remaining service period for the employees covered by the scheme. Net pension costs for the period are presented as wage and staff costs.
The contributions to contribution-based pension plans are recognised as costs as they occur.
Interest-bearing loans are recorded in the income statement as the proceeds that are received, net of any transaction costs. Loans are subsequently accounted for at amortised cost using the effective interest rate method, where the difference between net proceeds and redemption value is recognised in the income statement over the term of the loan.
In accordance with IAS 39 (Financial Instruments: Recognition and Measurement), financial instruments are classified in the following categories: fair value through profit or loss, available for sale, amortised cost and loans and receivables. The initial measurement of financial instruments is at fair value on the settlement date, normally at the transaction price.
- Financial assets and liabilities held for the purpose of profiting from short-term price fluctuations (held for trading purposes) or accounted for according to the fair value option are classified at fair value through profit or loss.
- All other financial assets with the exception of loans and receivables issued by the company are classified as available for sale.
- All other financial liabilities are classified as other liabilities and accounted for at amortised cost.
Gains or losses attributed to changes in fair value of financial instruments classified as available for sale are recognised as other comprehensive income until the disposal of the investment. The cumulative gain or loss on the financial instrument previously recognised in other comprehensive income will be reversed, and the gain or loss will be recognised in the income statement.
Changes in the fair value of financial instruments classified at fair value through profit or loss (held for trading purposes or fair value option) are recognised in the income statement and presented as financial income/expenses.
Financial instruments are included in the balance sheet when the Group becomes a party to the instrument’s contractual terms. Financial instruments are eliminated from the balance sheet when the contractual rights or obligations have been fulfilled, cancelled, or transferred, or they have expired. Financial instruments are classified as long-term when they are expected to be realised more than 12 months after the balance sheet date. Other financial instruments are classified as short-term.
DERIVATIVES AND HEDGING
The Group utilises derivatives such as future interest rate swaps and currency swaps to hedge its interest rate and currency risks. Such derivatives are recognised initially at fair value on the date when the contract is entered into and then measured at fair value on a current basis. Derivatives are accounted for as assets when the fair value is positive and as liabilities when the fair value is negative, provided that Statnett has no right or intention to settle the contracts net. Gains and losses resulting from changes in the fair value of derivatives that do not meet the conditions for hedge accounting are recorded in the income statement.
Derivatives that are embedded in other financial instruments or non-financial contracts are treated as separate derivatives when their risk and properties are not closely related to the contracts, and the contracts are not recorded at fair value with the change in value carried through profit or loss.
When entering into a hedging contract, the Group will formally identify and document the hedging contract that the Group will use hedge accounting for, as well as the risk that is hedged and the strategy for the hedge. Documentation includes identification of the hedging instrument, or the item or transaction that is hedged, the type of risk that is hedged, and how the Group will assess the effectiveness of the hedging instrument to counteract the exposure to changes in the hedged item’s fair value or cash flows that can be attributed to the hedged risk. Such hedges are expected to be highly effective in counteracting changes in fair value or cash flows, and are assessed on a current basis to determine whether they actually have been highly effective throughout the entire accounting period they are intended to cover.
Hedges that fulfil the strict conditions for hedge accounting are accounted for as follows:
Fair value hedging
Fair value hedging is hedging of the Group’s exposure to changes in the fair value of a recorded asset or liability or an unrecognised liability, or an identified portion of such, that can be attributed to a specific risk and can affect earnings. For fair value hedging the carrying value of the hedged item is adjusted for gains or losses from the risk that is hedged. Derivatives are re-measured at fair value, and gains or losses from both are recorded in the income statement.
For fair value hedging of items that are accounted for at amortised cost, the change in value is amortised in the income statement over the remaining period until maturity.
The Group discontinues fair value hedging if the hedging instrument expires or is sold, or is terminated or exercised, and the hedging no longer fulfils the conditions for hedge accounting or the Group cancels the hedging.
The Group uses fair value hedging primarily to hedge the interest rate risk for fixed interest rate loans and the currency risk for interest-bearing liabilities. Fair value hedging is also performed for specific acquisitions in foreign currencies for investment projects. Unrealised hedging gains/losses (currency futures) reduce/increase the cost price of the investments upon realisation.
Cash flow hedging
Cash flow hedging is hedging of the exposure to the variations in cash flow that is attributable to a particular risk associated with a recognised asset or liability, or a highly probable future transaction that could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognised as other comprehensive income, while the ineffective portion is recognised as financial income or cost.
Amounts that are initially recognised as other comprehensive income are reclassified and recognised in the income statement as financial income or cost when the hedged transaction affects the profit or loss.
If the expected future transaction is no longer expected to take place, amounts recognised earlier as other comprehensive income will be recognised in the income statement as financial income or cost. If the hedging instrument expires, or is sold, terminated or used, without being replaced or continued, or when the hedging is cancelled, the amount recognised previously as other comprehensive income is retained until the future transaction is executed. If it is not expected that the related transaction will be executed, the amount will be recognised in the income statement as financial income or cost.
The Group uses cash flow hedging primarily to hedge the interest rate risk in respect of loans with floating interest rates.
FINANCIAL RISK MANAGEMENT
Financial risk management is performed by the central finance department in accordance with guidelines approved by the Board of Directors. The Board of Directors lays down principles for general financial risk management in addition to guidelines that cover specific financial risks.
The consolidated financial statements are presented in Norwegian Kroner (NOK), which is also Statnett SF’s functional currency. All Group companies use NOK as their functional currency.
As all the companies in the Group have the same functional currency, no translation differences arise upon consolidation of the group companies.
Transactions in foreign currency are translated at the rate in effect on the transaction date. Monetary items in foreign currencies are translated into NOK at the exchange rate in effect on the balance sheet date. Non-monetary items that are measured at historical cost expressed in foreign currency are translated into NOK using the exchange rate in effect on the transaction date. Non-monetary items that are measured at fair value expressed in foreign currency are translated at the exchange rate in effect on the balance sheet date. Changes in exchange rates are recorded on a current basis in the income statement during the reporting period.
Long-term interest-bearing debt in foreign currency is related to interest rate and currency swaps and treated as borrowings in NOK.
Provisions for liabilities are recognised in the income statement when the Group has an existing liability (legal or assumed) as a result of an event that has taken place and it can be demonstrated as probable (more likely than not) that a financial settlement will be made as a result of the liability, and the amount can be reliably measured. Provisions are reviewed on each balance sheet date and the level reflects the best estimate of the liability. If there is a substantial time effect, the liability will be accounted for at the present value of future liabilities.
Government grants are not recorded in the accounts until it is reasonably certain that the Group will meet the conditions stipulated for receipt of the grants and that the grants will be received. Grants are recorded as a deduction in the expenses that they are meant to cover. Grants that are received for investment projects are recorded in the balance sheet as a reduction of the cost price.
EVENTS AFTER THE BALANCE SHEET DATE
New information on the company’s positions on the balance sheet date is incorporated into the annual financial statements. Events after the balance sheet date that do not affect the company’s position on the balance sheet date, but will affect the company’s position in the future, are disclosed if they are material.
Note 2 Operating revenues
Operating revenues regulated operations
Statnett's revenues are derived mainly from activities regulated by the NVE. Statnett's actual operating revenues from the regulated operations come from fixed and variable tariff revenues in the main grid and the regional grid, as well as congestion revenues.
Each year the NVE sets an upper limit, or cap, for Statnett's permitted revenue. This item corresponds to Statnett's revenue ceiling as well as revenue ceiling supplements in the year in question.
A discrepancy arises annually between Statnett's actual operating revenues from the regulated operations (the total of the tariff and congestion revenues) and the permitted revenue determined by NVE. This discrepancy is called higher or lower revenue. Higher revenue means that Statnett has had higher actual operating revenues than the revenue cap set by the NVE for a particular year, whereas lower revenue means that Statnett's actual operating revenues have been lower than the permitted revenue cap.
Pursuant to the Norwegian Water Resources and Energy Directorate regulations, any surplus in revenues must be returned to the customers in the form of lower prices in subsequent years. Correspondingly, lower revenues can be recouped by charging higher prices in subsequent years. The obligation to reduce future tariffs and the opportunity to collect increased tariffs do not qualify for capitalisation according to IFRS, consequently representing a latent obligation (in the event of accumulated higher revenue) and a latent receivable (in the event of accumulated lower revenue). Consequently, an annual change in these items will not be included in the income statement.
Statnett's actual operating revenues from the regulated operations equal the total of Statnett's permitted revenue set by the NVE and the higher/lower revenue the same year.
Specification of income on regional grid (R Grid) and main grid (M Grid)
Operating revenues R Grid S Grid Total 2010 R Grid M Grid Total 2011 Tariff revenues fixed element generation 28 963 991 29 964 993 Tariff revenues fixed element consumption 37 4 112 4 149 33 2 852 2 885 Other rental income 77 74 151 78 75 153 Tariff revenues energy element 3 1 154 1 157 -7 784 777 Congestion revenues - 893 893 - 768 768 Income from other owners in shared grids -59 -302 -361 -38 -222 -260 Total operating revenues regulated activities 86 6 894 6 980 95 5 221 5 316 Permitted revenue Revenue cap without grid losses 79 3 147 3 226 88 2 604 2 692 Revenue cap, grid losses 23 1 084 1 107 21 867 888 Supplement to revenue cap 12 458 470 4 712 716 Total permitted revenue / power transmission 114 4 689 4 803 113 4 183 4 296 This year's provision for interest higher/lower (-/+) -revenue -1 -8 -9 - -44 -44 This year's changed balance for higher/lower (-/+) -revenue 27 -2 213 -2 186 18 -1 082 -1 064 Balance higher/lower (-/+) revenue, incl. interest as at 1 Jan. -45 678 633 -18 -1 535 -1 553 Changed balance for higher/lower (-/+) revenue, incl. interest 27 -2 213 -2 186 18 -1 082 -1 064 Balance higher/lower (-/+) -revenue, incl. interest as at 31 Dec. -18 -1 535 -1 553 - -2 617 -2 617
Total operating revenues from regulated operations fell by NOK 1 664 million from 2010 to 2011. The reduction in operating revenues was mainly due to lower tariff revenues as a result of lower stipulated tariffs for 2011 compared with 2010.
Other operating revenues
Other operating revenues are revenues outside of the regulated activities and consist of mainly external consultancy commissions totalling NOK 37 million and rental income totalling NOK 44 million.
External assignments within the rest of the Group are carried out by Statnett Transport AS.
Statnett SF holds a separate licence to manage the regulating power settlement system in Norway.Download to Excel
This involves effectuating a financial settlement of the difference the market players have between planned electricity consumption and actually measured values.
This market is referred to as the regulating power market. Players in the regulating power market must have:
1. A trading licence from the NVE
2. A Balance Agreement between the customer and Statnett (or be part of another regulating power operator)
3. Access to power, either generation, bilaterally or at Nord Pool Spot. Most regulating power players are also players at Nord Pool Spot, in which case the member agreement is used (between Nord Pool Spot and the customer).
For 2011, the revenues for this service totalled NOK 80 million, including fee revenues of NOK 25 million. Outstanding trade accounts receivables relating to the balance settlement totalled a loss of NOK 4 million as at 31 December 2011 and are disclosed as trade accounts and other short-term receivables.
By accepting the Balance Agreement, approved members (regulating power members) undertake to furnish satisfactory security for financial settlement of power trading in the regulating power market.
The security requirement is calculated weekly under the rules in the Balance Agreement. The calculation is based on trading volume and market prices, and reflects the regulating power members' settlement risk. Statnett also assesses the security on an ongoing basis and may demand more security at any time if necessary.
The minimum security requirement for trading is NOK 200 000, which must be registered with Statnett before trading starts.
Security is posted as a guarantee on demand or as a cash deposit in a pledged bank account, or in another manner approved by Statnett in accordance with the applicable rules. The rules for posting security can be amended at one week's notice. The amount of security posted totalled NOK 1 284 million at year-end. The security posting requirement for regulating power members on the same date was NOK 339 million. All the regulating power members had posted satisfactory security under the Balance Agreement.
Note 3 System services and transmission losses
Parent company Group 2010 2011 (Amounts in NOK million) 2011 2010 -4 5 Net regulating and peak power 5 -4 201 199 Primary reserves 199 201 79 31 Tertiary reserves 31 79 110 98 Transit costs 98 110 145 173 Special adjustments 173 145 61 69 Other system services 69 61 592 575 Total system services 575 592
System services are costs relating to the exercise of Statnett's system responsibility as defined in the Regulations relating to the system responsibility in the power system (FoS).
The frequency in the power grid must be 50Hz. Statnett, as Transmission System Operator, is responsible for ensuring that this frequency remains stable. The primary regulation is automatic and activated immediately if any changes occur in the power grid frequency. This is possible by using a pre-agreed reserve capacity. The requirement to maintain a reserve capacity for regulating purposes imposes limitations on the producers as they are unable to generate and sell the full generator capacity. Primary reserves are costs Statnett incurs by buying reserve capacity from the producers.
In Norway there is an options market for regulating power. This is used to ensure that we have sufficient regulating resources in the Norwegian section of the regulating power market, also during periods of demand for increased output , such as in the winter months. In the winter, the Transmission System Operator sets up a market where they purchase a guarantee ensuring that market members submit bids for the regulating power list for the subsequent week. The guarantees can apply for both consumption and production.
Transit costs are compensations for the use of grids abroad. The power system in Europe is connected through transmission lines/cables crossing international borders.
In some cases there are restrictions in the transmission capacity (bottlenecks) which make it impossible to utilise the bids in the regulating power market in the "correct" price order. These adjustments are categorised as special adjustments and are compensated for by the associated price of the bid without this affecting the stipulation of the regulating power price. Thus, Statnett will incur a cost equal to the difference between the price of activated bids used for special adjustments and the current hourly price mainly aimed at the regulating power market multiplied by the especially adjusted volume.
Statnett buys transmission losses (volume) from external suppliers at spot price (market price) for the hour the transmission loss applies.
The main grid transmission loss result is distributed between the grid owners in accordance with their proportionate shareholding in the main grid. 7.2 per cent of the facilities are owned by other companies than Statnett SF.
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Parent company Group 2010 2011 (Amounts in NOK million) 2011 2010 2 289 2 322 Volume (GWh) 2 322 2 289 460 367 Price (NOK/MWh) 367 460 (Amounts in NOK million) 1 053 852 Transmission losses 852 1 053 5 2 Transm. losses result other 2 5 1 058 854 Total transmission losses 854 1 058
Note 4 Wage and personnel costs
Parent company Group 2010 2011 (Amounts in NOK million) 2011 2010 534 633 Wages 641 542 88 104 Employer's NICs 105 89 98 130 Pension costs (Note 5) 131 101 63 75 Other benefits 66 57 783 942 Total wage costs 943 789 -239 -283 Of which own investment projects -283 -239 544 659 Net wage costs 660 550 870 900 Number of full-time equivalents (FTEs) 913 900
Loans to employees
Employees had loans in the company totalling NOK 1 million as at 31 December 2011. The loans are interest-free and repaid by deductions from wages over a period of up to two years. The interest advantage of loans exceeding 3/5 of the basic amount under the national insurance scheme is taxed in relation to the current standard interest rate set by the authorities.Download to Excel
Note 5 Pensions and pension liabilities
The parent company and subsidiaries operate pension schemes entitling the employees to future pension benefits in the form of defined benefit schemes. The Group's pension schemes meet the requirements in the Norwegian Mandatory Occupational Pension Act.
The pension benefits are based on the number of service years and final salary at retirement age. The full retirement pension is 70 per cent of pensionable income less calculated disbursements under the Norwegian National Insurance Scheme. The pensionable income is limited upward to 12 times the basic amount under the National Insurance Scheme. The full contribution period is 30 years and the normal retirement age is 67. The pension scheme also includes disability pensions, spouse pensions and children's pensions.
Accrued pension rights are secured chiefly through pension schemes in Statnett SF's Group Pension Fund (Statnett SFs Pensjonskasse). In addition, the parent company has early retirement pension obligations that are funded through operations.
Contributions to the pension fund are made in accordance with actuarial calculations. The pension assets in the pension fund are invested primarily in securities. See the table relating to percentage distribution of pension assets in investment categories.
The Group management has separate additional agreements under which the normal retirement age is 65, but with the possibility of retirement after reaching the age of 62. The retirement pension is 66 per cent of the pensionable income. The pensionable income also includes a basis that exceeds 12 times the basic amount under the National Insurance Scheme.
For personnel employed after 1 March 2011, additional agreements will be entered into exceeding 12 times the Norwegian national insurance scheme's basic amount within the framework of the Guidelines relating to terms of employment for senior executives in state-owned enterprises and companies, stipulated on 31 March 2011. For more information, cf. Note 14 Remunerations/benefits to the Group management. Annual premium payments will be limited to 30 per cent of the salary exceeding 12 G.
The Group is a member of the private contractual early retirement scheme (AFP scheme) that came into force in 2011. The scheme entails that employees will receive a lifelong supplement to the national insurance retirement pension. The pension can be taken out from age 62, also if the employee decides to keep working. The AFP scheme is a defined-benefit multi-company scheme organised through a general office and financed through premiums stipulated as a percentage of the salaries. There is no reliable way to measure and allocate liabilities and assets under the scheme. Consequently, the scheme is treated as a defined contribution scheme, according to the accounting rules, and premium payments are recognised on a current basis, and no provisions are made in the accounts. The premium for 2012 is stipulated at 1.75 per cent of overall wage payments between 1G and 7,1G to the company's employees, estimated at NOK 8 million. There is currently no accumulation of funds under the scheme, and premiums are therefore expected to increase in the time ahead.
The old AFP scheme will be discontinued from 1 January 2011. Spekter will remain the Group's contracting party under the scheme, which now only applies to for personnel born before 1 December 1948 who applied for an exemption from the scheme on 1 December 2010 at the latest.
Pension liabilities are calculated in accordance with IAS 19 "Employee Benefits". The mortality risk table K2005, based on the best estimates for the populations in Norway, is applied.
The net pension liabilities in the balance sheet are determined after adjustment for deferred recognition in the income statement of the effect of changes in estimates and pension schemes, as well as discrepancies between the actual and expected return on pension assets that have not yet been recognised in the income statement. The net pension liabilities are reported as provisions for liabilities.
Employees who leave the enterprise before retirement age receive a paid-up policy. The paid-up policies are managed by the life insurance company Storebrand Livsforsikring AS. From the date the paid-up policy is issued, Statnett is exempt from any obligation to employees to which the paid-up policies apply. Assets and liabilities are measured at the date of issue of the paid-up policies, and are separated from pension assets and liabilities.
An independent actuary calculated the pension liabilities in January 2012 as an estimate of the situation at 31 December 2011.
When calculating the pension liabilities, the National Insurance contributions that the enterprise is required to pay on the payment of direct pensions or the payment of premiums for fund-based schemes are taken into account. The National Insurance contribution is a component of the enterprise's benefit and is recorded as part of the pension liabilities.
Parent company Group 2010 2011 Pension scheme members 2011 2010 1 292 1 328 Members of the pension fund 1 347 1 307 319 338 Of which pensioners 341 319 973 990 No. of active pension scheme members 1 006 988 Financial/actuarial assumptions, Parent Company and Group 2011 2010 Discount rate 2,60% 4,00% Expected return on pension assets 4,10% 5,40% Expected pay adjustments 3,50% 4,00% Expected pension adjustments 3,25% 3,75% Expected adjustment of basic amount (G) under national insurance scheme 3,25% 3,75% Remaining service period 16 år 15 år Percentual breakdown of pension assets into investment categories,
Parent Company and Group as at 31 December
2011 2010 Property 4% 0% Held-to-maturity bonds 32% 32% Norwegian bonds 26% 32% Foreign bonds 4% 5% Norwegian money market 13% 21% Foreign shares 15% 0% Norwegian shares 4% 0% Loans and receivables 0% 1% Bank deposits 2% 9% Total 100% 100%
Parent company Defined benefit schemes Group 2010 2011 (Amounts in NOK million) 2011 2010 107 125 Present value of this year's pension contributions 126 106 60 56 Interest cost of pension liability 57 60 -46 -51 Expected return on pension assets -51 -46 -23 - Actuarial gains/losses in income statement -1 -19 98 130 Net pension costs 131 101 14 18 Employer's contributions 18 14 112 148 Net pension costs, incl. employer's contribution 149 115
The expected pension premium for 2012 is NOK 139 million for the parent company and NOK 140 million for the Group.
Secured and unsecured pension liabilities and pension assets
Parent company Group 2010 2011 Defined-benefit schemes 2011 2010 Secured Secured (Amounts in NOK million) Secured Secured Change in gross pension liability 1 657 1 685 Gross pension liability at 1 Jan. 1 699 1 670 120 139 Present value of the year's pension contributions 140 122 -105 - Change in liability discontinuation of old AFP scheme - -105 68 64 Interest cost of pension liability 65 68 -6 447 Actuarial gains and losses 450 -6 -15 -16 Employer's contribution on premium paid -17 -16 -34 -26 Disbursed pension/paid-up policies -27 -34 1 685 2 293 Gross pension liabilities as at 31 Dec. *) 2 310 1 699 Change in gross pension assets 877 1 028 Fair value of pension assets at 1 Jan. 1 038 886 52 58 Actual return on pension assets 58 52 9 -4 Actuarial gains and losses -4 9 109 116 Premium paid 117 111 -19 -21 Pension/paid-up policies paid out -22 -20 1 028 1 177 Actual value of pension assets as at 31 Dec. 1 187 1 038 657 1 116 Net pension liabilities as at 31 Dec. 1 123 661 -313 -765 Estimate variances not rec. in income statement -771 -316 344 351 Net capitalised pension liability incl. employer's contribution at 31 Dec. 352 345 369 344 Net pension liabilities as at 1 Jan. 345 370 113 145 Pension costs recognised in income statement 147 115 -138 -138 Premium payments (excl. administrative expenses) -140 -140 344 351 Net capitalised pension liabilities incl. employer's contr. at 31 Dec. 352 345 - - Capitalised pension assets at 31 Dec. - - 344 351 Capitalised pension liabilities at 31 Dec. 352 345 1 573 2 149 *) Gross secured pension liabilities at 31 Dec. 2 166 1 587 112 144 *) Gross unsecured pension liabilities at 31 Dec. 144 112
Total liabilities, assets and estimate variances for the last five years
Parent company 2011 2010 2009 2008 2007 Gross defined-benefit pension liabilities at 31 Dec. 2 294 1 685 1 657 1 595 1 356 Fair value of pension assets at 31 Dec. 1 177 1 028 877 762 653 Net defined-benefit pension liabilities 1 117 657 780 833 703 Estimate variances not recognised in income statement -765 -313 -411 -491 -372 Book pension liabilities 352 344 369 342 331 Changes in estimate variances for the year Discount rate 530 Rate of return assets 4 Wage growth -82 Adjustments to G 22 Pension adjustments -105 Member movements 83 Total changes in estimate variances for the year 452 Group 2011 2010 2009 2008 2007 Gross defined-benefit pension liability at 31 Dec. 2 311 1 699 1 670 1 608 1 370 Fair value of pension assets at 31 Dec. 1 187 1 038 886 770 661 Net defined-benefit pension liabilities 1 124 661 784 838 709 Estimate variances not recognised in income statement -771 -316 -415 -496 -375 Book pension liability 353 345 369 342 334 Changes in estimate variances for the year Discount rate 533 Rate of return assets 4 Wage growth -82 Adjustments to G 22 Pension adjustments -106 Member movements 84 Total changes in estimate variances for the year 455
The figures below give an estimate of the potential effect of a change in certain assumptions for defined-benefit pension schemes in Norway for the Statnett.
The following estimates and estimated pension costs for 2012 are based on the facts and circumstances at 31 December 2011. Actual results may differ significantly from these estimates.
Pension liabilities and costs Current
Discount rate Annual wage growth and change in basic amount (G) Annual adjustment of pensions Change in percentage points -1% +1% -1% +1% -1% +1%
(Amounts in NOK million)
Parent company Pension cost before adjustment for interest
cost and return on pension assets (SC)
196 263 149 171 227 169 230 Defined-benefit pension liabilities -
minimum pension liability (ABO)
1 676 2 048 1 395 1 675 1 678 1 475 1 921 Defined-benefit pension liabilities -
present value of pension liability (PBO)
2 152 2 690 1 753 1 991 2 341 1 894 2 465 Group Pension cost before adjustment for interest
cost and return on pension assets (SC)
198 266 150 173 229 171 232 Defined-benefit pension liabilities -
minimum pension liability (ABO)
1 689 2 064 1 406 1 687 1 691 1 486 1 936 Defined-benefit pension liabilities -
present value of pension liability (PBO)
2 168 2 710 1 766 2 006 2 358 1 908 2 483
Risk tables for mortality and disability are based on tables in general use in Norway updated with historical data from the life companies' population. These data entail an adjustment of available tables in the form of increased life expectancy and increased disability probability. The average life expectancy for all age groups in the tables used is 80 years for men and 84 years for women. An extract from these tables is shown below. The table shows life expectancy and probability of disability and death within one year for different age groups.
Probability of disability Probability of death Life expectancy Age Men Women Men Women Men Women 20 0,13% 0,16% 0,01% 0,01% 79 84 40 0,21% 0,35% 0,07% 0,04% 80 84 60 1,48% 1,94% 0,63% 0,36% 82 85 80 - - 5,91% 3,91% 87 89
Pension disbursement flow Statnett SF
The average weighted maturity for pension liabilities, related to the main scheme in Statnett SF is estimated at 21 years based on the pension assumptions at 31 Dec. 2011. Average weighted maturity has been taken into account when choosing discount rate.
Current value of future disbursements at 31 Dec. 2011
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Note 6 Tangible fixed assets
(Amounts in NOK million) Electrotechnical equipment ICT equipment Buildings and land Other operating equipment Total Acquisition cost at 1 Jan. 2010 20 601 1 104 2 039 210 23 954 Additions, acquisition cost 846 142 164 43 1 195 Disposals, acquisition cost 12 3 12 5 32 Acquisition cost at 1 Jan 2011 21 435 1 243 2 191 248 25 117 Additions, acquisition cost 1 193 217 307 58 1 775 Disposals, acquisition cost 158 132 9 11 310 Acquisition cost at 31 Dec. 2011 22 470 1 328 2 489 295 26 582 Ordinary depreciation at 1 Jan 2010 7 048 762 380 122 8 312 Ordinary depreciation for the year 473 93 63 22 651 Disposals, ordinary depreciation 9 2 5 5 21 Ordinary depreciation at 1 Jan. 2011 7 512 853 438 139 8 942 Ordinary depreciation for the year 583 103 73 27 786 Disposals, ordinary depreciation 158 129 3 8 298 Ordinary depreciation at 31 Dec. 2011 7 937 827 508 158 9 430 Book value at 31 Dec. 2010 13 923 390 1 753 109 16 175 Book value at 31 Dec. 2011 14 533 501 1 981 137 17 152 Of which financial leasing: 31 Dec. 2010 233 60 219 - 512 31 Dec. 2011 225 99 204 - 528 Acquisition cost for tangible fixed assets fully depreciated, but still in use 857 547 47 74 1 525 Depreciation rate (straight-line) in % 2 - 7 5 - 33 0 - 2 10 - 33
(Amounts in NOK million) Electrotechnical equipment ICT equipment Buildings and land Other operating equipment Total Acquisition cost at 1 Jan. 2010 20 601 1 104 2 039 468 24 212 Additions, acquisition cost 846 142 164 47 1 199 Disposals, acquisition cost 12 3 12 7 34 Acquisition cost at 1 Jan 2011 21 435 1 243 2 191 508 25 377 Additions, acquisition cost 1 193 217 307 91 1 808 Disposals, acquisition cost 158 132 9 12 311 Acquisition cost at 31 Dec. 2011 22 470 1 328 2 489 587 26 874 Ordinary depreciation at 1 Jan 2010 7 048 762 380 152 8 342 Ordinary depreciation for the year 473 93 63 32 661 Disposals, ordinary depreciation 9 2 5 6 22 Ordinary depreciation at 1 Jan. 2011 7 512 853 438 178 8 981 Ordinary depreciation for the year 583 103 73 37 796 Disposals, ordinary depreciation 158 129 3 9 299 Ordinary depreciation at 31 Dec. 2011 7 937 827 508 206 9 478 Book value at 31 Dec. 2010 13 923 390 1 753 330 16 396 Book value at 31 Dec. 2011 14 533 501 1 981 381 17 396
Of which financial leasing:
31 Dec. 2010 233 60 219 - 512 31 Dec. 2011 225 99 204 - 528 Acquisition cost for tangible fixed assets fully depreciated, but still in use 857 547 47 74 1 525 Depreciation rate (straight-line) in % 2 - 7 5 - 33 0 - 2 10 - 33
The category electro-technical equipment mainly comprises installations in transformer and switching stations, overhead lines and earth and subsea cables.Download to Excel
Installations in transformer and switching stations have varying depreciation periods (Transformers and other main components have a depreciation period of 30-50 years. Control systems normally have a depreciation period of 15 years.)
Overhead lines have a depreciation period of 55 years. Earth /subsea cables have a 40 to 55-year depreciation period.
Financial leasing is paid for in full in advance. This means that there are no future lease obligations related to financial leasing.
Note 7 Plants under construction
Parent company Group 2010 2011 (Amounts in NOK million) 2011 2010 1 164 1 857 Acquisition cost at 1 January 1 857 1 164 1 752 2 108 Additions during the year 2 108 1 752 -1 059 -1 533 Transferred to tangible fixed assets -1 533 -1 059 - -3 Write-offs -3 - 1 857 2 429 Acquisition cost at 31 December 2 429 1 857 -11 -8 Accumulated write-downs -8 -11 2 16 Effect, hedged forward exch. contracts 16 2 1 848 2 437 Balance sheet value at 31 December 2 437 1 848
Write-downs relate to cable projects to the Continent and associated grid updates on land. Statnett has been and is involved in several such cable projects.
Changes to plans, progress, the design of facilities and uncertainty concerning some projects may cause plant under construction to be written down.
Specification of additions during the year:
Parent company Group 2010 2011 (Amounts in NOK million) 2011 2010 1 149 1 297 Materials and subcontractors 1 297 1 149 235 283 Wages, social security costs 283 235 325 459 Other operating costs 459 325 1 709 2 039 Total operating costs 2 039 1 709 43 69 Construction Interest 69 43 1 752 2 108 Total 2 108 1 752 Annual capitalisation rate used to determine the loan expense amount that can be capitalised 2011 2010 3,41% 3,23%
Overview of future contractual obligations as at 31 December 2011:
(The selection only includes future contractual obligations exceeding NOK 50 million)
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(Amounts in NOK million) Future contractual obligations Accrued costs Project Ørskog-Sogndal 1 457 222 Skagerrak 4 848 293 Ytre Oslofjord 510 280 Sima - Samnanger 170 486 Varangerbotn - Skogfoss 161 220 Renewal of Statnett's central operations system 118 120 Voltage reduction reactors 104 22 National Control Centre regulation and market system 71 43 Total 3 439 1 686 Other 751 Total plants under construction 2 437
Note 8 Financial items - profit/loss
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Parent company Group 2010 2011 (Amounts in NOK million) 2011 2010 Financial income 2 6 Income from investment in subsidiary - - 92 - Income from investment in joint ventures - 28 - 2 Income from investment in associates 5 - 32 43 Interest income 55 37 5 -2 Change in value of derivatives -2 5 21 22 Other financial income 22 35 152 71 Total financial income 80 105 Financial costs 342 374 Interest costs 374 343 -43 -69 Capitalized construction interest -69 -43 28 107 Other financial costs 51 37 327 412 Total financial costs 356 337
Note 9 Financial items - balance sheet
Financial assets and liabilities
The fair value of forward exchange contracts is determined by applying the forward exchange rate on the balance sheet date.
The fair value of currency swaps and interest rate swaps is calculated as the present value of future cash flows.
Fair value is mainly confirmed by the financial institution with which Statnett has entered into such contracts.
The fair value of financial assets and long-term liabilities accounted for at amortised cost has been calculated:
- using quoted market prices,
- using interest rate terms for liabilities with a corresponding maturity and credit risk, or
- using the present value of estimated cash flows discounted by the interest rate that applies to corresponding liabilities and assets on the balance sheet date.
In the case of financial instruments such as financial assets available for sales, trade account receivables and other short-term receivables, liquid assets, trade accounts payable and other current liabilities, it is assumed that the book value is a good estimate of fair value, due to the short-term nature of the items.
(Amounts in NOK million)
Parent company Category 2011
Fair value 2010
Fair value Assets Fixed assets Long-term receivables Loans and receivables 199 199 161 161 Subord. capital in Statnett SFs Pensjonskasse Fair value through profit/loss 75 75 75 75 Financial assets available for sale Available for sale 5 5 5 5 Derivatives Fair value through profit/loss 1 111 1 111 1 042 1 042 Total fixed asset investments 1 390 1 390 1 283 1 283 Current assets Trade accounts receivable Loans and receivables 137 137 443 443 Derivatives Fair value through profit/loss 364 364 114 114 Other short-term receivables Loans and receivables 685 685 322 322 Total trade accounts and other short-term receivables 1 186 1 186 879 879 Investment in market-based securities Fair value through profit/loss 272 272 310 310 Liquid assets Fair value through profit/loss 917 917 1 020 1 020 Liabilities Long-term interest-bearing debt Other liabilities 11 018 11 125 10 427 10 469 Derivatives Fair value through profit/loss 92 92 29 29 Total long-term interest-bearing debt 11 110 11 217 10 456 10 498 Short-term interest-bearing debt Other liabilities 2 298 2 305 1 301 1 301 Derivatives Fair value through profit/loss 4 4 1 1 Total short-term interest-bearing debt 2 302 2 309 1 302 1 302 Trade accounts payable and other short-term debt Other liabilities 1 224 1 224 1 260 1 260
(Amounts in NOK million)
Group Category 2011
Fair value 2010
Fair value Assets Fixed assets Long-term receivables Loans and receivables - - - - Subord. capital in Statnett SFs Pensjonskasse Fair value through profit/loss 75 75 75 75 Financial assets available for sale Available for sale 5 5 5 5 Derivatives Fair value through profit/loss 1 108 1 108 1 038 1 038 Total fixed asset investments 1 188 1 188 1 118 1 118 Current assets Trade accounts receivable Loans and receivables 137 137 461 461 Derivatives Fair value through profit/loss 364 364 114 114 Other short-term receivables Loans and receivables 637 637 294 294 Total trade accounts and other short-term receivables 1 138 1 138 869 869 Investment in market-based securities Fair value through profit/loss 600 600 593 593 Liquid assets Fair value through profit/loss 1 002 1 002 1 129 1 129 Liabilities Long-term interest-bearing debt Other liabilities 10 882 10 989 10 427 10 469 Derivatives Fair value through profit/loss 92 92 29 29 Total long-term interest-bearing debt 10 974 11 081 10 456 10 498 Short-term interest-bearing debt Other liabilities 2 298 2 305 1 300 1 300 Derivatives Fair value through profit/loss 4 4 1 1 Total short-term interest-bearing debt 2 302 2 309 1 301 1 301 Trade accounts and other short-term debt receivables Other liabilities 1 232 1 232 1 277 1 277
Financial instruments recognised at fair value according to the valuation method
(Amounts in NOK million)
As at 31 Dec. 2011
Morselskap Level 1 Level 2 Level 3 Total Assets Subord. capital in Statnett SFs Pensjonskasse - - 75 75 Financial assets available for sale - - 5 5 Derivatives - 1 475 - 1 475 Investment in market-based securities 272 - - 272 Liquid assets 917 - - 917 Total assets 1 189 1 475 80 2 744 Liabilities Derivatives - 96 - 96 Total liabilities - 96 - 96 Group (Amounts in NOK million) Assets Subord. capital in Statnett SFs Pensjonskasse - - 75 75 Financial assets available for sale - - 5 5 Derivatives - 1 473 - 1 473 Investment in market-based securities 600 - - 600 Liquid assets 1 002 - - 1 002 Total assets 1 602 1 473 80 3 155 Liabilities Derivatives - 96 - 96 Total liabilities - 96 - 96
Reconciliation of level 3 in fair value measurements
Parent company Group 2010 2011 2011 2010 75 75 Subord. capital in Statnett SFs Pensjonskasse 75 75 5 5 Financial assets available for sale 5 5 80 80 Total market level 3 80 80
Level 1: Fair value is used for quoted prices from active markets for identical financial instruments. No adjustments are made with regard to these prices.
Level 2: Fair value is measured using other observable input than for level 1, either direct (prices) or indirect (derived from prices).
Level 3: Fair value is measured using input not based on observable market data.
Interest-bearing assets and liabilities
Repayment profile for interest-bearing debt for the parent company
The loans are measured at amortised cost adjusted for the effect of fair value hedging
(Amounts in NOK million)
Maturity date 2012 2013 2014 2015 2016- Upon
Sum Fixed rate loans Bond loans 1 609 - 713 564 5 937 - 8 823 Total fixed rate loans 1 609 - 713 564 5 937 - 8 823 Floating rate loans Other interest-bearing debt 101 3 22 10 57 136 329 Bond loans 500 - 400 - 169 - 1 069 Loans from financial institutions 92 92 92 92 2 823 - 3 191 Total floating rate loans 693 95 514 102 3 049 136 4 589 Total short-term debt 2 302 - - - - - 2 302 Total long-term debt - 95 1 227 666 8 986 136 11 110 Total interest-bearing debt 2 302 95 1 227 666 8 986 136 13 412
* Statnett SF has an intra-group loan of NOK 136 million payable on demand.
Loans by currency as at 31 Dec. 2011
(Amounts in million)
Information about interest-bearing debt Average interest rate 1) Loans
Loans in NOK Currency NOK 3,77% 7 933 7 933 JPY 3,36% 9 000 746 CHF 3.40% 650 4 466 SEK 3,19% 200 169 EUR* ** 13 98 Total 13 412
* Amounts in EUR are linked to collateral under CSA (Credit Support Annex) agreements, which reflect higher/lower value of derivatives
** EONIA overnight - daily interest rates announced by the European Banking Federation (EBF)
1) All foreign currency loans are converted into NOK using currency and interest swap agreements.
The average interest rate for the loans includes interest swaps agreements. The interest is the average interest rate as at 31 Dec. 2011.
Fixed rate terms in the loan portfolio 2012 2013 2014 2015 2016- Total (Amounts in NOK million) 10 716 - 400 510 1786 13 412
Parent company Group Acquisition cost Book value (Amounts in NOK million) Acquisition cost Book value 64 65 Government 64 65 44 45 Municipality/municipal operations 49 50 55 55 Financial institutions, incl. banks 261 267 105 107 Private/industry 168 171 268 272 Total bonds 542 553 - - Norwegian equity funds 25 22 - - Foreign equity funds 27 25 - - Total equity funds 52 47 268 272 Total market based securities 594 600
All bonds are stated at nominal value in Norwegian Kroner (NOK)
Unrealised higher/lower value amounted to NOK 5 million and is unchanged for the period
Age distribution trade accounts
Not due 1-30 days 31-60 days 61-90 days Over 90 days Total trade acc. rcvb. Parent company 121 15 1 - 1 138 Group 121 14 1 - 1 137
Interest rate and currency swaps
Interest rate and currency swaps are agreements where the contracting parties exchange currency and/or interest rate terms for an agreed amount over a defined future period.
All interest rate and currency swaps are related to underlying loans. Any loss/gain on the swap will therefore correspond to the gain/loss on the loan.
(Amounts in NOK million)
Maturity Principal lending Principal borrowing Market value* 2010 Cash flow 2011 Market value* 2011 Change in value Intr. rate terms Statnett receives Intr. rate terms Statnett pays Free-standing** 2015 NOK 200 NOK 200 11 5 14 8 Fixed Nibor 6 months 2015 NOK 200 NOK 200 -3 -2 -8 -7 Nibor 6 months Fixed Sum 8 3 6 1 Cash flow hedging 2014 NOK 200 NOK 200 -5 -2 -7 -4 Nibor 6 months Fixed 2014 NOK 200 NOK 200 -3 -2 -6 -5 Nibor 6 months Fixed 2022 NOK 393 NOK 393 - -3 -34 -37 Nibor 6 months Fixed 2016 NOK 400 NOK 400 - 7 -12 -5 Nibor 6 months Fixed Sum -8 - -59 -51
(Amounts in NOK million)
Principal lending Principal borrowing Market value* 2010 Change in value Intr. rate terms Statnett receives Intr. rate terms
2012 CHF 250 NOK 1 245 363 -3 Fixed CHF Nibor 6 months 2014 NOK 300 NOK 300 6 6 Fixed Nibor 6 months 2014 JPY 5 000 NOK 296 111 23 Fixed JPY Nibor 6 months 2015 NOK 50 NOK 50 3 2 Fixed Nibor 6 months 2017 CHF 250 NOK 1 290 506 110 Fixed CHF Nibor 6 months 2019 JPY 4 000 NOK 201 138 28 Fixed JPY Nibor 6 months 2020 NOK 300 NOK 300 41 24 Fixed Nibor 6 months 2020 NOK 60 NOK 60 2 5 Fixed Nibor 6 months 2021 SEK 200 NOK 180 -11 - SEK Stibor 3 months Nibor 6 months 2023 NOK 600 NOK 600 72 65 Fixed Nibor 6 months 2025 NOK 600 NOK 600 80 76 Fixed Nibor 6 months 2021 CHF 150 NOK 923 138 133 Fixed CHF Nibor 6 months Total 1 449 469
* Accrued interest is not included in the market value. In the case of combined interest rate and currency swaps, the unrealised currency effect is included in the market value.
** All free-standing derivates are related to underlying loans, but hedge accounting is not used.
*** Changes in value in fair value hedges have no effect on the result.
At 31 December 2011, Statnett had no interest rate swaps with start in the future.
Interest rate options
Statnett had no interest rate options as at 31 December 2011.
Forward exchange options:
Forward exchange contracts are entered into to hedge the currency risk on transactions in currencies other than NOK.
(Amounts in NOK million) Nominal amount in currency Nominal amount in NOK
Average hedge rate
Market rate* Market value SEK 405 361 0,89 0,86 -8 EUR 27 222 8,31 7,93 -9 Total forward exchange contracts 583 -17
*The market rate is the average forward rate.
All contracts are related to capital expenditure on plants in foreign currency. Unrealised gains/losses on forward exchange contracts reduce/increase the cost price of the investments upon disposal.
Statnett had no commodity contracts at 31 December 2011.Download to Excel
Note 10 Financial risk management
The object of Statnett SF's financial policy is to ensure that the enterprise achieves the necessary financing of planned operational and investment programmes at the lowest possible cost, risk included. Statnett SF's financial policy also comprises aims and frameworks for minimising the enterprise's credit risk, interest rate risk and foreign exchange risk. Statnett SF uses financial derivatives to control the financial risk.
The enterprise has liabilities and equity as specified in the balance sheet. The loan agreements do not impose any capital requirements on the enterprise which are expected to restrict the capital structure of the enterprise. There are no explicit equity requirements other than those stipulated in applicable laws and regulations. The main objective of Statnett's capital management is to ensure that the company has a financial position which enables the enterprise to carry out all socio-economically profitable grid investments. This is in line with statements from the owner. Specific target figures for the enterprise's financial position have not been determined. If necessary, Statnett may request more equity from the owner. The need for more equity is assessed continuously on the basis of Statnett's objectives. The owner has established a long-term dividends policy of 50 per cent of the group's annual profit after tax adjusted for the changed balance for higher/lower revenues after tax up to and including the fiscal year 2015. Moreover, the capital structure is managed by raising and paying off short-term and long-term debt, as well as through changes in liquid assets. There have been no changes to capital management objectives or guidelines in 2011.
Overview over capital included in capital structure management:
Parent company Group 2010 2011 (Amounts in NOK million) 2011 2010 10 456 11 110 Long term interest-bearing liabilites 10 974 10 456 1 302 2 302 Short-term interest-bearing liabilites 2 302 1 301 1 330 1 189 Liquid assets and investment in market-based securities 1 602 1 722 10 428 12 223 Net liabilities 11 674 10 035
Statnett SF aims to be able to carry out 12 months of operations, investments and refinancing without raising any new debt. This will make Statnett less vulnerable during periods of low access to capital in the financial markets and periods with less favourable borrowing conditions.
Statnett reduces liquidity risk related to maturity of financial liabilities by having a distributed maturity structure, access to several sources of financing in Norway and abroad, as well as sufficient liquidity to cover scheduled operations, investment and financing needs without incurring any new debt within a time horizon of 12 months. Liquidity comprises existing cash and cash equivalents (bank/time deposits, certificates and bonds) and credit facility. In January 2011, Statnett entered into a new agreement for a credit facility of NOK 3.5 billion to allow for the enterprise's increase in liabilities. The former credit facility agreement was limited to NOK 2 billion. In December 2011, a new long-term loan agreement was entered into with the European Investment Bank (EIB) for a maximum borrowing of Euro 200 million. The loan can be drawn in several tranches. As of 29 March 2012, the loan from EIB remained fully undrawn and the credit facility had not been utilised. Liquidity is followed up continuously with weekly reporting.
Statnett SF has a good credit rating. Standard & Poor's and Moody's Investor Service have given Statnett SF credit ratings for long-term borrowings of A+ and A2 respectively. The high credit ratings afford Statnett SF good borrowing opportunities.
The table below shows all gross cash flows related to financial liabilities.
The cash flows have not been discounted and are based on interest rates and exchange rates at 31 Dec. 2011.
(Amounts in NOK million)
At 31 Dec. 2011 Under 1 year 1 to 5 years 5 years + Total Interest-bearing debt and interest rate payments 2 682 5 891 7 217 15 790 Other liabilities - - 66 66 Trade accounts payable and other short-term debt 1 224 - - 1 224 Derivatives 1 761 4 054 903 6 718 Total 5 667 9 945 8 186 23 798 Derivatives Under 1 år 1 til 5 år 5 år og utover Totalt Received 2 105 4 472 1 142 7 719 Disbursed -1 761 -4 054 -903 -6 718 Net derivatives 343 418 240 1 001
(Amounts in NOK million)
At 31 Dec. 2011 Under 1 year 1 to 5 years 5 years + Total Interest-bearing debt and interest rate payments 2 682 5 891 7 217 15 790 Other liabilities - - 66 66 Trade accounts payable and other short-term debt 1 232 - - 1 232 Derivatives 1 761 4 054 903 6 718 Total 5 675 9 945 8 185 23 806 Derivatives Under 1 år 1 til 5 år 5 år og utover Totalt Received 2 105 4 472 1 142 7 719 Disbursed -1 761 -4 054 -903 -6 718 Net derivatives 343 418 240 1 001
Statnett SF is exposed to credit risk through the investment of surplus liquidity with issuers of securities and through the use of various interest rate and currency derivatives. In order to limit this risk, Statnett has set credit limits based on the creditworthiness of counterparties and the maximum exposure for each counterparty. Creditworthiness is assessed at least once a year, and the counterpary risk is continuously monitored to ensure that Statnett's exposure does not exceed the set credit limits and is in compliance with internal rules.
Maximum credit exposure
Parent company Group 2010 2011 (Amounts in NOK million) 2011 2010 1 020 867 Liquid assets, excl. time deposits 952 1 128 - 50 Time deposits 50 20 310 272 Bonds and certificates 553 522 1 156 1 475 Derivatives 1 473 1 156 161 198 Long-term receivables, excl. derivatives - - 765 821 Trade accounts and other short-term receivables, excl. derivatives 774 755 3 412 3 683 Total maximum credit exposure 3 802 3 581
Foreign exchange risk
Foregin exchange risk is fluctuations in exchange rates that will result in changes in Statnett's income statement and balance sheet. To minimise foreign exchange risk, all foreign currency loans are converted to Norwegian kroner (NOK) using currency swap agreements. The liabilities undertaken by Statnett in foreign currencies in connection with investment projects are hedged using currency swaps. At 31 December 2011, the only currency exposure that had not been swapped or transferred to future payments or bank deposits in foreign currency totalled NOK 152 million for the parent company and foreign equity funds and shares totalled NOK 25 million for the Group.
Exchange rate sensitivity
Parent company Change in NOK exchange rate Group 2010 2011 (Amounts in NOK million) 2011 2010 -1 -3 +5 % -4 -2 1 3 -5 % 4 2
The table shows Statnett's sensitivity to potential changes in the exchange rate of the Norwegian Krone, if all other factors remain constant. The calculation is based on an identical change in relation to all relevant currencies. The effect on the result is due to a change in the value of monetary items that are not fully hedged. Other monetary items and all foreign currency debt are hedged, and the change in value is matched by a change in the value of the derivative.
Interest rate risk
The Statnett Group is exposed to interest rate risk through its loan portfolio, liquid assets and financial hedges. Statnett SF is also exposed to interest rate levels on which the revenue cap for the grid operations is based (the NVE interest rate).
In order to reduce the interest rate risk and minimise fluctuations in the result, the interest rate on Statnett's debt must correlate as much as possible with the NVE interest rate. The NVE interest rate is calculated on the basis of daily averages of the effective interest rate on 5-year Norwegian government bonds. To achieve the desired fixed-interest period on the enterprise's debt, interest rate swap agreements linked to the underlying debt are used.
Exchange rate sensitivity
The following table shows the sensitivity of the parent company and the Group to potential changes in interest rate levels. The calculation takes account of all interest-bearing instruments and associated interest rate derivatives. It shows the effect on the result of change in the interest rate levels at 31 December 2011.
Effect on result
Change in interest rate level Effect on result
2010 2011 (In NOK million) 2011 2010 -7 -5 +1% -11 -11 7 5 -1% 11 11
Average effective interest rate
The table below shows the average effective interest rate for the individual financial instruments for the full years 2009 and 2010.
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Parent company Group 2010 2011 2011 2010 4,16% 4,33% Bonds and certificates 4,69% 4,01% 2,22% 3,05% Deposits 3,05% 2,24% - - Shares and equities funds -8.10% 11,23% 3,11% 3,38% Loans 3,38% 3,11%
Note 11 Taxes
Parent company Group 2010 2011 (Amounts in NOK million) 2011 2010 Tax on result 566 273 Tax payable 273 566 -6 - Tax payable received as a result of government stimulus package - -6 6 - Change in deferred tax benefit as a result of government stimulus package - 6 288 80 Change in deferred tax/tax benefit 84 294 854 353 Tax charge 357 860 566 273 Tax payable for the year 273 566 - -2 Tax payable in conn. with Group contribution -2 - 566 271 Tax payable balance sheet 271 566 289 80 Deferred tax/tax benefit as a result of changes in temporary differences 84 294 27% 29% Effective tax rate 26% 28% Reconciliation of effective tax rate with Norwegian tax rate 3 133 1 206 Profit before tax 1 357 3 058 877 337 28 % tax 380 856 -17 18 Permanent differences 28 % -21 14 -6 -2 Share of loss in KS, FKV and TS -2 -10 854 353 Tax charge 357 860 Deferred tax(-)/tax assets in the balance sheet - - Other intangible assets -4 -4 -434 -515 Fixed assets -537 -452 27 42 Profit and loss account 42 26 - - Receivables 10 6 - - Technical provisions (insurance) -63 -54 96 99 Pensions 99 97 -4 - Securities and financial instruments (excl. cash flow hedges) -1 -3 2 16 Cash flow hedges 16 2 39 17 Other tax-related provisions 17 39 - -2 Tax effect of Group contribution -2 - - - Tax loss carried forward 17 9 -274 -343 Total deferred tax(-)/tax assets (net) -406 -334
Changes in temporary differences
Parent company 31 Dec. 2010 Recognised Other comprehensive income Group contribution 31 Dec. 2011 Fixed assets 1 551 289 - - 1 840 Profit and loss account -97 -52 - - -149 Receivables -1 1 - - - Pensions -344 -8 - - -352 Securities and financial instruments (excl. cash flow hedges) 14 -14 - - - Cash flow hedges -8 - -51 - -59 Other provisions -137 75 - - -62 Group contribution - - - 6 6 Total 978 291 -51 6 1 224 Group 31 Dec. 2010 Recognised Other comprehensive income Group contribution 31 Dec. 2011 Other intangible assets 14 -1 - - 13 Fixed assets 1 612 306 - - 1 918 Profit and loss account -95 -52 - - -147 Receivables -22 -15 - - -37 Technical provisions (insurance) 193 33 - - 226 Pensions -345 -7 - - -352 Securities and financial instruments (excl. cash flow hedges) 12 -9 - - 3 Cash flow hedges -8 - -51 - -59 Other provisions -138 75 - - -63 Group contribution - - - 6 6 Tax loss carried forward -32 -26 - - -58 Total 1 191 304 -51 6 1 450
On 28 June 2010, Statnett acquired 50 per cent of the shares in NorGer AS. This limited company owns only 10 per cent of NorGer KS. The deficit in NorGer AS amounted to NOK 4.9 million in the 2010 consolidation period. Due to uncertainty relating to future application of loss carried forward, deferred tax assets for this company were not recognised in the balance sheet in 2010.Download to Excel
On 26 August 2011, Statnett SF acquired the remaining 50 per cent of the shares in NorGer AS. The loss carried forward will form the basis for deferred tax assets in 2011. Concurrently, a group contribution of NOK 6.4 million was provided, which offsets tax loss carried forward in the limited company.
Note 12 Investments in subsidiaries, joint ventures and associates
Statnett SF had the following investments at 31 December 2011:
(Amounts in NOK thousand)
Company Type Year of acquisition Registered office Ownership interest Voting rights Book value Subsidiaries Statnett Transport AS Subsidiary 1996 Oslo 100% 100% 79 221 Statnett Forsikring AS Subsidiary 1998 Oslo 100% 100% 30 200 Nordlink AS Subsidiary 2010 Oslo 100% 100% 500 Noreveien 26 AS Subsidiary 2010 Oslo 100% 100% 100 NorGer AS Subsidiary 2010/2011 Oslo 100% 100% 20 657 NorGer KS Subsidiary 2010/2011 Oslo 100% 100% 136 617 Total subsidiaries 267 295 Associates Nord Pool Spot AS Associate 2002/2008 Bærum 30% 30% 36 320 Total book value subsidiaries, joint ventures and associates 303 615
Group value of companies recorded according to the equity method
2011 Group value at 1 Jan. Result for the year Dividend Group value at 31 Dec. Nord Pool Spot AS, 30% 51 080 4 987 -2 400 53 667 Total associates 51 080 4 987 -2 400 53 667 2010 Nord Pool ASA, 50% 1) 159 301 - - - Nord Pool Spot AS, 30% 46 660 4 420 - 51 080 Total joint ventures and associates 205 961 4 420 - 51 080
1) The company was sold on 30 April 2010.
Changes in investments in subsidiaries, joint ventures and associates
There have been no activities in Nord.Link AS in 2011.
In August 2011, Statnett purchased another 50 per cent of NorGer AS and 45 per cent of NorGer KS. NorGer AS has a direct interest of 10 per cent in NorGer KS. Directly and indirectly, Statnett SF owns 100 per cent of NorGer KS. Both NorGer AS and NorGer KS are accounted for as subsidiaries.
There have been no activities in Noreveien 26 AS in 2011.
Transaksjoner i 2010
Statnett established the company Nord.Link AS on 10 February 2010. There have been no activities in the company in 2010.
Statnett sold its 50 per cent ownership interest in Nord Pool ASA to NASDAQ OMX in April 2010. The Group's gain from the transaction is included in financial income.
In June 2010, Statnett purchased 50 per cent of the shares in NorGer AS and 45 per cent of NorGer KS. NorGer AS had a direct interest of 10 per cent in NorGer KS. Directly and indirectly, Statnett SF owned 50 per cent of NorGer KS. Both NorGer AS and NorGer KS are accounted for as subsidiaries.
In July 2010, Statnett Transport AS sold 100 per cent of its shares in Statnett Transport Bemanning AS to Møkster AS.
Statnett purchased all shares in Noreveien 26 AS in the autumn of 2010. The Company holds the right of ownership to the property Noreveien 26.Download to Excel
Note 13 Related parties
At 31 December 2011, Statnett SF was wholly-owned by the Norwegian State through the Ministry of Petroleum and Energy (MPE). Statnett has the following relations with the MPE both as owner and regulatory authority:
The Norwegian parliament (Storting) is the legislative authority that passes legislation based on bills put forward by the government. Regulations are adopted by the King in Council. The MPE administers its areas of responsibilities and delegates the administration of the greater part of the Energy Act to the Norwegian Water Resources and Energy Directorate (NVE). Pursuant to the Norwegian Public Administration Act, any administrative decision made by the NVE can be appealed to the MPE as the superior authority.
Other related parties
Parent company Subsidiary Associate Statnett SF Statnett Transport AS Nord Pool Spot As Statnett Forsikring AS Noreveien 26 AS Nord.Link AS NorGer KS NorGer AS
The subsidiaries are wholly-owned by Statnett SF, though so that Statnett owns 100 per cent of the shares in NorGer AS and 90 per cent of the shares in NorGer KS. In addition, NorGer AS owns 10 per cent of the shares in NorGer KS. This entails that Statnett SF, including indirect ownership, also holds 100 per cent of the shares in NorGer KS.
Statnett SF has an ownership interest in Nord Pool Spot AS of 30 per cent.
Related party transactions
Statnett SF and its subsidiaries have entered into loan agreements and agreements relating to the purchase and sale of services. All transactions are made as part of the normal commercial operations and at current market prices. The most important transactions were as follows:
Statnett Forsikring AS is licensed to provide cover for risks associated with companies in the Statnett Group, and operates both as a direct personal insurance company and a non-life insurance company. The company is also a reinsurer of Statnett's risks covered by other insurers.
Statnett Transport AS operates a heavy transport business on land and sea and is a supplier of transport services to Statnett SF, including preparedness services relating to cables. These services are valued by an external party.
Statnett SF purchases transmission losses on Nord Pool Spot on a daily basis. The purchase and sale of energy on Nord Pool Spot is settled at the power exchange's market prices.
In 2011, Statnett SF purchased all relevant activities relating to the interconnector to Germany from NorGer KS. The transaction was valued by an external party.
Statnett SF carries out certain administrative tasks for its subsidiaries. Agreements have been entered into which specify these services, and they are priced at market terms.
In 2011, Statnett SF received dividends totalling NOK 8.1 million from subsidiaries and associates.
Joint venture parties
TenneT TSO BV and Statnett SF have constructed a subsea cable to transport energy between Norway and the Netherlands, known as the NorNed cable. Each party owns its physical half of the cable, with Statnett owning the northern part and TenneT the southern part. The NorNed cable became operational in May 2008. Costs and revenues from the operation of the NorNed cable are shared equally between TenneT and Statnett.
From 14 January 2011, the MPE has given its approval for Statnett and TenneT to engage in explicit auction as a trading solution for power exchange between Norway and the Netherlands. Until 31 December 2010, Statnett and TenneT held an approval to engage in explicit auction as a temporary trading solution.
The Danish system operator Energinett.dk and Statnett have been granted a licence to install a cable for transmission of energy between Norway and Denmark, called Skagerrak 4. Each party will own its physical half of the cable, with Statnett owning the northern part and Energinett.dk the southern part. The cable is scheduled to be put into operation in 2014.
Statnett SF inter-company accounts
Trade accounts Long-term lending Long-term brw. Trade accounts payable (Amounts in NOK million) 2011 2010 2011 2010 2011 2010 2011 2010 Subsidiaries 5 7 198 161 137 - 29 7
Interest rates on long-term borrowing and lending have been agreed at six months' NIBOR with a mark-up in the interval 1% - 1.75%.
Statnett SF's intra-group trading
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Sales revenues Operating costs Financial revenues Dividends received (Amounts in NOK million) 2011 2010 2011 2010 2011 2010 2011 2010 Subsidiaries 4 4 238 99 7 6 8 2
Note 14 Remuneration/benefits to the Group management
The Board's declaration on determination of salary and other remuneration for the Group management.
The statement concerning remuneration to the President and CEO and the Group management has been prepared in accordance with the provisions in the Public Limited Liability Companies Act, the Norwegian Accounting Act, the Norwegian Code of Practice for Corporate Governance and the Guidelines relating to state-owned companies, which include an approach to executive pay, as well as the Norwegian Ministry of Petroleum and Energy's compliance expectations stipulated in its letter of 29 November 2011.
The Board of Directors has established a remuneration committee, consisting of two owner-appointed board members and one employee representative. Unless otherwise agreed, the HR Director will act as committee secretary. The remuneration committee is an advisory and preparatory body for the Board of Directors, and will put forward proposals for salary adjustments in accordance with the guidelines specified below.
In addition to a fixed salary the Group management is entitled to a company car and pension benefits. There is no bonus scheme for senior employees. The retirement age for the President and CEO and the Group senior management is 65. The President and CEO is entitled to 12 months' severance pay in the event of dismissal from the company. No other senior employees have agreements for wages after the termination of employment.
The Group's guiding principle for 2010 and 2011 has been to keep remuneration and other benefits for the Group management at a competitive level to ensure that the Group attracts and retains high-quality senior executives. The fixed salary does not need to be at the top of the pay scale. However, it must be competitive for our industry and compared to other companies recruiting in the same market as Statnett SF. At the same time, the salary must reflect individual experience, area of responsibility and achieved results.
The Board of Directors approves the annual salary adjustment for the company's general manager, and adopts a framework which the general manager uses to adjust the salaries for the rest of the Group management team.
The same guidelines specified above will be used as a basis for the next fiscal year.
Group management remuneration/benefits in NOK) Board remuneration Other remuneration Total remuneration Board remuneration Board of Directors 2011 2011 2011 2010 Kolbjørn Almlid (from June 2011) Chair 174 000 - 174 000 - Bjarne Aamodt (until June 2011) Chair 177 800 3 800 181 600 336 000 Thor Håkstad Vice Chair 239 000 - 239 000 231 000 Kirsten Indgjerd Værdal Board member 185 000 - 185 000 178 000 Grethe Høiland Board member 225 000 - 225 000 218 000 Heidi Ekrem Board member 190 000 - 190 000 183 000 Per Hjorth Board member 245 000 - 245 000 238 000 Kirsten Faugstad (until June 2010) Board member *) - - - 89 000 Steinar Jøråndstad Board member *) 225 000 - 225 000 218 000 Bjørn Solberg (until June 2010) Board member *) - - - 91 500 Per Erland Opgård Board member *) 190 000 - 190 000 89 000 Kjerstin Bakke (from June 2010) Board member *) 185 000 - 185 000 89 000 Total remuneration 2 035 800 3 800 2 039 600 1 960 500
All figures are exclusive of employer's NICs.
Deputy board members and observers do not receive remuneration
Some board members receive compensation for their participation in the Audit Committee or Remuneration Committee and the Board of Directors.
*) In the case of employee representatives, only board members' fees are stated
Group management remuneration/benefits in NOK) Salary Other remuneration Pension cost Total re-muneration Group management President and CEO Auke Lont 2 275 892 181 083 2 229 640 4 686 615 Executive Vice Presidents Gunnar G. Løvås Strategy and Public Affairs 1 440 860 137 788 679 236 2 257 884 Håkon Borgen Projects Division 1 555 835 102 949 694 968 2 353 752 Øivind Kristian Rue Grid Operations Division 1 687 016 130 323 1 228 155 3 045 494 Bente Hagem Commercial Development 1 471 466 140 515 1 053 644 2 665 625 Knut Hundhammer (from 23 May) Corporate Staff CFO 1 108 515 91 764 531 636 1 731 915 Marie Jore Ritterberg until 23 May) Finance 594 033 64 440 397 515 1 055 989 Peer Olav Østli ICT Division 1 403 809 140 021 726 481 2 270 311 Kirsten Berg (until 23 May) Corporate Staff 533 313 49 775 251 590 834 678 Total remuneration 12 070 739 1 038 658 7 792 865 20 902 263
All figures are exclusive of employer's NICs.
There was a change in Statnett's Group Management as of 23 May 2011 due to reorganisation of the company.
After the reorganisation the Group Management will consit of Executive VPs for Strategy and Public Affairs, Projects Division, Grid Operations Division, Commercial Development, ICT and Corporate Staff.
At the same time a management group for Group development was discontinued which in addition to the Group Management included
the Executive VPs of Corporate Staff, Finance and ICT.
Remuneration/benefits to the Group management/board 2010 (in NOK) Salary Other remuneration Pension cost Total re-muneration Group management President and CEO Auke Lont 2 150 200 155 379 2 132 009 4 437 588 Executive Vice Presidents Gunnar G. Løvås Strategy and Public Affairs 1 370 404 137 689 658 254 2 166 347 Håkon Borgen Projects Division 1 432 915 123 672 622 580 2 179 167 Øivind Kristian Rue Grid Operations Division 1 604 261 125 248 1 071 522 2 801 031 Bente Hagem Commercial Development 1 403 137 139 670 1 124 189 2 666 996 Gun Bente Johansen (left on 1 Sept. 2010) Corporate Staff 940 947 92 975 862 469 1 896 391 Marie Jore Ritterberg Finance 1 372 812 171 024 981 454 2 525 290 Peer Olav Østli ICT 1 336 836 139 715 795 611 2 272 162 Kirsten Berg Corporate Staff 1 078 513 109 495 603 817 1 791 825 Total remuneration 12 690 025 1 194 867 8 851 905 22 736 797
All figures are exclusive of employer's NICs.
Terms and conditions in connection with senior executives
Title/name Remuneration/retirement age/early retirement pension/retirement pension President and CEO:
From the age of 65, the full annual retirement pension is 66 per cent of the pension base, i.e. of the fixed, normal annual salary at retirement. The pension base is adjusted annually by the same percentage increase as in the basic amount under the National Insurance Scheme. From the age of 67, the annual retirement pension of 66 per cent will be co-ordinated with the retirement pension disbursed from Statnett SF's Group Pension Fund and the Norwegian National Insurance Scheme.
Upon death, any surviving spouse and children under the age of 21 will receive a pension.
Should the President become disabled before the age of 65, he or she will receive a disability pension. The full disability pension equals the retirement pension awarded at the age of 65. The disability pension disbursement will be reduced according to disability.
Executive vice presidents:
Øivind Kristian Rue
The retirement age is 65, but with the right to retire with an early retirement pension at any time after the age of 62. In the event of retirement between 62 and 65 an annual payment of 66 per cent of the pension base will be disbursed. The pension base is the fixed, normal annual salary at retirement. The pension base is adjusted annually by the same percentage increase as in the basic amount under the National Insurance Scheme. In the event that income is received from others and this, together with the early retirement pension disbursed by Statnett, exceeds the final salary, the early retirement pension will be reduced by 50 per cent of the amount that exceeds the final salary.
From the age of 65, the full annual retirement pension is 66 per cent of the pension base, i.e. of the fixed, normal annual salary at retirement. The pension base is adjusted annually by the same percentage increase as in the basic amount under the National Insurance Scheme. From the age of 67, the annual retirement pension of 66 per cent will be co-ordinated with the retirement pension disbursed from Statnett SF's Group Pension Fund and the Norwegian National Insurance Scheme
Upon death, any surviving spouse and children under the age of 21 will receive a pension.
The above persons' entitlements to pension benefits over and above paid-up policies from Statnett SF's Group Pension Fund from the age of 62 will lapse if they are no longer employed by Statnett SF on their 62nd birthday.
Should any of the above persons become disabled before reaching the age of 65, he or she will receive a disability pension. The full disability pension equals the retirement pension awarded at the age of 65. The disability pension disbursement will be reduced according to disability.
Executive vice presidents:
Gunnar G Løvås
Peer Olav Østli
Gun Bente Johansen
(until 1 Sept 2011)
(until 23 May 2011)
(until 23 May 2011)
The retirement age is 65, with the right to retire with an early retirement pension at any time after 62. The full contribution period is 30 years. In the event of retirement between ages 62 and 65, an annual payment shall be disbursed of 66 per cent of the pension base, less one percentage point for each year between 62 and 65. The pension base is the fixed, normal annual salary at retirement. The pension base is adjusted annually by the same percentage increase as in the basic amount under the National Insurance Scheme. Pension disbursement may be reduced if the member receives any pay, pension or remuneration from other companies in the Statnett Group.
From the age of 65, the full annual retirement pension is 66 per cent of the pension base. The pension base is the fixed, normal annual salary at retirement. The pension base is adjusted annually by the same percentage increase as in the basic amount under the National Insurance Scheme. From the age of 67, the annual retirement pension is covered through the National Insurance Scheme and Statnett's group pension scheme, plus 66 per cent of the part of the pension base that exceeds 12 times the basic amount, provided that there is a full contribution period (30 years).
Upon death, any children under the age of 21 will receive a children's pension.
If the member leaves the company before retirement age, a pension rights certificate will be issued, which will secure retirement pension benefits from age 65. The pension rights certificate will be adjusted by 75 per cent of the increase in the basic amount for each year until retirement.
Should any of the above persons become disabled before reaching the age of 65, he or she will receive a disability pension. The full disability pension equals the retirement pension awarded at the age of 67, based on the pension base at the time the disability occurred. The disability pension will be reduced according to disability.
Executive vice president:
The retirement age for executive positions is 65. A pension agreement has been entered into in addition to the ordinary membership in the enterprise's group pension scheme. The pension is secured through the accrued savings balance, including interest, disbursed to Hundhammer as taxable income. Statnett holds the rights to the guarantee account up to the moment of disbursement. The guarantee account will be disbursed to Statnett SF at retirement at the latest. The guarantee account including interest is used to finance the benefits which will be disbursed to Hundhammer at retirement. The pension base is the permanent ordinary salary. Statnett will - each year until retirement, or resignation - pay up to 30 per cent of the difference between the ordinary salary and 12 times the Norwegian national insurance scheme's basic amount into the pension saving scheme. For 2011, payments of NOK 240 000 were made. For subsequent years, this amount will be adjusted with a corresponding salary percentage increase, with a minimum increase corresponding to the increase in G. Upon death the surviving spouse or spouse equivalent will receive an amount corresponding to the remaining savings balance including interest from Statnett SF. This amount will be taxable for the spouse/spouse equivalent.
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The normal notice period for resignation is three months, whereas for dismissals the notice period is six months after an employment period of two years.
No loans have been guaranteed or granted to members of the Group management or the Board of Directors.
Note 15 Events after the balance sheet date
In connection with the power system incident on 19 September 2011 in Nordre Helgeland and Salten, the Norwegian Water Resources and Energy Directorate has notified Statett in their letter of 29 February 2012 that they are considering whether Statnett is guilty of three breaches of the Regulations relating to system operation.Download to Excel
We are not aware of any other circumstances occurring after the balance sheet date that may be of significance for the evaluation of the financial statements.
Note 16 Secured debt, guarantees
The parent company may not pledge the enterprise's assets, apart from providing security to financial institutions in connection with day-to-day banking transactions, and providing the customary security as part of the day-to-day operations.Download to Excel
Note 17 Disputes
From time to time, Statnett is involved in disputes with landowners, customers and others with regard to the interpretation of signed contracts, statutory obligations, discretionary assessments and disagreement related to ordinary operations and building of power lines and cable connections. Disputes of this nature are regarded as part of regular operations.Download to Excel
Note 18 Other operating costs
Parent company Group 2010 2011 (Amounts in NOK million) 2011 2010 38 36 Lease rental payable 38 39 200 245 Contracted personnel/consultants 307 268 51 53 Insurance 57 19 325 359 Materials and subcontractors 255 332 130 130 Property tax 130 130 64 66 IT costs 66 64 232 179 Miscellaneous 129 250 1 040 1 068 Total other operating costs 982 1102
Operating lease agreements (maturity less than one year from balance sheet date)
Parent company Group 2010 2011 (Amounts in NOK million) 2011 2010 17 19 Buildings 22 18 15 11 Contracted communication 11 15 6 6 Miscellaneous 6 6 38 36 Total lease rental payable 39 39
Operating lease agreements falling due later than one year from the balance sheet date
The Group has entered into several minor lease agreements for buildings, communication and other operating equipment in our long and narrow country relating to ordinary onsite operations and implementation of our projects. The leases vary from a few months to 15 years. Leases are paid and carried to expense in accordance with the terms of each contract. The Group's material future lease obligations include buildings and communication. These will increase from the current level by approx. NOK 40 million from 2013.
Parent company Group 2010 2011 (Amounts in NOK million) 2011 2010 963 680 Auditing of annual accounts 898 1 125 211 344 Other attestation services 373 213 220 246 Tax-related assistance 273 220 142 190 Other assistance 215 142 1 536 1 460 Total fees (excl. VAT) 1 759 1 700
Auditor's fees are exclusive of VAT.Download to Excel
Note 19 Comparative figures for the Statnett Group
All amounts in the income statement, balance sheet, cash flow and supplementary information are given showing two years comparative figures.
Below, comparative figures for selected amounts have been cited for five years.
From the statement of comprehensive income
Statnett Group 2011 2010 2009 2008 2007 Permitted revenue 4 296 4 803 3 722 3 355 3 243 Higher/lower revenue for the period 1 020 2 177 -1 059 721 20 Other operating revenue 181 267 199 180 152 Total operating revenue 5 497 7 247 2 862 4 256 3 415 Operating costs 3 869 3 968 3 265 3 062 2 390 Operating profit/loss 1 628 3 279 -403 1 194 1 025 Income from joint ventures and associates 5 11 24 962 58 Net financial items -276 -232 -289 -414 -203 Profit/loss before tax 1 357 3 058 -668 1 742 880 Profit/loss for the year 1 000 2 198 -480 1 517 651
From the statement of comprehensive income, not including higher/lower revenue
Statnett Group 2011 2010 2009 2008 2007 Permitted revenue 4 296 4 803 3 722 3 355 3 243 Other operating revenue 181 267 199 180 152 Total operating revenue 4 477 5 070 3 921 3 535 3 395 Operating costs 3 869 3 968 3 265 3 062 2 390 Operating profit/loss excl. higher/lower revenue 608 1 102 656 473 1 005 Income from joint ventures and associates 5 11 24 962 58 Net financial items -276 -232 -289 -414 -203 Profit/loss before tax excl. higher/lower revenue 337 881 391 1 021 860
Illustration showing the effect of higher/lower revenue on the Group's profit/loss
From the balance sheet
Statnett Group 2011 2010 2009 2008 2007 Intangible assets 66 66 - - - Fixed assets 21 075 19 413 17 858 19 349 14 945 Current assets 2 740 2 591 1 484 1 570 1 494 Total assets 23 881 22 070 19 342 20 919 16 439 Equity 8 277 7 628 5 618 6 585 5 562 Interest-bearing liabilities 13 276 11 757 12 340 12 340 9 309 Other liability items 2 328 2 685 1 384 1 994 1 568 Total equity and liabilities 23 881 22 070 19 342 20 919 16 439
From cash flow
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Statnett Group 2011 2010 2009 2008 2007 Net cash flow from operating activities 1 523 3 804 -466 1 529 1 795 Net cash flow from investing activities -2 370 -1 740 -140 -2 670 -2 958 Net cash flow from financing activities 720 -1 277 388 1 221 1 454 Net cash flow for the period -127 787 -218 80 291 Liquid assets 1 002 1 129 342 556 476 Dividend for the year to owner 315 132 499 318 152
Note 20 New accounting standards
New accounting standards
Below follows a list of new/revised/additional standards and interpretations that had been announced as at 31 December 2011, but that had not come into effect for the fiscal year 1 January - 31 December 2011. Only matters assumed to be relevant for Statnett, have been included. However, none of the above amendments imply substantial changes in the Group's accounting principles or notes. For amendments that are considered to have an impact on the Group's application of accounting principles or notes to the accounts, cf. Note 1.
The Group management has established that all the compulsory and relevant interpretations and standards adopted by the EU will be implemented in the consolidated financial statements from the date they become effective, unless decided otherwise.
Amendments to IFRS 7 Financial Instruments - information
The amendment concerns a note requirement related to the transfer of financial assets which the company continues to be involved in, and aims to provide the users with a more accurate picture of the exposure of the company transferring the financial assets. The amendments will be effective for fiscal years starting on 1 July 2011 or later. The Group adopted the amended standard as of 1 January 2012.
Amendment to IFRS 7 Financial instruments - information
The amendments entail that the enterprise has a duty to provide several quantitative details relating to set-off of financial assets and financial liabilities. The information requirements apply to all recognised financial instruments set off pursuant to IAS 32. The amendments will be effective for fiscal years starting on 1 January 2013 or later. However, the amendments have still not been approved by the EU. Earlier application is permitted, provided that the EU approves the standard. The Group expects to implement the amended standard as of 1 January 2013.
IFRS 9 - Financial Instruments
IFRS 9 will replace IAS 39. The project is divided into several phases. The International Accounting Standards Board (IASB) has completed the initial phase relating to classification and measuring rules. According to IFRS 9, financial assets that contain ordinary loan terms are to be carried at amortised cost, unless it is decided to carry them at fair value, while other financial assets shall be carried at fair value. The classification and measurements rules relating to financial liabilities in IAS 39 will be continued, with the exception of financial liabilities designated at fair value with changes in value recognised through profit or loss (fair value option), where changes in value associated with own credit risk are separated and recognised as other revenues and costs. IFRS 9 will be effective for fiscal years starting on 1 January 2015 or later. However, it has still not been approved by the EU. Earlier application is permitted, provided that the EU approves the standard. The Group expects to implement IFRS 9 as of 1 January 2015.
IFRS 10 Consolidated Financial Statements
IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses consolidated financial statements, and SIC-12 Consolidation - Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities. The definition of control differs somewhat from IAS 27. Whether companies should be consolidated according to IFRS 10 is determined by whether there is control. Control exists when the investor has power over the investee; is exposed to or entitled to variable returns from the investee; and the ability to exercise power to govern activities of the investee that significantly affect the investee's return. IFRS 10 will be effective for fiscal years starting on 1 January 2013 or later. However, the standard has still not been approved by the EU. Earlier application is permitted, provided that the EU approves the standard. The Group expects to implement IFRS 10 as of 1 January 2013.
IFRS 11 Joint Arrangements
This standard replaces IAS 31 Interests in Joint Ventures, as well as SIC-13 Jointly Controlled Entities - Non-monetary Contributions by Venturers". IFRS 11 applies to joint arrangements and provides guidelines for reporting of two different types of joint arrangements - joint operations and joint ventures. IFRS 11 stipulates that joint ventures should be accounted for using the equity method. For joint operations the parties must recognise their share of assets and liabilities in which they have a common interest. Assets and liabilities which one party holds alone must be included in their entirety. The profit or loss from joint operations must be recognised with the parties corresponding to their share of operations. IFRS 11 will be effective for fiscal years starting on 1 January 2013 or later. However, it has still not been approved by the EU. Earlier application is permitted, provided that the EU approves the standard. The Group expects to implement IFRS 11 as of 1 January 2013.
IFRS 12 Disclosure of Interests in Other Entities
IFRS 12 applies to entities that have an interest in subsidiaries, joint arrangements, associates or unconsolidated structured entities. IFRS 12 replaces the disclosure requirements that used to be found in IAS 27 Consolidated and Separate Financial Statements, IAS 28 Investments in Associates and Joint Ventures and IAS 31 Interests in Joint Ventures. In addition, several new disclosure requirements have been introduced. IFRS 12 will be effective for fiscal years starting on 1 January 2013 or later. However, it has still not been approved by the EU. Earlier application is permitted, provided that the EU approves the standard. The Group expects to implement IFRS 12 as of 1 January 2013.
IFRS 13 Fair Value Measurement
The standard defines principles and guidelines for measuring the fair value of assets and liabilities which other standards require or permit to be measured at fair value. IFRS 13 will be effective for fiscal years starting on 1 January 2013 or later. However, it has still not been approved by the EU. Earlier application is permitted, provided that the EU approves the standard. The Group expects to implement IFRS 13 as of 1 January 2013.
Amendments to IAS 1 Presentation of Financial Statements
The amendment to IAS 1 was based on a requirement to group revenues and costs in the statement of revenues and costs based on their potential to be reclassified to profit or loss, or not. The amendments will be effective for fiscal years starting on 1 July 2012 or later. However, the amendments have still not been approved by the EU. Earlier application is permitted, provided that the EU approves the amendments. The Group expects to implement the amended standard as of 1 January 2013.
Amendments to IAS 12 Income Taxes
The amendment to IAS 12 entails that deferred tax on investment properties measured at fair value under IAS 40 Investment Property should generally be determined on the presumption that the asset will be recovered through its sale (and not through its use). Furthermore, the amendment involves incorporation of SIC 21 - Income Taxes - Recovery of Revalued Non Depreciable Assets which stipulates that deferred tax on non-depreciable assets measured according to the value regulation model in IAS 16 Property, Plant and Equipment always must be determined on the basis of a presumption that the asset will be recovered through its sale (and not through its use). The amendments in IAS 12 will be effective for fiscal years starting on 1 January 2012 or later. However, the amendments have still not been approved by the EU. Earlier application is permitted, provided that the EU approves the amendments. The Group expects to implement the amended standard as of 1 January 2012.
Amendments to IAS 27 (Revised) Separate Financial Statements
Following the introduction of IFRS 10 and IFRS 12, amendments were made to IAS 27 coordinating the standard with the new accounting standards. IFRS 10 Consolidated Financial Statements replaces the sections in IAS 27 relating to consolidated accounts. IAS 27 now only applies to company accounts, and will therefore not be relevant for the consolidated accounts after the amended IAS 27 becomes effective. The amendments will be effective for fiscal years starting on 1 January 2013 or later. However, the amendments have still not been approved by the EU. Earlier application is permitted, provided that the EU approves the amendments. The Group expects to implement the amended standard as of 1 January 2013.
Changes to IAS 28 (Revised) / Investment in Associates and Joint Ventures
The scope of IAS 28 has been expanded to include investments in joint ventures. The standard describes principles for accounting of investments in affiliated companies and joint ventures, and specifies how the equity method should be applied. The amendments will be effective for fiscal years starting on 1 January 2013 or later. However, the amendments have still not been approved by the EU. Earlier application is permitted, provided that the EU approves the amendments. The Group expects to implement the amended standard as of 1 January 2013.
Amendments to IAS 32 Financial Instruments - Presentation
IAS 32 has been amended to clarify the phrase "currently has a legal enforceable right to set-off" and to clarify the application of IAS 32's set-off criteria for settlement systems. The amendments will be effective for fiscal years starting on 1 January 2014 or later. However, the amendments have still not been approved by the EU. Earlier application is permitted, provided that the EU approves the amendments and that the amendments in IFRS 7 requiring disclosure of set-off of financial instruments are met. The Group expects to implement the amended standard as of 1 January 2014.Download to Excel