1. Segment information
Wärtsilä´s highest operative decision maker (CODM, Chief Operating Decision Maker) is the President and CEO with the support of the Board of Management and in some cases the Board of Directors. The President and CEO assesses the Group´s profitability, financial position and development as a whole. Consequently to the management approach by the Chief Operating Decision Maker, Wärtsilä is one operating segment.
The operating segment is subdivided into two mutually supportive market areas, Marine Solutions and Energy Solutions, which are supported by Services. Wärtsilä provides advanced technologies and lifecycle solutions to its marine and energy market customers. These technologies and solutions are sold and delivered globally by the same Wärtsilä companies. Manufacturing supplies products to both Energy Solutions and Marine Solutions from the same assembly lines, allowing for synergies in the production process and in research and development. Also sourcing function supports both market areas and Services. Due to the business model, integrated operations, and governance structure, the Group is reported as one segment. However, to enable better understanding of the different market areas’ development and the business cycles, Wärtsilä discloses the net sales by market areas and Services.
Net sales by market areas and Services
						Restated
MEUR					2018	2017
Energy Solutions					1 517	1 401
Marine Solutions					1 232	1 104
Services					2 426	2 407
Total					5 174	4 911
As geographical information, Wärtsilä reports the geographical areas Finland, other European countries, Asia, the Americas, and other continents. In the geographical information net sales are split by customer´s destination and non-current assets by origin.
During the financial period 1 January - 31 December 2018 and 1 January - 31 December 2017 Wärtsilä did not have any individual significant customers or countries. The sales to the USA represented 14% (12) of the total net sales.
Geographical information
						Restated
				2018		2017
MEUR			Net sales	Non-current assets*	Net sales	Non-current assets*
Finland			56	242	115	249
Other European countries			1 429	1 534	1 411	1 378
Asia			1 867	90	1 933	112
The Americas			1 245	266	1 132	265
Other			577	5	321	5
Total			5 174	2 137	4 911	2 009
* Non-current assets consist of goodwill, intangible assets, property, plant and equipment, and investments in associates and joint ventures.

2. Acquisitions
Acquisitions 2018
Transas Group
In May, Wärtsilä acquired 100% of Transas, a global company headquartered in the UK.
Transas is a global market leader in marine navigation solutions that include complete bridge systems, digital products and electronic charts. The company is also a leader in professional training and simulation services, ship traffic control, as well as monitoring and support.
The following tables summarise the preliminary amounts for the consideration paid for Transas, the cash flow from the acquisition, and the amounts of the assets acquired and liabilities assumed recognised at the acquisition date.
Preliminary consideration		MEUR
Consideration transferred		183
Total consideration transferred		183
Preliminary cash flow from the acquisition		MEUR
Consideration paid in cash		183
Cash and cash equivalents of the acquired company		-12
Total cash flow from the acquisition		171
Provisional values of the assets and liabilities arising from the acquisition		MEUR
Intangible assets		66
Property, plant and equipment		2
Inventories		8
Trade and other receivables		50
Deferred tax assets		2
Cash and cash equivalents		12
Total assets		140
Provisions		3
Interest-bearing debt		29
Trade payables and other liabilities		39
Deferred tax liabilities		13
Total liabilities		83
Total net assets		57
Preliminary goodwill		113
The preliminary fair values of the acquired identifiable intangible assets at the date of the acquisition (including technology, customer relations, and trade marks) amounted to EUR 55 million. The fair value of the current trade receivables and other receivables is approximately EUR 50 million. The fair value of the trade receivables does not include any significant risk.
The preliminary goodwill of EUR 113 million reflects the value of know-how and expertise in digital marine solutions and services. The acquisition takes Wärtsilä a significant step closer to achieving its mission of enabling sustainable societies with smart technologies. It will also speed delivery on the company’s promise to disrupt the industry by establishing an ecosystem that is digitally connected across the entire supply chain, through applications that are secure, smart and cloud-based.
During 2018 the Group incurred acquisition-related costs of EUR 3 million related to external legal fees and due diligence costs. The costs have been included in the other operating expenses in the consolidated statement of income.
Pro forma
If the acquisition had occurred on 1 January 2018, management estimates that the consolidated net sales would have been EUR 5,213 million. The impact in the consolidated operating result would not have been significant. In determining these amounts, management has assumed that the fair value adjustments which arose on the date of the acquisition would have been the same if the acquisition had occurred on 1 January 2018.
Other acquisitions
In February, Wärtsilä acquired 100% of Trident B.V. and LOCK-N-STITCH Inc. In October, Wärtsilä acquired 100% of Burriel Navarro, S.L.
Trident B.V. is a Netherland based company specialised in underwater ship maintenance, inspection, and repair services. With this acquisition, Wärtsilä builds in-house competence, captures the full potential of services’ product synergies, and strengthens its position in the market.
LOCK-N-STITCH Inc. is an American engineering company serving customers within the marine and energy sectors as well as other industries. It specialises in cast iron repairs. The acquisition strengthens Wärtsilä’s service portfolio for customers operating multiple brands.
Burriel Navarro, S.L is a company operating in underwater services in the main ports of Spain. The acquisition supports the growth of Wärtsilä’s underwater services and expands the company’s local presence in the European market.
The following tables summarise the preliminary amounts for the consideration paid, the cash flow from the acquisitions, and the amounts of the assets acquired and liabilities assumed recognised at the acquisition dates.
Preliminary consideration		MEUR
Consideration transferred		27
Total consideration transferred		27
Preliminary cash flow from the acquisitions		MEUR
Consideration paid in cash		23
Contingent consideration		4
Cash and cash equivalents of the acquired companies		-1
Total cash flow from the acquisitions		26
Provisional values of the assets and liabilities arising from the acquisitions		MEUR
Intangible assets		10
Property, plant and equipment		2
Inventories		1
Trade and other receivables		6
Cash and cash equivalents		1
Total assets		19
Trade payables and other liabilities		4
Deferred tax liabilities		3
Total liabilities		6
Total net assets		13
Preliminary goodwill		13
The preliminary fair values of acquired identifiable intangible assets at the dates of the acquisitions (including technology, customer relations, and trade marks) amounted to EUR 10 million. The fair value of current trade receivables and other receivables is approximately EUR 6 million. The fair value of the trade receivables does not include any significant risk.
The preliminary goodwill of EUR 13 million reflects the value of know-how and expertise in advanced underwater services.
During 2018, the acquisition-related costs the Group incurred related to external legal fees and due diligence costs were insignificant. The costs have been included in the other operating expenses in the consolidated statement of income.
Pro forma
If the acquisitions had occurred on 1 January 2018, management estimates that the consolidated net sales would have been EUR 5,176 million. The impact in the consolidated operating result would not have been significant. In determining these amounts, management has assumed that the fair value adjustments which arose on the dates of the acquisitions would have been the same if the acquisitions had occurred on 1 January 2018.
Acquisitions 2017
Greensmith Energy Management Systems Inc.
On 3 July 2017, Wärtsilä acquired 100% of Greensmith Energy Management Systems Inc.
Greensmith Energy Management Systems Inc. is a market leader in grid-scale energy storage software and integrated solutions. The acquisition of Greensmith enables Wärtsilä to rapidly expand its footprint in the energy storage market globally and position as a premier energy system integrator.
The following tables summarise the amounts for the consideration paid for Greensmith, the cash flow from the acquisition, and the amounts of the assets acquired and liabilities assumed recognised at the acquisition date.
Total consideration		MEUR
Consideration transferred		144
Total consideration transferred		144
Cash flow from the acquisition		MEUR
Consideration paid in cash		144
Total cash flow from the acquisition		144
The assets and liabilities arising from the acquisition		MEUR
Intangible assets		42
Trade and other receivables		5
Deferred tax assets		4
Total assets		51
Provisions		5
Trade payables and other liabilities		5
Deferred tax liabilities		17
Total liabilities		27
Total net assets		24
Goodwill		120
The fair values of the acquired identifiable intangible assets at the date of the acquisition (including trademark and tehcnology related IP) amounted to EUR 42 million. The fair value of the current trade receivables and other receivables is approximately EUR 5 million. The fair value of the trade receivables does not include any significant risk.
The goodwill of EUR 120 million reflects the value of know-how and expertise in grid-scale energy storage and integrated solutions. Wärtsilä foresees that the acquisition will strengthen its position as an energy system integrator as well as support its growth strategy by improving Wärtsilä's offering and services towards customers.
During 2017 the Group incurred acquisition-related costs of EUR 1 million related to external legal fees and due diligence costs. The costs have been included in the other operating expenses in the consolidated statement of income.
Pro Forma
If the Greensmith acquisition had occurred on 1 January 2017, management estimates that the consolidated net sales would have been EUR 4,928 million. The impact in the consolidated operating result would not have been significant. In determining these amounts, management has assumed that the fair value adjustments which arose on the date of the acquisition would have been the same if the acquisition had occurred on 1 January 2017.
Other acquisitions
In October, Wärtsilä acquired 100% of Puregas Solutions Ab and Guidance Navigation Holdings Limited.
Puregas Solutions is a Sweden based leader in turnkey biogas upgrading solutions. The acquisition complements Wärtsilä’s existing position in the biogas liquefaction market.
Guidance Navigation Holdings Limited is a UK based privately owned company. The company is a technology leader in the marine industry for sensor solutions relating to dynamic positioning and other vessel control systems. The acquisition enhances Wärtsilä’s capabilities in the areas of situational awareness and near-field measurement, both essential for more intelligent vessel navigation.
The following tables summarise the amounts for the consideration paid, the cash flow from the acquisitions, and the amounts of the assets acquired and liabilities assumed recognised at the acquisition dates.
Total consideration		MEUR
Consideration transferred		63
Total consideration transferred		63
Cash flow from the acquisitions		MEUR
Consideration paid in cash		53
Contingent consideration		9
Cash and cash equivalents of the acquired companies		-10
Total cash flow from the acquisitions		52
The assets and liabilities arising from the acquisitions		MEUR
Intangible assets		17
Inventories		1
Trade and other receivables		14
Cash and cash equivalents		10
Total assets		43
Provisions		1
Trade payables and other liabilities		9
Advances received		4
Deferred tax liabilities		4
Total liabilities		17
Total net assets		26
Goodwill		37
The fair values of the acquired identifiable intangible assets at the dates of acquisitions (including customer relations, technology and trade marks) amounted to EUR 17 million. The fair value of the current trade receivables and other receivables is approximately EUR 14 million. The fair value of the trade receivables does not include any significant risk.
The goodwill of EUR 37 million reflects the value of know-how and expertise in turnkey biogas upgrading solutions and more intelligent vessel navigation. Wärtsilä foresees that the acquisition of Puregas Solutions Ab will strengthen and complement its position in the biogas liquefaction market as well as improve Wärtsilä's offering and reach in the gas value chain. The acquisition of Guidance Navigation Holdings Limited enhances Wärtsilä’s capabilities in the areas of situational awareness and near-field measurement, both essential for more intelligent vessel navigation.
During 2017, the Group incurred acquisition-related costs of EUR 1 million related to external legal fees and due diligence costs. The costs have been included in the other operating expenses in the consolidated statement of income.
Pro forma
If the other acquisitions had occurred on 1 January 2017, management estimates that the consolidated net sales would have been EUR 4,940 million. The impact in the consolidated operating result would not have been significant. In determining these amounts, management has assumed that the fair value adjustments which arose on the dates of the acquisitions would have been the same if the acquisitions had occurred on 1 January 2017.

3. Disposals

Disposals 2018

Disposal of pumps business

On 31 October 2018, Wärtsilä divested its pumps business to Solix Group, a Scandinavian investment company. Wärtsilä Pumps has belonged to the Wärtsilä Marine Solutions organisation and became part of the Group along with the acquisition of Hamworthy in 2012. The Wärtsilä Pumps business recorded sales of approximately EUR 50 million in 2017. The cash consideration of the transaction was EUR 45 million, and in addition EUR 20 million of the transaction price is reported as a receivable in the non-current other receivables in the consolidated statement of financial position. Wärtsilä reported a gain of EUR 27 million in other operating income from the transaction according to the preliminary sales profit calculation.

Other disposals

On 20 October 2018, Wärtsilä sold its majority interest in Wärtsilä Yuchai Engine Co. Ltd. The consideration received and the impact on profit for the financial period were not significant.

Disposals 2017

In 2017, there were no disposals.

4. Disaggregation of revenue
Revenue from the contracts with customers is derived over time and at a point in time in the following revenue types.
Net sales by revenue type
MEUR		2018	2017
Products		1 145	1 149
Goods and services		557	567
Projects		2 992	2 785
Long-term agreements		480	410
Total		5 174	4 911
Timing of satisfying performance obligations
MEUR		2018	2017
At a point in time		3 740	3 555
Over time		1 434	1 356
Total		5 174	4 911
Product sales consist of sales of spare parts and standard equipment for which the revenue is recognised at a point in time when the control of the products has transferred to customer, in general at the delivery of the goods.
Goods and services -type of revenue involves short-term field service jobs, which includes the delivery of a combination of service and equipment. The revenue is recognised at a point in time when service is rendered.
Projects contain short-term and long-term projects. Depending on the contract terms and the duration of the project, the revenue is recognised at a point in time or over time. Revenue related to long-term projects, such as construction contracts, integrated solutions projects, ship design, and energy solutions contracts, is recognised over time. Revenue for tailor-made equipment delivery projects is recognised at a point in time.
Long-term agreements contain long-term operating and maintenance agreements for which the revenue is recognised over time.

5. Other operating income
MEUR	2018	2017
Capital gains	32	18
Government grants	7	10
Sale of scrapped material	3	3
Sale of by-products	2	1
Income related to cancelled orders*	10	6
Insurance indemnities	4	4
Other	24	19
Total	80	60
* Expenses related to cancelled orders are recorded on respective expense accounts.

6. Material and services
		Restated
MEUR	2018	2017
Purchases during the financial period	-1 598	-1 418
Change in inventories	40	1
External services	-1 294	-1 144
Total	-2 852	-2 561

7. Employee benefit expenses
MEUR		2018	2017
Wages and salaries		954	1 000
Pension costs
Defined benefit plans		7	9
Defined contribution plans		71	66
Other compulsory personnel costs		142	139
Total		1 175	1 214
Management remuneration is specified in Note 30. Related party disclosures.
Long-term incentive schemes
Wages and salaries include a release of provision for expenses arising from bonus schemes 2016-2018 and 2017-2019 totalling EUR 21 million (previous year increase 40). The provision is recognised at fair value. The bonus schemes are tied to the price development of the company’s share during a pre-determined timeframe, and an upper limit is set for the bonus. When a bonus scheme ends and the employment requirement is fulfilled, the bonus is settled in cash. Board of Management members shall acquire Wärtsilä shares with 50% of the net bonuses received, until the share ownership corresponding to the individuals' annual gross base salary level has been achieved.
The bonus payment for bonus schemes is based on the share price development during a three-year period. The decision about the share issue without payment has been reflected to the amount and criteria of long-term incentive schemes. The 2016-2018 bonus scheme comprises 4,857,000 incentive rights, the 2017-2019 bonus scheme 5,490,000 incentive rights and the 2018-2020 bonus scheme 4,845,000 incentive rights. For the bonus scheme 2016-2018 the basis of a share price is EUR 15.82, for the bonus scheme 2017-2019 EUR 16.19, and for the bonus scheme 2018-2020 EUR 22.58. The bonus schemes take into account 100% of dividends paid, and the paid bonus cannot exceed EUR 4.61 per incentive right in the 2016-2018 bonus scheme, EUR 6.07 in the 2017-2019 bonus scheme, or EUR 8.47 in the 2018-2020 bonus scheme.
		2018	2017
Personnel on average		18 899	17 866
Personnel at the end of the financial period		19 294	18 065

8. Depreciation, amortisation and impairment
MEUR	2018	2017
Development expenses	11	12
Purchase price allocation amortisation	43	36
Other intangible assets	12	12
Buildings and structures	16	15
Machinery and equipment	43	45
Other tangible assets	1	1
Impairments	3	14
Total	130	134

9. Other operating expenses
MEUR	2018	2017
Travel costs	145	138
Rental costs	90	90
Legal and consultancy costs	89	71
Information technology costs	61	55
Other personnel related costs	58	51
Other	204	173
Total	648	577

10. Financial income and expenses
MEUR	2018	2017
Interest income on loans and receivables	2	2
Interest income on financial assets at fair value through the statement of income	20	9
Interest income on investments at amortised cost	1
Other financial income	1	2
Total financial income	24	12
Interest expenses on financial liabilities recognised at amortised cost	-11	-10
Interest expenses on financial liabilities at fair value through the statement of income	-34	-14
Net interest from defined benefit plans	-3	-3
Changes in fair values of financial assets/liabilities at fair value through the statement of income	-4	1
Write-down of financial receivables	-1
Exchange rate differences*	-6	-27
Fee expenses	-2	-1
Other financial expenses	-4	-4
Total financial expenses	-65	-59
Total	-40	-47
* In 2018, the result from the ineffective portion of cash flow hedges related to cancelled orders, EUR -2 million (-15), and exchange rate differences from unhedged internal loans, EUR -5 million (-7) were included in exchange rate differences in the consolidated statement of income.

11. Income taxes
			Restated
MEUR		2018	2017
Income taxes
for the financial period		-126	-121
for prior financial periods		1	-2
Change in deferred tax
origination and reversal of temporary differences		10	2
changes in tax rates		1	4
Total		-116	-117
Reconciliation of effective tax rate:
Profit before taxes		502	491
Tax calculated at the domestic corporate tax rate 20.0%		-100	-98
Effect of changed tax rates		1	4
Effect of different tax rates in foreign subsidiaries		6	4
Effect of income not subject to tax and non-deductible expenses		2	-3
Effect of share of result of associates and joint ventures		3	3
Utilisation of previously unrecognised tax losses carried forward			4
Unrecognised taxes on losses carried forward		-17	-14
Other taxes*		-10	-14
Other temporary differences		-1	-1
Income taxes for prior financial periods		1	-2
Tax charge in the consolidated statement of income		-116	-117
Effective tax rate (%)		23.1	23.7
* Other taxes consist mainly of witholding taxes not utilised and taxes not directly based on taxable income.
Income taxes related to other comprehensive income are presented in Consolidated statement of comprehensive income. Changes in deferred tax assets and liabilities are presented in Note 22. Deferred taxes.
Wärtsilä is subject to tax audits in some countries, which can result in tax reassessment decisions and obligations to pay additional taxes and related payments.

12. Earnings per share
Earnings per share is calculated by dividing the profit for the financial period attributable to equity holders of the parent company by the weighted average number of shares outstanding. During the financial periods there were no programmes with dilutive effect.
			Restated
MEUR		2018	2017
Profit for the financial period attributable to equity holders of the parent company		386	375
Thousands of shares
weighted average number of shares outstanding*		591 723	591 723
Earnings per share attributable to equity holders of the parent company (basic and diluted):
Earnings per share (EPS), basic and diluted, EUR		0.65	0.63
* Additional information on the number of shares is presented in Note 24. Equity.
Earnings per share for the comparison period has been restated to reflect the increased number of shares.

13. Intangible assets
Goodwill
Goodwill allocation
Goodwill arising from business acquisitions is allocated to the Group cash-generating unit (CGU) that is the Group´s operating segment. The operating segment represents the lowest level within the Group at which the goodwill is monitored. The companies acquired during the financial period are integrated to the Group CGU at the acquisition date. Previously separately presented CGU’s have also been integrated to the Group CGU during the financial period. The goodwill is presented in the table below:
Goodwill/Cash Generating Unit
MEUR				2018	2017
Wärtsilä on 1 January				1 237	1 112
Acquisitions and disposals				113	157
Other changes					1
Changes in exchange rates				4	-33
Total				1 355	1 237
Impairment testing of goodwill
The Group performs its annual impairment testing of goodwill on 30 September. Impairment of goodwill is also carried out when changes in circumstances indicate that the carrying amount may not be recoverable.
The recoverable amount from the CGU is determined based on value-in-use calculation. The calculation is made on a discounted cash flow method basis, derived from the order book and five-year cash flow projections from management approved strategic plans. The estimated cash flow of CGU is based on utilisation of the existing property, plant and equipment in their current condition with normal maintenance capital expenditure, excluding any potential future acquisitions. Cash flow beyond the five-year period is calculated using the terminal value method. The terminal growth rate used in projections is based on management’s assessment on conservative long-term growth. The terminal growth rate used is 2%.
The key driver for the valuation is the growth in the global economy and in particular the development of the global power market, the global shipbuilding industry, and the demand for related services. The projected development of total costs in the market affects the profitability, whereas no single cost item is considered to have a material impact. The valuation driver for the new equipment sales is the growth in the global economy, whereas for after sales the drivers are also the demand for related services and the projected development in labour cost.
The applied discount rate is the weighted average pre-tax cost of capital (WACC) as defined by Wärtsilä. The components of the WACC are risk-free rate, market risk premium, industry specific beta, cost of debt and debt equity ratio. When defining the WACC for 2018, it has been considered that the general interest rate is currently on a lower level. Wärtsilä has used a WACC of 8.9% (9.4) in the calculations.
As a result of the impairment test, no impairment loss for the CGU was recognised for the financial periods ended 31 December 2018 and 2017 respectively. The recoverable amount from the CGU exceeded its carrying value remarkably.
Sensitivity analysis
The management has assessed that no reasonable possible changes in the key assumptions would cause the CGU´s carrying amount to exceed its recoverable amount. Sensitivity analyses have been carried out for the valuation of the recoverable amount for the CGU by changing the assumptions used in the calculation. A change in an assumption that would cause the recoverable amount to equal the carrying amount is presented in the table below.
				Change
Pre-tax discount rate		increase more than 20 percentage points
Terminal growth rate		decrease more than 68 percentage points
Profitability		decrease more than 82 percentage
In management’s opinion, the changes in the basic assumptions shall not be seen as an indication that these factors are likely to materialise. The sensitivity analyses are hypothetical and should therefore be treated with caution.
2018
MEUR	Develop- ment expenses	Construc- tion in progress and advances paid	Other intangible assets	Goodwill	Total
Cost on 1 January 2018	142	21	783	1 243	2 189
Changes in exchange rates			-2	4	2
Acquisitions and disposals	-2	10	66	113	187
Additions	2	35	8	1	45
Decreases and other changes			-12	-1	-13
Reclassifications		-13	13
Cost on 31 December 2018	141	53	857	1 361	2 411
Accumulated amortisation and impairment on 1 January 2018	-85		-521	-6	-612
Changes in exchange rates			1		1
Accumulated amortisation on decreases and other changes	2		12	1	15
Amortisation during the financial period	-11		-55		-66
Impairments			-1	-1	-2
Accumulated amortisation and impairment on 31 December 2018	-94		-565	-6	-665
Carrying amount on 31 December 2018	47	53	292	1 355	1 747
Development costs for internally generated assets capitalised during the financial period amounted to EUR 30 million (16). The carrying amount was EUR 91 million (73). Purchase price allocation amortisation amounted to EUR 43 million (36) and the carrying amount was EUR 248 million (227).
2017
MEUR	Develop- ment expenses	Construc- tion in progress and advances paid	Other intangible assets	Goodwill	Total
Cost on 1 January 2017	107	41	743	1 118	2 008
Changes in exchange rates			-15	-33	-49
Acquisitions			61	157	217
Additions	1	19	5		25
Decreases and other changes			-12	1	-12
Reclassifications	34	-39	5
Cost on 31 December 2017	142	21	783	1 243	2 189
Accumulated amortisation and impairment on 1 January 2017	-73		-495	-5	-574
Changes in exchange rates			9		10
Accumulated amortisation on decreases and other changes			12		12
Amortisation during the financial period	-12		-48		-60
Impairments			-1		-1
Accumulated amortisation and impairment on 31 December 2017	-85		-521	-6	-612
Carrying amount on 31 December 2017	57	21	262	1 237	1 577

14. Property, plant & equipment
2018
MEUR	Land and water	Build- ings and struc- tures	Machin- ery and equip- ment	Construc- tion in progress and advances paid	Other tangible assets	Total
Cost on 1 January 2018	43	313	787	18	23	1 185
Changes in exchange rates		-1	-1			-3
Acquisitions and disposals	-9	-22	-19			-50
Additions	1	5	23	35		64
Decreases	-4	-4	-22			-30
Reclassifications		7	12	-14		5
Cost on 31 December 2018	31	297	780	40	24	1 171
Accumulated depreciation and impairment on 1 January 2018	-2	-172	-642		-20	-835
Changes in exchange rates		1	1			1
Accumulated depreciation on decreases and disposals	1	11	41			53
Depreciation during the financial period		-16	-43		-1	-60
Impairments			-2			-2
Reclassifications		-1	-4			-5
Accumulated depreciation and impairment on 31 December 2018	-1	-177	-648		-21	-847
Carrying amount on 31 December 2018	30	120	132	39	3	324
Value of finance-leased assets included in carrying amount		1	1			3
2017
MEUR	Land and water	Build- ings and struc- tures	Machin- ery and equip- ment	Construc- tion in progress and advances paid	Other tangible assets	Total
Cost on 1 January 2017	46	349	834	12	25	1 266
Changes in exchange rates	-1	-10	-18			-30
Additions		2	20	17		39
Decreases	-2	-22	-45			-69
Reclassifications		-6	-5	-11	-1	-22
Cost on 31 December 2017	43	313	787	18	23	1 185
Accumulated depreciation and impairment on 1 January 2017	-1	-179	-660		-21	-861
Changes in exchange rates		4	13			18
Accumulated depreciation on decreases		15	44			59
Depreciation during the financial period		-15	-45		-1	-61
Impairments		-6	-7			-13
Reclassifications		9	13		1	22
Accumulated depreciation and impairment on 31 December 2017	-2	-172	-642		-20	-835
Carrying amount on 31 December 2017	41	142	146	18	3	349
Value of finance-leased assets included in carrying amount						1

15. Investments in associates and joint ventures
MEUR							2018	2017
Carrying amount on 1 January							83	84
Investments							1
Share of result							13	13
Dividends							-17	-12
Translation differences							-1	-1
Reduction of share capital in associates and joint ventures							-13
Carrying amount on 31 December							66	83
In 2018, Wärtsilä invested EUR 1 million in the joint venture CSSC Wärtsilä Electrical & Automation Co., Ltd., and received EUR 13 million as return of capital from Wärtsilä Hyundai Engine Co Ltd.
Summary of financial information (100%):
2018
MEUR			Holding %	Assets	Equity	Liabil- ities	Net sales	Profit for the financial period
Joint ventures
Wärtsilä Qiyao Diesel Company Ltd.		China	50.0	26	19	8	17
Wärtsilä Hyundai Engine Co Ltd.		South Korea	50.0	111	91	20	164	29
CSSC Wärtsilä Electrical & Automation Co., Ltd.		China	49.0	2	2	1		-1
CSSC Wärtsilä Engine (Shanghai) Co., Ltd.		China	49.0	70	19	51	49	-3
Repropel Sociedad de reparacao de helices		Portugal	50.0	1	1	1	1
Associated companies
Wärtsilä Land & Sea Academy, Inc.		Philippines	40.0		-2	2
Neptun Maritime AS		Norway	40.0	1	1		1
CSSC Wärtsilä Engine (Shanghai) Co., Ltd. factory is manufacturing medium and large bore medium speed diesel and dual-fuel engines at Lingang, Shanghai. Wärtsilä Hyundai Engine Co Ltd. manufactures Wärtsilä 50DF dual-fuel engines for LNG carriers and other marine application in Mokpo, South Korea. Wärtsilä Qiyao Diesel Company Ltd. manufactures marine auxiliary engines in Shanghai, China. CSSC Wärtsilä Electrical & Automation Co., Ltd. manufactures advanced electronical and automation solutions for the cruise industry.
2017
MEUR			Holding %	Assets	Equity	Liabil- ities	Net sales	Profit for the financial period
Joint ventures
Wärtsilä Qiyao Diesel Company Ltd.		China	50.0	25	19	7	13
Wärtsilä Hyundai Engine Co Ltd.		South Korea	50.0	192	122	70	176	34
CSSC Wärtsilä Engine (Shanghai) Co., Ltd.		China	49.0	62	22	40	26	-9
Repropel Sociedad de reparacao de helices		Portugal	50.0	1	1	1	1
Associated companies
Wärtsilä Land & Sea Academy, Inc.		Philippines	40.0		-2	2
Neptun Maritime AS		Norway	40.0	1	1		1

16. Financial assets and liabilities by measurement category
2018
MEUR		Measured at amortised cost	At fair value through the statement of income	At fair value through other compre- hensive income	Carrying amounts of the statement of financial position items	Fair value
Non-current financial assets
Interest-bearing investments			3		3	3
Trade receivables		49			49	49
Derivatives			3		3	3
Other investments			16		16	16
Other receivables		20			20	20
Current financial assets
Trade receivables		1 219			1 219	1 219
Trade receivables for sale			3		3	3
Derivatives			5	3	8	8
Other financial receivables		3			3	3
Cash and cash equivalents		466	21		487	487
Carrying amount by measurement category		1 758	52	3	1 813	1 813
Non-current financial liabilities
Interest-bearing debt		748			748	754
Derivatives			16		16	16
Current financial liabilities
Interest-bearing debt		74			74	74
Trade payables		596			596	596
Derivatives			27	36	63	63
Other financial liabilities		9			9	9
Carrying amount by measurement category		1 428	43	36	1 507	1 513
2017
MEUR		Measured at amortised cost	At fair value through the statement of income	At fair value through other compre- hensive income	Carrying amounts of the statement of financial position items	Fair value
Non-current financial assets
Interest-bearing investments			5		5	5
Trade receivables		109			109	109
Other investments			13		13	13
Other receivables		3			3	3
Current financial assets
Trade receivables		1 306			1 306	1 306
Trade receivables for sale			1		1	1
Derivatives			15	14	28	28
Other financial receivables		4			4	4
Cash and cash equivalents		360	19		379	379
Carrying amount by measurement category		1 782	53	14	1 848	1 848
Non-current financial liabilities
Interest-bearing debt		517			517	524
Derivatives			19		19	19
Current financial liabilities
Interest-bearing debt		102			102	102
Trade payables		539			539	539
Derivatives			12	10	22	22
Other financial liabilities		11			11	11
Carrying amount by measurement category		1 169	31	10	1 211	1 218
Fair value hierarchy
Financial instruments measured at fair value are classified according to the following fair value hierarchy: instruments measured using quoted prices in active markets (level 1), instruments measured using inputs other than quoted prices included in level 1 observable either directly or indirectly (level 2), and instruments measured using inputs that are not based on observable market data (level 3). Financial instruments measured at fair value include financial assets and liabilities at fair value through the statement of income. Due to the short nature of the current receivables, their carrying amount is considered to be same as their fair value.
Specific valuation techniques used to value financial instruments include:
• the fair value of forward foreign exchange contracts is determined by using forward rates at the closing date
• the fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves
• the use of quoted market prices or dealer quotes for similar instruments
				2018		2017
MEUR			Level 2	Level 3	Level 2	Level 3
Financial assets
Other investments				16		13
Interest-bearing investments, non-current			3		5
Other receivables, non-current			3		3
Derivatives			12		28
Financial liabilities
Interest-bearing debt, non-current*			754		524
Derivatives			79		41
* Measured at amortised cost in the consolidated statement of financial position.
Additional information on financial liabilities is presented in Note 26. Financial liabilities.
Other investments
Other investments include unlisted shares carried at fair value. These investments are valued using certain DCF models where critical assumptions relate to WACC level and expected cash flows from future dividends. However, the results from different scenarios vary a lot. Thus, the management considers that the valuation at amortised cost is the best estimate of fair value.
MEUR					2018	2017
Carrying amount on 1 January					13	15
Acquired shares					3
Disposal of shares						-1
Impairment						-1
Carrying amount on 31 December					16	13
In 2018, the cost for other unlisted shares (level 3) was EUR 16 million (13), and the market value of them was EUR 16 million (13).

17. Inventories
MEUR	2018	2017
Materials and consumables	471	432
Work in progress	615	557
Finished products	35	27
Advances paid	43	36
Total	1 165	1 051
In 2018, EUR 1 million (4) impairment for obsolete inventories has been recognised in the consolidated statement of income. Acquisition-related increase in inventories is EUR 8 million (1).

18. Contract balances
MEUR	2018	2017
Trade receivables	1 271	1 416
Contract assets	557	351
Contract liabilities
Advances received	584	523
Deferred income	345	265
Trade receivables and contract assets
Non-current	49	109
Current	1 779	1 658
Contract liabilities
Non-current	41	64
Current	888	724
Revenue recognised in the financial period that was included in the contract liability on 1 January	724	615
Remaining performance obligations from projects and contracts under execution*	3 794
* As permitted under the transitional provision in IFRS 15, the transaction price allocated to unsatisfied performance obligations as of 31 December 2017 is not disclosed.
Trade receivables related to contracts with customers are non-interest-bearing receivables. Trade receivables have decreased during 2018 through collection of some sizable overdue receivables. Contract assets primarily relate to the Group’s right to consideration for transferred goods or services, but which is not yet billed at the reporting date. The contract assets are transferred to receivables when the rights become unconditional. The contract liabilities mainly relate to the advance consideration received from customers for contracts, but for which the corresponding good or service has not yet been transferred. The contract assets and liabilities arise from long-term service agreements and projects recognised over time such as gas solutions construction contracts, integrated solutions projects, ship design, and energy solutions turn key contracts. The increase in contract assets in 2018 is the result of usual business-related variation mainly in Energy Solutions projects, as well as the impact of new acquisitions amounting to EUR 15 million. In addition, the accrued revenue has increased in some larger long-term service agreements. The increase in contract liabilities in 2018 arises mainly from the usual business-related variation in Energy Solutions projects as well as the acquisition impact of EUR 1 million.

19. Other receivables
		Restated
MEUR	2018	2017
Derivatives	12	28
Interest and other financial items	3	4
Insurance receivables	5	3
Rental accruals	3	4
Prepaid expenses	6
Other accruals	42	46
Loan receivables	3	3
Defined benefit plans		1
VAT receivables	104	97
Other*	83	52
Total	262	238
Non-current	34	18
Current	228	221
* Includes payroll related tax receivables of EUR 9 million (10) in Brazil, which cannot be utilised within a year.

20. Cash and cash equivalents
MEUR	2018	2017
Cash and bank balances*	461	359
Cash equivalents	26	20
Total	487	379
* EUR 128 million (122) of cash and bank balances relate to cash in countries where repatriation is limited due to local regulation and consequently the cash is not immediately available to the parent company.

21. Net debt reconciliation
Net interest-bearing debt
MEUR					2018	2017
Interest-bearing debt, non-current					748	517
Interest-bearing debt, current					74	102
Total interest-bearing liabilities					823	619
Interest-bearing receivables					-3	-5
Cash and cash equivalents					-487	-379
Total interest-bearing assets					-490	-385
Total net interest-bearing debt					333	234
Net debt reconciliation
MEUR		Carrying amount on 1 January 2018	Cash flows	Changes in exchange rates	Acquistions and disposals	Carrying amount on 31 December 2018
Interest-bearing debt, non-current		517	231	-1		748
Interest-bearing debt, current		102	-40	-6	18	74
Interest-bearing receivables		-5	-2		6	-3
Cash and cash equivalents		-379	-101	4	-11	-487
Net debt as at 31 December 2018		234	87	-2	13	333
MEUR		Carrying amount on 1 January 2017	Cash flows	Changes in exchange rates	Acquistions	Carrying amount on 31 December 2017
Interest-bearing debt, non-current		520	-12	9		517
Interest-bearing debt, current		108	10	-14		102
Interest-bearing receivables		-7	1	2		-5
Cash and cash equivalents		-472	94	9	-10	-379
Net debt as at 31 December 2017		150	92	6	-10	234

22. Deferred taxes
Changes in deferred taxes during 2018
MEUR		1 January 2018	Recog- nised in the con- solidated statement of income	Other compre- hensive income	Transla- tion dif- ferences	Acquisi- tions and disposals	31 December 2018
Deferred tax assets
Tax loss carry-forwards		18				2	18
Pension obligations		23	-2				21
Provisions		30	-2				28
Elimination of intragroup margin in inventories		5					5
Fair value reserve		6		3			9
Other temporary differences		49	6		1	-7	49
Total		131	1	3	1	-6	129
Deferred tax liabilities
Intangible assets and property, plant and equipment		57	-6			14	66
Fair value reserve		2		-2
Other temporary differences		42	-2			-7	32
Total		102	-8	-2		7	99
Net deferred tax assets/liabilities		29	9	5	1	-13	30
On 31 December 2018, the Group had temporary differences on which no deferred tax assets were booked totalling EUR 63 million (47), as it is uncertain if they will be realised. Most of the unrecognised deferred tax assets are related to cumulative tax losses. Of these, EUR 18 million (8) will expire within the next five years and the rest will expire later or never. Most of the cumulative tax losses on which deferred tax assets have been booked will never expire.
Changes in deferred taxes during 2017
							Restated
MEUR		1 January 2017	Recog- nised in the con- solidated statement of income	Other compre- hensive income	Transla- tion dif- ferences	Acquisi- tions and disposals	31 December 2017
Deferred tax assets
Tax loss carry-forwards		19	-1		-1	2	18
Pension obligations		25	-2		-1		23
Provisions		32	-2		-2	2	30
Elimination of intragroup margin in inventories		9	-3				5
Fair value reserve		12		-6	-1		6
Other temporary differences		44	5		-3		49
Total		141	-3	-6	-7	4	131
Deferred tax liabilities
Intangible assets and property, plant and equipment		59	-19		-1	21	57
Fair value reserve		1		2			2
Other temporary differences		35	8		-3		42
Total		93	-10	2	-3	21	102
Net deferred tax assets/liabilities		48	7	-8	-4	-17	29

23. Pension obligations
MEUR			2018	2017
Net defined benefit liabilities on 31 December			149	154
Liability for other long term employee benefits on 31 December			13	11
Wärtsilä has defined benefit plans for its employees mainly in Europe and Asia. The major plans are located in Switzerland, Germany, Great Britain and Sweden. The Swiss defined benefit plan accounts for 31% of the Group's total defined benefit obligations and 57% of the plans' assets. Most of the plans provide a lifetime pension to the members at the normal retirement age but there are also plans, which provide a lump sum payment at the retirement date. Most of these defined benefit pension plans are managed by pension funds. Their assets are not included in the Group's assets. The plans' assets are typically invested according to the investment strategies approved by the funds' Board of Trustees, or in some cases they are completely administered by insurance companies. Wärtsilä's subsidiaries make their payments to pension funds in accordance with the local legislation and practice. Authorised actuaries in each country have performed the actuarial calculations required for the defined benefit plans.
The Swiss Plan
Wärtsilä operates a defined benefit plan in Switzerland in accordance with the local pension laws and regulations. The plan provides benefits to the members in the form of a pension payable after retirement. The level of benefits provided depends on the accrued retirement savings capital, which is a result of contributions paid up to retirement plus respective interest. The plan is run as a pension fund by the Board of Trustees separately from the company. Contributions to the plan are paid both by the employees as well as by the employers based on a percentage of the insured salary as defined in the pension fund regulations. Contributions by the employers vary depending on the age of the employee and cover on average two thirds of the total contributions. The investment strategy for a pension fund's asset is the responsibility of the Board of Trustees. Assets are invested in accordance with the strategy and the corridors for different investment categories as defined by local laws. Other risks of the plan are longevity of plan members as well as death or disability of employees before their retirement. The pension plan is reinsured for the risk of death and disability until 31 December 2018. Inflationary increases for pensions in payment are at the discretion of the Board of Trustees as benefits paid by the plan are exceeding the minimum level required by law.
The German Plans
Wärtsilä operates defined benefit plans in Germany in accordance with the local pension laws and regulations. The plans provide benefits to the members in the form of a pension payable after retirement. The level of benefits provided depends on the accrued retirement savings capital, which is a result of contributions paid up to retirement plus respective interest. The plans vary from unfunded plans to a plan run as a pension fund. In some of the plans, contributions are paid to the plan both by the employees and the employers based on a percentage of the insured salary as defined in the pension fund regulations. However, in some plans only the employer is obliged to make the payments. Contributions by the employers vary depending on the age of the employee, the duration of the employment, and also on the position of the employee. The main risks of the plans are longevity of plan members and death or disability of employees before their retirement. In a funded plan, also the investment strategy chosen includes certain risk. Inflationary increases for pensions in payment are valuated on a yearly basis.
MEUR			2018	2017
Present value of unfunded defined benefit obligations			108	111
Present value of funded defined benefit obligations			177	197
Fair value of plan assets			-135	-154
Net liability in the statement of financial position			149	154
%			Present value of defined benefit obligations	Fair value of plan assets
Switzerland			31	57
Germany			24	5
Other Europe			35	25
Asia			10	13
Total			100	100
MEUR		Present value of defined benefit obligation	Fair value of plan assets	Net defined benefit liability
Balance on 1 January 2017		323	-156	168
Changes in exchange rates		-14	10	-4
Acquisitions		4		4
Recognised in the statement of income:
Current service cost		8		9
Interest cost (+) / interest income (-)		5	-2	3
Remeasurements recognised in other comprehensive income:
Return on plan assets, excluding interest income			-3	-3
Experience adjustments		8		8
Changes in demographic assumptions		-1		-1
Changes in financial assumptions		-10		-10
Contribution paid by the plan members		1	-1
Contribution paid by the employer			-10	-10
Benefits paid		-19	10	-9
Balance on 31 December 2017		307	-154	154
Balance on 1 January 2018		307	-154	154
Changes in exchange rates		2	-2	-1
Recognised in the statement of income:
Current service cost		10		10
Past service cost (- credit)		-1		-1
Gains (-) / losses (+) on curtailments and settlements		-21	20	-2
Interest cost (+) / interest income (-)		5	-3	3
Remeasurements recognised in other comprehensive income:
Return on plan assets, excluding interest income			11	11
Experience adjustments		-6		-6
Changes in financial assumptions		-2		-2
Contribution paid by the plan members		1	-1
Contribution paid by the employer			-11	-11
Benefits paid		-13	5	-8
Balance on 31 December 2018		282	-134	149
Plan assets invested in:
%			2018	2017
Shares and other equity instruments			17	26
Bonds and other debt instruments			33	35
Property			17	16
Other assets			33	23
The main actuarial assumptions at the end of the financial period are (expressed as weighted averages):
%			2018	2017
Discount rate			1.78	1.65
Future salary growth			2.16	2.15
Future pension growth			1.18	1.14
On 31 December 2018, the weighted average duration of the defined benefit obligation was 12 years. The Group expects to contribute EUR 5 million to the plans during the next financial period.
Assumptions regarding future mortality are set based on actuarial advice in accordance with the published statistics and experience in each country. These assumptions translate into a weighted average life expectancy in years for a pensioner at the retirement age as follows:
			2018	2017
Plan participants retiring at the end of the financial period:
Male			17.0	17.7
Female			17.1	19.6
Plan participants retiring 20 years after the end of the financial period:
Male			16.1	19.5
Female			18.1	21.9
The following table presents a sensitivity analysis for each significant actuarial assumption showing how the defined benefit obligation would have been affected by changes in the relevant actuarial assumption that were reasonably possible at the end of the financial period. This sensitivity analysis applies to the defined benefit obligation only and not to the net defined benefit pension liability in its entirety.
Sensitivity analysis
			Effect to defined benefit obligation, MEUR
		Change in assumption	2018	2017
Discount rate		increase 1%	-33	-36
Discount rate		decrease 1%	41	44
Future salary growth		increase 1%	9	13
Future salary growth		decrease 1%	-8	-10
Future pension growth		increase 1%	25	28
Future pension growth		decrease 1%	-15	-15

24. Equity
Equity consists of share capital, share premium, translation differences, fair value reserve, remeasurements of defined benefit liabilities and retained earnings.
Share capital and number of shares
MEUR
Share capital	Number of shares and votes	Share capital	Share premium	Total
1 January 2017	197 241 130	336	61	397
31 December 2017	197 241 130	336	61	397
Share issue without payment on 12 March 2018	394 482 260
31 December 2018	591 723 390	336	61	397
Wärtsilä's share does not have a nominal value. Wärtsilä has one series of shares. Each share is assigned one vote in the Annual General Meeting and has equal right to dividend.
Share Capital
The subscription price of a share received by the company in connection with share issues is credited to the share capital, unless it is provided in the share issue decision that a part of the subscription price is to be recorded in the fund for invested non-restricted equity.
Share Premium
Share premium is restricted equity. It may be reduced in accordance with the rules applying to decreasing share capital in accordance with the Finnish Limited Liability Companies Act. It can also be used to increase the share capital.
Translation differences
Translating foreign subsidiaries' financial statements by using different exchange rates in the statement of comprehensive income and in the statement of financial position causes translation differences, which are recognised in equity. Translation differences of foreign subsidiaries’ acquisition cost eliminations and post acquisition gains and losses are also presented in equity. Also translation differences arising from subsidiary net investment and non-current subsidiary loan without agreed settlement dates are presented in equity. The change in translation differences is recognised in other comprehensive income.
Fair value reserve
Fair value reserve includes the changes in fair value of derivative financial instruments, if the hedging is effective and eligible for hedge accounting. The changes in items included in fair value reserve are recognised in other comprehensive income.
MEUR				Cash flow hedges
Difference between fair value and carrying amount on 1 January 2017				-50
Taxes related to fair value adjustments				12
Fair value reserve on 1 January 2017				-39
Transferred to the statement of income, net of taxes				28
Fair value adjustments				1
Taxes related to fair value adjustments				-1
Fair value reserve on 31 December 2017				-10
Transferred to the statement of income, net of taxes				-6
Fair value adjustments				-17
Taxes related to fair value adjustments				3
Fair value reserve on 31 December 2018				-31
Parent company's distributable funds
After the balance sheet date, the Board of Directors proposed that a dividend of EUR 0.48 per share be paid for the financial period 2018, the total dividend payable being EUR 284 million. The remaining part of the retained profits will be carried further in the unrestricted equity. For the profit for the financial period 2017, a dividend of EUR 0.46 per share was distributed, totalling EUR 272 million, and the rest of the retained profits were carried further in the unrestricted equity. The dividend per share for the comparison period has been restated to reflect the increased number of shares.
Additional information on equity is presented in Notes to the parent company financial statements, in Note 10. Shareholders' equity.

25. Provisions
2018
MEUR	Litigation	Warranties	Onerous contracts	Restruc- turing	Other provisions	Total
Provisions on 1 January 2018	19	173	27	6	35	261
Acquisitions		1	1	1		3
Additions	12	60	107	9	11	198
Used provisions	-2	-62	-64	-6	-5	-138
Released provisions	-9		-5	-4	-4	-21
Provisions on 31 December 2018	21	172	67	7	38	305
Non-current						54
Current						251
2017
						Restated
MEUR	Litigation	Warranties	Onerous contracts	Restruc- turing	Other provisions	Total
Provisions on 1 January 2017	17	170	17	18	29	250
Changes in exchange rates		-2	-1		-1	-4
Acquisitions		1	5			6
Additions	10	57	20	6	11	104
Used provisions	-2	-52	-10	-17	-3	-84
Released provisions	-6		-3		-1	-10
Provisions on 31 December 2017	19	173	27	6	35	261
Non-current						52
Current						209
Warranty provisions include estimated future warranty costs relating to products delivered. The amount of future warranty costs is based on accumulated historical experience. The standard warranty period is one year from the delivery onwards.
The Group is a defendant in a number of legal cases which arise out of, or are incidental to, the ordinary course of its business. These lawsuits concern mainly issues such as contractual and other liability, labour relations, property damage, and regulatory matters. The Group receives from time to time claims of different amounts and with varying degrees of substantiation. There is currently one unusually sizeable claim, but it is highly unlikely that the outcome of it would be unfavourable. The claim is treated as a contingent liability as it is the Group’s policy to provide for amounts related to the claims as well as for the litigation and arbitration matters when an unfavourable outcome is probable and the amount of loss can be reasonably estimated.

26. Financial liabilities
2018
	Current	Non-current
MEUR	< 1 year	1-3 years	3-5 years	> 5 years	Total
Loans from other financial institutions*	63	186	311	250	809
Finance lease liabilities*	1	2			2
Other interest-bearing debt*	11				11
Trade payables	596				596
Derivatives**	63	12	3		79
Other liabilities	9				9
Total	744	199	314	250	1 507
* Estimated interest expenses, total	8	13	11	7	39
Estimated contractual cash flows	752	212	326	257	1 546
2017
	Current	Non-current
MEUR	< 1 year	1-3 years	3-5 years	> 5 years	Total
Loans from pension insurance companies*	8				8
Loans from other financial institutions*	90	112	237	166	605
Finance lease liabilities*	1				1
Other interest-bearing debt*	4				4
Trade payables	539				539
Derivatives**	23	1	17		41
Other liabilities	11				11
Total	676	114	255	166	1 211
* Estimated interest expenses, total	7	12	10	5	34
Estimated contractual cash flows	683	126	265	171	1 245
** Valuation for derivatives with negative market value by maturity date. Nominal contractual amounts are presented in Note 28. Derivative financial instruments.
Interest expenses for long-term loans are calculated by using the average interest rate prevailing on 31 December 2018. Fair values of financial liabilities are presented in Note 16. Financial assets and liabilities by measurement category.

27. Other liabilities
		Restated
MEUR	2018	2017
Accrued expenses	295	335
Personnel costs	124	191
Derivatives	79	41
Interest and other financial items	9	11
Other accruals	45	52
VAT liabilities	26	26
Other	67	70
Total	645	726
Non-current	1	1
Current	645	726

28. Derivative financial instruments
The Group applies hedge accounting to significant foreign currency forward contracts. Detailed financial information is presented in Note 31. Financial risks.
MEUR		2018	of which closed	2017	of which closed
Nominal values of derivative financial instruments (level 2)
Interest rate swaps		270		165
Cross currency swaps		238		74
Currency forwards, included in hedge accounting		1 227	314	814	312
Currency forwards, no hedge accounting		1 600	721	1 134	435
Total		3 335	1 035	2 187	746
Fair values of derivative financial instruments (level 2)
Interest rate swaps		-4		-2
Cross currency swaps		-8		-17
Currency forwards, included in hedge accounting		-22		2
Currency forwards, no hedge accounting		-33		3
Total		-67		-13
In addition, the Group had copper futures and swaps amounting to 264 tons (254) valued at EUR 1 million (2).
Foreign currency forward contracts are against transactional risks and fall due during the following 12 months (12). A currency forward is considered closed when there are offsetting cash flows in the same currency with the same value date. Interest rate swaps are denominated in euros and their average maturity is 48 months (18). The average maturity for cross currency swaps is 54 months (40).
Normally all of the Groups' derivatives are done under International Swaps and Derivatives Association's Master Agreements (ISDA). In case of an event of default under these agreements the non-defaulting party may request early termination and set-off of all outstanding transactions. These agreements do not meet the criteria for offsetting in the statement of financial position. The following table sets out the carrying amounts of recognised financial instruments that are subject to the above agreements.
MEUR				2018	2017
Gross fair values of derivative financial instruments subject to ISDAs
Assets
Cross currency swaps				3
Currency forwards				8	28
Total				12	28
Liabilities
Interest rate swaps				-4	-19
Cross currency swaps				-11
Currency forwards				-63	-22
Total				-79	-41
Net fair values of derivative financial instruments subject to ISDAs
Assets					12
Liabilities				-67	-27
Total				-67	-16

29. Collateral, contingent liabilities and other commitments
			2018		2017
MEUR		Debt in the statement of financial position	Collateral	Debt in the statement of financial position	Collateral
Mortgages given as collateral for liabilities and commitments
Other commitments		15	10	16	10
Total		15	10	16	10
Chattel mortgages and other pledges and securities given as collateral for liabilities and commitments
Loans from credit institutions		8	2	11	4
Other commitments			17		16
Total		8	19	11	19
MEUR				2018	2017
Guarantees and contingent liabilities
on behalf of Group companies				775	737
Total				775	737
Nominal amounts of rents according to leasing contracts
Payable within one year				53	35
Payable between one and five years				148	101
Payable later				83	48
Total				284	185

30. Related party disclosures
Related parties comprise the Board of Directors, the President and CEO, the Board of Management, the associated companies, and joint ventures.
Management remuneration
		Benefits recognised in the statement of income
TEUR		2018	2017
President and CEO
Salaries and other short-term benefits		862	785
Bonuses			234
Share based bonuses*		-1 742	3 438
Statutory pension costs		119	145
Voluntary pension costs		170	156
Deputy of President and CEO
Salaries and other short-term benefits		384	425
Bonuses			80
Share based bonuses*		-871	1 719
Statutory pension costs		115
Voluntary pension costs		107	88
Other members of the Board of Management
Salaries and other short-term benefits		2 263	2 153
Bonuses			456
Share based bonuses*		-5 716	9 896
Statutory pension costs		315	322
Voluntary pension costs		368	493
Total		-3 627	20 389
Board of Directors on 31 December 2018
Mikael Lilius, Chairman		175	153
Tom Johnstone, Deputy Chairman		119	108
Maarit Aarni-Sirviö, member		96	78
Kaj-Gustaf Bergh, member		82	74
Karin Falk, member		78	71
Johan Forssell, member		82	72
Risto Murto, member		94	79
Markus Rauramo, member		103	81
Board of Directors, until 2 March 2017
Sune Carlsson, Deputy Chairman			1
Gunilla Nordström, member			1
Total		829	718
Management remuneration, total		-2 798	21 107
* Share based bonuses are measured at fair value at the reporting date. Due to the development of Wärtsilä share price during 2018, impact to the result for the financial period is positive.
The holdings of Wärtsilä shares of the President and CEO, and the members of the Board of Directors and Board of Management at the year end were 304,439 shares (97,605).
The President and CEO is entitled to retire on reaching 63 years of age. The members of the Board of Management are entitled to retire on reaching the statutory retirement age. One member of the Board of Management is entitled to retire earlier, on reaching 60 years of age. The Group has no loan receivables from the executive management or the Board of Directors. No pledges or other commitments have been given on behalf of management or shareholders.
Business transactions with the associated companies and joint ventures
MEUR		2018	2017
Sales to the associates and joint ventures		40	49
Purchases from the associates and joint ventures		27	53
Receivables from the associates and joint ventures		10	14
Advances paid to the associates and joint ventures			11
Payables to the associates and joint ventures		7	8
Detailed financial information on the associated companies and joint ventures is presented in Note 15. Investments in associates and joint ventures.