Under the equity method of accounting, interests
in joint ventures are initially recognised at cost and
adjusted thereafter to recognise the Group’s share of
the post-acquisition profits or losses and movements
in other comprehensive income. When the Group’s
share of losses in a joint venture equals or exceeds
its interests in the joint ventures, the Group does
not recognise further losses, unless it has incurred
obligations or made payments on behalf of the joint
ventures.
Unrealised gains on transactions between the Group
and its joint venture are eliminated to the extent of
the Group’s interest in the joint ventures. Unrealised
losses are also eliminated unless the transaction
provides evidence of an impairment of the asset
transferred. Accounting policies of the joint ventures
have been changed where necessary to ensure
consistency with the policies adopted by the Group.
REVENUE RECOGNITION PRINCIPLES
TVO operates on a cost-price principle. Revenue
is recognised based on the consideration received
when electricity is delivered or services are rendered.
Revenue is presented net of indirect sales taxes.
Revenue is recognised as follows:
Sales of electricity and other revenue
Revenue on sales of electricity is divided into variable
and fixed charge. Revenue on sales of electricity
concerning variable charge is recognised based on
delivery. The recognised income for shareholders is
based on the quantities delivered. The variable charge
is invoiced and recognised in turnover monthly. These
variable costs are paid retrospectively on the 24th of
the next month. The fixed costs, or liabilities based on
customer contracts, are invoiced one month in advance
and recognised as advance payments received. The
fixed charge is entered as income in the right month.
According to TVO’s Articles of Association, the fixed
costs must be paid monthly in advance, and no later
than the 24th day of the preceding month.
The revenue from services is recognised on an
accrual basis in the accounting period when the
services are rendered to the customer and when the
control of the service transfers to a customer.
SEGMENT REPORTING
The Board of Directors is the chief operating decision
maker in TVO, and is in charge of the allocation of
resources to the operating segments and for the
assessment of their results. The Board also decides
on the corporate strategy, significant investments,
the organisational structure, as well as financing and
insurance policies. The operating plan and the budget
are also approved by the Board of Directors which
also monitors their implementation and delivers the
elements required to secure the operation of systems
and procedures that are critical to nuclear safety and
safety culture.
TVO owns and operates three nuclear power plant
units (OL1, OL2, and OL3). The electricity production
of the Olkiluoto 3 EPR plant unit (OL3) started on
March 2022. The test production phase for Olkiluoto
3 was completed and regular electricity production
started on April 2023. TVO decided to submit on
April 2023 to the OL3 plant supplier the Provisional
Takeover Certificate. In addition TVO confirmed that
the commercial operation of the plant started on
May 2023.
TVO’s shares are divided into A and B series. Share
-
holders with series A shares are entitled to the elec-
tricity produced at the OL1 and OL2 nuclear power
plant units. Shareholders with series B shares are
entitled to the electricity produced at the OL3 nuclear
power plant unit. Pursuant to the Articles of Asso
-
ciation, the purpose of all of the TVO Group’s busi-
ness operations is to construct and acquire power
plants and power transmission equipment, and to
generate, transfer and transmit electricity primarily
to the shareholders of the Company on the terms
and conditions set out in the Articles of Association.
Based on the series of shares, TVO identifies two
operating segments; “OL1/OL2 (series A shares)”
and “OL3 (series B shares)” which are reported on to
the Board of Directors on a regular basis. Operating
segments “OL1/OL2 (series A shares)” and “OL3
(series B shares)” are aggregated into one operating
segment “Nuclear power” based on the aggregation
criteria presented in the standard (IFRS 8:12).
The operating segments have similar economic char
-
acteristics as they share the same cost structure and
TVO as a whole operates according to the cost-price
principle (Mankala principle). The shareholders are
charged incurred costs in the price of electricity, and
thus in principle the profit/loss for the period under
review is zero, unless specific circumstances dictate
otherwise. The shareholders pay variable costs based
on the volumes of energy supplied, and fixed costs in
proportion to their ownership, irrespective of whether
or not they have used their share of the power
output. Due to the operating principle, key figures
based on the financial result are not presented.
Furthermore, the operating segments are similar
in terms of all of the following characteristics: the
nature of the products and services, the nature of the
production processes, the type or class of customer
for the products and services, the methods used
to distribute the products or provide the services,
and the nature of the regulatory environment. Both
operating segments use nuclear power to generate
electricity in Olkiluoto in the Municipality of Eura
-
joki. Through TVO’s direct owners, the electricity
produced by TVO is provided to the Finnish industry
as well as energy companies.
The customers of the operating segments consist of
the shareholders of the Company. The shareholders
of both share series are essentially the same. The
ownership proportions of the shareholders are
essentially the same for both share series and
electricity is sold to the shareholders in propor
-
tion to their ownership of each share series. The
charging principle of electricity is the same to all
the shareholders of the share series. The regulatory
environment of the operating segments is consistent.
The premise of the Nuclear Energy Act (990/1987)
is that the use of nuclear energy shall be in line with
the overall good of the society as well as safe and it
shall not cause any harm to people, the environment,
or property. The licensee has several obligations in
respect of the use of nuclear energy; for example,
the licensee is responsible for the safety of the use
of nuclear energy and for the waste generated by
the operations as well as for all the costs of nuclear
waste management. The operating segments also
share the same financing and personnel. Electricity
production is the one business area of TVO and from
the point of view of the shareholders, nuclear energy
is considered as a whole.
Based on the criteria presented above, the operating
segments are aggregated into one operating segment
and the Group has one reportable segment: “Nuclear
power”. This segment also covers TVO Nuclear
Services Oy (TVONS), a subsidiary of the Group,
which engages in operations related to nuclear power.
REPORT OF THE BOARD OF DIRECTORS AND FINANCIAL STATEMENTS 2023
39
REPORT OF THE BOARD OF DIRECTORS KEY FIGURES GROUP FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS FINANCIAL INFORMATION