NORD POOL ASA ANNUAL REPORT 2008 - Nasdaq · The NASDAQ OmX Group, inc announced the completion of...

NORD POOL ASAANNUAL REPORT2008

CONteNtS

introductionhighlights 2008 ....................................................................................................... 1the new offer ................................................................................................................ 2Organisation and ownership ............................................................. 3 the world’s leading power exchangekey figures ............................................................................................................................ 4CeO’s report ....................................................................................................................... 6Products and services ................................................................................... 10 export of power marketseuropean expansion ......................................................................................... 14the future carbon market ...................................................................... 18 Business reportsFinancial market ......................................................................................................... 20Clearing ...................................................................................................................................... 21Consulting ............................................................................................................................ 22 a reliable and secure market Corporate governance ................................................................................... 23 annual accountsDirectors’ report 2008 .................................................................................. 25Profit and loss account ................................................................................ 31Balance sheet ................................................................................................................ 32Cash flow analysis ................................................................................................ 34accounting principles ..................................................................................... 35Notes to the accounts ................................................................................... 37auditor’s report .......................................................................................................... 47

NORD POOL ASA / ANNUAL REPORT 2008 +

1

11 JANUARy LAUNchED GERmAN DERivATivE cONTRAcTSNord Pool ASA, Europe’s leading international commodity exchange for power and carbon, launched derivative contracts for the international power markets.

27 FEbRUARy SALE OF EEX ShARESNord Pool ASA entered into an agreement with Eurex to sell the 17.39 per cent stake held by the company in the Leipzig-based European Energy Exchange AG (EEX) for EUR 46 million, or EUR 6.60 per share.

17 OcTObER LAUNchED NPN 365™ POwER PRicE iNDEXNord Pool ASA launched a forward price index for Nordic power under the name NPN 365™. This represents the price of power for a period lasting 365 days, based on Nord Pool ASA’s derivative contracts.

21 OcTObER NASDAQ OmX cOmPLETED AcQUiSiTiON OF NORD POOL’S ASSETS The NASDAQ OmX Group, inc announced the completion of its acquisition of Nord Pool’s clearing, international derivatives and consultancy business areas.

hiGhLiGhTS 2008

27 NOvEmbER NASDAQ OmX cOmmODiTiES AND NORD POOL SPOT wERE chOSEN TO DELivER mARkET AND cLEARiNG SERvicES FOR ThE Uk whOLESALE POwER mARkET NASDAQ OmX commodities and Nord Pool Spot were chosen by the Futures & Options Association in the Uk to establish a spot and cash-settled derivative power market with a full range of clearing services.

2 JULyiNTRODUcED A Gcm mODELNord Pool clearing ASA launched a general clearing member (Gcm) model, increasing flexibility and accessibility for members and liquidity in Nord Pool’s financial markets. The new member category will be the counterparty to the clearinghouse for both proprietary and client trading.

28 AUGUST GRANTED LicENcE FOR US TRADiNGNord Pool ASA was granted permission by the US commodity Futures Trading commission (cFTc) to allow US companies to trade and clear Nordic and international power derivatives and carbon products. The licence gives Nord Pool the opportunity to set up cLick Trade XTTm (PowercLick) terminals in the USA.

2

+ NORD POOL ASA / ANNUAL REPORT 2008

Combined offering • Nord Pool ASA and NASDAQ OMX Commodities offer their

members access to trading and clearing of Nordic, Dutch and German power derivatives as well as carbon products

To whom? • Basic customers such as power utilities, industry, manufacturing

and oil companies• Financial customers such as banks, brokers, hedge funds and

other financial institutions

When? • Seeking alternative investment possibilities• Hedging power contracts• Selling/buying carbon products• Seeking to reduce capital employed, counterparty risk and

administration

What advantages do Nord Pool ASA and NASDAQ OMX Commodities offer compared with others? • Plan to offer a single membership with access to trading and

clearing in multiple asset classes• Current NASDAQ OMX offering includes commodities, equities,

index and fixed income

Offer access to the most liquid market for Nordic power derivatives• 55.5 per cent of cleared Nordic power volumes are traded on

Nord Pool ASA• Almost all Nordic power volumes are cleared through Nord Pool

Clearing ASA • Offer access to the world’s most transparent and mature power

market in the world• The European Union has characterised Nord Pool as Europe’s

best-functioning power market• Offer expertise and knowledge acquired from being at the fore-

front of the power market for 15 years

How do Nord Pool ASA and NASDAQ OMX Commodities improve the customer’s business? • More efficient transactions for customers through a single entry

point – an existing membership will give a member access to new asset classes and commodity instruments

• Through the clearing service, members can reduce capital employed, counterparty risk and administration

Business area responsibilities NASDAQ OMX Commodities • Ownership of international power derivatives and carbon

products• Clearing of all Nord Pool’s and NASDAQ OMX Commodities’

exchange traded products • Clearing of standardised OTC-traded products• Consultancy services in the power sector globally• Market data services for the power and carbon markets

Nord Pool ASA• Exchange trading of Nordic power derivatives• Exchange trading of international power derivatives (German

and Dutch) and carbon products (EUAs and CERs) on behalf of NASDAQ OMX Commodities AS

• Holds the exchange licence and runs the exchange operation• Market surveillance

In 2009, the combined commodity offering will comprise• Trading and clearing of power derivatives in four European

power markets – Nordic, German, Dutch and British (launch of UK power market in 2009)

• Trading carbon products – European Union emission allowances (EUAs) and global certified emission reductions (CERs)

ThE NEw OFFER FROm NORD POOL ASA AND NASDAQ OmX cOmmODiTiESin October 2008, NASDAQ OmX acquired Nord Pool’s international power derivatives, the carbon products, the clearing business and the consultancy services provided for commodity markets globally.

3


NASDAQ OMX COMMODITIES AS

NORD POOL CONSULTING AS

SVENSKA KRAFTNÄT

STATNETT

50% 30%

50% 30%

FINGRID

ENERGINET.DK

NORD POOL ASAThe exchange for Nordic

power derivatives, and for international

power derivatives and carbon products on

behalf of NASDAQ OMX Commodities

NORD POOL SPOT ASThe spot market for Nordic day-ahead power (Elspot)

and continuous trading (Elbas)

NORD POOL CLEARING ASA

The clearing house for Nordic and international power derivatives and carbon products – exchange-

and OTC-traded

Ownership of international power derivatives and carbon products

Financial Supervisory Authority of Norway

Ministry of Petroleum and Energy, Norway

Norwegian Water Resourcesand Energy Directorate

20%

20%

ORGANiSATiON AND OwNERShiP

4

For more than 15 years Nord Pool has created the world’s most successful power exchange. it ranks today as the biggest in volume terms, the most liquid, and the one with the largest number of members.


ThE wORLD’S LEADiNG POwER DERivATivE EXchANGE

Key figures Nord Pool Spot AS (the underlying physical market for Nord Pool’s financial market) Turnover Elspot 2008 2007 change %

Volume (TWh) 297.6 290.6 2Value (EUR million) 14 872.1 9 608.4 55Market share in Nordic region (%) 70.1 68.9 2

Turnover Elbas 2008 2007 change %

volume (TWh) 1.8 1.6 13

Key figures Nord Pool ASA and Nord Pool Clearing ASA (part of Nord Pool Clearing ASA Commodities) Turnover power trading (including international contracts) 2008 2007 change %

Volume (TWh) 1 436.6 1 059.9 36Value (EUR million) 74 841 43 202. 73Number of transactions 154 814 108 631 43

Turnover power trading and clearing of OTc trades 2008 2007 change %

Volume (TWh) 2 576.6 2 369.2 9Value (EUR million) 119 398 81 645 46Number of transactions 210 383 159 337 32

Turnover carbon trading (EUA/cER) 2008 2007 change %

Volume (1 000 tonnes) 31 863 32 363 ( 2)Value (EUR million) 666.4 539.2 23Number of transactions 3 176 3 322 (5)

Turnover carbon trading and clearing of OTc trades (EUA/cER) 2008 2007 change %

Volume (1 000 tonnes) 121 731 95 118 28Value (EUR million) 2 460.5 1 614.2 52Number of transactions 6 685 6 599 1

ThE wORLD’S LEADiNG POwER DERivATivE EXchANGE

5

80%

15%

5%

Exchange trading (TWh)

NPEEXPWX

119.3 vALUE cLEARED cONTRAcTS (EUR)

bN


6

cEO’S REPORT

As the new chief executive of the exchange, responsible for operating the financial market and for market surveillance, I want to ensure that the development of the Nordic power market continues . Nord Pool ranks today as the largest, most liquid and most transparent power exchange. However, improvements will always be possible in order to offer market participants better products and to enhance liquidity even further. Collaboration with NASDAQ OMX Commodities will be one of several factors contributing to this.

Continuing as beforeIt is important to emphasise that Nord Pool will still be listing all the products, including those offered by NASDAQ OMX Commodities . All trading will still be conducted over the Nord Pool platform. Responsibility for all trading activity and market surveillance is unaf-fected by the NASDAQ OMX acquisition and remains at Nord Pool. Where product development for each market is concerned, respon-sibility rests with the company owing the product. In other words, product development and market-related work for Nordic power remains with Nord Pool, while NASDAQ OMX Commodities will handle carbon and international products. However, product development will be pursued in close collaboration be tween the companies to provide the best offerings to members.

Increase distributionNord Pool faces a number of tasks in 2009. While its goals coin-cide to a great extent with those of NASDAQ OMX Commodities, the company needs to take account of special considerations in the Nordic region.

On the distribution side, Nord Pool wants to expand opportunities for small participants.Through the new general clearing member (GCM) model, the new membership category known as non-clearing member (NCM) will have a GCM as its counterparty in the transactions. Hopefully, this will help to increase the number of exchange members and liquidity even further. It will accordingly be important to secure Nordic banks as GCMs, and for NAS-DAQ OMX Commodities to obtain a corresponding arrangement internationally.

Product developmentThe collaboration with NASDAQ OMX Commodities in the Nordic market will focus on developing netting opportunities for clearing

between different geographical markets and between different products – such as power and carbon. Nord Pool will also look at products which exploit price differentials between various markets, such as the German-Nordic power spread.

International marketing of opportunities in the Nordic power market will also be strengthened. With the CFTC licence, which allows terminals to be established in the USA, and the collaboration with NASDAQ OMX Commodities, Nord Pool is experiencing increased interest among American players in becoming members of the world’s most liquid power market. Dedicated sales resources have accordingly been allocated to this work.

The exchange is playing an important role in establishing the UK power market. Trading in financial contracts will take place on the Nord Pool exchange, using its exchange licence. The UK market corresponds to that in the Nordic region and will provide a further investment opportunity for financial participants. This will help to enhance the liquidity of Nord Pool’s existing products.

Better systemsBoth the exchange and the clearing business are due to implement upgraded information technology systems in April. Substantial work has been devoted in-house to developing these solutions. Members have been notified of preparations for the upgrade through a number of market announcements. Although the technology boost will provide members with better tools for trading and clearing, its primary benefit is to improve Nord Pool’s internal IT systems. That will allow the company to devote more time to customer care and to product development in the future.

Some work remains to be done in-house on integrating former Nord Pool entities with NASDAQ OMX Commodities. Since NASDAQ OMX supplies both trading and clearing applications, this work will clearly also have consequences for all members. However, Nord Pool’s goal is that this integration work will be pursued with the minimum impact on customers. A future common IT platform will primarily yield benefits through improved access to development resources and technology. This is intended to make a broad range of products available on the exchange.

Nord Pool ASA experienced yet another year with record volumes and results in 2008. The figures clearly show that the Nordic power market remains the foundation of the business. Nord Pool’s NASDAQ OmX commodities partner will concentrate primarily on expanding internationally. That means the most important job at Nord Pool after the acquisition is to ensure that the Nordic power market is developed through new products and increased distribution, and to maintain the focus on market surveillance.

FOcUS ON ThE NORDic REGiON


7

1 437 TRADED ON ThE EXchANGE (iNcL iNTERNATiONAL cONTRAcTS)

Twh

Nord Pool ASA and NASDAQ OmX commodities offer trading and clearing services for the financial market. The financial trading is almost 6.5 times the Nordic consumption – corresponding to almost 2 600 Twh in 2008.

Nord Pool ASA and NASDAQ OmX commodities plan to offer a single membership with access to trading and clearing in multiple asset classes. This will give more efficient transactions for customers through a single entry point – an existing membership will give a member access to new asset classes and commodity instruments.

by 2009, it will be possible to trade Nordic, German, Dutch and Uk power on the world’s leading and most liquid power exchange.

The world’s most liquid power market

Four different power markets

NORD POOL ASA+ NASDAQ OmX cOmmODiTiES

= ThE wORLD’S LEADiNG POwER EXchANGE

10


Trade in four different power markets

• By 2009, members will be able to trade Nordic, German, Dutch and British power on the world’s lead-ing and most liquid power exchange.

• The contracts have a trading horizon of up to six years, covering daily, weekly, monthly, quarterly and annual periods.

Manage worldwide carbon exposure

• Europe’s first and one of the largest marketplaces for European Union emission allowances (EUAs) and global certified emission reductions (CERs).

• The CER specifications meet EU requirements.

• Planned netting between EUAs and CERs from mid-2009.

CleArINg ServICeS

Manage risk

Nord Pool Clearing ASA enters into financial power, EUA and CER contracts as a contractual counterparty. The clearing house assumes liability for covering the future settlement of these contracts, which reduces the risk for both buyer and seller. Nord Pool Clearing provides clearing of all contracts traded on the exchange and standard ised contracts traded in the OTC market.

CONSulTINg ServICeS

State-of-the-art power expertise

Nord Pool Consulting AS provides specialist services in the fields of consulting, operation and development of international deregulated power markets. The company has been involved in power market projects in more than 65 countries worldwide.

PRODUcTS AND SERvicES Nord Pool ASA and NASDAQ OmX commodities aim to increase the exchange’s attractiveness by offering new trading opportunities in the largest European power markets.

THe fINANCIAl MArKeT

Products in the financial market are a combined offering from Nord Pool ASA and NASDAQ OMX Commodities.

• Flexible membership structure• Efficient electronic trading systems and voice execution• Clearing of exchange- and OTC-traded contracts• Reduced margin call by offering netting between markets• Trayport – an additional trading solution• Regulated exchange and clearing house• One margin call for all markets• Straight-through processing to settlement• Guaranteed financial settlement• Efficient handling of both exchange- and OTC-traded contracts

through an electronic clearing application• Easy-access web interface for clearing reports, including traded

contracts, net positions, margin calls and settlements

elspot – physical electricity marketDay-ahead auction market – supply and demand cross (system price). Mechanism for handling of constraints.Handled by Nord Pool Spot AS.

elbas – adjustment marketContinuous hourly intraday market. Handled by Nord Pool Spot AS.

Balancing marketRealtime market operated by the transmission system operators (TSOs).

financial power marketCash-settled futures, forwards, options and contracts for differences (CfDs). Contracts with a trading horizon of up to six years, which cover daily, weekly, monthly, quarterly and annual periods. Handled by Nord Pool ASA.

Clearing Exchange and OTC contracts.Handled by Nord Pool Clearing ASA.

Carbon marketEUA spot contract (day-ahead), EUA and CER physical forward contracts for 2009-2012 and CER/EUA swaps and strips for 2009-2012.Handled by Nord Pool ASA.

11


The combined Nord Pool ASA and NASDAQ OmX commodities product offering will deliver improved services to the market participants.

0 1 HOUR 24 HOURS 1 YEAR 6 YEARS

TIME

Reference price

FINANCIAL POWER MARKET

CARBON MARKET

CASH-SETTLEDPHYSICAL DELIVERY

PHYSICALELECTRICITY MARKET

ADJUSTMENT MARKET

BALANCING MARKET

Nord Pool has been involved in developing power market projects in more than 65 countries. NASDAQ OmX is the world’s leading technology provider to the exchange industry. combining their expertise, experience and technology, they are now creating the Uk power exchange – N2EX.

Anthony belchambers, chief executive of the FOA: “The depth of experience and resources and the quality of the offering by NASDAQ OmX commodities and Nord Pool Spot was sufficient to secure the unanimous support of the market participant project board.”

The Uk power market is almost as large as the Nordic – around 400 Twh in annual consumption. N2EX will provide trading, clearing and notification services for spot, auction, prompt and derivative markets.

Developing power markets

Large potential

15 yEARS OF POwER mARkET EXPERiENcE+ A wORLD LEADER iN EXchANGE TEchNOLOGy

= EXPORT OF POwER mARkETS

14


The two partners will provide a complete solution for the UK, including trading, clearing and notification services for spot, auction, prompt and derivatives markets. It will comprise a cash-settled power derivative market, allowing complete netting across contracts with the same delivery periods, as well as netting offset against existing Nordic and international power contracts.

Anthony Belchambers, chief executive of the FOA, comments: “There’s a paramount need to enhance liquidity in the UK power market, and this was what prompted us to issue a request for proposals (RFP) from market infrastructure providers. While the responses were all comprehensive and of a very high standard, the practitioner project market advisory board felt that the one from NASDAQ OMX Commodities and Nord Pool Spot was best placed to deliver on the requirements set out in the RFP. Work has now started in earnest with a view to achieving a ‘go-live’ date in the autumn.”

Erik Sæther, chief executive of Nord Pool Spot, which is respon-sible for the physical market, says: “We’re very grateful for the opportunity the FOA has given us. Establishing a successful UK market has our highest priority in 2009. We have proven that, to build a well functioning derivatives market, you first need to create a liquid and robust physical spot market.”

Geir Reigstad, head of NASDAQ OMX Commodities and responsi-

ble for the derivatives market with trading and clearing facilities of all physical and financial contracts, adds: “The UK will be one of the biggest developed economies to use ideas behind the Nordic model, which has been developed and tested for over 15 years in Norway, Sweden, Denmark and Finland. This model has also been used in Germany and France. The market regime and the legal framework forged in the Nordic region will be tailored to the unique nature of the British market to provide confidence and transparency.”

Mr Sæther adds: “The success of the model can best be seen from its results, with almost 70 per cent of physical power consumption in the Nordic area traded over Nord Pool Spot. In the traded financial markets, Nord Pool has a market share of 56 per cent of the total cleared market.”

Both he and Mr Reigstad believe that the success of the Nordic market rests on the principles set out below. These can hope-fully be tailored to the UK power market in order to fulfil the needs of participants for a well-functioning physical and financial market.

Implicit auction Power price and capacity are managed in a single operation. When the calculation system has determined the equilibrium for all sales and purchase bids over the next 24 hours, it has also handled

Nord Pool has contributed to developing power market projects in more than 65 countries since 1993. NASDAQ OmX is the world leader in exchange technology. As proof that this forms a powerful combination, britain’s Futures and Options Association (FOA) chose a consor-tium of Nord Pool Spot and NASDAQ OmX commodities to establish the new Uk power market.

EUROPEAN EXPANSiON

Anthony BelchambersCEO of the FOA

Geir ReigstadHead of NASDAQ OMX Commodities

Erik SætherCEO of Nord Pool Spot

15


The success of the model is best seen in the results, with almost 70 per cent of physical power consumption in the Nordic area traded over Nord Pool Spot. in the traded financial markets , Nord Pool has a 56 per cent share of the total cleared market.

possible constraints in the transmission network. This secures highly efficient price and capacity calculations.

rules and regulationThe trading and clearing rulebooks for the physical and financial markets have been developed over 15 years of operation on the basis of directions from the regulatory agencies and in close cooperation with market participants. The legal framework enjoys broad acceptance and is incorporated into business practices.

Information regimeWithin the legal framework, requirements for market participants are based on a fundamental principle: all of them must provide information to the power exchange immediately if they believe that it could influence price calculations. The power exchange

then publishes this information through its channels to all market participants simultaneously.

Market experience and technologyNord Pool has been involved with power markets since 1993, and is considered to be the world leader in developing such exchanges . NASDAQ OMX supplies exchange technology to more than 60 financial marketplaces in over 50 countries.

flexible membership structureParticipants can choose between different types of membership in accordance with their needs, ranging from a direct membership both on the exchange and towards the clearing house to being clients of a general clearing member.

TGE

ENDEX

BELPEX

OTE

BORZEN

GMESOUTH POOL

OPCOMEXAA

OMEL

OMIP

NORD POOL/NASDAQ OMX Commodities

EEX

PWX

APX

APXUK

NORD POOL mARkETSNORD POOL FUTURE mARkET

more auctioning – frequent reporting – reducing trading barriers – better information to the market.

Nord Pool ASA and NASDAQ OmX commodities know how to create liquid marketplaces. with state- of-the-art knowledge about well functioning markets , the companies see several improvement areas for global carbon trading.

carbon markets must offer the same trans-parency, fairness and efficiency as other commodity markets. This is dependant on political willingness and must not be hindered by lack of decision-making.

improving carbon markets

Seeing beyond kyoto

cARbON PiONEERS + ThE wORLD’S LARGEST

EXchANGE cOmPANy

= PAviNG ThE wAy FOR GLObAL cARbON TRADiNG

18


As world-class leaders in derivatives and commodity trading, Nord Pool ASA and NASDAQ OmX commodities are paving the way to a well-functioning carbon market.

ThE FUTURE cARbON mARkET

According to industry analyst Celent, the carbon exchange market grew from less than EUR 9 billion in 2005 to about EUR 25 billion in 2007. Annual transaction value could reach EUR 40 billion by 2012 and climb to over EUR 100 billion by 2020, depen-ding on the future regulatory framework. Most of the activity in this market is centred in Europe, with the financial sector and electricity generators as the main participants.

Setting an emission cap and allowing firms to trade their emission allowances, an approach called “cap-and-trade”, provides the best of both worlds: flexibility to find the emission reductions with the lowest cost, while providing incentives to reach emission targets. Cap-and-trade has been shown to provide at least 40 per cent cost savings compared with a command-and-control regime. However, some challenges need to be addressed.

Areas where improvements need to be made to the carbon market include:• reducing market fragmentation• avoiding over-allocation of quotas• eliminating different product standards• reducing barriers to entry• improving market surveillance• improving information and transparency• creating certainty over inclusion of new sectors and the future

of the Kyoto framework

Based on global carbon market irregularities and their experience of the EU’s emission trading scheme (ETS) market, Nord Pool and NASDAQ OMX Commodities have identified some principles criti-cal to the functioning of local and global carbon trading.

• A large number of buyers and sellers provide reliable pricing and create liquidity

• Standardised (homogeneous) products link markets globally• Low barriers to trading: reducing credit risk and transaction costs

allow more players to enter the market• Perfect information on prices, volumes, emissions and regula-

tions reduces risk• A predictable long-term framework provides a stable investment

environment • Wide sector coverage• Borrowing and banking of allowances• Increased use of auctioning and linking to carbon credits and

other trading schemes

Improving carbon marketsThe two companies believe that market functionality will be improved in the future by auctioning quotas and frequent emission reporting. This will increase liquidity, reducing trading barriers and providing better information to the market. On the basis of their experience in developing the Nordic power market, the world’s most successful, they would suggest a

NORD POOL CARBON TURNOVER (CONTRACTS/MONTH)

FM CERFM EUAOTC CER

20 000

15 000

10 000

5 000

0

OTC EUA

2006 2007 2008

19


The greatest value NASDAQ OmX commodities can deliver is a transparent marketplace and risk management solutions which provide a level playing field for all members.

Geir ReigstadHead of NASDAQ OMX Commodities

centralisation of policy-making, registration and regulatory institutions.

Linking between schemes will also enlarge the pool of liquidity, allowing participants to identify emission reductions with the lowest cost, providing a better price mechanism, and encoura-ging other world regions to join a globally-linked system. Critical factors will be global exchanges, standardised global guidelines for market design, centralised registries, information dissemination and an open-ended stable framework.

Work should be directed towards a vision of a global downstream allowance and credit system in which all activity equally reflects the price of emissions, and in which equal treatment removes the need for special protection.

Seeing beyond KyotoThe greatest value NASDAQ OMX Commodities can deliver is a transparent marketplace and risk management solutions which provide a level playing field for all members. As this market evolves , however, the company believes a carbon trading platform must offer the transparency, fairness and efficiency which are the hallmarks of fair and orderly markets. Ultimately, the future of the carbon market lies in the hands of the politicians. With increasing political awareness relating to environment issues worldwide, however, the politics may move to supporting cap-and-trade for emissions over the next few years.

20


IntroductionParticipants demonstrated their commitment during 2008 to a transparent and efficient electronically traded Nordic power market . For the first time, more volume was traded on the financial exchange than through OTC brokers, giving the exchange 55.5 per cent of the total cleared volume of Nordic power.

The reasons for this development are believed to be efficiency, transparency and trust in market price formation, while extreme price volatility also contributed to an actively traded market.

DevelopmentThe exchange-traded volume rose from 1 060 to 1 406.5 TWh (excluding international contracts), an increase of 32.7 per cent from 2007 to 2008, with the number of transactions rising from 108 631 to 158 814, up 46 per cent.

A trend towards declining market concentration for Nordic power has been seen over the past few years. No member accounted

for more than eight per cent of the total exchange-traded volume in 2008. Similarly, the number of members accounting for 80 per cent of total turnover increased to 31 in 2008.

The exchange-traded volume in the carbon market was 32 million tonnes in 2008, unchanged from the year before. Sixteen new exchange members joined this market in 2008. A total of 101 com-panies now trade EUAs and CERs over Nord Pool.

StrategyIntegration and partnership with NASDAQ OMX represent a mile-stone in the exchange’s history, and are expected to bring greater efficiency, new products and more liquidity to the exchange. Given its ambition of being a leading global power and carbon exchange combined with state-of-the-art technology, the company has a solid basis for building the business to the benefit of its owners and members.

For the first time, more volume was traded on the financial exchange than through OTc brokers, giving the exchange 55.5 per cent of the total cleared volume of Nordic power.

integration and partnership with NASDAQ OmX represent a milestone in Nord Pool’s history, and are expected to bring greater efficiency, new products and more liquidity to the exchange.

FiNANciAL mARkET

POWER VOLUMES (EUR MILLION) 1996–2008

40 000

50 000

60 000

70 000

30 000

20 000

10 000

0

Financial market

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

bUSiNESS REPORT

21


Introduction Nord Pool Clearing ASA enters into contracts as the counterparty in order to reduce the financial counterparty risk for the parties.

The contracts for clearing consist of:• financially settled power contracts in the Nordic market• carbon contracts (EUAs and CERs)• financially settled power contracts in the German and Dutch

markets• UK market in 2009

Nord Pool Clearing had 391 counterparties/members from 22 countries at 31 December 2008.

DevelopmentSubstantial price fluctuations and high volatility in power contracts were experienced during 2008. Volatility increased throughout the year, while prices peaked in the late summer. Combined with the uncertainty in world financial markets and the tightened credit

risk, this prompted an increase in margin requirements for all contracts.

The total volume cleared by Nord Pool Clearing came to 2 577 TWh in 2008, a rise of 8.8 per cent from 2 369 TWh the year before. The volume registered for clearing from Nord Pool’s financial market came to 1 437 TWh, up by 35.6 per cent from 1 060 TWh in 2007. The total carbon volume cleared by Nord Pool Clearing in 2008 was 121.7 million tonnes, an increase of 28 per cent from 2007.

StrategyThe rationale for NASDAQ OMX’s acquisition of Nord Pool Clearing rests on financial, technological and distribution-related assessments. Obvious benefits are seen from integrating the clearing business in a larger structure and securing access to NASDAQ OMX’s distribution network and technology. At the same time, integrating Nord Pool Clearing’s expertise in commodity derivatives with NASDAQ OMX’s knowledge of share-based derivatives will form the basis for a very competitive global clearing house.

Substantial price fluctuations and high volatility in power contracts were experienced during 2008.

integrating Nord Pool clearing’s expertise in commodity derivatives with NASDAQ OmX’s knowledge of share-based derivatives will form the basis for a very competitive global clearing house.

cLEARiNG

POWER VOLUMES (EUR MILLION) 1996–2008

Clearing volume (OTC)

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

0

10 000

20 000

30 000

40 000

50 000

bUSiNESS REPORT

22


22


Introduction Nord Pool Consulting AS offers a wide range of services, from feasibility studies, infrastructure and market design for deregulation of power markets to the specification, delivery and support of day-ahead market trading systems. It also offers market simulations and capacity building.

Major projects of Nord Pool Consulting during 2008 included:• Regional market design and trading system delivery for Opcom,

the Romanian power exchange.• Trading system delivery and production setup for the Southern

African Power Pool, SAPP.• Trading system support for Powernext, the French power

exchange.• Trading system support for the Indian Energy Exchange, IEX.• Market analysis and training in the INPIC2 project for the Indian

power market, in cooperation with SWECO, for the Norwegian embassy in New Delhi.

• Regional market development for the Greater Mekong Subregion in cooperation with France’s RTE for the Asian Development Bank.

• Consultancy services for: – TEIAS, the Turkish transmission system operator – the Central and Eastern European Power Exchange (CEEPEX),

on assignment from the Austrian and Hungarian regulators – a project assigned by the World Bank for the opening of the

wholesale market of south-eastern Europe (SEE)• Training seminars were held for customers from China, India and

Lithuania, among others.

DevelopmentOperating profit was NOK 3.8 million, up from NOK 1.7 million in 2007. Total operating revenues increased from NOK 20.7 million to NOK 29.4 million, while operating costs were up from NOK 19 million to NOK 25.5 million.

StrategyNord Pool Consulting merged its software and system architecture products with its consultancy activities in 2007. Its combined services , which build on leading-edge knowledge founded on experience from the Nordic region combined with proven software tools, attract great interest and demand is growing for integrated solutions based on this wide range. Nord Pool Consulting delivers a market concept, including consultancy and system services.

The focus for Nord Pool Consulting in 2009 is to ensure the quality of all its ongoing projects and to support the regional market launch of both SAPP and Opcom supported by software from Nord Pool Consulting. With its new and combined services, Nord Pool Consulting looks forward to supporting further development for current customers, and to engaging with new clients worldwide in their development of electricity markets.

based on the combined services offered to customers, 2008 was the best year ever for Nord Pool consulting. The market responded well to its service offering. The company delivers a market concept which combines consultancy with system services.

Nord Pool consulting delivers a market concept, including consultancy and system services, which build on leading-edge knowledge and experience combined with proven software tools.

cONSULTiNGbUSiNESS REPORT

23

NORD POOL ASA / ANNUAL REPORT 2008 + NORD POOL ASA / ANNUAL REPORT 2008 +

A well-functioning market presupposes and depends on trust. This trust must be held by all participants affected by the business. Nord Pool’s corporate governance principles accordingly address all the factors which can influence trust in the market.

The Nord Pool exchange offers financial power contracts, EUAs and CERs. Price formation for the products traded is very impor-tant for key elements in European society. The political debate in Europe over the environment, emission allowances and future energy supplies represents a direct extension of the power exchange’s operations. Trading on Nord Pool sends immediate and clear signals about conditions under discussion in society. Nord Pool’s corporate governance must therefore be based on a clear understanding of its social role.

This is reflected in the corporate governance principles, which aim to ensure that:• the company facilitates transparent price formation• the exchange provides an efficient marketplace• the regulatory authorities are confident that the company fulfils

the roles assigned by its exchange licence• employees comply with the company’s ethical guidelines• control bodies in the organisation are adequate for ensuring that

all elements of the business are subject at all times to systematic risk analysis

• the participants want Nord Pool ASA as their preferred marketplace

Building trust The object of the code of practice issued by the Norwegian Corporate Governance Board (NCGB) is confined to ensuring that

listed companies provide a clarification of the division of roles between shareholders, the board of directors and the executive management which goes beyond legal requirements.

As far as the code issued by the NCGB is concerned, Nord Pool is subject to additional regulations and legal requirements through its exchange licence. The NCGB code is intended for listed com-panies with numerous shareholders, so that many of its 15 main points are not relevant for Nord Pool ASA, where two owners hold equal shares in the company.

With regard to building further trust in the market through its corporate governance, Nord Pool has several bodies which handle risk management and member compliance with the rulebook.

Among legislation and statutory regulations which supplement the recommendations in the NCGB code, Chapter 3 of the Norwegian Exchange Act and regulation 1057/1997 from the Financial Supervisory Authority of Norway on clarifying control responsibility , documentation and confirmation of internal control (replaced with effect from 1 January 2009 by regulation 1080/2008 on risk manage ment and internal control) are particularly important.

Control committee Pursuant to section 3-3 of the former Norwegian Exchange Act of 17 November 2000 and section 13-1 (5) of the Norwegian Act on Securities Trading, Nord Pool ASA had a control committee in 2008. This body issues an annual report on its work to the general meeting and to the Financial Supervisory Authority. However, section 38 of the current Exchange Act no longer requires Nord

Understanding of the role played by Nord Pool finds expression through its vision of building a secure market.

NORD POOL’S cORPORATE GOvERNANcE

24


24


Pool to have a control committee, and its abolition will therefore be proposed to the annual general meeting of Nord Pool in 2009. Pursuant to section 13-1 (5) of the Act on Securities Trading, the control committee for Nord Pool Clearing ASA will be retained.

risk committee To comply with the requirements of section 11 of the Exchange Act and regulation 1057/1997 (replaced with effect from 1 January 2009 by regulation 1080/2008 on risk management and internal control) from the Financial Supervisory Authority, Nord Pool has also established an in-house risk committee and internal audit function which systematically and continuously analyses the risks which might threaten the company’s strategic and operational goals. Its membership is drawn not only from Nord Pool ASA but also from NASDAQ OMX Commodities AS and Nord Pool Clearing ASA. Collaboration within the committee accordingly embraces all the key parts of the exchange trading and clearing business in order to ensure that the systematic approach to risk has a sufficiently broad scope. The committee reports directly in a separate annual report and indirectly through the line management to the chief executive of Nord Pool ASA.

Disciplinary committee Nord Pool ASA has also established a disciplinary committee to advise the board in the event of breaches of Nord Pool ASA’s rules. Its duties are directly related to the vision of building a secure market, since they form part of the work done to ensure that mem-bers retain their trust in the market. Appointed by the board, the committee works on cases identified by Nord Pool ASA’s market surveillance department.

In addition, Nord Pool ASA has developed a set of ethical guideli-nes for market behaviour as part of the rules for both trading and clearing. All employees are also subject to a special set of ethical guide lines, which pay particular attention to their duty of confi-dentiality, conflicts of interest and opportunities to own financial instruments pursuant to sections 14-16 of the Exchange Act.

Continuous efforts are being devoted to the further development of corporate governance at Nord Pool ASA.

with regard to building further trust in the market through its corporate governance, Nord Pool has several bodies which handle risk management and member compliance with the rulebook.

25


25


Solid progress and results for 2008A new volume record was set on the exchange in 2008, with a turnover of 1 406.5 TWh (excluding international contracts). That corresponded to 55.5 per cent of the market for cleared volumes in the Nordic region.

Nord Pool ASA completed two successful sales transactions in 2008. It sold the shares in EEX in June with a gain of NOK 328 million, while the sale of the clearing and consultancy business and the international products to NASDAQ OMX Group, Inc in October yielded a gain of NOK 1 765 million.

• The sale to NASDAQ OMX yielded a gain of NOK 1 765 million for Nord Pool ASA.

• The sale of shares in EEX gave a gain of NOK 328 million.• At 1 406.5 TWh (excluding international contracts), turnover

for the exchange was up by 32.7 per cent from 1 060 TWh in 2007.

• The total Nordic volumes traded and cleared came to 2 535 TWh, an increase of seven per cent from 2 369 TWh in 2007.

Power marketTurnover for Nordic contracts traded on the exchange in 2008 came to 1 406.5 TWh, compared with 1 060 TWh the year before. This is the highest traded volume in the history of the exchange, and the board is satisfied with the development of traded volumes in recent years.

Nord Pool’s ambition is still to be the leading power exchange in Europe. That calls for a comprehensive range of products which satisfy trading and clearing in a number of markets. This ambition will require a comprehensive and constructive collaboration with NASDAQ OMX Commodities AS as the owner of part of the seven products traded by Nord Pool ASA. The board’s view is that this collaboration functioned well in 2008, and will secure the continued development of the Nordic power market.

Nord Pool ASA was awarded a licence by the US Commodity Futures Trading Commission which gives American companies direct access to trade and clear the exchange-traded products.

International power marketInternational power contracts for Germany and the Netherlands were launched in January 2008. A total of 30.2 TWh of German contracts were traded on the exchange, and 41.7 TWh were cleared . No Dutch power contracts were traded.

Carbon marketTurnover of EUAs and CERs on the exchange totalled 31.9 million tonnes of carbon dioxide compared with 32.3 million in 2007. The total volume traded and cleared through Nord Pool increased from 95.1 million tonnes in 2007 to 121.7 million tonnes in 2008. The latter figure is apportioned between 69.6 million tonnes of EUAs and 52.1 million tonnes of CERs. This turnover had a total value of EUR 2 461 million as against EUR 1 614 million in 2007.

DiREcTORS’ REPORT

CLEARING TURNOVER OTC 1998-2008

2 000

1 500

1 000

500

0

TWh

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

26

+ NORD POOL ASA / ANNUAL REPORT 2008+ NORD POOL ASA / ANNUAL REPORT 2008

ClearingNord Pool Clearing ASA was sold to NASDAQ OMX Group, Inc in October 2008. The total volume of Nordic and international power contracts cleared by the company in 2008, including volumes from Nord Pool ASA, came to 2 577 TWh compared with 2 369 TWh the year before. That represents an increase of seven per cent.

A new member category called the general clearing member (GCM) was introduced by Nord Pool Clearing in July 2008. This represents a further extension of its offering to the major financial participants in the markets.

Nord Pool Clearing ASA had 391 legal counterparties at 31 December, a net decline of nine from the beginning of the year. This contraction primarily reflects the winding up of the FishEx exchange, with the con-sequent cancellation of Nord Pool Clearing’s contract for clearing fish derivatives. The turbulence in the financial markets has also meant that a few participants no longer desire an exposure to the power market.

NASDAQ OMXThe sale of ownership rights to the international power contracts, the carbon contracts, and the clearing and consultancy businesses to NASDAQ OMX Group, Inc was completed on 21 October 2008. This transaction laid the basis for an exciting development of markets and products in cooperation with one of the world’s leading exchange trading groups.

Implementation of the transfer was accomplished through a non-cash contribution by Nord Pool ASA to a newly established company called Nord Pool International AS, which has changed its name to NASDAQ OMX Commodities AS. The contribution in kind comprised shares in the Nord Pool Clearing ASA and Nord Pool Consulting AS subsidiaries as well as that part of Nord Pool ASA’s business related to trading with international power contracts , trading with European Union emission allowances and global certified emission reductions, and the associated human resources and business assets. The board carried out detailed valuations of each part of the transaction, particularly in light of the develop-ments in the financial markets at the time of the transaction.

The board was very concerned to ensure that the valuation made at the time of the completion of the transaction reflected the actual asset value at the transfer date, regardless of whether the pricing of the transaction as a whole was carried out at a time when other financial conditions prevailed.

Market surveillanceMarket surveillance is a common function for Nord Pool Spot AS and Nord Pool ASA, which continuously monitors trades and price formation in both physical and financial markets. This department investigates possible breaches of the market conduct rules and recommends possible sanctions to the board for decision. It also has an advisory function related to Nord Pool’s own rules.

Odd Håkon Hoelsæter Bo Lennart Krantz

Elisabeth Westberg

Christina König

Erik Thrane

27


27


Mikael Odenberg Bente HagemEva Granly FredriksenKnut Rabbe

The market surveillance department has coordinated submissions on behalf of Nord Pool ASA and Nord Pool Spot AS concerning the assessment of the regulation of market manipulation and transparency at a European level. These submissions relate to the preparation of advice by the Committee of European Securities Regulators (CESR) and the European Regulators’ Group for Electricity and Gas (ERGEG) to the European Commission for the third energy package.

On the instructions of the board, the department has further for-malised its consideration of cases and tightened up its practice related to the provision of information and reporting by market participants.

The board will continue its efforts to ensure a transparent market which inspires confidence.

financial positionThe profit for 2008 is a consequence of the agreement concluded with NASDAQ OMX Group, Inc. The company’s ordinary operating profit from 1 January 2008 until the accounting transfer at 31 October 2008 is encompassed by this agreement. Ordinary operating profit does not include the gains made on the sale of the shares in EEX, the disbursement of shares in Nord Pool Spot AS and the NASDAQ OMX transaction, or interest earned on these receipts. The company’s operating profit was influenced by the provisions made for severance pay agreed with the former chief executive, by the transfer of capi-

talised pension obligations to NASDAQ OMX Commodities AS and the reversal of provision for pension costs for the year.

Subsequent to the transaction, the company purchases adminis-trative and technical services from NASDAQ OMX Commodities AS. The scope of these services is substantial, not only in the administrative sphere but also in relation to the delivery of operating solutions for the trading systems. Part of the costs related to the tra-ding systems are volume-dependent. Nevertheless , the result of the company depend on traded volumes. The board is paying attention to maintaining the quality of service deliveries at every stage and also to keeping the development of costs under control.

The board regards the company’s equity as satisfactory in rela-tion to its total exposure and risk. Pursuant to section 3-3a of the Norwegian Accounting Act, the board confirms that the going concern assumption is realistic. The accounts presented have been prepared on that basis.

The group’s financial position is satisfactory. No events of significance for the 2008 annual accounts had occurred up to the date they were presented. The group at 31 December compri-sed the parent company, Nord Pool ASA, and the wholly owned Nord Pool AB subsidiary. Nord Pool AB’s earnings are confined to intragroup sales to Nord Pool ASA. The group’s head office is located at Lysaker outside Oslo, and it has permanent operational premises in Stockholm and Helsinki.

28


Accounts for 2008The consolidated profit and loss account includes items for the divested subsidiaries Nord Pool Clearing ASA and Nord Pool Consulting AS as well as carbon and international power contracts up to 31 October. As a result, the group’s results for 2008 are not directly comparable with the figures for the year before.

Consolidated operating revenue for 2008 totalled NOK 1 846 mil-lion, including NOK 1 480 million in gain on sales of operations. Operating profit came to NOK 1 576 million. The consolidated pro-fit of NOK 2 017 million before tax includes NOK 328 million in gain on the sale of the shares in EEX, NOK 1 480 million in gain from the NASDAQ OMX transaction and NOK 47 million from the distribu-tion of the shares in Nord Pool Spot AS. The two sales transactions resulted in extraordinary levels of financial income, and financial income for 2008 therefore amounted to NOK 441 million.

The board is satisfied with the results achieved in 2008.

Allocation of net profitA dividend of NOK 2 258 million is proposed from Nord Pool ASA’s net profit for 2008.

The parent company’s liquidity is satisfactory. At 31 Decem-ber 2008, its working capital totalled NOK 2 081 million as against NOK 15 million a year earlier. The total balance sheet at 31 December was NOK 2 722 million, compared with NOK 583

million at the end of 2007. Company equity at 31 December totalled NOK 2 533 million as against NOK 405 million in 2007. Unrestricted equity in Nord Pool ASA at 31 December totalled NOK 2 259 million, compared with NOK 128.9 million the year before.

Organisation and working environmentThe Nord Pool group had 18 employees at 31 December, including 16 in Norway, one in Sweden and one in Finland. Sixteen people were employed by Nord Pool ASA and two by Nord Pool AB. One employee was on leave of absence at 31 December.

As a result of the NASDAQ OMX transaction, the number of employees in the group was reduced by 62 from the end of 2007.

Leave of absence owing to illness in Nord Pool ASA during 2008 was 2.01 per cent, compared with 1.62 per cent the year before.

No lost-time injuries or accidents were suffered during 2008. Nord Pool ASA’s operations do not impact the external environment.

gender breakdownSix of the 18 employees were women and 12 were men, or 30 and 70 per cent respectively.

Nord Pool’s board of directors has eight members, including two employees of Nord Pool ASA. The gender distribution is four women

POWER VOLUMES 1996-2008 (TWh)

2 000

1 500

1 000

500

0

CLEARING VOLUME (OTC)FINANCIAL MARKETELSPOT MARKET

1998 19991996 1997 2000 2001 2002 2003 2004 2005 2006 2007 2008

29


and four men. The executive management consists of one woman and two men. The remaining managers comprise two men.

Human resources policy Nord Pool ASA’s human resources policy is based on equal pay for equal work, which means that women and men in equivalent jobs receive the same pay providing expertise, experience, responsibility and other factors are comparable. Pay figures for 2008 (excluding top management) show that annual pay for male employees was 21.5 per cent higher on average than for the company’s female staff.

The company wants to encourage all employees of both genders to establish solutions which make it easier to combine work and

family life. One employee was on leave of absence at 31 December . The company had three part-time staff at 31 December, including two men.

ProspectsThe new constellation of Nord Pool ASA and NASDAQ OMX Com-modities AS is a competitive entity and provides benefits for exis-ting Nord Pool ASA members. Nord Pool ASA is the marketplace for Nordic power derivatives, and is responsible for listing products from NASDAQ OMX Commodities AS. Collaboration between these two companies is expected to result in the development of Nordic and international products, while participants will be able to trade and clear in the same way as before.

SYSTEM PRICE

SYSTEM PRICE (EUR/MWh)

19991998 2000 2001 2002 2003 2004 2005 2006 2007 2008

0

10

20

30

40

50

70

60

TURNOVER ON THE EXCHANGE 1998-2008

1 200

900

600

300

0

TWh

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Nord Pool ASA was awarded a licence by the US commodity Futures Trading commission which gives American companies direct access to trade and clear the exchange-traded products.

30


The board expects that the collaboration between NASDAQ OMX Commodities, Nord Pool Spot AS and Nord Pool ASA on creating a power market in the UK will be a significant factor in the conti-nued development of transparent markets in Europe. Trading with power derivatives in this collaboration will utilise the Nord Pool ASA exchange platform and licence.

As part of their agreement with the NASDAQ OMX Group, Inc, the owners of Nord Pool ASA have the right to transfer Nord Pool ASA in the form of either the business activities or the shares in the company to NASDAQ OMX. The board has been informed that Affärsverket Svenska Kraftnät and Statnett SF have initiated a process for assessing such a transfer.

The agreement with NASDAQ OMX means that income from exchange trading of Nordic power contracts is the only component in Nord Pool ASA’s income base in 2009. The financial crisis which arose in 2008, the development of volumes – which are weaker so far in 2009 than in the corresponding period of last year – and the above-mentioned contraction in the income base mean that the board expects significantly lower income and profits than were achieved in 2008.

Lysaker, 11 February 2009

Odd Håkon Hoelsæter Mikael Odenberg Bo Lennart Krantz Elisabeth Westberg Chair Deputy chair

Eva Granly Fredriksen Bente Hagem Knut Rabbe Christina König

Erik Thrane President and CEO

31


Nord Pool ASA Nord Pool group2008 2007 Amounts in NOK 1 000 Note 2008 2007

EUA spot/green cert sales 3 50 919 2 942 677EUA spot/green cert purchases 3 50 919 2 942 677Net EUA/green cert 0 0

103 759 86 581 Fee revenues 1 284 254 281 61551 305 58 067 Service agreements 4,11 9 393 16 333

Sale of operations 9 1 480 45351 858 56 761 Other operating income 5,18 71 615 63 920

206 922 201 409 Total operating income 2 1 845 715 361 868

29 511 18 601 Trading and clearing fees 78 033 63 6448 041 7 123 Depreciation 12,13 12 150 11 890

45 205 52 527 Payroll expenses 6,19 75 686 84 39691 665 84 921 Other operating expenses 7,8,18 104 172 90 146

174 422 163 172 Total operating expenses 2 270 041 250 076

32 500 38 237 Operating profit 1 575 674 111 792

73 968 Income from associated companies 9 47 543 6 4772 127 454 7 177 Net financial items 10,11 393 930 23 163

2 233 922 45 414 Ordinary profit before taxes 2 017 147 141 43233 582 11 529 Taxes 22 59 850 38 545

2 200 340 33 885 Net profit 1 957 297 102 887

Information on allocations2 258 000 Dividend 2 258 000

31

PROfiT AND LOSS AccOUNT

32


Nord Pool ASA Nord Pool group31 Dec 08 31 Dec 07 Amounts in NOK 1 000 Note 31 Dec 08 31 Dec 07

ASSETSFIxED ASSETSIntangibles

51 837 Computerised trading systems 12 58 2796 155 7 901 Deferred tax benefit 22 6 156 10 781 6 155 59 738 Total intangibles 6 156 69 060

55 8 683 Tangible fixed assets 13 486 9 518

Financial fixed assets88 304 913 Investment in subsidiaries 9 - 0 3 072 Investment in associated companies 9 29 4980 36 900 Investment in other companies 9 36 900

100 000 Loans to group562 522 Other financial fixed assets 562 522 - 562 610 444 885 Total financial fixed assets 562 522 66 398

568 820 513 306 TOTAl FIxED AssETs 569 164 144 976

CUrrENT ASSETS31 407 6 722 Accounts receivable 14 31 407 9 313

11 547 Intragroup receivables1 342 8 376 Other receivables 1 825 19 765

32 749 26 645 Total receivables 33 232 29 078

2 121 604 43 422 Cash and bank deposits 15 2 122 866 721 265

2 154 353 70 067 TOTAl cUrrENT AssETs 2 156 098 750 343

2 723 173 583 373 TOTAl AssETs 2 725 262 895 319

bALANcE ShEETASSETS

33


Nord Pool ASA Nord Pool group31 Dec 08 31 Dec 07 Amounts in NOK 1 000 Note 31 Dec 08 31 Dec 07

EqUITy AND LIAbILITIESEqUITyPaid-in equity

240 000 240 000 Share capital (200 000 shares at NOK 1 200) 16,17 240 000 240 00028 332 28 332 Share premium reserve 17 28 332 28 332

268 332 268 332 Total paid-in equity 268 332 268 332

retained equity7 081 136 784 Other equity 17 8 177 380 9177 081 136 784 Total earned equity 8 177 380 917

275 413 405 116 TOTAl EqUITy 17 276 509 649 249

LIAbILITIESProvisions

17 193 22 956 Pension obligations 18,19 17 193 32 82617 193 22 956 Total provisions 17 193 32 826

Other long-term liabilities100 000 100 000 Subordinated loan 20 100 000 100 000100 000 100 000 Total long-term liabilities 100 000 100 000

current liabilities5 691 9 244 Accounts payable 5 754 9 926

31 849 12 582 Tax payable 22 32 167 39 6653 006 Fees payable to public authorities 7 703

2 258 000 Dividend 17 2 258 00035 027 30 469 Other current liabilities 21 35 639 55 950

2 330 567 55 301 Total current liabilities 2 331 560 113 244

2 447 760 178 257 TOTAl lIAbIlITIEs 2 448 753 246 070

2 723 173 583 373 TOTAl EqUITy AND lIAbIlITIEs 2 725 262 895 319

Lysaker, 11 February 2009

Odd Håkon Hoelsæter Mikael Odenberg bo Lennart Krantz Elisabeth Westberg Chair Deputy chair

Eva Granly Fredriksen bente Hagem Knut rabbe Christina König

Erik Thrane President and CEO

bALANcE ShEETEqUiTy AND LiAbiLiTiES

34


Nord Pool ASA Nord Pool group2008 2007 Amounts in NOK 1 000 2008 2007

cash flow from operating activities2 200 340 33 885 Profit for the year after taxes 1 957 297 102 887

(72) 20 Loss/(gain) on sale of tangible fixed assets (38) 208 041 7 123 Ordinary depreciation 12 150 11 890

(12 009) 12 635 Change in accounts receivable 2 622 19 095(3 553) (4 119) Change in accounts payable (16 216) (5 829)(5 763) 7 231 Change in pension obligations (3 232) 9 699

(2 162 889) Loss/(gain) on sale of investments (1 854 126) (1 437)16 761 18 188 Change in other accrual items 36 566 21 41440 856 74 963 Net cash flow from operating activities 135 023 157 739

cash flow from investment activities294 57 Proceeds from sale of tangible fixed assets 599 57

(9 222) (55 668)Payment for purchases of tangible and intangible fixed assets (9 534) (56 462)

5 040 Dividend received 5 0402 041 214 Proceeds from sale of shares 1 270 473

(87) Payment for purchase of shares in Nord Pool Ab

2 037 326 (55 698) Net cash flow from investment activities 1 266 578 (56 405)

cash flow from financing activities0 (30 000) Payment of dividend 0 (30 000)0 (30 000) Net cash flow from financing activities 0 (30 000)

2 078 182 (10 735) Net change in cash and bank deposits 1 401 601 71 33443 422 54 157 Cash and bank deposits at 1 January 721 265 649 931

2 121 604 43 422 cash and bank deposits at 31 December 2 122 866 721 265

cASh fLOw ANALySiS

35


The annual accounts have been prepared in accordance with the Norwegian Accounting Act of 1998 and Norwegian generally accepted accounting principles.

corporate structure Nord Pool ASA is the marketplace for financially settled Nordic and international power contracts and physical delivery and financially settled carbon contracts in Europe. It is owned 50–50 by Statnett SF and Affärsverket Svenska Kraftnät.

Nord Pool Clearing ASA is a clearing house for the Nordic and international financial power market and for the physical delivery and financial carbon market in Europe. It was wholly owned by Nord Pool ASA, but was sold to the NASDAq OMx Group, Inc on 21 October 2008.

Nord Pool Consulting AS delivers consultancy services related to IT and systems. It was wholly owned by Nord Pool ASA until 21 October 2008, when all the shares were sold to the NASDAq OMx Group, Inc.

Nord Pool Spot AS is the marketplace for organised trade in physical delivery electricity contracts in the Nordic countries. It was owned 20 per cent by Nord Pool until 24 April 2008.

Nord Pool Clearing ASA, Nord Pool Consulting AS and Nord Pool Spot AS purchased most of their administrative services from Nord Pool ASA until they were sold.

consolidation principles The group’s consolidated accounts comprise the accounts of parent company Nord Pool ASA and the Nord Pool Ab subsidiary . Gross accounting items for the sold subsidiaries Nord Pool Consulting AS and Nord Pool Clearing ASA, with its associated Nord Pool Clearing Ab subsidiary, are included until 31 October 2008. The group accounts are prepared as if the group were a single financial entity. Transactions and balances between companies in the group are eliminated, and the group accounts are prepared in accordance with uniform principles since the subsidiaries apply the same accounting principles as the parent company.

Nord Pool Ab, Nord Pool Consulting AS, Nord Pool Clearing ASA and Nord Pool Clearing Ab are recorded in the group accounts on the basis of the parent company’s acquisition cost. The acquisition cost is allocated to identifiable assets and liabilities in the subsidiary.

Associated companies are valued in accordance with the equity method in the group accounts. The group’s share of profit in an associated company is its proportionate share of net profit in the associated company, less any internal gains and depreciation of surplus value because the cost of the shares exceeds the acquired share of booked equity. The share of profit in associated companies is shown in the profit and loss account under “Income from associated companies”. The share of income from Nord Pool Spot AS in 2008 is included until its disposal.

When consolidating branch accounts in foreign currencies, exchange rates prevailing at the close of the accounting year are applied.

subsidiaries/associated companies Subsidiaries are valued in accordance with the cost method in the parent company accounts. Investments are valued at the acquisition cost of the shares unless a write-down has been necessary.

Investments are written down to market value if the decline in value is not deemed to be temporary and when considered necessary in accordance with generally accepted accounting principles. Write-downs are reversed when the conditions for the write-down are no longer present.

Associated companies are valued in accordance with the cost method in the Nord Pool group accounts.

Income Power contracts with a time frame of up to six years are traded in the financial market. These comprise financially settled futures, forwards and option contracts. In addition to power contracts, a physical and financial market has been established for trading carbon contracts (EUAs and CErs). The value of financially settled power and carbon contracts is not recorded in the accounts.

Fees The Nord Pool group’s income base comprises: • entrance fees • annual fees • trading fees • clearing fees

Entrance fees are recorded to income in full at the time a participant is admitted to trading and/or clearing. Trading and clearing fees in the financial market are recorded to income at the time the trade is formally entered into. Clearing fees for contracts traded on the OTC market are recorded to income at the time such contracts are registered for clearing.

classification and valuation of balance sheet items Current assets and liabilities include items which fall due within one year of their acquisition date, and items associated with the business cycle. Other items are classified as fixed assets or long-term liabilities.

Current assets are valued at the lower of acquisition cost or market value. Current liabilities are recorded in the balance sheet at face value at the time of the transaction.

Fixed assets are recorded at acquisition cost. Upon a change in value not deemed to be temporary, the affected fixed asset is written down. Long-term liabilities are recorded in the balance sheet at their face value on the date they are assumed.

receivables Accounts receivable and other receivables are recorded in the balance sheet at face value after provision for expected bad debts.

Intangible assets Intangible assets are recorded in the balance sheet to the extent that financial benefits associated with the intangible asset in

AccOUNTiNg PRiNciPLES

36


question can be identified. If such benefits cannot be identified, the expenses are recorded as costs on a current basis.

In-house development In-house development of proprietary software systems is capitalised at its calculated cost.

Foreign currency Accounts receivable and payable in foreign currency, and translation of assets and liabilities for the Swedish branch, are valued at the year-end exchange rate.

Tangible fixed assets Tangible fixed assets are recorded in the balance sheet and depreciated on a straight-line basis over the expected useful life of the assets. Direct maintenance costs related to tangible assets are recorded on a continuous basis as operating expenses, whereas upgrades and improvements are added to the cost bases of the operating assets and depreciated at the same rate as the assets to which they refer.

Pensions Pensions are recorded in the accounts in accordance with IAS 19, since Norwegian accounting standard (NrS) 6 A provides the opportunity to do so.

Nord Pool ASA has pension plans which provide employees with the right to defined future pension benefits (defined benefit plans). benefits are based on the number of years of employment and pay at retirement age.

Accrued pension rights are primarily secured through a pension plan managed by Storebrand. In addition, the company has an early retirement (AFP) plan financed from operations.

Premiums paid to the pension fund are based on actuarial calculations . Pension assets in the fund are primarily invested in securities. Pension liabilities are calculated in accordance with the NrS for pension costs.

The company has a contribution-based pension plan for employees in Nord Pool Ab. The current year’s pension cost corresponds to the current year’s premium payment.

Pension obligations are valued at the present value of future pension obligations earned at the balance sheet date, which are to be paid through the company’s own pension fund or financed from operations.

Net pension liabilities are recorded in the balance sheet after correcting for the effect of changes in estimates and pension plans on deferred profit, as well as for variances between actual and projected yield on pension assets not yet recorded in the profit and loss account. Net pension obligations are presented as a provision. Over-funded plans where the assets cannot be transferred to under-funded plans are shown as pension assets (financial fixed assets).

The group and the parent company apply the corridor principle for reporting changes in pension liabilities.

Changes in liabilities and pension assets arising from changes to and variances in assumptions applied to calculations (changes in estimates) are distributed over the remaining expected average earnings period if the variances at 1 January exceed 10 per cent of whichever is the greater of gross pension liabilities or pension assets.

Net pension costs for the year are included as a salary expense in the profit and loss account. Premiums paid are treated as investments in pension funds.

Taxes Tax expenses in the profit and loss account comprise both taxes payable for the period and the change in deferred tax. Deferred tax is calculated as 28 per cent of the temporary differences between accounting and tax values, as well as the tax loss carried forward at the end of the accounting year. If the temporary differences which increase or decrease taxes are reversed or could be reversed in the same period, the differences have been eliminated. Net deferred tax benefits are recorded in the balance sheet to the extent that it is likely they will be used.

At 31 December 2008, the company had net negative temporary differences between accounting and tax values . The associated deferred tax benefit is recorded in the balance sheet as an asset.

The tax treaty between Norway and Sweden is based on the credit method of taxing business activities which are taxable in both Norway and Sweden. Thus, taxable profits are fully taxed in Norway in accordance with Norwegian taxation rules, and taxes paid in Sweden are applied as a credit against taxes payable in Norway.

cash flow The cash flow analysis has been prepared using the indirect method. Net cash flow from operating activities is obtained by entering the net profit for the year and the other operating items shown. Cash flows from investment and financial activities are presented gross.

37


NOTE 1 POSTiNg cOLLATERALPosting collateral No collateral had been posted for the parent company or the group at 31 December 2008.

Collateral was posted to the group until the disposal of the Nord Pool Clearing ASA subsidiary. All members of Nord Pool Clearing ASA had posted satisfactory collateral as specified by the standard terms.

NOTE 2 bUSiNESS AREAS

Nord Pool ASAfinancial market NP clearing NP consulting Other activities1 Total Nord Pool ASA

Amounts in NOK mill 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007

Operating income 116.6 99.6 - - - - 90.3 101.8 206.9 201.4Operating expenses 77.9 71.2 - - - - 96.5 92.0 174.4 163.2Operating profit 38.7 28.4 - - - - -6.2 9.8 32.5 38.2

Value of power contracts 738 306 346 276 - - - - - - 738 306 346 276

Value of EUA/CEr contracts 5 319 4 322 - - - - - - 5 319 4 322Volume power in TWh 1 437 1 060 - - - - - - 1 437 1 060

Volume EUA/CEr in 1 000 tonnes 31 863 32 363 - - - - - - 31 863 32 363

Nord Pool group

financial market NP clearing2 NP consulting2

Other activities1 2

Total Nord Pool group

Amounts in NOK mill 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007

Operating income 116.6 99.6 181.8 196.9 24.4 20.7 1522.9 101.8 1 845.7 361.9Operating expenses 77.9 71.0 123.9 125.4 20.7 19.1 47.5 91.7 270.0 250.1Operating profit 38.7 28.6 57.9 71.5 3.7 1.6 1475.4 10.1 1 575.7 111.8

Value of power contracts 738 306 346 276 314 713 308 133 - - - - 1 053 020 654 409Value of EUA/CEr contracts 5 319 4 322 5 338 8 616 - - - - 10 657 12 938Volume traded in TWh 1 437 1 060 - - - - - - 1 437 1 060Volume cleared in TWh– Exchange-traded power - - 1 437 1 060 - - - - 1 437 1 060– OTC-traded power - - 963 1 309 - - - - 963 1 309Volume traded in 1 000 tonnes 31 863 32 363 - - - - - - 31 863 32 363Volume cleared in 1 000 tonnes– Exchange-traded EUA/CEr - - 31 863 32 363 - - - - 31 863 32 363– OTC-traded EUA/CEr - - 82 526 62 755 - - - - 82 526 62 755

1 Other activities comprise administrative services performed for Nord Pool Spot AS, Nord Pool Clearing ASA and Nord Pool Consulting AS, as well as international activities, the sale of market data and provision of courses.

2 Embraces the period until the disposal, see note 9.

NOTES TO ThE AccOUNTS

38


NOTE 3 EUA SPOT AND gREEN cERTificATES

Nord Pool groupAmounts in NOK 1 000 2008 2007

saleEUA spot 50 919 2 917 568Green certificates 0 25 109Total 50 919 2 942 677

PurchaseEUA spot 50 919 2 917 568Green certificates 0 25 109Total 50 919 2 942 677

Nord Pool Clearing ASA is the counterparty for posting of collateral and financial risk, and these products are covered by Nord Pool Clearing ASA’s risk management system. See note 1.

NOTE 4 SERvicE AgREEmENTS

Nord Pool ASAAmounts in NOK 1 000 2008 2007

Services rendered to Nord Pool Spot AS 9 393 16 333Services rendered to group companies 41 912 41 734Total 51 305 58 067

Nord Pool groupAmounts in NOK 1 000 2008 2007

Services rendered to Nord Pool Spot AS 9 393 16 333Total 9 393 16 333

NOTE 5 OThER OPERATiNg iNcOmE


Licence income trading system 12 825 8 171re-invoicing of other services 6 581 3 140Services to Powernext France 3 042 7 009Subscription income 7 723 7 319Income from international operations 19 548 26 699Consultancy income 337 1 039Miscellaneous other operating income 1 802 3 384Total 51 858 56 761

Nord Pool group 2008 2007

Licence income trading system 12 996 8 366re-invoicing of other services 6 581 3 140Services to Powernext France 3 042 7 009Subscription income 7 723 7 319Income from international operations 19 548 26 699Consultancy income 19 092 3 407Miscellaneous other operating income 2 634 7 980Total 71 615 63 920

39


NOTE 6 PAyROLL ExPENSES, EmPLOyEES, REmUNERATiON, LOANS TO EmPLOyEES, ETc

Nord Pool ASA Nord Pool groupAmounts in NOK 1 000 2008 2007 2008 2007

Pay 37 691 34 337 58 441 55 530Capitalised own investment work (312) (3 730) (312) (3 730) Payroll tax 6 011 6 218 9 781 10 541Pension costs 660 11 999 6 305 17 752Other benefits 1 155 3 703 1 472 4 303Total 45 205 52 527 75 686 84 396

Nord Pool ASA had 16 employees totalling 15.7 work-years and one under contract at 31 December 2008, while the group had 18 employees totalling 17.7 work-years and one under contract at the same date. This compares with 48.75 work-years for Nord Pool ASA at 31 December 2007, and 80 employees plus two under contract totalling 80.75 work-years for the group.

Pay/director’s fees

Other remuneration

Accrued pension costs

Total remuneration

senior executivesTorger Lien, chief executive, Nord Pool 2 063 191 4 723 6 977Petter Torp, vice president staff, Nord Pool 1 127 127 579 1 833Erik Thrane, vice president legal affairs 1 077 130 362 1 569Total remuneration 4 267 448 5 664 10 379

board of directors of Nord PoolOdd Håkon Hoelsæter, chair - - - - Mikael Ingemarsson Odenberg, deputy chair - - - - Elisabeth Westberg 125 - - 125bo Lennart Krantz - - - - Eva Granly Fredriksen - - - - bente Hagem - - - - Knut rabbe, worker director - - - - Christina König, worker director - - - - Total remuneration 125 0 0 125

remuneration is paid only to external directors, and not to directors employed by Statnett SF, Affärsverket Svenska Kraftnät or the Nord Pool group. The directors and chief executive do not have an agreement on share-based remuneration.

Nord Pool’s chief executive has a pension plan which provides supplementary benefits in addition to the general scheme. The retirement age under the supplementary agreement is 64. At his own request or at the desire of the board, the chief executive can take early retirement between the ages of 62 and 64. His pension will then total 60 per cent of the pension base. The rest of the executive management is covered by Nord Pool’s group pension plan, and have no rights beyond those associated with that plan.

The chief executive of Nord Pool ASA at 31 December 2008 resigned from his post at the same date because of structural changes. That triggered an agreement on two year’s pay, benefits and pension contributions. A provision of NOK 10 million has been made in the accounts for this.

No loans have been granted nor security posted on behalf of the chief executive, the chair of the board or other close associates. No individual loan or collateral posting represents more than five per cent of the Nord Pool group’s equity.

Employee bonus plan The group has a bonus plan for its employees based on meeting various performance criteria, including volumes, profit, innovation, quality and precision. The maximum bonus is 15 per cent of an employee’s annual salary. An average bonus of 3.9 per cent was attained in 2008.

Declaration on the determination of compensation for the executive managementThe company has developed its compensation programme for the chief executive and executive management around two objec-tives: to attract and retain the right people, continue developing and retain key expertise, and encourage a long-term perspective in order to attain the goals of the company and shareholders. The compensation packages comprise a combination of basic pay and bonus. A combination of criteria is applied when determining the size of pay-outs. Information on these criteria is provided under the relevant section on the arrangements.

40


Auditors Fees paid to the external auditor for regular auditing services in 2008, excluding VAT, amounted to NOK 250 000 for Nord Pool ASA and NOK 380 000 for the group. Fees paid by the group for other auditing services amounted to NOK 189 000 excluding VAT. Fees for consultancy services amounted to NOK 669 000 excluding VAT.

NOTE 7 OThER OPERATiNg ExPENSESNord Pool ASA Nord Pool group

Amounts in NOK 1 000 2008 2007 2008 2007

Outsourced services 44 216 54 430 52 361 42 758Software development 2 871 4 782 2 871 5 080Costs for re-invoicing 20 625 0 2 878Miscellaneous administrative expenses 23 953 25 709 46 063 42 308Total 91 665 84 921 104 172 90 146

NOTE 8 LEASES fOR OfficE PREmiSES

The group has a lease for rented office space in the Granfos Industrial Park at Lysaker outside Oslo. This lease runs for 10 years from 1 July 2008. The annual rent for 2008 was NOK 4 million. This amount is adjusted annually in accordance with the consumer price index.

NOTE 9 SUbSiDiARy, ASSOciATED cOmPANiES AND OThER iNvESTmENTS

Amounts in NOK 1 000

Acquisition date Disposal date headquarters Ownership

Share of voting rights

subsidiariesNord Pool Clearing ASA 10 Dec 1998 21 Oct 2008 Oslo 100.0% 100.0%Nord Pool Consulting AS 1 Jan 2004 21 Oct 2008 Oslo 100.0% 100.0%Nord Pool Ab 1 Jun 2008 Stockholm 100.0% 100.0%

Associated companiesNord Pool Spot AS 1 Jan 2002 24-04-2008 Oslo 20.0% 20.0%

Investments in other companiesEuropean Energy Exchange AG 3 Jun 1999 30-06-2008 Leipzig 17.4% 17.4%

The agreement with NASDAq OMx Group, Inc was signed on 21 February 2008, and the transaction was closed on 21 October 2008 when official approval had been secured. Under the agreement, Nord Pool ASA undertook to establish a wholly owned sub-sidiary through a non-cash contribution immediately before the implementation of the sales transaction. The non-cash contribution consisted primarily of the shares in Nord Pool Clearing ASA and Nord Pool Consulting AS as well as part of the business of parent company Nord Pool ASA. The allocation of assets in the non-cash contribution was based on the best estimate of their value at the execution date, with account taken of the prevailing turbulence in financial markets. The sale consideration was NOK 2 150 million, and the accounting gain for Nord Pool ASA came to NOK 1 765 million. The corresponding gain for the group was NOK 1 480 mil-lion. The sale consideration took the form of NOK 1 700 million in cash and NOK 450 million in a long-term receivable which matures in the spring of 2010. Depending on future volume development for the various products and markets covered by the agreement, a further consideration for the transfer could be paid.

Investments in the associated company Nord Pool Spot AS are recorded in the parent company accounts using the cost method and in the consolidated accounts using the equity method. The shares were allotted as extraordinary dividend at a fair value of NOK 72 mil lion, which gave a book gain for the parent company of NOK 69 million. The corresponding gain for the group was NOK 45 million.

The shares in European Energy Exchange AG were sold for NOK 368 million, yielding an accounting gain of NOK 328 million.

41


Nord Pool ASA

investments valued in accordance with the cost method

company nameTotal share

capital Shares

ownedPar value per share

Total par value book value

Nord Pool Spot AS 50 400 000 2 880 3 500 10 080 000 DivestedNord Pool Consulting AS 6 000 000 6 000 1 000 6 000 000 SoldEuropean Energy Exchange AG € 40.050.000 6 966 825 EUr 1 € 6.966.825 SoldNord Pool Clearing ASA 300 050 12 002 25 000 300 050 000 SoldNord Pool Ab 100 000 100 000 1 100 000

Nord Pool groupinvestments valued in accordance with the equity method Nord Pool Spot groupAmounts in NOK 1 000 2008

calculated share of net profitShare of net profit 2 163share of net profit earned at disposal 2 163

calculated book value and gain at disposal date 24 Apr 2008

Opening balance 1 Jan 08 29 498Share of net profit 2 162Dividend received (5 040)Closing balance at disposal 26 620Fair value of the shares 72 000Gain from disposal 45 380Share of profit for the year 2 163Total income associated companies 47 543

NOTE 10 NET fiNANciAL iTEmS Nord Pool ASA Nord Pool group

Amounts in NOK 1 000 2008 2007 2008 2007

Financial incomeDividend from associated company 5 040 5 040 - Interest income from group companies 5 098 6 701 - Gain on proceeds from shares in Nord Pool Spot AS 68 928 47 543 Gain on sale of shares in EEx 328 292 328 292 Gain on sale of shares to NASDAq OMx Group, Inc 1 765 668Other interest income 32 520 2 803 69 179 31 718Gain on foreign currency 2 159 21 3 068 105Total financial income 2 207 705 14 565 448 082 31 823

Financial expensesInterest expenses, subordinated loan (6 250) (6 611) (6250) (6 611)Other interest expenses (33) (148) (359) (69)Loss on foreign currency (629) (1 980)Total financial expenses (6 283) (7 388) (6 609) (8 660)

Net financial items 2 201 422 7 177 441 473 23 163

42


NOTE 11 iNTRAgROUP PROfiT AND LOSS iTEmS Nord Pool ASA

Amounts in NOK 1 000

Nord Pool Ab

2008

Nord Pool Ab

2007

Nord Poolclearing ASA

okt- 08

Nord Poolclearing ASA

2007

Nord Poolconsulting AS

okt- 08

Nord Poolconsulting AS

2007

Operating income 42 524 40 817 5 006 917Operating expenses (11 400) (5 996) 525 (500) (5 339) (14 185)Net financial items 5 098 6 701 - Total (11 400) (5 996) 48 147 47 018 (333) (13 268)

NOTE 12 cOmPUTERiSED TRADiNg SySTEmS

Nord Pool ASAintangible

fixed assets

Nord Pool groupintangible

fixed assetsAmounts in NOK 1 000

Acquisition cost at 1 Jan 2008 63 881 86 507Additions 6 618 6 930Disposals (70 499) (93 437)Acquisition cost at 31 Dec 2008 0 0Accumulated depreciation at 31 Dec 2008 0 0book value at 31 Dec 2008 0 0

Depreciation for the year 3 799 3 887

both parent company and group apply straight-line depreciation to all intangible fixed assets. The expected useful life of intangible fixed assets is five years.

NOTE 13 TANgibLE fixED ASSETS

Nord Pool ASA Amounts in NOK 1 000 vehicles

machinery and equipment

Total tangible fixed assets

Tangible fixed assetsAcquisition cost at 1 Jan 2008 1 194 79 447 80 641Additions 1 806 1 806Disposals (894) (81 253) (82 147)Acquisition cost at 31 Dec 2008 300 0 300Accumulated depreciation at 1 Jan 2008 (770) (71 220) (71 990)Depreciation for the year (178) (4 064) (4 242)Disposal depreciation, sold assets 703 75 284 75 987book value at 31 Dec 2008 55 0 55

Nord Pool groupAmounts in NOK 1 000 vehicles

machinery and equipment

Total tangible fixed assets

Tangible fixed assetsAcquisition cost at 1 Jan 2008 2 220 82 830 85 051Translation differences 0Additions - 3 043 3 043Disposals (1 920) (85 335) (87 255)Acquisition cost at 31 Dec 2008 300 538 839Accumulated depreciation at 1 Jan 2008 (1 298) (74 267) (75 565)Depreciation for the year (273) (7 990) (8 263)Disposal depreciation, sold assets 1 326 82 149 83 475book value at 31 Dec 2008 55 430 486

both parent company and group apply straight-line depreciation to all tangible fixed assets. Expected useful life of assets: • Machinery and equipment 3–10 years • Vehicles 5 years

43


NOTE 14 AccOUNTS REcEivAbLE

No losses were recorded on accounts receivable during 2008. A loss of NOK 88 000 on accounts receivable was recorded in 2007. Accounts receivable were booked at face value at 31 December 2008.

NOTE 15 bANK DEPOSiTS

Amounts in NOK 1 000 Nord Pool ASA Nord Pool group

restricted tax withholdings 2 860 2 860

NOTE 16 ShARE cAPiTAL AND ShAREhOLDER iNfORmATiON

Nord Pool ASAAmounts in NOK 1 000 Number of shares Par value book value

The share capital comprisesOrdinary shares 200 000 1 200 240 000 000 Total 200 000 240 000 000

Nord Pool had two shareholders at 31 December 2008. The company has only one share class and all shares carry the same rights.

Number of shares held Ownership

Share of voting rights

shareholders at 31 Dec 2008Statnett SF 100 000 50.0% 50.0%Affärsverket Svenska Kraftnät 100 000 50.0% 50.0%Total number of shares 200 000 0.0% 0.0%

NOTE 17 EqUiTy

Nord Pool ASA Amounts in NOK 1 000 Share capital

Share premium reserve Other equity Total equity

Equity at 1 Jan 2008 240 000 28 332 136 783 405 115

Extraordinary dividend paid, shares Nord Pool Spot AS (72 000) (72 000) Translation differences (42) (42) Net profit 2 200 340 2 200 340 Provision for dividend (2 258 000) (2 258 000) Equity at 31 Dec 2008 240 000 28 332 7 081 275 413

Nord Pool groupAmounts in NOK 1 000 Share capital

Share premium reserve Other equity Total equity

Equity at 1 Jan 2008 240 000 28 332 380 917 649 249 -

Extraordinary dividend paid, shares Nord Pool Spot AS (72 000) (72 000) Translation differences (37) (37) Net profit - - 1 957 297 1 957 297 Provision for dividend - - (2 258 000) (2 258 000) Equity at 31 Dec 2008 240 000 28 332 8 177 276 509

44


NOTE 18 cLOSE ASSOciATES – OwNERS

Nord Pool’s shares are owned 50-50 by Affärsverket Svenska Kraftnät and Statnett SF. Nord Pool performs no tasks or services for Affärsverket Svenska Kraftnät. All transactions with Statnett SF are conducted at market value.

services and tasks performed by Nord Pool for statnett sF a) balance settlement and regulating power market Nord Pool ASA had a contract with Statnett SF to provide maintenance for Statnett SF’s system for the regulating power market. Nord Pool ASA exited from this contract in connection with the transfer of operations to NASDAq OMx Group, Inc. Total income for 2008 until the transfer amounted to NOK 0.2 million, compared with NOK 0.3 million for the whole of 2007.

services and tasks performed by statnett sF for Nord Pool a) Administrative services Nord Pool ASA had an agreement with Statnett SF concerning real property leases and IT solutions associated with back-up solutions for the marketplace. Nord Pool ASA exited from this contract in connection with the transfer of operations to NASDAq OMx Group, Inc. Nord Pool ASA still has an agreement on a joint insurance policy with Statnett SF. Costs for these services totalled NOK 1.2 million in 2008, compared with NOK 1.5 million for the whole of 2007. The contract runs for one year at a time.

NOTE 19 PENSiONS

The Nord Pool group has pension plans for employees in Norway which cover a total of 18 people. The corresponding figure for the parent company is 18. These plans entitle beneficiaries to defined future benefits, which depend primarily on the length of employment, pay at retirement and level of the Norwegian state pension. The pension plans satisfy the requirements of the Norwegian Act on Compulsory Occupational Pensions.


Present value of current year’s pension earnings 9 276 9 399Interest cost for pension liabilities 2 368 2 678yield on pension assets (1 204) (1 286)Change in estimates and variances 3 546 1 208Curtailment (26 601) 0Change in estimates and variances from curtailment 11 988 0Net pension expenses for defined benefit plan (627) 11 999

Nord Pool group2008 2007

Present value of current year’s pension earnings 9 362 14 359Interest cost for pension liabilities 2 368 3 887yield on pension assets (1 204) (2 040)Change in estimates and variances 3 546 1 546Curtailment (26 601) 0Change in estimates and variances from curtailment 11 988 0Net pension expenses for defined benefit plan (541) 17 752

2008funded

Nord Pool ASA2008

Unfunded 2007

funded

Nord Pool ASA2007

Unfunded

Calculated pension liabilities at 31 Dec 08 19 005 10 687 44 206 9 723 Estimated pension assets at 31 Dec 08 (8 243) (20 116)

Effect of changes in estimates and variances not recorded in profit and loss account (6 007) (1 273) (13 061) (2 565)Payroll tax 1 517 1 507 3 397 1 372Net pension liabilities 6 272 10 921 14 426 8 530

45


Nord Pool group Nord Pool group2008 2008 2007 2007

Funded Unfunded Funded Unfunded

Calculated pension liabilities at 31 Dec 08 19 005 10 687 76 688 11 660Estimated pension assets at 31 Dec 08 (8 242) (36 997)

Effect of changes in estimates and variances not recorded in profit and loss account (6 007) (1 273) (22 013) (3 754)Payroll tax 1 517 1 507 5 597 1 645Net pension liabilities 6 273 10 921 23 275 9 551

Technical assumptions 2008 2007

Discount rate 4.50% 4.50%Expected growth in pay 5.00% 4.50%Expected growth in National Insurance base amount 4.25% 4.50%Expected growth in pensions 4.25% 4.50%Expected yield on assets 6.00% 6.00%Average payroll tax rate 14.10% 14.10%

Allocations to pension liabilities are based on estimated pension liabilities at 31 December 2008.

The actuarial assumptions are based on common assumptions made in the insurance business for demographic factors.

The Swedish subsidiary has a contribution-based pension plan for employees in Sweden. This plan covered two employees at 31 December. The annual pension cost for employees in Sweden was NOK 0.8 million in 2008.

NOTE 20 SUbORDiNATED LOAN cAPiTAL

The subordinated loan has been provided by the company’s two owners, each contributing NOK 50 million. The loan’s priority is junior to all other debt. The borrower is entitled, under specified conditions, to extend the loan’s maturity by five years. After five years, the borrower is entitled to redeem the loan in whole or in part, subject to advance approval by the Financial Services Authority of Norway.

Loan Amount of loan Interest rate Maturity Date issued Maturity date

Subordinated loan NOK 100 000 000 6.25% 10 years 20 Feb 07 20 Feb 17

NOTE 21 OThER cURRENT LiAbiLiTiES


Other operating expenses, accrued 16 773 8 793Accrued trading fees 7 847 5 324Holiday pay 3 930 3 943Accrued interest costs for subordinated loan from owners 5 347 5 347Intragroup liabilities Nord Pool Ab 1 129 0Accrued investment, intangible assets 0 7 062Total 35 027 30 469

Nord Pool group 2008 2007

Other operating expenses, accrued 18 354 17 691Accrued trading and clearing fees 7 847 19 279Holiday pay 4 090 6 570Accrued interest costs for subordinated loan from owners 5 347 5 347Accrued investment, intangible assets 0 7 063Total 35 639 55 950

46


NOTE 22 TAxES Nord Pool ASA Nord Pool group

Amounts in NOK 1 000 2008 2007 2008 2007

Tax cost for the year comprisesTaxes payable 31 849 12 564 32 167 39 710Tax provision for divested subsidiaries 25 950 0Change in deferred tax 1 745 (1 005) 1 745 (1 627)Over/underprovision for tax in previous year (12) (30) (12) 462Total tax costs 33 582 11 529 59 850 38 545

calculated tax base for the year

Profit before tax 2 233 922 45 414 2 017 147 87 323Permanent differences¹ 1 054 (4 130) 1 054 1 193Gain on shares (2 167 928) (1 859 172) 0reversal relating to share sale (94 143) 0Change in temporary differences (6 223) 3 589 (6 223) 8 387

Income recognition of taxable share gainGain on sale of shares to NASDAq OMx Group, Inc 1 765 667Tax base 3% 52 970 52 970

Tax base for the year 113 795 44 873 111 633 96 903

Presentation of temporary differencesFixed assets (4 790) (5 262) (4 790) (5 676)Pensions (17 193) (22 955) (17 193) (32 826)Total (21 983) (28 217) (21 983) (38 502)

Calculated deferred tax benefit on temp differences (6 155) (7 901) (6 155) (10 781)Total deferred tax benefit (6 155) (7 901) (6 155) (10 781)

Explanation of why current year’s tax cost does not constitute 28 per cent of pre-tax profit

Nord Pool ASA 2008 2007

Profit before tax 2 233 922 45 413Gain on shares – exemption method (2 167 928)28% tax on pre-tax profit 18 467 12 716Tax on share gains² 14 832Underprovision for tax in previous years (12) (30)Permanent differences (28%) 295 (1 156)calculated tax cost 33 582 11 529

Nominal tax rate² 1.5% 25.4%

Since the tax treaty between Norway and Sweden is based on the credit method, taxes paid in Sweden will be refunded through taxes payable in Norway. Tax cost for the year is calculated in accordance with Norwegian taxation rules.

1 Including non-deductible expenses, such as entertainment.2 Tax cost as a percentage of pre-tax profit. The NASDAq OMx Group, Inc transaction is considered to be subject in its entirety to the exemption method.

47


AUDiTOR’S REPORT

WWW.NORDPOOL.COM

NORWayNORD POOL aSa/NaSDaQ OMX COMMODitieSVOLLSVeieN 19P O BOX 373NO-1326 LySakeRteL +47 67 52 80 00 | FaX +47 67 52 80 01 SWeDeN NORD POOL aB/ NaSDaQ OMX COMMODitieStuLLVaktSVägeN 15Se-10578 StOCkhOLMteL +46 8 405 60 00 | FaX +46 8 405 60 01 FiNLaND NORD POOL aSa/NaSDaQ OMX COMMODitieSFaBiaNiNkatu 14P O BOX 361Fi-00131 heLSiNkiteL +358 9 616 671 | FaX +358 9 6166 7368 ukNaSDaQ OMX COMMODitieS131 FiNSBuRy PaVeMeNtLONDONgB-eC2a 1NtteL +44 20 7065 8000 | FaX +44 20 7065 8001 geRMaNyNaSDaQ OMX COMMODitieSteRMiNaLStR Mitte 18De-85356 MuNiChteL +49 89 97 007 337 | FaX +49 89 97 007 200

NORD POOL ASAANNUAL REPORT2008

Date post:	21-Feb-2019
Category:	Documents
Upload:	lequynh
View:	216 times
Download:	6 times

NORD POOL ASA ANNUAL REPORT 2008 - Nasdaq · The NASDAQ OmX Group, inc announced the completion of...

Documents