2012-02-21 10:00:02 CET
2012-02-21 10:00:30 CET
REGULATED INFORMATION
Fingrid Oyj - Annual Financial Report
Fingrid's Group's financial statements and annual report 2011: Capital investments at a record-high level, profit decreased
Helsinki, Finland, 2012-02-21 10:00 CET (GLOBE NEWSWIRE) -- Fingrid Oyj
Financial Statement release 21 February 2012 at 11.00 EET
Fingrid Group's financial statements and annual report 2011:
Capital investments at a record-high level, profit decreased
- operating profit of the Group 57 million euros (74 million euros in 2010)
- operating profit of the Group in the last quarter 17 (23) million euros
- revenue 438 (456) million euros
- capital expenditure 244 (144) million euros
- equity ratio 25.7 (28.6) %
- interest-bearing net borrowings 1,020 (855) million euros
- the Board of Directors proposes that a dividend of 2,018.26 euros per share
be paid.
Jukka Ruusunen, Fingrid's President & CEO, on the financial statements:
“A decrease in electricity consumption in Finland together with a rise in
market-based costs undermined Fingrid's financial performance. Especially the
costs of reserves which safeguard the system security of the transmission
system and the financial costs due to an elevated interest rate level were on
the increase as compared to 2010.
Net borrowing by the company is growing due to our sizeable capital investment
programme. During 2011, Fingrid issued a bond valued at 1 billion Swedish krona
under the company's international Medium Term Note Programme and signed a
long-term loan of 20 million euros with the Nordic Investment Bank, NIB.
Fingrid's capital expenditure was at a record-high level in 2011. The
extraordinarily high level of capital investments in euros is explained by the
fact that several large-scale construction projects were in progress
concurrently. It appears that the capital expenditure level in 2011 is the
highest within the company's ten-year capital investment programme, in
accordance with which we are going to spend 1,700 million euros in the
transmission system and reserve power in the next 10 years. The capital
investments will require additional borrowing and also increases to the
transmission tariffs in the coming years. At the beginning of 2012, Fingrid
raised the transmission tariffs by an average of 30 per cent. Despite this,
Fingrid's transmission tariffs are among the most inexpensive in Europe.
The system security of the Finnish transmission system continued to stay at a
good level in 2011. However, the disturbance duration per a grid customer's
connection point was above the average. The disturbance duration was increased
especially by faults in some customers' branch lines connected to the grid,
encountered during the storms at Christmas time. The impacts of these faults
were also reflected in Fingrid's grid. The transmission grid itself survived
the storms very well, considering their intensity.
Congestions in the transmission grid restricted electricity trade between
Finland and the other Nordic countries. The available transmission capacity was
about normal, but the scant rainfall in the early part of the year increased
the demand for electricity exports from Finland, and abundant hydropower
capacity in the autumn boosted the demand for imports into Finland. In many
cases, the area prices between Finland and Sweden differed from each other by
dozens of euros per megawatt hour. The situation levelled off towards the late
autumn, which was partly due to the fact that the Fenno-Skan 2 transmission
link was made available to the electricity market a month ahead of schedule.
The link increased the transmission capacity between Finland and Sweden by 40
per cent.”
Financial result
The Group's revenue between October and December was 108 million euros (138
million euros during the corresponding period in 2010). Grid revenue was 59
(64) million euros and sales of imbalance power 25 (49) million euros. The IFRS
profit before taxes between October and December was 8 (14) million euros.
Revenue of the Fingrid Group in 2011 was 438 (456) million euros. Other
operating income was 3 (7) million euros.
Grid revenue remained at the same level as in 2010 despite the tariff increase
of 4.5 per cent. This was due to a decrease of 3.8 per cent in electricity
consumption in Finland from 2010. The sales of imbalance power decreased to 146
(160) million euros mainly as a result of lower electricity market prices.
Cross-border transmission income on the connection between Finland and Russia
decreased by 2 million euros from the previous year. Fingrid's congestion
income on the Nordic interconnectors was 16 (9) million euros.
Revenue and other operating income 1-12/11 1-12/10 10-12/11 10-12/10
(million €)
Grid service revenue 210 211 59 64
Sales of imbalance power 146 160 25 49
Cross-border transmission 22 24 5 6
Estlink congestion income 10 9 1 6
Nordic congestion income 16 9 4 1
Peak load capacity 7 14 5 2
ITC income 22 19 7 5
Feed-in tariff for peat 0 1 0
Other revenue 5 9 2 4
Other operating income 3 7 1 4
Revenue and other income total 441 463 109 142
The purchases of imbalance power were 131 (145) million euros. The loss energy
costs decreased by 2 million euros from the previous year due to the
significantly lower average area price for Finland. The costs of reserves which
safeguard the system security of the transmission system increased by 7 million
euros and the depreciation costs rose by 1 million euros. The maintenance
management costs and personnel costs remained at the same level as in 2010.
Costs (million €) 1-12/1 1-12/1 10-12/ 10-12/
1 0 11 10
Purchase of imbalance power 131 145 22 49
Purchase of loss energy 63 65 16 19
Depreciation 68 67 18 17
Reserves 28 22 7 6
Personnel 20 20 6 6
Maintenance management 18 18 6 5
Peak load capacity 7 13 5 3
ITC charges 12 10 4 2
Estlink grid rents 9 9 1 6
Feed-in tariff for peat 1 0
Other costs 23 21 7 7
Costs total 380 391 90 120
Operating profit excluding the change in the 62 72 19 22
fair value of commodity derivatives
Operating profit of Group 57 74 17 23
The operating profit of the Group was 57 (74) million euros. Of the change in
the fair value of commodity derivatives, -5 (+2) million euros were recognised
in the income statement.
The operating profit in the last quarter was 17 (23) million euros.
The consolidated profit for the year was 33 (42) million euros. The cash flow
from the operations of the Group deducted by capital expenditure was 148
million euros negative (-12 million euros). The company's Board of Directors
will propose to the Annual General Meeting of Shareholders that 2,018.26 euros
of dividend per share be paid.
The return on investment was 3.6 (5.1) per cent and the return on equity 6.5
(8.7) per cent. The equity ratio was 25.7 (28.6) per cent at the end of the
review period.
The Fingrid Group and Fingrid Oyj employed 266 persons, including temporary
employees, at the end of 2010. The corresponding figure a year before was 263.
The number of permanent personnel was 252 (249).
Capital expenditure
Fingrid's gross capital expenditure in 2011 was 244 million euros (144 million
euros in 2010). Of this amount, a total of 173 (109) million euros were used
for the transmission grid and 68 (31) million euros for reserve power.
IT-related capital expenditure was approximately 3 (4) million euros.
Research and development were allocated a total of 1.8 (1.5) million euros.
Some 50 research and development projects were in progress in 2011. The
foremost R&D input was placed on the development of new transmission line tower
types and control methods for system security.
Power system
Electricity consumption in Finland decreased by 3.8 per cent on the previous
year as a result of declining industrial production and the warm latter part of
2011. Electricity consumption in Finland in 2011 totalled 84.4 terawatt hours
(87.7 terawatt hours in 2010). A total of 64.2 (68.1) terawatt hours of
electricity was transmitted in Fingrid's grid, representing 76 per cent of the
electricity consumption in Finland.
A total of 5.9 (2.8) terawatt hours of electricity was imported from Sweden to
Finland during 2011, and 4.0 (5.7) terawatt hours was exported from Finland to
Sweden.
The volume of electricity imports from Estonia to Finland on the Estlink
connection was 1.6 (2.0) terawatt hours, and 0.5 (0.2) terawatt hours of
electricity was exported from Finland to Estonia.
Electricity imports from Russia to Finland totalled 10.8 (11.6) terawatt hours
in 2011.
Electricity market
The price level in the spot market of electricity was clearly lower than in
2010. The average system price was 47 euros per megawatt hour (53 €/MWh in
2010), and the average area price for Finland was 49 €/MWh (57 €/MWh).
Fingrid accumulated 15.8 million euros of Nordic congestion income during the
year under review (9.0 million euros in 2010). Congestions were encountered on
the border between Finland and Sweden in 23 per cent of the time, and in many
cases the market prices between the two countries differed from each other by
dozens of euros per megawatt hour.
In 2011, Fingrid used 1.6 (0.2) million euros for counter trade. This mainly
resulted from disturbances on the cross-border connections and partly from
transmission restrictions within Finland.
Events after the closing of the financial year and estimate of future outlook
On 17 January 2012, the international rating agency Standard & Poor's Rating
Services (S&P) affirmed Fingrid Oyj's long-term credit rating AA- and
short-term rating A-1+. The outlook changed from stable to negative. The change
was associated with S&P's decision to change the outlook of the Republic of
Finland from stable to negative.
Fingrid will continue the implementation of its capital expenditure programme
of 1,700 million euros. The capital investments will be financed by increasing
external financing. Furthermore, the company raised the transmission tariffs by
30 per cent from 1 January 2012.
In other respects, there have been no material events or changes in Fingrid's
business or financial situation after the closing of the financial year.
These financial statements have been audited.
The financial statements and annual review are appended to this stock exchange
release, and a separate corporate governance statement of Fingrid Oyj has also
been provided.
Key figures 1-12/11 1-12/10 10-12/11 10-12/10
Turnover, million € 438.5 456.3 107.9 138.0
Capital expenditure, gross, million € 244.4 144.1 76.4 56.7
- of revenue % 55.7 31.6 70.9 41.1
Research and development expenses, 1.8 1.6 0.7 0.7
million €
- of revenue % 0.4 0.3 0.6 0.4
Personnel, average 263 260
Personnel, end of year 266 263
Salaries and bonuses, total, million € 17.2 17.2 4.6 5.0
Operating profit, million € 56.6 74.4 17.1 23.1
- of revenue % 12.9 16.3 15.8 16.7
Profit before taxes, million € 34.2 56.3 8.3 14.4
- of revenue % 7.8 12.3 7.7 10.4
Return on investment (ROI), % 3.6 5.1
Return on equity (ROE), % 6.5 8.7
Equity ratio, % 25.7 28.6
Interest-bearing net borrowings, 1,020.2 855.2
million €
Earnings per share, € 9,924 12,562 4,163 3,217
Dividends per share, € 2,018.26* 2,018.26
Equity per share, € 152,573 154,654
Number of shares at 31 Dec
- Series A shares 2,078 2,078
- Series B shares 1,247 1,247
Total 3,325 3,325
*The Board of Directors' proposal to the Annual General Meeting.
Appendices
Fingrid Oyj's financial statements and annual report 2011
Fingrid Oyj's corporate governance statement
Further information: Jukka Ruusunen, President & CEO, tel. +358 (0)30 395 5140
or +358 (0)40 593 8428Tom Pippingsköld, CFO, +358 (0)30 395 5157 or +358 (0)40
519 5041
English translation
FINGRID OYJ
ANNUAL REVIEW AND FINANCIAL STATEMENTS
1 January 2011 - 31 December 2011
CONTENTS
1. Annual review
Report of the Board of Directors
Key indicators
The Board of Directors' proposal for the distribution of profit
2. Financial statements
Consolidated financial statements (IFRS)
Income statement
Balance sheet
Statement of changes in equity
Cash flow statement
Notes to the financial statements
Parent company financial statements (FAS)
Profit and loss account
Balance sheet
Cash flow statement
Notes to the financial statements
3. Signatures for the annual review and for the financial statements
1. REPORT OF THE BOARD OF DIRECTORS
Financial result
Revenue of the Fingrid Group in 2011 was 438 million euros (456 million euros
in 2010). Other operating income was 3 (7) million euros.
Grid revenue remained at the same level as in 2010 despite the tariff increase
of 4.5 per cent. This was due to a decrease of 3.8 per cent in electricity
consumption in Finland from 2010. The sales of imbalance power decreased to 146
(160) million euros mainly as a result of lower electricity market prices.
Cross-border transmission income on the connection between Finland and Russia
decreased by 2 million euros from the previous year. Fingrid's congestion
income on the Nordic interconnectors was 16 (9) million euros. Fingrid's
portion of the Nordic congestion income is currently only calculated for the
cross-border transmission connection between Finland and Sweden. As of April
2010, Fingrid and the Estonian transmission system operator Elering AS have
rented the cross-border transmission capacity of the Estlink 1 transmission
connection between Finland and Estonia for use by the electricity market.
Fingrid's rental costs for the connection were covered by the congestion income
of 10 (9) million euros earned on it. Fingrid's share of the net amount of the
European inter-TSO compensations remained at the level of 2010.
Revenue and other operating income 1-12/11 1-12/10 10-12/11 10-12/10
(million €)
Grid service revenue 210 211 59 64
Sales of imbalance power 146 160 25 49
Cross-border transmission 22 24 5 6
Finland-Estonia congestion income 10 9 1 6
Finland-Sweden congestion income 16 9 4 1
Peak load capacity 7 14 5 2
ITC income 22 19 7 5
Feed-in tariff for peat 0 1 0
Other revenue 5 9 2 4
Other operating income 3 7 1 4
Revenue and other income total 441 463 109 142
The purchases of imbalance power were 131 million euros (145 million euros).
The loss energy costs decreased by 2 million euros from the previous year due
to the lower average area price for Finland. The costs of reserves which
safeguard the system security of the transmission system increased by 7 million
euros and the depreciation costs rose by 1 million euros. The maintenance
management costs and personnel costs remained at the same level as in 2010. The
income from the peak load capacity arrangement was balanced in the early part
of the year when the relevant act came to an end on 28 February 2011. In line
with the new act, the peak load capacity arrangement did not begin to cause
income and expenses until the last quarter of 2011. As a result, the net income
from the peak load capacity arrangement decreased by 1 million euros. The act
on the feed-in tariff of electricity produced from fuel peat in condensing
power plants was in force until 31 December 2010. This is why the feed-in
tariff did not cause income or expenses in the financial year of 2011. The
corresponding changes during the last quarter of the financial year are shown
in the table below (in million euros).
Costs, million € 1-12/1 1-12/1 10-12/1 10-12/1
1 0 1 0
Purchase of imbalance power 131 145 22 49
Purchase of loss energy 63 65 16 19
Depreciation 68 67 18 17
Reserves 28 22 7 6
Personnel 20 20 6 6
Maintenance management 18 18 6 5
Peak load capacity 7 13 5 3
ITC charges 12 10 4 2
Estlink grid rents 9 9 1 6
Feed-in tariff for peat 1 0
Other costs 23 21 7 7
Costs total 380 391 90 120
Operating profit 62 72 19 22
excluding the change in the fair value of
commodity derivatives
Operating profit of group 57 74 17 23
The operating profit of the Group was 57 (74) million euros. Of the change in
the fair value of commodity derivatives, -5 (+2) million euros were recognised
in the income statement.
The Group's revenue between October and December was 108 (138) million euros.
The operating profit in the last quarter was 17 (23) million euros.
The consolidated profit for the year was 33 (42) million euros. Due to the
change in the fair value of electricity derivatives, the consolidated total
comprehensive income was 0.2 million euros negative (73 million euros). The
cash flow from the operations of the Group deducted by capital expenditure was
148 million euros negative (-12 million euros) because many significant capital
investment projects were scheduled for 2011.
The return on investment was 3.6 (5.1) per cent and the return on equity 6.5
(8.7) per cent. The equity ratio was 25.7 (28.6) per cent at the end of the
review period. Revenue of the parent company was 434 (456) million euros and
profit for the financial year 22 (6) million euros.
Grid development and maintenance
Fingrid's annual expenditure in the transmission system has increased
considerably from the level of 40 million euros in the early part of the
millennium. The year 2011 was a peak year in terms of capital investments inFingrid's history, since many large-scale projects were in progress. The sharp
increase in capital expenditure is the result of the connection of new
generating capacity to the transmission system, the promotion of the
functioning of the electricity market, renewal of the ageing grid, and regional
changes in electricity consumption and production patterns in Finland.
Two important electricity transmission connections were brought to conclusion
in 2011. The Fenno-Skan 2 submarine cable link was commissioned in November,
and the Seinäjoki-Tuovila 400 kilovolt transmission link was completed in the
autumn. There are also other major ongoing contracts, such as the
Yllikkälä-Huutokoski transmission line and the EstLink 2 cable link to Estonia.
Moreover, a new reserve power plant is being built in Forssa.
Fingrid's Board of Directors made a decision concerning the construction of a
400 kilovolt transmission line between Forssa and Hikiä and a 110 kilovolt line
between Tihisenniemi and Katerma. The environmental impact assessment (EIA)
procedures for the 400 kilovolt transmission line between Central Finland and
the Oulujoki river and for the grid reinforcements required by the Olkiluoto 4
nuclear power plant unit were launched in 2011. The EIA programmes of both
projects were displayed in public from December 2011.
Fingrid plans the transmission system in Finland as part of the Nordic and
European electricity transmission network through ENTSO-E and its Regional
Group Nordic. The regional network plans drawn up with Fingrid's customers are
also an integral part of this planning process. In 2011, a comprehensive plan
was drawn up for the replacement of the aged 220 kilovolt transmission lines
and substations in Ostrobothnia and Central Finland with 400 kilovolt and 110
kilovolt network solutions. There are additional challenges in the planning
process especially in Ostrobothnia because preparations need to be made for
numerous upcoming wind power projects.
Fingrid's gross capital expenditure in 2011 was 244 million euros (144 million
euros in 2010). Of this amount, a total of 173 (109) million euros were used
for the transmission grid and 68 (31) million euros for reserve power.
IT-related capital expenditure was approximately 3 (4) million euros.
Research and development were allocated a total of 1.8 (1.5) million euros.
Some 50 research and development projects were in progress in 2011. The
foremost R&D input was placed on the development of new transmission line tower
types and control methods for system security.
Power system
Electricity consumption in Finland decreased by 3.8 per cent on the previous
year as a result of declining industrial production and the warm latter part of
2011. Electricity consumption in Finland in 2011 totalled 84.4 terawatt hours
(87.7 terawatt hours in 2010). A total of 64.2 (68.1) terawatt hours of
electricity was transmitted in Fingrid's grid, representing 76 per cent of the
electricity consumption in Finland.
In the early part of 2011, electricity transmissions between Finland and Sweden
consisted mainly of exports from Finland, but this changed to considerable
imports to Finland in the summer. Construction work on the Fenno-Skan 2
transmission link occasionally restricted the capacity offered to the
electricity market. A total of 5.9 (2.8) terawatt hours of electricity was
imported from Sweden to Finland during 2011, and 4.0 (5.7) terawatt hours was
exported from Finland to Sweden.
Electricity transmissions between Finland and Estonia were dominated by imports
to Finland in the early part of 2011, but imports gave way to a majority of
exports from Finland during the summer and autumn. Maintenance work on the
Estlink connection did not cause significant restrictions in the capacity
offered to the market. The volume of electricity imports from Estonia to
Finland on the Estlink connection was 1.6 (2.0) terawatt hours, and 0.5 (0.2)
terawatt hours of electricity was exported from Finland to Estonia.
Almost the full electricity import capacity from Russia was in use during the
review period. Towards the end of the year, the imports were below the volume
permitted by the transmission capacity. In July and August, the import capacity
was restricted by maintenance work at the Vyborg direct current substation and
in the Russian grid. Electricity imports from Russia to Finland totalled 10.8
(11.6) terawatt hours in 2011.
The transmission grid experienced more disturbances than on average due to
violent thunderstorms in the summer, but these had little effect on the
customers. As a result of some long supply interruptions caused by the storms
at Christmas time, the disturbance duration per a grid customer's connection
point was clearly longer than on average.
Promotion of electricity market
In the early part of 2011, the Nordic electricity market was characterised by a
scarce supply of hydropower. At the same time, there was much demand for
electricity, partly as a result of the cold and long winter. However, there
were no price spikes during the cold winter weather. The water reservoir
situation improved towards the summer, and in the autumn the water reservoirs
were almost full. The price level in the spot market of electricity was clearly
lower than in 2010. The average system price was 47 euros per megawatt hour (53
€/MWh in 2010), and the average area price for Finland was 49 €/MWh (57 €/MWh).
Efforts for electricity market integration were pursued further, both towards
Western Continental Europe and the Baltic countries. However, any new
significant results will not be seen before the end of 2012. In line with the
EU's third legislative package for an internal energy market, the European
transmission system operators started to prepare new types of network rules.
These binding provisions will define the rules of the electricity market very
precisely.
Fingrid accumulated 15.8 million euros of Nordic congestion income during the
year under review (9.0 million euros in 2010). Congestions were encountered on
the border between Finland and Sweden in 23 per cent of the time, and in many
cases the market prices between the two countries differed from each other by
dozens of euros per megawatt hour. In the late autumn, the situation improved
due to factors such as the commissioning of the Fenno-Skan 2 transmission link
and the introduction of bidding areas in Sweden.
In 2011, Fingrid used 1.6 (0.2) million euros for counter trade. This mainly
resulted from disturbances on the cross-border connections and partly from
transmission restrictions within Finland.
Financing
The financial position of the Group continued to be satisfactory. During 2011,
Fingrid issued a bond valued at 1 billion Swedish krona under the company's
International Medium Term Note Programme and signed a long-term loan of 20
million euros with the Nordic Investment Bank, NIB. Moreover, on 18 April 2011
the company signed a multicurrency revolving credit facility of 250 million
euros with a group of banks consisting of Nordic and other international banks.
The loan period of the credit facility is 5 years. The credit facility is
undrawn, and it secures the company's liquidity together with the financial
assets.
The net financial costs excluding the change in the fair value of derivatives
increased to 19 million euros (12 million euros in 2010) during the year under
review as a result of the rising interest rate level and higher amount of net
debt. Interest income was 4 (2) million euros. The net financial costs in
accordance with the IFRS were 23 (18) million euros, including the negative
change of 3 million euros (negative 6 million euros) in the fair value of
derivatives.
The financial assets at 31 December 2011 totalled 204 (222) million euros. The
interest-bearing borrowings totalled 1,224 (1,077) million euros, of which 845
(878) million euros were long-term and 379 (199) million euros were short-term.
The counterparty risk arising from the currency derivative contracts and
interest rate derivative contracts was 63 (56) million euros.
International rating agencies updated Fingrid Oyj's credit ratings in 2011. On
20 October 2011, Fitch Ratings downgraded Fingrid Oyj's senior unsecured debt
rating to A+ from AA-, and long-term issuer default rating (IDR) to A from A+.
Fingrid's short-term IDR assigned by Fitch Ratings remained at F1. Fitch
Ratings changed Fingrid's outlook from negative to stable. Moody's Investors
Service updated Fingrid's credit opinion on 13 December 2011, keeping the
opinion unchanged. The long-term rating is A1 and the short-term rating is P-1.
The outlook was changed from negative to stable. On 20 April 2011, Standard &
Poor's Rating Services (S&P) raised Fingrid's long-term credit rating to AA-
from A+ and the short-term rating to A-1+ from A-1. At that point, S&P assessed
the company's outlook to be stable. On 13 December 2011, S&P placed Fingrid's
corporate credit ratings on CreditWatch with negative implications.
Personnel and rewarding systems
The Fingrid Group and Fingrid Oyj employed 266 persons, including temporary
employees, at the end of 2010. The corresponding figure a year before was 263.
The number of permanent personnel was 252 (249).
Of the personnel employed by the company, 23.7 per cent (22.4 per cent in 2010)
were women and 76.3 (77.6) per cent were men at the end of the year.
Number of permanent personnel:
Age 2011 2010
24 to 29 years 24 21
30 to 34 years 33 36
35 to 39 years 41 37
40 to 44 years 32 35
45 to 49 years 40 41
50 to 54 years 37 37
55 to 59 years 23 21
60 to 65 years 21 21
over 65 years 1 0
During 2011, a total of 14,333 (17,564) hours were used for personnel training,
with an average of 57 (67) hours per person. Employee absences on account of
illness in 2011 accounted for 1.9 per cent of the total working hours. In
addition to a compensation system which is based on the requirements of each
position, Fingrid applies quality and incentive bonus schemes. The Board of
Directors approved the principles for the remuneration systems of the company's
personnel and executive management group for 2012.
Board of Directors and corporate management
Fingrid Oyj's Annual General Meeting was held in Helsinki on 3 May 2011. Helena
Walldén, M.Sc. (Tech.), was elected as the Chairman of the Board, and Arto
Lepistö, Deputy Director General, was elected as the Vice Chairman. The other
Board members elected were Elina Engman, Vice President, Energy, Timo
Kärkkäinen, Senior Portfolio Manager, and Esko Raunio, Director, Private Equity
Real Estate Investments. The Board members until 3 May 2011 were Lauri
Virkkunen (Chairman), Timo Karttinen, Arto Lepistö, Risto Autio, Ari Koponen,
Ritva Nirkkonen and Anja Silvennoinen.
PricewaterhouseCoopers Oy was elected as the auditor of the company.
The Board of Directors has two committees: an audit committee and a
remuneration committee. The members of the audit committee from 20 May 2011 are
Arto Lepistö (Chairman), Helena Walldén and Timo Kärkkäinen. The members of the
audit committee until 3 May 2011 were Ritva Nirkkonen (Chairperson), Risto
Autio, Arto Lepistö and Anja Silvennoinen. The remuneration committee consists
of Helena Walldén (Chairperson) and Arto Lepistö from 20 May 2011. Until 3 May
2011, the remuneration committee consisted of Lauri Virkkunen (Chairman), Timo
Karttinen and Arto Lepistö.
Jukka Ruusunen serves as the President & CEO of the company.
An account of the governance and control systems of the company, required by
the Finnish Corporate Governance Code, has been provided separately. The
account and other information required by the Code are also available on the
company's website at www.fingrid.fi.
Internal control, risk management, internal audit
Internal control intends to make sure that Fingrid works efficiently and
productively, that financial reporting is reliable, and that the laws,
regulations and the company's own procedural guidelines are followed. The
company's internal control is based on independent internal audit, financial
reporting, supervision and documentation, as well as transparent processes and
procedures. Moreover, the company applies an instruction system, which contains
the key principles adopted by the Board of Directors, policies approved by the
executive management group, and procedural guidelines of the functions and
units.
Fingrid Oyj's Board of Directors discusses and approves the annual budget of
the Group, giving those who sign documents the right to act within the limits
of the budget and decisions in order to conclude agreements. All individual
capital investments decisions which are crucial in terms of the company's
business or have a cost effect in excess of 10 million euros, and all annual
capital investment programmes in excess of 10 million euros are approved by the
Board of Directors of Fingrid Oyj. Fingrid Oyj's Board of Directors approves
any capital investments in excess of 2 million euros outside the budget. After
being processed by the Board of Directors and after being approved, the
procurements can be accepted in accordance with the company's acceptance
authority if the project has been subjected to competitive tendering in
accordance with Fingrid's procurement instructions.
The Board of Directors approves the risk management policy annually. The Board
approves the risk management measures as part of the corporate strategy,
performance indicators, action plan and budget. The audit committee of the
Board of Directors obtains an annual report of the foremost risks pertaining to
the company's operations and of their management.
The internal auditor monitors issues such as adherence to the internal rules of
the company, acts and official regulations, and reports his findings to the
audit committee. A comprehensive audit plan has been accepted for internal
audit for 2011 to 2013, with the plan to be updated annually. The audit
committee of the Board of Directors examines the functioning of internal
control and reports to the Board of Directors. The company's internal audit was
outsourced in the summer of 2011. As part of internal control, internal audit
audited issues such as Fingrid's acceptance authority and processes related to
capital investment management in 2011.
Operative risk management is based on an annual risk analysis carried out in
connection with the drawing up of action plans. The heads of the units are
responsible for the identification, reporting and risk management measures of
the operative risks in their respective areas of responsibility. Responsible
persons in each function attend to the implementation and follow-up of risk
management in their areas of responsibility. The company applies a
comprehensive risk management system, which is being developed further.
The President is responsible for risk management related to the corporate-level
strategic goals. The strategic risks are identified as part of the company's
annual strategy work. The corporate strategy presents the primary
corporate-level risks and the related risk management. These risks are
monitored, co-ordinated and managed by the executive management group, but each
function and/or business process is responsible for implementing its own risk
management. The executive management group identifies and assesses regularly
the strategic risks pertaining to personnel and expertise, corporate finances,
customers and stakeholders, and business processes. Moreover, the risks are
assessed in view of society with regard to the functioning of the electricity
market, system security, safety, and the environment. The financial
administration of the Group is responsible for the control structures relating
to the financial reporting process.
Foremost risks and factors of uncertainty
The foremost business risks of the company include risks relating to the
functioning of the power system, such as a major disturbance or power shortage,
and incorrect or unanticipated capital expenditure projects, for example due to
a change in regional electricity consumption or changes in generation. Risks
related to official regulation, such as changes in the Finnish or European
regulation, can also weaken the financial position of the company or its
opportunities to pursue the objectives related to the development of the
electricity market. Significant risks also include an unanticipated increase in
costs as a result of the realisation of the counterparty risk or due to sudden
changes in the price of electricity or in the interest rate level.
Correspondingly, reduced income as a result of a drastic decrease in
electricity consumption constitutes a significant risk. Other risks include
personnel risks related to large structures of the power system and electrical
safety.
Fingrid is prepared for a wide-spread disturbance concerning Finland or the
Nordic power system by means of various reserves, procedural guidelines,
contingency plans, and exercises. In its strategy, the company also focuses on
the versatile utilisation of the operation control system, expedited
disturbance management, and management of power shortage situations. A
wide-spread disturbance in the power system may be caused by several
simultaneous faults in the grid, inoperability of Fingrid's operation control
system, insufficiency of production capacity, external events, or problems
related to operation support systems or data security, preventing grid
operation entirely or partially.
The objective is to avoid potential incorrect or unanticipated capital
expenditure by updating the grid plans regularly, by means of constant
interaction with the customers, and by conducting co-operation with the other
transmission system operators.
Fingrid's operations are subject to official regulation and supervised by the
Energy Market Authority. The company aims to establish well-working
co-operation and interaction with the various stakeholders, to contribute
actively to the reports and task forces of authorities, and to focus on working
within ENTSO-E, the European Network of Transmission System Operators for
Electricity, hence making preparations for and contributing to the impacts ofregulation.
An unanticipated increase in costs or decrease in income is restricted by
enhancing financial control in the Group and assessment concerning financial
latitude. Derivatives are used for hedging against changes in the price of
electricity or in the interest rate level. The counterparty risk involved in
the obligations of parties which have a contractual relationship with Fingrid
is limited contractually, by using various limits and by regularly monitoring
the financial standing of the counterparties.
The expertise and occupational safety risks pertaining to personnel risks are
limited by the company's strategic long-term personnel planning, allocated
training programmes for both the company's own personnel and service providers,
and by auditing the work sites systematically in order to attain the best
practices and to enhance occupational safety.
As part of its corporate social responsibility, Fingrid has identified the
risks that have a major impact on society. These include a major disturbance or
an extensive disturbance with a long duration, diminished confidence in the
electricity market, postponement of cross-border line construction projects,
delayed reinforcement programme for the trunk grid, and unexpected and
long-term restrictions in transmission capacity.
In its selected strategic focal areas, Fingrid has also taken the management of
these risks into account and made preparations for the risks in its action plan
using various means, such as those described above in conjunction with a major
disturbance. The company aims to contribute to the integration of the European
electricity market and intensification of market mechanisms by constructing new
cross-border transmission connections whenever necessary and by publishing
market information which has bearing on the transparency of the market. The
company prepares and allocates resources for projects which reinforce the
cross-border connections and the trunk grid, and takes environmental impacts
into account in planning and construction with a long time span. Long-term
restrictions in transmission capacity inflict financial disadvantage on the
customers and society. This disadvantage is minimised by securing the critical
items in the transmission grid and on the cross-border connections and by means
of efficient outage planning, for example by optimising the timing of outages
so that the financial impact on the customers is kept to a minimum.
Share capital
The minimum share capital of the company is 55,900,000 euros and the maximum
share capital is 223,600,000 euros, within which limits the share capital may
be increased or lowered without amending the articles of association. At
present, the share capital is 55,900,000 euros. The shares of the company are
divided into series A shares and series B shares.
The number of series A shares is 2,078 and the number of series B shares is
1,247. The votes and dividends related to the shares are described in more
detail in the notes to the financial statements and in the articles of
association available on the website of the company.
Environmental matters
The primary environmental impacts of Fingrid's operations are caused by
transmission lines, substations and reserve power plants, which are all part of
our living environment. Transmission lines have in particular land use and
landscape effects, and both positive and negative impacts on wildlife and
biodiversity. Like all other electrical equipment, transmission lines create
electrical and magnetic fields around them. The foremost environmental aspects
of substations and reserve power plants are related to the storage and handling
of fuels and chemicals. When the transmission system is being improved, the
goal is to achieve minimum electricity transmission losses in a cost effective
manner, thus enhancing energy efficiency. A reduction in greenhouse gas
emissions is also regarded as a major consideration.
Fingrid has a total of 26,499 tonnes of creosote-impregnated or CCA-impregnated
wooden towers, categorised as hazardous waste. Impregnated wood categorised as
hazardous waste is also used in cable trench covers. The related disposal costs
of approx. 1.9 million euros have been entered in the financial statements
under provisions for liabilities and charges, which in turn have been added
correspondingly to property, plant and equipment. Equipment used in Fingrid's
substations contains 28 tonnes of sulphur hexafluoride (SF6 gas), which is
categorised as a greenhouse gas. However, no provision has been made for the
disposal cost of this gas because it can be re-used after cleaning.
Fingrid serves as the issuing body for guarantees of origin of electricity in
Finland. The guarantee is included in the system required by the RES-E
directive of the European Union.
Events after the closing of the financial year and estimate of future outlook
On 17 January 2012, the international rating agency Standard & Poor's Rating
Services (S&P) affirmed Fingrid Oyj's long-term credit rating AA- and
short-term rating A-1+. The outlook changed from stable to negative. The change
was associated with S&P's decision to change the outlook of the Republic of
Finland from stable to negative.
Fingrid will continue the implementation of its capital expenditure programme
of 1,700 million euros. The capital investments will be financed by increasing
external financing. Furthermore, the company raised the transmission tariffs by
30 per cent from 1 January 2012.
In other respects, there have been no material events or changes in Fingrid's
business or financial situation after the closing of the financial year.
CONSOLIDATED KEY 2007 2008 2009 2010 2011
INDICATORS
--------------------------------------------------------------------------------
IFRS IFRS IFRS IFRS IFRS
--------------------------------------------------------------------------------
Extent of operations
Turnover millio 334.6 382.3 358.9 456.3 438.5
n €
Capital expenditure, millio 79.2 87.9 135.6 144.1 244.4
gross n €
- of turnover % 23.7 23.0 37.8 31.6 55.7
Research and millio 1.2 0.9 1.3 1.6 1.8
development expense n €
- of turnover % 0.4 0.2 0.4 0.3 0.4
Personnel, average 241 241 251 260 263
Personnel, end of year 244 249 260 263 266
Salaries and bonuses, millio 14.6 15.8 16.0 17.2 17.2
total n €
Profitability
Operating profit millio 90.7 68.4 50.8 74.4 56.6
n €
- of revenue % 27.1 17.9 14.1 16.3 12.9
Profit before taxes millio 56.5 37.5 33.2 56.3 34.2
n €
- of revenue % 16.9 9.8 9.3 12.3 7.8
Return on investment % 7.3 5.8 3.9 5.1 3.6
(ROI)
Return on equity (ROE) % 10.3 6.6 5.7 8.7 6.5
Financing and financial
position
Equity ratio % 27.5 26.7 27.2 28.6 25.7
Interest-bearing net millio 754.6 726.7 797.5 855.2 1,020.2
borrowings n €
Share-specific
indicators
Earnings per share € 12,616 8,379 7,417 12,562 9,924
Dividends per share € 2,156.17 2,018.26 2,022.29 2,018.26 2018.26
*
Equity per share € 129,338 125,600 134,676 154,654 152,573
Number of shares at 31
Dec
- Series A shares qty 2,078 2,078 2,078 2,078 2,078
- Series B shares qty 1,247 1,247 1,247 1,247 1,247
Total qty 3,325 3,325 3,325 3,325 3,325
*The Board of
Directors' proposal to
the General Annual
Meeting.
CALCULATION OF KEY INDICATORS
Return on = Profit before taxes + interest and other finance x 100
investment, % costs
------------------------------------------------------
Balance sheet total - non-interest-bearing
liabilities (average for the year)
Return on equity, % = Profit for the financial year x 100
---------------------------------------------
Shareholders' equity (average for the year)
Equity ratio, % = Shareholders' equity x 100
-----------------------------------------
Balance sheet total - advances received
Earnings per share, € = Profit for the financial year
------------------------------
Average number of shares
Dividends per share, € = Dividends for the financial year
---------------------------------
Average number of shares
Equity per share, € = Shareholders' equity
---------------------------------
Number of shares at closing date
Interest-bearing net = Interest-bearing borrowings - cash and cash
borrowings, € equivalents
THE BOARD OF DIRECTORS' PROPOSAL FOR THE DISTRIBUTION OF PROFIT
Fingrid Oyj's distributable funds in the financial statements are 22,541,194.47
euros. After the closing of the financial year, there have not been essential
changes in the financial position of the company, nor does the proposed
dividend distribution threaten the solvency of the company according to the
Board of Directors.
The company's Board of Directors will propose to the Annual General Meeting of
Shareholders that
- 2,018.26 euros of dividend per share be paid, totalling 6,710,714.50 euros
- 15,830,479.97 euros to be carried over as unrestricted equity.
2. Financial statements
CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1 Jan - 31 1 Jan - 31
Dec 2011 Dec 2010
--------------------------------------------------------------------------------
Notes 1,000 € 1,000 €
--------------------------------------------------------------------------------
REVENUE 2 438,456 456,326
Other operating income 3 2,976 6,978
Raw materials and consumables used 4 -241,503 -253,593
Employee benefits expenses 5 -20,334 -20,385
Depreciation 6 -67,879 -66,813
Other operating expenses 7, 8, -55,153 -48,096
9
--------------------------------------------------------------------------------
OPERATING PROFIT 56,563 74,416
Finance income 10 3,551 2,040
Finance costs 10 -26,106 -20,508
--------------------------------------------------------------------------------
Finance income and costs -22,554 -18,468
Portion of profit of associated companies 193 384
PROFIT BEFORE TAXES 34,201 56,332
Income taxes 11 -1,204 -14,564
--------------------------------------------------------------------------------
PROFIT FOR THE FINANCIAL YEAR 32,998 41,768
================================================================================
OTHER COMPREHENSIVE INCOME
Cash flow hedges 12 -33,399 31,159
Translation reserve 12 240 224
Available-for-sale financial assets 12 -48 1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR -209 73,152
================================================================================
Profit attributable to:
Equity holders of parent company 32,998 41,768
Total comprehensive income attributable to:
Equity holders of the company -209 73,152
Earnings per share, € 13 9,924 12,562
Earnings per share for profit attributable to
the equity holders of the parent company:
Undiluted earnings per share, € 13 9,924 12,562
Diluted earnings per share, € 13 9,924 12,562
Notes are an integral part of the financial statements.
CONSOLIDATED BALANCE SHEET
ASSETS 31 dec 2011 31 Dec 2010
---------------------------------------------------------------------------
Notes 1,000 € 1,000 €
---------------------------------------------------------------------------
NON-CURRENT ASSETS
Intangible assets:
Goodwill 15 87,920 87,920
Other intangible assets 16 89,737 89,692
---------------------------------------------------------------------------
177 657 177,613
Property, plant and equipment: 17
Land and water areas 13,671 13,509
Buildings and structures 98,345 82,991
Machinery and equipment 450,700 403,357
Transmission lines 689,929 607,389
Other property, plant and equipment 3,009 3,097
Advance payments and purchases in progress 163,908 142,930
---------------------------------------------------------------------------
1,419,561 1,253,273
Investments: 18
Equity investments in associated companies 7,947 7,718
Available-for-sale investments 301 366
---------------------------------------------------------------------------
8,247 8,084
Receivables:
Derivative instruments 29 57,495 79,400
Deferred tax assets 26 19,873 10,893
---------------------------------------------------------------------------
---------------------------------------------------------------------------
77,368 90,293
TOTAL NON-CURRENT ASSETS 1,682,834 1,529,263
---------------------------------------------------------------------------
CURRENT ASSETS
Inventories 19 6,706 6,101
Derivative instruments 29 14,288 295
Trade receivables and other receivables 20 64,633 57,563
Financial assets recognised in 21 202,387 217,903
income statement at fair value
Cash and cash equivalents 22 1,454 3,780
TOTAL CURRENT ASSETS 289,468 285,642
---------------------------------------------------------------------------
TOTAL ASSETS 1,972,301 1,814,905
===========================================================================
Notes are an integral part of the financial statements.
CONSOLIDATED BALANCE SHEET
----------------------------------------------------------------------
EQUITY AND LIABILITIES 31 Dec 2011 31 Dec 2010 Notes 1,000 € 1,000 €
----------------------------------------------------------------------
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
OF THE PARENT COMPANY
Share capital 25 55,922 55,922
Share premium account 25 55,922 55,922
Revaluation reserve 25 -13,679 19,768
Translation reserve 25 551 312
Retained earnings 25 408,586 382,299
----------------------------------------------------------------------
TOTAL EQUITY 507,304 514,224
----------------------------------------------------------------------
NON-CURRENT LIABILITIES
Deferred tax liabilities 26 140,340 149,262
Borrowings 27 845,154 877,530
Provisions 28 1,897 1,899
Derivative instruments 29 34,472 116
----------------------------------------------------------------------
1,021,864 1,028,807
CURRENT LIABILITIES
Borrowings 27 378,841 199,327
Derivative instruments 29 670 481
Trade payables and other liabilities 30 63,623 72,066----------------------------------------------------------------------
443,133 271,874
TOTAL LIABILITIES 1,464,997 1,300,681
----------------------------------------------------------------------
TOTAL EQUITY AND LIABILITIES 1,972,301 1,814,905
======================================================================
Notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
-
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY, 1,000 €
-------------------------------------------------------
--------------------------------------------------------------------------------
-
Attributable to equity holders of the parent company
Notes Share Share Revaluation Translation Retaine Total
capital premium reserve reserve d
account earning
s
--------------------------------------------------------------------------------
Balanc 55,922 55,922 -11,392 88 347,255 447,796
e at 1
Jan
2010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Comprehensive income
Profit 25 41,768 41,768
or
loss
Other
compr
ehensi
ve
incom
e
Cash 12 31,159 31,159
flow
hedge
s
Transl 12 224 224
ation
reser
ve
Items 12 1 1
relat
ed to
long-
term
asset
items
avail
able-f
or-sal
e
--------------------------------------------------------------------------------
Total 31,160 224 31,384
other
compr
ehensi
ve
incom
e
--------------------------------------------------------------------------------
Total 31,160 224 41,768 73,152
comprehensiv
e income
--------------------------------------------------------------------------------
Transa
ctions
with
owner
s
Divide 25 -6,724 -6,724
nds
relat
ing to
2009
--------------------------------------------------------------------------------
Balanc 55,922 55,922 19,768 312 382,299 514,224
e at
31
Dec
2010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Balanc 55,922 55,922 19,768 312 382,299 514,224
e at 1
Jan
2011
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Compre
hensiv
e
incom
e
Profit 25 32,998 32,998
or
loss
Other
compr
ehensi
ve
incom
e
Cash 12 -33,399 -33,399
flow
hedge
s
Transl 12 240 240
ation
reser
ve
Items 12 -48 -48
relat
ed to
long-
term
asset
items
avail
able-f
or-sal
e
--------------------------------------------------------------------------------
Total -33,447 240 -33,207
other
compr
ehensi
ve
incom
e
--------------------------------------------------------------------------------
Total -33,447 240 32,998 -209
compr
ehensi
ve
incom
e
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Transa
ctions
with
owner
s
Divide 25 -6,711 -6,711
nds
relat
ing to
2010
--------------------------------------------------------------------------------
Balance at 31 55,922 55,922 -13,679 551 408,586 507,304
Dec 2011
--------------------------------------------------------------------------------
Notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT 1 Jan - 31 Dec 1 Jan - 31 Dec
2011 2010
Notes 1,000 € 1,000 €
--------------------------------------------------------------------------------
Cash flow from operating activities:
Profit for the financial year 25 32,998 41,768
Adjustments:
Business transactions not involving a 35 72,761 63,677
payment transaction
Interest and other finance costs 26,106 20,508
Interest income -3,544 -2,035
Dividend income -7 -4
Taxes 1,204 14,564
Changes in working capital:
Change in trade receivables and other -3,159 -3,270
receivables
Change in inventories -606 -686
Change in trade payables and other -8,584 -496
liabilities
Change in provisions 28 -2 -23
Financial assets at fair value 645 -133
Interests paid -22,815 -19,450
Interests received 2,899 2,167
Taxes paid 11 -2,344 -1,760
--------------------------------------------------------------------------------
Net cash flow from operating activities 95,552 114,827
Cash flow from investing activities:
Purchase of property, plant and equipment 17 -241,046 -137,982
Purchase of intangible assets 16 -3,331 -4,814
Purchase of other assets 18 3
Proceeds from sale of property, plant and 17 50 904
equipment
Dividends received 10 211 4
Contributions received 143 15,000
--------------------------------------------------------------------------------
Net cash flow from investing activities -243,973 -126,885
Cash flow from financing activities:
Withdrawal of loans 749,938 731,398
Repayment of loans -612,649 -694,804
Dividends paid 25 -6,711 -6,724
--------------------------------------------------------------------------------
Net cash flow from financing activities 130,579 29,870
Net change in cash and cash equivalents -17,842 17,812
Cash and cash equivalents 1 Jan 221,683 203,871
Cash and cash equivalents 31 Dec 21,22 203,841 221,683
--------------------------------------------------------------------------------
Notes are an integral part of the financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING PRINCIPLES OF CONSOLIDATED FINANCIAL STATEMENTS
Fingrid Oyj is a Finnish public limited company established in accordance with
Finnish law. Fingrid's consolidated financial statements have been drawn up in
accordance with the International Financial Reporting Standards (IFRS) as
adopted by the EU. Fingrid's registered office is in Helsinki at address P.O.
Box 530 (Arkadiankatu 23 B), 00101 Helsinki.
A copy of the consolidated financial statements is available on the internet at
www.fingrid.fi or at Fingrid Oyj's head office.
The amounts in the financial statements are in thousands of euros and based on
the original acquisition costs unless otherwise stated in the accounting
principles or notes.
Fingrid Oyj's Board of Directors has accepted the publication of these
financial statements in its meeting on 16 February 2012. In accordance with the
Finnish Companies Act, the shareholders have an opportunity to adopt or reject
the financial statements in the shareholders' meeting held after their
publication. The shareholders' meeting can also amend the financial statements.
Primary business areas
Fingrid Oyj is the national transmission system operator responsible for the
main electricity transmission grid in Finland. The company's responsibilities
are to develop the main grid, to maintain a continuous balance between
electricity consumption and generation, to settle the electricity deliveries
between the parties on a nation-wide level, and to promote the electricity
market. The company is also in charge of the cross-border transmission
connections to the other Nordic countries, Estonia and Russia.
The consolidated financial statements contain the parent company Fingrid Oyj
and its fully-owned subsidiary Finextra Oy. The consolidated associated
companies are Porvoon Alueverkko Oy (ownership 33.3%) and Nord Pool Spot AS
(ownership 20.0%). The Group has no joint ventures.
All intercompany transactions, internal margins on inventories and property,
plant and equipment, internal receivables and liabilities as well as internal
profit distribution are eliminated in consolidation. Ownership of shares
between the Group companies is accounted for under the purchase method of
accounting. The associated companies are consolidated using the equity method
of accounting. The portion corresponding to the Group's ownership in the
associated companies is eliminated of unrealised profits between the Group and
its associated companies. If necessary, the accounting principles applied by
the associated companies have been adjusted to correspond to the principles
applied by the Group.
Segment reporting
The entire business of the Fingrid Group is deemed to comprise transmission
system operation in Finland with system responsibility, only constituting a
single segment. There are no essential differences in the risks and
profitability of individual products and services. This is why segment
reporting in accordance with the IFRS 8 standard is not presented. The
operating segment is reported in a manner consistent with the internal
reporting delivered to the Chief Operating Decision Maker. The Chief Operating
Decision Maker is the government.
Revenue and sales recognition
Sales recognition takes place on the basis of the supply of the service.
Electricity transmission is recognised once the transmission has taken place.
Balance power services are recognised on the basis of the supply of the
service. Connection fees are recognised on the basis of the relevant time.
Indirect taxes and discounts, among others, are deducted from the sales income
when calculating revenue.
Public contributions
Public contributions received from the EU or other parties related to property,
plant and equipment are deducted in the acquisition cost of the item of
property, plant or equipment, whereby the contributions reduce the depreciation
made on the property, plant or equipment. Other contributions received are
presented in other operating income.
Pension schemes
The pension security of the Group's personnel is arranged by an outside pension
insurance company. Pension premiums paid for contribution-based schemes are
charged to the income statement in the year to which they relate. In
contribution-based schemes, the Group has no legal or factual obligation to pay
additional premiums if the party receiving the premiums is unable to pay the
pension benefits.
The present value of the commitment at the closing date is recorded as a
liability in the balance sheet of benefit-based pension schemes. The fair value
of the assets included in the scheme is deducted from this present value, and
it is adjusted by unrecorded actuarial gains and losses and by expenses based
on retroactive long-term work performance. The amount of the commitment
resulting from benefit-based schemes is based on annual calculations by
impartial actuaries, with the calculations employing the projected unit credit
method. The present value of the commitment is determined by discounting the
estimated future cash flows by an interest rate which corresponds to the
interest rate of high-quality bonds issued by business enterprises. Actuarial
gains and losses, which result from empirical adjustments and changes in
actuarial assumptions and which exceed 10% of the fair value of the assets
included in the scheme or 10% of the present value of the commitment resulting
from a benefit-based scheme (depending on which of these two is higher), are
recognised in the income statement at fair value.
The group currently only has contribution-based pension schemes.
Research and development
Research and development by the Group aim to intensify intra-company
operations. No new services or products sold separately are created as a result
of R&D. This is why R&D costs are recorded in the income statement as expenses
in the accounting year in which they are created.
Leases
Lease obligations where the risks and rewards incident to ownership remain with
the lessor are recorded as other leases. Lease obligations paid on the basis of
other leases are recorded in other operating expenses, and they are recognised
in the income statement as equally large items during the lease period. The
other leases primarily concern office facilities, land areas and network
leases. In accordance with the principles of standard IAS 17 Leases, those
leases where the company is transferred substantially all the risks and rewards
incident to ownership are categorised as finance leases.
Foreign currency transactions
The consolidated financial statements are presented in euros, which is the
functional currency by the parent company. Commercial flows and financial items
denominated in foreign currencies are booked at the foreign exchange mid-rate
quoted by the European Central Bank (ECB) at the transaction value date.
Receivables and liabilities denominated in foreign currencies are translated at
the mid-rate quoted by ECB at the closing day and recognised in the financial
statements. Foreign exchange gains and losses from business are included in
corresponding items above operating profit. Foreign exchange gains and losses
from financial instruments are recorded at net amounts in finance income and
costs.
Foreign exchange gains and losses from translating the income statement items
of the foreign associated company to the mid-rate and from translating its
balance sheet items to the rate at the closing date are presented as a separate
item in shareholders' equity.
Income taxes
Taxes presented in the consolidated income statement include the Group
companies' accrual taxes for the profit of the financial year, tax adjustments
from previous financial years and changes in deferred taxes. In accordance with
IAS 12, the Group records deferred tax assets as non-current receivables and
deferred tax liabilities as non-current liabilities.
Deferred tax assets and liabilities are recorded of all temporary differences
between the tax values of asset and liability items and their carrying amounts
using the liability method. Deferred tax is recorded using tax rates valid at
the closing date.
The largest temporary differences result from the depreciation of property,
plant and equipment and from financial instruments. No deferred tax is recorded
of the undistributed profits of the foreign associated company, because
receiving the dividend does not cause a tax impact by virtue of a Nordic tax
agreement (and the difference will not likely be realised in the foreseeable
future). The deferred tax asset from temporary differences is recorded up to an
amount which can likely be utilised against taxable income created in the
future.
Earnings per share
The Group has calculated the undiluted earnings per share in accordance with
standard IAS 33. The undiluted earnings per share are calculated using the
weighted average number of shares outstanding during the financial year.
Since Fingrid has no option systems or benefits bound to the shareholders'
equity nor other equity financial instruments, there is no dilution effect.
Goodwill and other intangible assets
Goodwill created as a result of the acquisition of enterprises and businesses
is composed of the excess of the acquisition cost over the identifiable net
assets of the acquired business valued at fair value. Goodwill is allocated to
cash-generating units and it is tested annually for impairment. With associated
companies, goodwill is included in the value of the investment in the
associated company.
Other intangible assets comprise computer systems and land use rights. Computer
systems are valued at the original acquisition cost and depreciated on a
straight line basis during their estimated economic lives. Land use rights with
unlimited economic lives are not depreciated but tested annually for
impairment.
The depreciation periods of intangible assets are as follows:
Computer systems
3 years
Subsequent expenses relating to intangible assets are only capitalised if their
financial benefit for the company increases above the former performance
level. In other cases, the expenses are recorded in the income statement when
they materialise.
Emission rights
Emission rights acquired free of charge are valued in intangible assets at
their nominal value, and purchased emission rights are recorded at the
acquisition cost. A liability is recorded of emission rights to be returned. If
the Group has a sufficient volume of emission rights to cover the return
obligations, the liability is recognised at the carrying amount corresponding
to the emission rights in question. If there are not sufficient emission rights
to cover the return obligations, the liability is recognised at the market
price of the emission rights in question. No depreciation is recorded of
emission rights. They are derecognised in the balance sheet at the time of
transfer when the actual emissions have been ascertained. The expense resulting
from the liability is recorded in the income statement under the expense item
Materials and services. Capital gains from emissions rights are recorded under
Other operating income.
Property, plant and equipment
Land areas, buildings, transmission lines, machinery and equipment constitute
most of the property, plant and equipment. These are recognised in the balance
sheet at the original acquisition cost less accumulated depreciation and
potential impairment. Interest expenses during the construction period are not
capitalised. If an asset is made up of several parts with economic lives of
different lengths, the parts are recorded as separate items.
The revised standard IAS 23 Borrowing Costs requires that borrowing costs that
are directly attributable to the acquisition, construction or production of a
qualifying asset are included in the acquisition cost of that asset. The Group
has applied the revised standard to those qualifying assets the capitalisation
of whose borrowing costs has commenced at 1 January 2009, when the value of the
assets exceeds 50,000 euros and when the completion of the investment takes
more than 12 months. Borrowing costs capitalised to the acquisition cost are
calculated on the basis of the average borrowing cost of the Group.
When a separately recorded part of property, plant and equipment is renewed,
the costs relating to the new part are capitalised. Other subsequent costs are
capitalised only if it is likely that the future financial benefit relating to
the asset benefits the Group and the acquisition cost of the asset can be
determined reliably. Repair and maintenance costs are recognised in the income
statement once they have materialised.
Straight-line depreciation is recorded of property, plant and equipment on the
basis of their economic lives. Depreciation on property, plant and equipment
taken into use during the financial year is calculated asset-specifically from
the month of introduction. Land and water areas are not depreciated. The
expected economic lives are verified at each closing date, and if they differ
significantly from the earlier estimates, the depreciation periods are amended
accordingly.
The depreciation periods of property, plant and equipment are as follows:
Buildings and structures
Substation buildings and separate buildings
40 years Substation structures
30 years
Buildings and structures at gas turbine power
plants 20-40 years
Separate structures
15 years
Transmission lines
Transmission lines 400 kV
40 years
Direct current lines
40 years
Transmission lines 110-220 kV
30 years
Creosote-impregnated towers and related
disposal expenses 30 years
Aluminium towers of transmission lines (400
kV) 10 years
Optical ground wires
10-20 years
Machinery and equipment
Substation machinery
10-30 years
Gas turbine power plants
20 years
Other machinery and equipment
3-5 years
Gains or losses from the sale or disposition of property, plant and equipment
are recorded in the income statement under either other operating income or
expenses. Property, plant and equipment are derecognised in the balance sheet
when the planned depreciation period has expired, the asset has been sold,
scrapped or otherwise disposed of to an outsider.
Impairment
The carrying amounts of asset items are assessed at the closing date to detect
potential impairment. If impairment is detected, the recoverable amount of the
asset is estimated. An asset is impaired if the balance sheet value of the
asset or of a cash-generating unit exceeds the recoverable amount. Impairment
losses are recorded in the income statement.
The asset items subject to depreciation are examined for impairment also when
events or changes in circumstances suggest that the amount corresponding to the
carrying amount of the asset items may not be recovered.
The impairment loss of a cash-generating unit is first allocated to reduce the
goodwill of the cash-generating unit and thereafter to reduce in proportion the
other asset items of the unit.
The recoverable amount of intangible assets and property, plant and equipment
is defined so that it is the higher of the fair value reduced by the costs
resulting from sale or the value in use. When defining the value in use, the
estimated future cash flows are discounted at their present value based on
discount rates which reflect the average capital cost of the said
cash-generating unit before taxes. The specific risk of the assets in question
is also considered in the discount rates.
An impairment loss relating to property, plant and equipment and intangible
assets other than goodwill is reversed if a change has taken place in the
estimates used for defining the recoverable amount of the asset. An impairment
loss is reversed at the most up to an amount which would have been defined as
the carrying amount of the asset (reduced by depreciation) if no impairment
loss had been recorded of it in the previous years. An impairment loss recorded
of goodwill is not reversed.
Available-for-sale investments
Available-for-sale investments are long-term assets unless executive management
intends to sell them within 12 months from the closing date. Publicly quoted
securities are classified as available-for-sale investments and recorded at
fair value, which is the market value at the closing date. Changes in fair
value are recorded in the shareholders' equity until the investment is sold or
otherwise disposed of, in which case the changes in fair value are recorded in
the income statement.
Inventories
Inventories are entered at the lower of the acquisition cost or net realisable
value. The acquisition cost is determined using the FIFO principle. The net
realisable value is the estimated market price in normal business reduced by
the estimated future costs of completing and estimated costs required by sale.
Inventories consist of material and fuel inventories.
Loans receivables and other receivables
Loans receivables and other receivables are recorded initially at fair value.
The amount of bad receivables is estimated based on the risks of individual
items. An impairment loss of receivables is recorded when there is valid
evidence that the Group will not receive all of its receivables at the original
terms (e.g. due to the debtor's serious financial problems, likelihood that the
debtor will go bankrupt or subject to other financial rearrangements, and
negligence of due dates of payments by more than 90 days). Impairment losses
are recorded directly to reduce the carrying amount of receivables and under
item Other operating expenses.
Derivative instruments
Trading derivatives are classified as a derivatives asset or liability.
Derivatives are initially recognised at fair value on the date a derivative
contract is entered into are subsequently re-measured at their fair value. The
method of recognising the resulting gain or loss depends on whether the
derivative is designated as a hedging instrument, and if so, the nature of the
item being hedged. The company uses derivative contracts only for hedging
purposes according to a specific risk management policy.
Electricity derivatives
The company enters into electricity derivative contracts in order to hedge its
electricity purchases in accordance with the loss energy forecast, by following
the loss energy procurement principles approved by the Board of Directors.. The
company applies hedge accounting for electricity derivatives based on cash flow
hedging of loss energy purchases. The company documents at the inception of the
contract the relationship between the hedged item and the hedging instrument.
Similarly are the risk management objectives and strategy documentated for
undertaking various hedging transactions. The effective portion of changes in
the fair values of instruments that are designated and qualify as cash flow
hedges are recorded in equity. The gain or loss relating to the ineffective
portion is recognised immediately in the income statement within other gains
and losses. Amounts accumulated in equity are reclassified to profit or loss in
the periods when the hedged item affects profit and loss. Changes in fair value
of instruments which are designated and qualify for hedge accounting are
recorded in equity, hedging reserve. Changes in the fair values of other
electricity derivatives continue to be recorded in the income statement. Hedge
accounting is applied to publicly quoted annual and quarterly instruments
bought by the company. When a hedging instrument expires, is sold or no longer
meets the criteria for hedge accounting, any cumulative gain or loss existing
in equity at that time remains in equity, and is recognised only when the
forecast transaction is ultimately recognised in the income statement within
other gains and losses.
Instruments quoted at NASDAQ OMX Commodities are valued at the market prices at
the closing date.
Interest rate and currency derivatives
The company enters into derivative contracts in order to hedge the financial
risks (interest rate and foreign exchange exposures) in accordance with the
primary principles for financing approved by the Board of Directors. Fingrid
does not apply hedge accounting to the derivatives.
Derivative assets and liabilities are recognised at the original fair value.
Derivatives are measured at fair value at the closing date, and their change infair value is recorded in the income statement in finance income and costs. The
fair values of derivatives at the closing date are based on different
calculation methods. Foreign exchange forwards have been measured at the
forward prices. Interest rate and cross-currency swaps have been measured at
the present value on the basis of the yield curve of each currency. Interest
rate options have been valued by using generally accepted option pricing models
in the market.
Held-for-trading financial securities
Financial securities at fair value through profit or loss are financial assets
held for trading. The category includes money market securities and investments
in short-term money market funds. Financial securities are recorded in the
balance sheet at fair value at the settlement day. Subsequently financial
securities are measured in the financial statements at fair value, and their
change in fair value is recognised in the income statement in finance income
and costs.
Financial assets recognised in the income statement at fair value primarily
comprise certificates of deposit, commercial papers and municipality bills with
maturities of 3 - 6 months, and investments in short-term money market funds.
Financial securities are derecognised when they mature, are sold or otherwise
disposed of.
Assets in this category are classified as current assets.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and bank deposits. Cash and cash
equivalents are derecognised when they mature, are sold or otherwise disposed
of. Assets in this category are classified as current assets.
Borrowings
Borrowings include bond and commercial paper issuance and loans raised by the
company, recognised initially at fair value net of the transaction costs
incurred. Transaction costs consist of bond prices above or below par value,
credit fees, commissions and administrative fees. Borrowings are subsequently
carried at amortised cost; any difference between the proceeds and the
redemption value is recognised in the income statement over the period of the
borrowings using the effective interest rate method. Borrowings are
derecognised when they mature and are repaid.
Provisions
A provision is recorded when the Group has a legal or factual obligation based
on an earlier event and it is likely that fulfilling the obligation will
require a payment, and the amount of the obligation can be estimated reliably.
The provisions are valued at the present value of costs required to cover the
obligation. The discounting factor used in calculating the present value is
chosen so that it reflects the market view of the time value of money at the
assessment date and of the risks pertaining to the obligation.
Fingrid uses creosote-impregnated and CCA-impregnated wooden towers and cable
trench covers. Decree YMA 1129/2001 by the Finnish Ministry of the Environment
categorises decommissioned impregnated wood as hazardous waste. A provision was
recorded in 2004 of the related disposal costs materialising in the future
decades.
Dividend distribution
The Board of Directors' proposal concerning dividend distribution is not
recorded in the financial statements. This is only recorded after a decision
made by the Annual General Meeting of Shareholders.
Critical accounting estimates and judgements
When the consolidated financial statements are drawn up in accordance with the
IFRS, the company management needs to make estimates and assumptions which have
an impact on the amounts of assets, liabilities, income and expenses recorded
and conditional items presented. These estimates and assumptions are based on
historical experience and other justified assumptions which are believed to be
reasonable in the conditions which constitute the foundation for the estimates
of the items recorded in the financial statements. The actual amounts may
differ from these estimates. In the financial statements, estimates have been
used for example in the drawing up of impairment testing calculations, when
specifying the economic lives of tangible and intangible asset items, and in
conjunction with deferred taxes and provisions.
Imbalance power purchase and sale estimate
The income and expenses of imbalance power are ascertained through nation-wide
imbalance settlement procedure, which is based on the decree by the Ministry of
Employment and Economy on 9 December 2008 disclosure obligation related to
settlement of electricity delivery. The final balance settlement is completed
is completed no later than two months from the delivery month, which is why the
income and expenses of imbalance power in the financial statements are partly
based on preliminary balance settlement. The preliminary settlement has been
made separately for consumption balance, production balance and foreign
balances. For the two first balances, the volume of unsettled imbalance power
has been estimated using reference group calculations.
For foreign balances, the calculations have been verified with the foreign
counterparties.
ITC compensation
Inter-compensations for the transit transmissions of electricity have been
agreed upon through the ITC agreement between the European transmission system
operators. The centralised calculations are carried out by ENTSO-E, the
European Network of Transmission System Operators of Electricity. The ITC
compensations are determined on basis of the compensation paid for the use of
the grid and transmission losses in Europe. The ITC compensations are
calculated considering the electricity transmissions between the various ITC
agreement countries plus the price of electricity in Europe. Fingrid's portion
of the ITC compensation is determined on the basis of the cross-border
electricity transmissions and imputed grid losses.
The ITC compensation invoicing is monthly in arrears after all parties to the
ITC agreement have accepted the invoice sums, approximately 3 to 5 months in
arrears for the allocated month. This is why the uninvoiced ITC compensations
for August to December 2011 have been estimated in the financial statements.
The estimate has been made using actual energy border transmissions in Finland
and unit compensations, which have been estimated analysing the actual figures
in previous months and data on grid transmissions during these months.
Estimated impairment of goodwill
Goodwill is tested annually for potential impairment, in accordance with the
accounting principles stated in note 15.
Application of new or revised IFRS standards and IFRIC interpretations
In preparing these interim financial statements, the group has followed the
same accounting policies as in the annual financial statements for 2010 except
for the effect of changes required by the adoption of the following new
standards, interpretations and amendments to existing standards and
interpretations on 1 January 2011. These entered into force on the new or
restructured Standard for and interpretations does not have a material impact
on the 2011 financial statements.
IAS 24 (Revised) `Related Party Disclosures`
The revised standard simplifies the disclosure requirements for
government-related entities and clarifies the definition of a related party.
The revised standard still requires disclosures that are important to users of
financial statements but eliminates requirements to disclose information that
is costly to gather and of less value to users. It achieves this balance by
requiring disclosure about these transactions only if they are individually or
collectively significant.
IAS 32 (Amendment) `Financial Instruments: Presentation - Classification of
Rights Issues`
The amendment addresses the accounting for rights issues (rights, options or
warrants) that are denominated in a currency other than the functional currency
of the issuer. Previously such rights issues were accounted for as derivative
liabilities. However, the amendment requires that, provided certain conditions
are met, such rights issues are classified as equity regardless of the currency
in which the exercise price is denominated.
IFRIC 19 `Extinguishing Financial Liabilities with Equity Instruments`
The interpretation clarifies the accounting when an entity renegotiates the
terms of its debt with the result that the liability is extinguished by the
debtor issuing its own equity instruments to the creditor. IFRIC 19 requires a
gain or loss to be recognised in profit or loss when a liability is settled
through the issuance of the entity's own equity instruments. The amount of the
gain or loss recognised in profit or loss will be the difference between the
carrying value of the financial liability and the fair value of the equity
instruments issued.
IASB published changes to 12 standards or interpretations in Maj 2010 as part
of the annual Improvements to IFRSs:
IFRS 3 (amendments) `Business combinations`
a) Transition requirements for contingent consideration from a business
combination that occurred before the effective date of the revised IFRS
Clarifies that the amendments to IFRS 7, ‘Financial instruments: Disclosures',
IAS 32, ‘Financial instruments: Presentation', and IAS 39, ‘Financial
instruments: Recognition and measurement', that eliminate the exemption for
contingent consideration, do not apply to contingent consideration that arose
from business combinations whose acquisition dates precede the application of
IFRS 3 (as revised in 2008).
b) Measurement of non-controlling interests
The choice of measuring non-controlling interests at fair value or at the
proportionate share of the acquiree's net assets applies only to instruments
that represent present ownership interests and entitle their holders to a
proportionate share of the net assets in the event of liquidation. All other
components of non-controlling interest are measured at fair value unless
another measurement basis is required by IFRS.
c) Un-replaced and voluntarily replaced share-based payment awards
The application guidance in IFRS 3 applies to all share-based payment
transactions that are part of a business combination, including unreplaced and
voluntarily replaced share-based payment awards.
IFRS 7 (amendment) `Financial instruments: Financial statement disclosures`
The amendment emphasizes the interaction between quantitative and qualitative
disclosures about the nature and extent of risks associated with financial
instruments.
IAS 1 (amendment) `Presentation of financial statements - statement of changes
in equity`
Clarifies that an entity shall present an analysis of other comprehensive
income for each component of equity, either in the statement of changes in
equity or in the notes to the financial statements.
IAS 27 (amendment) `Consolidated and separate financial statements`
Clarifies that the consequential amendments from IAS 27 made to IAS 21, ‘The
effect of changes in foreign exchange rates', IAS 28, ‘Investments in
associates', and IAS 31, ‘Interests in joint ventures', apply prospectively for
annual periods beginning on or after 1 July 2009, or earlier when IAS 27 is
applied earlier.
IAS 34 (amendment) `Interim financial reporting`
The change provides guidance to illustrate how to apply disclosure principles
in IAS 34 and add disclosure requirements around:
- The circumstances likely to affect fair values of
financial instruments and their classification;
- Transfers of financial instruments between
different levels of the fair value hierarchy;
- Changes in classification of financial assets; and
- Changes in contingent liabilities and assets.
The Group will adopt the following amendments to existing standards 01/01/2012
or later.
IFRS 7 (amendments)* ‘Financial instruments: Disclosures' on derecognition
This amendment will promote transparency in the reporting of transfer
transactions and improve users' understanding of the risk exposures relating to
transfers of financial assets and the effect of those risks on an entity's
financial position, particularly those involving securitisation of financial
assets. Earlier application subject to EU endorsement is permitted.
IAS 12 (amendment)* ‘Income taxes' on deferred tax
IAS 12, ‘Income taxes', currently requires an entity to measure the deferred
tax relating to an asset depending on whether the entity expects to recover the
carrying amount of the asset through use or sale. It can be difficult and
subjective to assess whether recovery will be through use or through sale when
the asset is measured using the fair value model in IAS 40, ‘Investment
property'. This amendment therefore introduces an exception to the existing
principle for the measurement of deferred tax assets or liabilities arising on
investment property measured at fair value. As a result of the amendments, SIC
21,
‘Income taxes - recovery of revalued non-depreciable assets', will no longer
apply to investment properties carried at fair value. The amendments also
incorporate into IAS 12 the remaining guidance previously contained in SIC 21,
which is withdrawn.
IAS 1 (amendment)* ‘Financial statement presentation' regarding other
comprehensive income
The main change resulting from these amendments is a requirement for entities
to group items presented in ‘other comprehensive income' (OCI) on the basis of
whether they are potentially reclassifiable to profit or loss subsequently
(reclassification adjustments). The amendments do not address which items are
presented in OCI.
*) The amendment has not yet been approved by the EU.
The changes are not expected to have a material impact on the consolidated
financial statements.
2. INFORMATION ON REVENUE AND SEGMENTS
REVENUE, 1,000 € 2011 2010
-------------------------------------------
Grid service revenue 210,207 211,462
Sale of imbalance power 145,861 159,812
Cross-border transmission 22,399 23,865
ITC income 22,181 19,298
Peak load capacity 7,221 13,962
Estlink congestion income 9,632 9,465
Nordic congestion income 15,765 9,045
Feed-in tariff for peat 1 895
Other operating revenue 5,188 8,520
-------------------------------------------
Total 438,456 456,326
===========================================
Through the grid services, a customer obtains the right to transmit electricity
to and from the main grid through its connection point. Grid service is agreed
by means of a grid service contract signed between a customer connected to the
main grid and Fingrid. Fingrid charges a consumption fee, use of grid fee,
connection point fee and market border fee for the grid service. The contract
terms are equal and public.
Transmission services on the cross-border connections to the other Nordic
countries enable participation in the Nordic Elspot and Elbas exchange trade.
Fingrid makes transmission services on the cross-border connections from Russia
available to all electricity market parties. The transmission service is
intended for fixed electricity imports. When making an agreement on
transmission services from Russia, the customer reserves a transmission right
(in MW) for a period of time to be agreed upon separately. The smallest unit
that can be reserved is 50 MW. The contract terms are equal and public.
Each electricity market party must ensure that its electricity balance is in
balance by making an agreement with either Fingrid or some other party. Fingrid
buys and sells imbalance power in order to balance the hourly power balance of
an electricity market party (balance provider). Imbalance power trade and
pricing of imbalance power are based on a balance service agreement with equal
and public terms and conditions.
Fingrid is responsible for the continuous power balance in Finland by buying
and selling regulating power in Finland. The balance providers can participate
in the Nordic balancing power market by submitting bids of their available
capacity. The terms and conditions of participation in the regulating power
market and the pricing of balancing power are based on the balance service
agreement.
The congestion income is revenues that the transmission system operator
receives from market actors for use of transmission capacity for those
transmission links, on which the operational reliability of the power system
restricts the power transmission. Fingrid receives a contractual portion of the
Nordic congestion income.
ITC-compensation are income and/or costs for Fingrid, which the transmission
system operator receives for the use of its grid by other European transmission
operators and/or pays to other transmission system operators when using their
grid when servicing its own customers.
Peak load power includes condensing power capacity, when it is under threat of
being closed down, to be kept in readiness for use (peak load power) and the
feed-in tariff for peat includes compensation for peat condensing power.
Information on segments is not presented, because the entire business of the
Fingrid Group is deemed to comprise transmission system operation in Finland
with system responsibility, only constituting a single segment. There are no
essential differences in the risks and profitability of individual products and
services.
3. OTHER OPERATING INCOME, 1,000 € 2011 2010
------------------------------------------------
Rental income 1,740 1,632
Contributions received 205 138
Other income 1,031 5,207
------------------------------------------------
Total 2,976 6,978
================================================
4. MATERIALS AND SERVICES, 1,000 € 2011 2010
---------------------------------------------------------------------
Purchases during financial year 225,338 243,000
Change in inventories, increase (-) or decrease (+) -606 -686
---------------------------------------------------------------------
Materials and consumables 224,732 242,314
External services 16,770 11,279
---------------------------------------------------------------------
Total 241,503 253,593
=====================================================================
5. EMPLOYEE BENEFITS EXPENSES, 1,000 € 2011 2010
----------------------------------------------------------------
Salaries and bonuses 17,213 17,177
Pension expenses - contribution-based schemes 2,438 2,891
Pension expenses - benefit-based schemes -82 -456
Other additional personnel expenses 765 773
----------------------------------------------------------------
Total 20,334 20,385
================================================================
Salaries and bonuses of top management (note 36) 1,564 1,376
The Group uses a compensation system, of which the general principles have been
approved by the Board of Directors on 23 October 2007. The principles for the
bonus programme for the Executive Management Group have additionally been
determined in a meeting held on 12 December 2007 by the Remuneration Committee.
The base salary and the profit-based compensation for the Executive Management
Group, is based on the strategic indicators of the company. The members of the
Executive Management Group are paid a bonus decided by the Remuneration
Committee of the Board of Directors, of which the maximum amount is 35 % for
the President & CEO and 25 % for the other members of the Management Executive
Group of the annual salary. The system changed from a one-year to a three-year
review period as of 1 January 2010, when the compensation will be based on a
three-year average of the strategic indicators from 2009 until 2011.
Number of salaried employees in the company during the financial 2011 2010
year:
Personnel, average 263 260
Personnel, 31 Dec 266 263
6. DEPRECIATION, 1,000 € 2011 2010
---------------------------------------------------
Intangible assets 2,796 2,792
Buildings and structures 4,052 3,669
Machinery and equipment 32,502 32,631
Transmission lines 27,875 27,299
Other property, plant and equipment 653 423
---------------------------------------------------
Total 67,879 66,813
===================================================
7. OTHER OPERATING EXPENSES, 1,000 € 2011 2010
--------------------------------------------------------------------------------
Contracts, assignments etc. undertaken externally 31,833 32,618
Gains/losses from measuring electricity derivatives at fair 4,725 -2,282
value
Rental expenses 11,538 11,543
Foreign exchange gains and losses 8 -649
Other expenses 7,050 6,866
--------------------------------------------------------------------------------
Total 55,153 48,096
================================================================================
8. AUDITORS FEES, 1,000 € 2011 2010
-------------------------------------
-------------------------------------
Auditing fee 32 42
Other fees 6 46
-------------------------------------
Total 38 88
=====================================
9. RESEARCH AND DEVELOPMENT, 1,000 € 2011 2010
--------------------------------------------------
Research and development expenses 1,833 1,556
--------------------------------------------------
Total 1,833 1,556
==================================================
10. FINANCE INCOME AND COSTS, 1,000 € 2011 2010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Interest income on held-for-trading financial assets -3,523 -2,005
Interest income on cash and cash equivalents and bank deposits -21 -30
Dividend income -7 -4
--------------------------------------------------------------------------------
-3,551 -2,039
Interest expenses on borrowings 29,281 21,242
Net financial expenses on interest and foreign exchange -7,079 -7,645
derivatives
Gains from measuring derivative contracts at fair value -7,363 -4,008
Losses from measuring derivative contracts at fair value 10,523 10,258
Net foreign exchange gains and losses 0 0
Other finance costs 2,174 760
-------------------------------------------------------------------------------- 27,535 20,607
Capitalised finance costs, borrowing costs; the capitalisation -1,430 -100
rate used 2.14 % (note 17)
--------------------------------------------------------------------------------
Total 22,554 18,468
================================================================================
11. INCOME TAXES, 1,000 € 2011 2010
--------------------------------------------------------------------------------
Direct taxes 7,720 2,207
Change of deferred taxes (note 26) -6,517 12,357
--------------------------------------------------------------------------------
Total 1,204 14,564
================================================================================
Reconciliation of income tax:
Profit before taxes 34,201 56,332
--------------------------------------------------------------------------------
Tax calculated in accordance with statutory tax rate in Finland 8,892 14,646
26 %
Deferred tax resulting from change in tax rate - 7,653
Non-deductible expenses and tax-free income -36 -82
--------------------------------------------------------------------------------
Income Taxes in the Consolidated Income Statement 1,204 14,564
================================================================================
12. TAXES RELATED TO OTHER ITEMS IN TOTAL COMPREHENSIVE INCOME, 1,000 €
--------------------------------------------------------------------------------
-
2011 2010
--------------------------------------------------------------------------------
Before Tax After Before Tax After
taxes impact taxes taxes impact taxes
----------------------------- ---------
----------------- -------------------------
Cashflow hedges -37,841 4,443 -33,399 38,084 -6,924 31,159
Translation reserve 240 240 224 224
Items related to long-term -65 17 -48 1 0 1
asset items
available-for-sale
--------------------------------------------------------------------------------
Total -37,667 4,460 -33,207 38,308 -6,924 31,384
================================================================================
13. EARNINGS PER SHARE 2011 2010
------------------------------------------------------
Profit for the financial year, 1,000 € 32,998 41,768
Weighted average number of shares, qty 3,325 3,325
Undiluted earnings per share, € 9,924 12,562
Diluted earnings per share, € 9,924 12,562
14. DIVIDEND PER SHARE
--------------------------------------------------------------------------------
After the closing date, the Board of Directors has proposed that a dividend of
2,018.26 (2010: 2,018.26) euros per share be distributed, totalling 6.7 (2010:
6.7) million euros.
15. GOODWILL, 1,000 € 2011 2010
--------------------------------------
--------------------------------------
Cost at 1 Jan 87,920 87,920
--------------------------------------
Cost at 31 Dec 87,920 87,920
Carrying amount 31 Dec 87,920 87,920
======================================
The entire business of the Fingrid Group comprises transmission system
operation in Finland with system responsibility, which the full goodwill of the
Group concerns.
In impairment testing, the recoverable amount from business is defined by means
of value in use. The cash flow forecasts used in impairment calculations are
based on ten year strategic financial estimates. The cash flows used in the
imparement test are based on income and expenses deriving from the business
operations and replacement capital expenditure according to the capital
expenditure programme. The estimated cash flows cover the following five year
period. The expected cash flows during the subsequent years are estimated by
extrapolating the expected cash flows using a growth estimate of zero per cent.
The discount rate before taxes used in the calculations is 7.0%.
According to the view of the management, reasonable changes in the primary
assumptions used in the calculations will not lead to a need for recording
impairment losses.
16. INTANGIBLE ASSETS, 1,000 € 2011 2010
------------------------------------------------------------------
Land use rights
Cost at 1 Jan 84,600 82,114
Increases 1 Jan - 31 Dec 1,498 2,545
Decreases 1 Jan - 31 Dec -59
------------------------------------------------------------------
Cost at 31 Dec 86,098 84,600
------------------------------------------------------------------
Carrying amount 31 Dec 86,098 84,600
------------------------------------------------------------------
Other intangible assets
Cost at 1 Jan 23,582 21,623
Increases 1 Jan - 31 Dec 1,343 1,959
------------------------------------------------------------------
Cost at 31 Dec 24,925 23,582
Accumulated depreciation according to plan 1 Jan -18,489 -15,697
Depreciation according to plan 1 Jan - 31 Dec -2,796 -2,792
------------------------------------------------------------------
Carrying amount 31 Dec 3,639 5,092
------------------------------------------------------------------
Carrying amount 31 Dec 89,737 89,692
==================================================================
17. PROPERTY, PLANT AND EQUIPMENT, 1,000 € 2011 2010
--------------------------------------------------------------------------------
Land and water areas
Cost at 1 Jan 13,509 11,410
Increases 1 Jan - 31 Dec 162 2,098
Decreases 1 Jan - 31 Dec 0
--------------------------------------------------------------------------------
Cost at 31 Dec 13,671 13,509
--------------------------------------------------------------------------------
Carrying amount 31 Dec 13,671 13,509
--------------------------------------------------------------------------------
Buildings and structures
Cost at 1 Jan 107,624 97,842
Increases 1 Jan - 31 Dec 19,432 9,783
Decreases 1 Jan - 31 Dec -43
--------------------------------------------------------------------------------
Cost at 31 Dec 127,014 107,624
Accumulated depreciation according to plan 1 Jan -24,633 -20,964
Decreases, depreciation according to plan 1 Jan - 31 Dec 17
Depreciation according to plan 1 Jan - 31 Dec -4,052 -3,669
Carrying amount 31 Dec 98,345 82,991
--------------------------------------------------------------------------------
Machinery and equipment
Cost at 1 Jan 687,816 663,983
Increases 1 Jan - 31 Dec 79,972 23,836
Decreases 1 Jan - 31 Dec -255 -4
--------------------------------------------------------------------------------
Cost at 31 Dec 767,533 687,816
Accumulated depreciation according to plan 1 Jan -284,459 -251,828
Decreases, depreciation according to plan 1 Jan - 31 Dec 127
Depreciation according to plan 1 Jan - 31 Dec -32,502 -32,631
Carrying amount 31 Dec 450,700 403,357
--------------------------------------------------------------------------------
Transmission lines
Cost at 1 Jan 896,373 869,911
Increases 1 Jan - 31 Dec 110,415 27,130
Decreases 1 Jan - 31 Dec -668
--------------------------------------------------------------------------------
Cost at 31 Dec 1,006,788 896,373
Accumulated depreciation according to plan 1 Jan -288,984 -261,915
Decreases, depreciation according to plan 1 Jan - 31 Dec 230
Depreciation according to plan 1 Jan - 31 Dec -27,875 -27,299
Carrying amount 31 Dec 689,929 607,389
--------------------------------------------------------------------------------
Other property, plant and equipment
Cost at 1 Jan 14,096 13,830
Increases 1 Jan - 31 Dec 562 266
Cost at 31 Dec 14,658 14,096
--------------------------------------------------------------------------------
Accumulated depreciation according to plan 1 Jan -10,999 -10,577
Depreciation according to plan 1 Jan - 31 Dec -650 -423
Carrying amount 31 Dec 3,009 3,097
--------------------------------------------------------------------------------
Advance payments and purchases in progress
Cost at 1 Jan 142,930 69,447
Increases 1 Jan - 31 Dec 224,097 127,274
Transfers to other property, plant, and equipment and to -204,549 -53,890
other intangible assets 1 Jan - 31 Dec
Borrowing costs capitalised in the financial year (note 1,430 100
10)
--------------------------------------------------------------------------------
Cost at 31 Dec 163,908 142,930
--------------------------------------------------------------------------------
Carrying amount 31 Dec 163,908 142,930
--------------------------------------------------------------------------------
Carrying amount 31 Dec 1,419,561 1,253,273
================================================================================
Item Advance payments and purchases in progress contains the advance payments
of noncurrent property, plant and equipment and intangible assets, and
acquisition costs caused by capital investments in progress.
18. INVESTMENTS, 1,000 € 2011 2010
-------------------------------------------------------------------------------
Available-for-sale investments
Cost at 1 Jan 366 329
Increases 1 Jan - 31 Dec 39
Decreases 1 Jan - 31 Dec -3
Changes in fair value 1 Jan - 31 Dec -65 1
-------------------------------------------------------------------------------
Carrying amount 31 Dec 301 366
-------------------------------------------------------------------------------
The changes in fair value are recorded in equity (note 25).
Equity investments in associated companies
Cost at 1 Jan 7,718 7,110
Portion of profit 1 Jan - 31 Dec 193 384
Translation differences 1 Jan - 31 Dec 240 224
Dividends 1 Jan - 31 Dec -204
-------------------------------------------------------------------------------
Carrying amount 31 Dec 7,947 7,718
-------------------------------------------------------------------------------
Carrying amount 31 Dec 8,247 8,084
===============================================================================
Goodwill contained in the carrying amount of associated companies 3,245 3,245
at 31 Dec
-------------------------------------------------------------------------------
There are no such essential temporary differences with associated companies of
which deferred tax assets or liabilities would have been recorded.
Financial summary of associated companies, 1,000 €
2010 Assets Liabiliti Revenu Profit/los Ownership
es e s (%)
--------------------------------------------------------------------------------
Nord Pool Spot AS, Lysaker, 340,747 319,121 13,839 2,002 20.0
Norway
Porvoon Alueverkko Oy, 5,797 5,209 4,949 12 33.3
Porvoo, Finland
--------------------------------------------------------------------------------
2011 Assets Liabiliti Revenu Profit/los Ownership
es e s (%)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Nord Pool Spot AS, Lysaker, 97,372 70,649 16,897 2,133 20.0
Norway
Porvoon Alueverkko Oy, 6,979 6,358 5,039 17 33.3
Porvoo, Finland
Subsidiary shares 31 Dec Ownership Ownership
2011 (%) (%)
--------------------------------------------------------------------------------
Finextra Oy, Helsinki, 100 100
Finland
19. INVENTORIES, 1,000 € 2011 2010
------------------------------------------------
Materials and consumables at 1 Jan 6,642 5,542
Work in progress 65 559
------------------------------------------------
Total 6,706 6,101
================================================
The cost of inventories recognised as expense was 0.4 (2010: 0.5) million euros.
20. TRADE RECEIVABLES AND OTHER RECEIVABLES, 2011 2010
1,000 €
--------------------------------------------------------------------------
Trade receivables 49,903 45,300
Trade receivables from associated companies (note 36) 708 3,219
Prepayments and accrued income 13,968 9,001
Other receivables 53 43
--------------------------------------------------------------------------
Total 64,633 57,563
==========================================================================
Essential items included in prepayments and accrued income 2011 2010
--------------------------------------------------------------------------
Accruals of sales 5,024 3,606
Accruals of purchases/prepayments 493 857
Interest receivable 8,249 4,334
Rents/prepayments 203 205
--------------------------------------------------------------------------
Total 13,968 9,001
==========================================================================
Age distribution of trade receivables 2011 2010
--------------------------------------------------------------------------
Unmatured trade receivables 46,672 47,970
Trade receivables matured by 1-30 days 3,868 501
Trade receivables matured by 31-60 days 60 32
Trade receivables matured by more than 60 days 12 16
--------------------------------------------------------------------------
Total 50,611 48,519
==========================================================================
On 31 December 2011 or on 31 December 2010, the company did not have matured
trade receivables of which impairment losses would have been recorded. Based on
earlier payments, the company expects to receive the matured receivables in
less than 3 months.
Receivables where the due dates have been renegotiated are not included in
matured trade receivables.
Trade receivables and other receivables broken down by 2011 2010
currencies, 1,000 €
--------------------------------------------------------------------------------
EUR 64,631 57,546
GBP 2
SEK 17
--------------------------------------------------------------------------------
Total 64,633 57,563
================================================================================
The fair value of trade receivables and other receivables does not differ
essentially from the balance sheet value.
21. FINANCIAL ASSETS RECOGNISED AT FAIR VALUE, 1,000 € 2011 2010
------------------------------------------------------------------------
Certificates of deposit 99,693 99,659
Commercial papers 102,694 118,244
------------------------------------------------------------------------
Total 202,387 217,903
========================================================================
Financial assets are recognised at fair value and the change in fair value is
presented in the income statement in finance income and costs.
22. CASH AND CASH EQUIVALENTS, 1,000 € 2011 2010
----------------------------------------------------
----------------------------------------------------
Cash and bank accounts 152 1,111
Pledged accounts 1,302 2,669
----------------------------------------------------
Total 1,454 3,780
====================================================
23. CARRYING AMOUNTS OF FINANCIAL ASSETS AND LIABILITIES BY
MEASUREMENT CATEGORIES, 1,000 €
--------------------------------------------------------------------------------
-
Balance Loans Assets/ Available Financial Total Note
sheet and liabilities -for-sale assets/
item other recognised in financial liabilities
31 Dec receiva income assets measured at
2011 bles statement at amortised cost
fair value
--------------------------------------------------------------------------------
Non-curren
t
financial
assets
Available- 301 301 18
for-sale
investmen
ts
Interest 64,558 64,558 29
rate and
currency
derivativ
es
Current
financial
assets
Interest 15,474 15,474 29
rate and
currency
derivativ
es
Trade 64,633 64,633 20
receivabl
es and
other
receivabl
es
Financial 202,387 202,387 21
Assets
recognise
d in
income
statement
at fair
value
Cash in 1,454 1,454 22
hand and
bank
receivabl
es
--------------------------------------------------------------------------------
Financial 64,633 283,873 301 348,806
assets
total
================================================================================
Non-curren
t
financial
liabiliti
es
Borrowings 845,154 845,154 27
Interest 15,293 15,293 29
rate and
currency
derivativ
es
Current
financial
liabiliti
es
Borrowings 378,841 378,841 27
Interest 1,945 1,945 29
rate and
currency
derivativ
es
Trade 45,143 14,491 59,635 30
payables
and other
liabiliti
es
--------------------------------------------------------------------------------
Financial 45,143 17,238 1,238,486 1,300,868
liabiliti
es total
================================================================================
Balance sheet Loans Assets/ Availabl Financial Total Note
item and liabilities e-for-sa assets/
31 Dec 2010 other recognised in le liabilities
receiva income financia measured at
bles statement at l assets amortised
fair value cost
--------------------------------------------------------------------------------
Non-current
financial
assets
Available-for 366 366 18
-sale
investments
Interest rate 52,798 52,798 29
and currency
derivatives
Current
financial
assets
Interest rate 4,629 4,629 29
and currency
derivatives
Trade 57,563 57,563 20
receivables
and other
receivables
Financial 217,903 217,903 21
assets
recognised
in income
statement at
fair value
Cash in hand 3,780 3,780 22
and bank
receivables
--------------------------------------------------------------------------------
Financial 61,343 275,330 366 337,039
assets total
================================================================================
Non-current
financial
liabilities
Borrowings 877,530 877,530 27
Interest rate 116 116 29
and currency
derivatives
Current
financial
liabilities
Borrowings 199,327 199,327 27
Interest rate 1,679 1,679 29
and currency
derivatives
Trade 58,556 9,843 68,398 30
payables and
other
liabilities
--------------------------------------------------------------------------------
Financial 58,556 1,795 1,086,700 1,147,051
liabilities
total
================================================================================
24. FAIR VALUE HIERARCHY, 2011 2010
1,000 €
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Level Level 2 Level Level Level 2 Level
1 3 1 3
-------------------------------------------------
-------------------------------
Financial assets held at fair
value
Available-for-sale investments 48 200 49 265
Interest rate and currency 64,421 56,645
derivatives
Electricity forward contracts, 26,602
NASDAQ OMX Commodities
Financial assets recognised at 202,387 217,903
fair value
--------------------------------------------------------------------------------
Financial assets held at fair 48 267,008 26,651 274,813
value total
================================================================================
Financial liabilities held at
fair value
Interest rate and currency 1,628 1,013
derivatives
Electricity forward contracts, 22,814
NASDAQ OMX Commodities
Electricity forward contracts, 75
others
--------------------------------------------------------------------------------
Financial liabilities held at 22,889 1,628 1,013
fair value total
================================================================================
Fair value measurement of assets and liabilities are categorised in a
three-level hierarchy in the fair value presentation. The appropriate hierarchy
is based on the input data of the instrument. The level is determined on the
basis of the lowest level of input for the instrument in its entirety that is
significant to the fair value measurement.
Level 1: inputs are publicly quoted in active markets.
Level 2: inputs are not publicly quoted and are observerable market parameters
either directly or indirectly.
Level 3: inputs are unobserverable market parameters.
25. EQUITY
Equity is composed of the share capital, share premium account, fair value
reserve (incl. hedge and revaluation reserves), translation reserve, and
retained earnings. The hedge reserve includes the changes in the fair value of
hedging instruments for loss energy. The fair value reserve includes the
changes in the fair value of available-for-sale investments. The translation
reserve includes translation differences in the net capital investments of
associated companies in accordance with the purchase method of accounting. The
profit for the financial year is recorded in retained earnings.
Share capital and share premium Share capital Share premium Total
account, 1,000 € account
--------------------------------------------------------------------------------
1 Jan 2010 55,922 55,922 111,845
------------------------------------------
Change
--------------------------------------------------------------------------------
31 Dec 2010 55,922 55,922 111,845
------------------------------------------
Change
------------------------------------------
31 Dec 2011 55,922 55,922 111,845
================================================================================
The share capital is broken down as Number of Of all shares Of
follows: shares % votes qty %
--------------------------------------------------------------------------------
Series A shares 2,078 62.49 83.32
------------------------------------------
Series B shares 1,247 37.51 16.68
--------------------------------------------------------------------------------
Total 3,325 100.00 100.00
================================================================================
Number of shares, qty Series Series Total
A shares B shares
--------------------------------------------------------------------------------
1 Jan 2011 2,078 1,247 3,325
------------------------------------------
Change
--------------------------------------------------------------------------------
31 Dec 2011 2,078 1,247 3,325
================================================================================
The maximum number of shares is 13,300 as in 2010. The shares have no par value.
Series A shares confer three votes each at a shareholders' meeting and series B
shares one vote each. When electing members of the Board of Directors, series A
share confers 10 votes each at a shareholders' meeting and each series B share
one vote each.
Series B shares have the right before series A shares to obtain the annual
dividend specified below from the funds available for profit distribution.
After this, a corresponding dividend is distributed to series A shares. If the
annual dividend cannot be distributed in some year, the shares confer a right
to receive the undistributed amount from the funds available for profit
distribution in the subsequent years; however so that series B shares have the
right before series A shares to receive the annual dividend and the
undistributed amount. Series B shares have no right to receive any other
dividend.
The shareholders' meeting decides on the annual dividend.
The determination of the dividend: the amount of the annual dividend is
calculated on the basis of calendar years so that the subscription price of the
share added by amounts paid in conjunction with potential increases of share
capital and reduced by potential amounts paid in refunds of equity, is
multiplied by the dividend percentage; however so that the minimum dividend is
6 %. The dividend percentage is defined on the basis of the yield of the
30-year German Government Bond.
The dividend proposal for series B shares for 2011 is 6.0 per cent.
There are no non-controlling interests.
Shareholders by different categories Number of shares Of all Of votes
qty shares %
%
------------------------------------------------------------------------
-----------------------------------
Public organisations 1,767 53.14 70.86
-----------------------------------
Financial and insurance institutions 1,558 46.86 29.14
------------------------------------------------------------------------
Total 3,325 100.00 100.00
========================================================================
Shareholders Number of shares Of all Of votes
qty shares % %
------------------------------------------------------------------------------
-----------------------------------
Republic of Finland 1,382 41.56 55.42
-----------------------------------
Mutual Pension Insurance Company Ilmarinen 661 19.88 17.15
-----------------------------------
Varma Mutual Pension Insurance Company 405 12.18 5.41
-----------------------------------
National Emergency Supply Agency 385 11.58 15.44
-----------------------------------
Tapiola Mutual Pension Insurance Company 150 4.51 2.01
-----------------------------------
Suomi Mutual Life Assurance Company 75 2.26 1.00
-----------------------------------
Pohjola Insurance Ltd 75 2.26 1.00
-----------------------------------
Mandatum Life Insurance Company Limited 54 1.62 0.72
-----------------------------------
Tapiola General Mutual Insurance Company 50 1.50 0.67
-----------------------------------
Tapiola Mutual Life Assurance Company 47 1.41 0.63
-----------------------------------
If P&C Insurance Company Ltd 25 0.75 0.33
-----------------------------------
Imatran Seudun Sähkö Oy 10 0.30 0.13
-----------------------------------
Fennia Life Insurance Company 6 0.18 0.08
------------------------------------------------------------------------------
Total 3,325 100.00 100.00
==============================================================================
Share premium account
The share premium account includes the difference between the counter value of
the shares and the value obtained. According to the Finnish Companies Act the
premium fund means tied equity. The share capital can be increased by
transferring funds from the premium fund account. The premium fund account can
be decreased in order to cover losses or it can under certain conditions be
returned to the owners.
Fair value reserves
The fair value reserves include the changes in the fair value of derivative
instruments used for hedging cash flow (hedge reserve) and the changes in the
fair value of available-for-sale investments (publicly quoted and unquoted
securities) (revaluation reserve).
Hedge reserve, 1,000 € 2011 2010
--------------------------------------------------------------------------------
1 Jan 19,708 -11,452
Changes in fair value during financial year -37,841 38,084
Taxes 4,443 -6,924
--------------------------------------------------------------------------------
Hedge reserve 31 Dec -13,691 19,708
================================================================================
Revaluation reserve, 1,000 € 2011 2010
--------------------------------------------------------------------------------
1 Jan 61 60
Changes in fair value during financial year -65 1
Taxes on changes in fair value during financial year 17 0
--------------------------------------------------------------------------------
Revaluation reserve 31 Dec 12 61
================================================================================
Translation reserve, 1,000 € 2011 2010
--------------------------------------------------------------------------------
Translation reserve 31 Dec 551 312
================================================================================
The translation reserve includes the translation differences resulting from
converting the financial statements of the foreign associated company.
Dividends, 1,000 € 2011 2010
--------------------------------------------------------------------------------
Dividends paid 6,711 6,724
================================================================================
The proposal for dividend distribution for the financial year
2011 is presented innote 14.
Retained earnings, 1,000 € 2011 2010
--------------------------------------------------------------------------------
Profit from previous financial years 375,589 340,531
Profit for the financial year 32,998 41,768
--------------------------------------------------------------------------------
Retained earnings 31 Dec 408,586 382,299
================================================================================
26. DEFERRED TAX ASSETS AND LIABILITIES, 1,000 €
------------------------------------------------
Changes in deferred
taxes in 2011:
31 Dec Recorded in Recorded in 31 Dec
2010 income statement other 2011
at fair value comprehensive
income
--------------------------------------------------------------------------------
Deferred tax assets
Provisions 494 0 493
Current financial 1,892 -3,452
assets
Trade payables and 491
other liabilities
Interest-bearing 8,464 1,971 10,434
borrowings
Derivative instruments 30 3,973 4,443 8,446
Other items 13 -5 8
--------------------------------------------------------------------------------
Total 10,893 2,486 4,443 19,873
Deferred tax
liabilities
Accumulated -113,453 6,991 -106,463
depreciations
difference
Property, plant and -17,522 -1,766 -19,287
equipment, tangible
and intangible assets
Available-for-sale -39 17 -22
investments
Other receivables -1,128 -896 -2,024
Financial assets -113 -152 -265
recognised in income
statement at fair
value
Non-current financial -9,438 -1,282 -10,720
assets
Derivative instruments -6,924 6,924
Current financial -1,559
assets
Trade payables and -644 1,134
other liabilities
--------------------------------------------------------------------------------
Total -149,261 4,029 6,941 -140,340
Changes in deferred taxes
in 2010:
31 Dec Recorded in income Recorded 31 Dec
2009 statement at fair in equity 2010
value
--------------------------------------------------------------------------------
Deferred tax assets
Provisions 500 -6 494
Current financial assets 1,376 516 1,892
Non-current financial 196
assets
Interest-bearing borrowings 10,242 8,464
Derivative instruments 4,625 -571 -4,024 30
Other items 15 -1 13
--------------------------------------------------------------------------------
Total 6,711 10,179 -4,024 10,893
Deferred tax liabilities
Accumulated depreciation -103,074 -10,379 -113,453
difference
Property, plant and -14,997 -2,525 -17,522
equipment, tangible and
intangible assets
Available-for-sale -39 0 -39
investments
Other receivables -1,020 -109 -1,128
Financial assets recognised -148 35 -113
in income statement at
fair value
Non-current financial -9,634 -9,438
assets
Interest-bearing borrowings -1,778
Derivative instruments -6,924 -6,924
Trade payables and other -718 75 -644
liabilities
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total -121,774 -22,536 -6,925 -149,262
27. BORROWINGS, 1,000 € 2011 2010
--------------------------------------------------------------------------------
Non-current Fair Balance Fair Balance
value sheet value value sheet value
-----------------------------------------------
Bonds 637,276 619,998 675,619 663,218
Loans from financial 231,086 225,156 212,976 214,312
institutions
-----------------------------------------------
---------------------------------
868,362 845,154 888,595 877,530
Current Fair Balance Fair Balance
value sheet value value sheet value
-----------------------------------------------
Current portion of long-term 173,391 171,673 105,888 104,768
borrowings maturing within a
year
Other loans / Commercial papers 207,537 207,168 94,897 94,559
(international and domestic)
--------------------------------------------------------------------------------
380,928 378,841 200,785 199,327
Total 1,249,290 1,223,995 1,089,380 1,076,858
================================================================================
The fair values of borrowings are based on the present values of cash flows.
Loans raised in various currencies are measured at the present value on the
basis of the yield curve of each currency. The discount rate includes the
company-specific and loan-specific risk premium. Borrowings denominated in
foreign currencies are translated into euros at the mid-rate quoted by ECB at
the closing day.
Bonds included in borrowings, 1,000 € 2011 2010
------------------------------------------------------------------
International: Maturity date Interest
EUR 10,000 16.03.2011 3.625 % 10 000
EUR 25,000 23.03.2011 variable interest 25,000
EUR 15,000 24.03.2011 variable interest 15,000
EUR 20,000 07.04.2011 variable interest 20,000
EUR 25,000 16.03.2012 variable interest 25,000 25,000
EUR 25,000 12.04.2012 variable interest 25,000 25,000
EUR 10,000 16.04.2013 variable interest 10,000 10,000
EUR 20,000 28.04.2013 variable interest 20,000 20,000
EUR 20,000 15.10.2013 4.30 % 20,000 20,000
EUR 24,000 02.07.2014 variable interest 24,000 24,000
EUR 18,000 11.11.2014 variable interest 18,000 18,000
EUR 8,000 11.11.2014 variable interest 8,000 8,000
EUR 10,000 20.11.2014 3.26 % 10,000 10,000
EUR 20,000 11.04.2017 variable interest 20,000 20,000
EUR 25,000 11.04.2017 variable interest 25,000 25,000
EUR 30,000 15.06.2017 3.07 % 30,000 30,000
------------------------------------------------------------------
235,000 305,000
FIM 160,000 19.08.2013 5.20 % 26,909 26,908
------------------------------------------------------------------
26,909 26,908
JPY 3,000,000 05.07.2011 1.31 % * 27,612
JPY 3,000,000 25.07.2012 1.3575 % ** 29,940 27,612
JPY 3,000,000 20.04.2015 1.45 % 29,940 27,612
JPY 500,000 22.06.2017 1.28 % 4,990 4,602
------------------------------------------------------------------------------
64,870 87,437
CHF 39,000 22.05.2012 2.475 % 32,083 31,190
------------------------------------------------------------------------------
32,083 31,190
NOK 170,000 19.11.2014 4.68 % 21,924 21,795
NOK 200,000 17.10.2016 5.15 % 25,793 25,641
NOK 200,000 11.04.2017 5.16 % 25,793 25,641
NOK 200,000 10.11.2017 5.12 % 25,793 25,641
NOK 200,000 12.11.2019 5.37 % 25,793 25,641
------------------------------------------------------------------------------
125,097 124,359
SEK 225,000 03.04.2012 variable interest 25,247 25,096
SEK 225,000 11.04.2012 variable interest 25,247 25,096
SEK 100,000 21.03.2013 variable interest 11,221 11,154
SEK 200,000 03.04.2013 3.70 % 22,442 22,308
SEK 175,000 04.04.2014 4.30 % 19,636 19,519
SEK 300,000 15.06.2015 3.195 % 33,662 33,462
SEK 100,000 17.06.2015 3.10 % 11,221 11,154
SEK 220,000 01.12.2015 interest rate structure 26,588 26,994
SEK 100,000 15.01.2016 3.297 % 11,221 11,154
SEK 500,000 18.10.2016 variable interest 55,967
SEK 500,000 18.10.2016 3.50 % 56,104
------------------------------------------------------------------------------
298,556 185,936
Bonds, long-term total 619,998 663,218
Bonds, short-term total 162,517 97,612
------------------------------------------------------------------------------
Total 782,515 760,830
================================================================
*call option not exercised 5 July 2004
**call option not exercised 25 July 2006
Maturity of non-current borrowings, 1,000 €
2012 2013 2014 2015 2016 2016+ Total
--------------------------------------------------------------------------------
Bonds 162,517 110,571 101,561 101,412 149,085 157,369 782,515
Loans from 9,156 11,156 4,000 16,424 20,710 172,866 234,312
financial
institutions
--------------------------------------------------------------------------------
Total 171,673 121,727 105,561 117,836 169,795 330,235 1,016,827
================================================================================
Capital structure
The corporate finances are planned over a long time span, and the company is
ensured sufficient latitude and independent power of decision in the management
of finances. The company aims to secure sufficient cash flow for the long-term
development of transmission capacity, secured operational reliability and
development of the electricity market so that the tariff level remains
moderate. The company pursues as low average capital costs as possible by
utilising a lower cost through debt financing as compared to equity cost.
However, the goal is to keep the cash flow and debt service ratios of the
company at such a level that the company retains its high credit rating. The
high credit rating enables the company to tap the international and domestic
money and capital markets. The target for the equity ratio is a level of 30 per
cent.
28. PROVISIONS FOR LIABILITIES AND CHARGES, 1,000 € 2011 2010
-----------------------------------------------------------------
Provisions 1 Jan 1,899 1,921
Provisions used -2 -23
-----------------------------------------------------------------
Provisions 31 Dec 1,897 1,899
=================================================================
29. DERIVATIVE INSTRUMENTS, 1,000 €
--------------------------------------------------------------------------------
-
2011 2010
--------------------------------------------------------------------------------
Interest Fair Fair Net Nominal Fair Fair Net Nominal
rate value value fair value value value fair value
and pos. neg. value 31.12.11 pos. neg. value 31.12.10
currenc 31.12. 31.12.1 31.12.1 31.12. 31.12. 31.12.
y 11 1 1 10 10 10
derivat
ives
--------- ---------------------------------------------------------------
--------
Cross-cu 73,198 -9,592 63,606 518,841 48,940 -479 48,462 426,467
rrency
swaps
Forward -384 -384 24,700 245 245 1,747
contrac
ts
Interest 6,019 -7,262 -1,243 301,000 300 -1,313 -1,013 241,00
rate
swaps
Interest 814 814 880,000 7,938 7,938 880,000
rate
options
, bought
--------------------------------------------------------------------------------
Total 80,032 -17,238 62,793 1,724,541 57,424 -1,792 55,632 1,549,214
================================================================================
Electric Fair Fair Net Volume Fair Fair Net Volume
ity value value fair TWh value value fair TWh
derivat pos. neg. value 31.12.11 pos. neg. value 31.1210
ives 31.12. 31.12.1 31.12.1 31.12. 31.12. 31.12.
11 1 1 10 10 10
--------- ---------------------------------------------------------------
--------
Electric -22,814 -22,814 3,81 26,625 -400 26,225 3.66
ity
forward
contrac
ts,
designa
ted as
hedge
account
ing,
NASDAQ
OMX
Commodi
ties
Electric -75 -75 0.01 377 377 0.03
ity
forward
contrac
ts,
NASDAQ
OMX
Commodi
ties
--------------------------------------------------------------------------------
Total -22,889 -22,889 3.82 27,002 -400 26,602 3.69
================================================================================
Interest rate options included in interest and currency derivatives are
interest rate cap contracts with identical structures. The reference rate of
the contract is the 6 month Euribor, and at the effective date a contract
includes 6 or 8 caplets. The option premium has been paid in full to the
counterparty at the contract date.
The electricity derivatives hedge future costs of energy losses.
The net fair value of derivatives indicates the realised profit/loss if they
had been reversed on the last business day of 2011.
Maturity of derivative contracts:
Nominal value, 2012 2013 2014 2015 2016 2016+ Total
1,000 €
--------------------------------------------------------------------------------
Interest rate 55,000 80,000 36,000 30,000 70,000 30,000 301,000
swaps
Interest rate 30,000 185,000 445,000 220,000 880,000
options
Cross-currency 112,517 33,662 41,561 99,509 149,222 82,369 518,841
swaps
Forward 24,700 24,700
contracts
--------------------------------------------------------------------------------
Total 222,217 298,662 522,561 349,509 219,222 112,369 1,724,541
================================================================================
TWh 2021 2013 2014 2015 2016 2016+ Total
-------------------------------------------------------------------
Electricity derivatives 1.21 1.04 0.79 0.52 0.26 3.82
-------------------------------------------------------------------
Total 1.21 1.04 0.79 0.52 0.26 3.82
===================================================================
30. TRADE PAYABLES AND OTHER LIABILITIES, 1,000 € 2011 2010
-----------------------------------------------------------------
Trade payables 23,344 30,805
Trade payables to associated companies 120 324
Interest liabilities 14,491 9,843
Value added tax 2,481 3,051
Electricity tax 1,507 616
Accruals 21,159 26,782
Other debt 520 644
-----------------------------------------------------------------
Total 63,623 72,066
=================================================================
Essential items included in accruals 2011 2010
-----------------------------------------------------------------
Personnel expenses 3,351 4,409
Accruals of sales and purchases 17,808 22,361
Other 12
-----------------------------------------------------------------
Total 21,159 26,782
=================================================================
31. COMMITMENTS AND CONTINGENT LIABILITIES, 2011 2010
1,000 €
-------------------------------------------------------------------------
Pledges
Pledge covering property lease agreements 47 46
Pledged account in favour of the Customs Office 150 150
Pledged account covering electricity exchange purchases 127 1,878
-------------------------------------------------------------------------
-------------------------------------------------------------------------
323 2,074
Unrecorded investment commitments 218,072 385,012
Other financial commitments
Counterguarantee in favour of an associated company 1,700 1,700
Credit facility commitment fee and commitment fee:
Commitment fee for the next year 401 120
Commitment fee for subsequent years 1,584 89
-------------------------------------------------------------------------
-------------------------------------------------------------------------
3,685 1,908
32. OTHER LEASE AGREEMENTS, 1,000 € 2011 2010
--------------------------------------------------------------------------------
Minimum rental obligations of other irrevocable lease
agreements:
In one year 1,999 2,038
In more than one year and less than five years 8,818 9,664
In more than five years 15,277 16,003
--------------------------------------------------------------------------------
Total 26,095 27,706
================================================================================
The foremost lease agreements of the Group relate to office premises. The
durations of the lease agreements range from less than one year to ten years,
and the contracts can usually be extended after the original date of
expiration. The index, renewal and other terms of the different agreements
vary.
The Group has rented for instance several land areas and some 110 kilovolt
transmission lines and circuit breaker bays.
33. LEGAL PROCEEDINGS AND PROCEEDINGS BY AUTHORITIES
----------------------------------------------------
There are no ongoing legal proceedings or proceedings by authorities that would
have a material impact on the business of the company. In relation to
transmission line projects there are many times complaints made to different
instances of justice. According to the management of the company there are no
ongoing legal proceedings or other such legal proceedings relating to other
areas, which final outcome would have a material impact on the financial
position of the Group.
In December 2008 the Market Court reached a decision concerning Fingrid's
appeal to the Energy Market Authority´s decision 13 December 2007"Determination of the methodology for the assessment of the return of the grid
owners' grid operations transmission services pricing for the review period
starting on 1 January 2008 and ending on 31 December 2011". The Market Court
partly changed the Energy Market Authority's decision according to Fingrid's
appeal. The Energy Market Authority in turn appealed the decision to the
Supreme Administrative Court. The Supreme Administrative Court partly approved
the Energy Market Authority's appeal.
Fingrid has lodged an appeal with the Market Court against a decision issued by
the Energy Market Authority on 23 November 2011 (record number 831/430/2011),
concerning the confirmation of the methodology for the assessment of the return
of the grid owner's grid operations and of the fees levied for the transmission
service for the review period starting on 1 January 2012 and finishing on 31
December 2015.
34. RISK MANAGEMENT
-------------------
The objective of Fingrid's risk management is to make preparations for
cost-effective measures providing protection against damage and loss relating
to risks and to make the entire personnel committed to considering the risks
pertaining to the company, its various organisational units and each employee.
In order to fulfil these objectives, risk management is continuous and
systematic. The significance of individual risks or risk entities is assessed
against the present level of protection, taking into account the probability of
a disadvantageous event, its financial impact and impact on corporate image or
on the attainment of the business goals. The Board of Directors approves the
primary principles for risk management and any amendments to them. The Board of
Directors approves the primary action for risk management as part of the
corporate strategy, indicators, operating plan, and budget. The control
committee of the Board of Directors receives a situation report of the major
risks relating to the operations of the company and of the management of such
risks.
FINANCIAL RISK MANAGEMENT
Fingrid Oyj is exposed to market, liquidity and credit risks when managing the
financial position of the company. The company's objective is to reduce risks
such that the fluctuations of Fingrid's cash flow remain low.
Primary principles for financing
The Board of Directors of Fingrid Oyj approves the primary principles for
financing, stating the guidelines for external funding, financial asset
management, market, liquidity, refinancing and credit risks.
Risk management execution and reporting
The treasury is responsible for executing the external funding, the financial
asset management and manages the market risks which the company is exposed to.
The financial activities of the company are reported four times a year to the
Board of Directors. The treasury is responsible for identifying, measuring and
reporting the financial risks, which the company may be exposed to.
Risk management processes
The treasury is in charge of risk management monitoring, systems and models as
well as methods, for risk calculation and assessment. The internal audit
additionally ensures that there is compliance with the primary principles for
financing activities and the internal guidelines.
Market risks
Fingrid Oyj uses derivative agreements in order to hedge market risks such as
foreign exchange, interest rate risk and commodity risks. Derivatives are only
used for hedging purposes, and therefore the company does not enter into any
deals for market speculation. The hedging instruments are defined in the
primary principles for financing or in the loss power procurement policy, and
chosen in order to achieve efficient hedging of a risk exposure.
Foreign exchange risk
The functional currency of the company is the euro. The basic rule of the
company is to hedge against foreign exchange risks, but can according to the
primary principals for financing, leave an exposure unhedged, which may not
exceed 10 % of the financial assets.
Transaction exposure
The company issues securities in the domestic and international money and
capital markets. The loan portfolio of the company is distributed between
different convertible currencies and the total debt portfolio and the related
interest rate flows are hedged against currency risk. The foreign exchange
risk of each bond is done in conjunction with the underlying debt issuance.
Business related currency risks are small and they are hedged. Therefore there
is no sensitivity analysis presentation. During the financial year the company
used foreign exchange forwards and cross currency swaps for hedging the
transaction exposure. The tables below first illustrate currency distribution
and the hedging rate of the interest bearing debt of the company and then the
sensitivity analysis of the euro against the foreign currencies, which also
proves that the company does not have any open foreign exchange risk.
Currency distribution and hedging degree of borrowings, 1,000 €
--------------------------------------------------------------------------------
Currency Carrying Portio Hedging Currency Carrying Portio Hedgin
distributi amount n % degree distributi amount n % g
on on degree
31 Dec 2011 31 Dec 2010
EUR 678,734 55 EUR 647,936 60
CHF 56,737 5 100 CHF 31,190 3 100
JPY 64,870 5 100 JPY 87,437 8 100
NOK 125,097 10 100 NOK 124,359 12 100
SEK 298,556 24 100 SEK 185,936 17 100
--------------------------------------------------------------------------------
Total 1,223,995 100 100 Total 1,076,858 100 100
================================================================================
The sensitivity analysis of foreign exchange rate is measured as a 10 % change
between the euro and the currency in question. The company's result will not be
subject to exchange rate differentials, since the debt denominated in foreign
currencies are hedged against foreign exchange changes. In the figures
presented in the tables below, a negative figure would increase foreign
exchange loss and a positive figure would correspondingly increase foreign
exchange gain.
Exchange rate changes, 1,000 €
31 Dec 2011 Bonds Commercia Total Cross-curr Forward Total Net
l papers ency swaps contract exposur
s e
Total
--------------------------------------------------------------------------------
CHF +10 % -3,651 -2,742 -6,392 3,651 2,742 6,392 0
--------------------------------------------------------------------------------
- 10 % 2,987 2,243 5,230 -2,987 -2,243 -5,230 0
--------------------------------------------------------------------------------
JPY +10 % -7,375 -7,375 7,375 7 ,375 0
--------------------------------------------------------------------------------
- 10 % 6,033 6,033 -6,033 -6,033 0
--------------------------------------------------------------------------------
NOK +10 % -14,594 -14,594 14,594 14,594 0
--------------------------------------------------------------------------------
- 10 % 11,941 11,941 -11,941 -11,941 0
--------------------------------------------------------------------------------
SEK +10 % -33,251 -33,251 33,251 33,251 0
--------------------------------------------------------------------------------
- 10 % 27,206 27,206 -27,206 -27,206 0
--------------------------------------------------------------------------------
Exchange rate changes, 1,000 €
31 Dec 2010 Bonds Commercia Total Cross-curr Forward Total Net
l papers ency swaps contract exposur
s e
Total
--------------------------------------------------------------------------------
CHF +10 % -3,608 -3,608 3,608 3,608 0
--------------------------------------------------------------------------------
- 10 % 2,952 2,952 -2,952 -2,952 0
--------------------------------------------------------------------------------
JPY +10 % -9,442 -9,442 9,442 9,442 0
--------------------------------------------------------------------------------
- 10 % 8,135 8,135 -8,135 -8,135 0
--------------------------------------------------------------------------------
NOK +10 % -14,280 -14,280 14,280 14,280 0
--------------------------------------------------------------------------------
- 10 % 11,684 11,684 -11,684 -11,684 0
--------------------------------------------------------------------------------
SEK +10 % -20,583 -20,583 20,583 20,583 0
--------------------------------------------------------------------------------
- 10 % 16,841 16,841 -16,841 -16,841 0
--------------------------------------------------------------------------------
Translation exposure
The company holds an equity investment in an associated company denominated in
a foreign currency. This translation risk is unhedged. The sensitivity analysis
(10 % changes) is presented in the following table. The table shows a 10 %
change of the Norwegian krone and the impact of the change on the company's
equity.
Translation exposure, 1,000 € 2011 2010
-------------------------------------------------------
Equity Equity
31 Dec 2011 31 Dec 2010
NOK +10 % 505 481
- 10 % -413 -393
-------------------------------------------------------
Interest rate risk
The company is only exposed to interest rate risk in euros, because the
interest bearing debt are both in terms of principal and interest payments
hedged against exchange rate risk, and the financial assets are denominated in
euros. The interest-bearing liabilities are mainly linked to floating rates.
Interest rate risk is managed in accordance with the main principles of
financing so that 30 - 70 % of the interest costs are hedged over the next five
years. When the interest rates are high, the hedging level is kept close to the
lower limit of the range, and when the interest rates are low, the hedging
level is kept close to the upper limit of the range. The specified low level of
interest rates is when 6 month Euribor interest rate is 3 % or less. The high
level of interest rates is when the 6 month Euribor interest rate is 5 % or
more. At the end of 2011, 65 % of the interest costs for the next five years
were hedged, and correspondingly 70 % were hedged at the end of 2010.
The sensitivity of the interest rate risk is measured as a 1 percentage unit
interest rate fluctuation and by using the CfaR method (Cashflow at Risk). The
assumed fluctuation in interest rates is the effect of a 1 percentage unit
fluctuation during the next 12 months from the closing date. The analysis of
interest rate sensitivity is carried out on borrowings including exchange rate
hedging, the derivatives portfolio hedging the interest rate exposure, and on
cash and cash equivalents, which result in a net debt position exposed to
interest rate fluctuations.
Interest rate sensitivity, 1,000 € 2011 2010
---------------------------------------------------------------------------
-1 %-unit +1%-unit -1%-unit +1%-unit
Borrowings 7,325 -7,325 6,692 -6,692
---------------------------------------------------------------------------
Interest rate derivatives -1,350 1,350 -1,034 1,034
---------------------------------------------------------------------------
Borrowings total 5,975 -5,975 5,658 -5,658
---------------------------------------------------------------------------
Cash and cash equivalents -1,624 1,624 -1,772 1,772
---------------------------------------------------------------------------
Net borrowings total 4,351 -4,351 3,887 -3,887
===========================================================================
The following table presents how the CfaR method is used for measuring the
impact of borrowings, derivatives, and cash and cash equivalents, with a given
confidence level and a time horizon of 12 months, on the cash flow of the
company. The other finance costs of the company are not included in the
calculation.
Cashflow at Risk, 1,000 € 2011 2010
--------------------------------------------------------------------------------
31 Dec 2011 31 Dec 2010
Confidence level Net finance costs Confidence level Net finance
costs
--------------------------------------------------------------------------------
96 % min. 19,747 96 % min. 16,511
max. 26,898 max. 22,339
--------------------------------------------------------------------------------
98 % min. 19,200 98 % min. 16,264
max. 27,058 max. 22,642
--------------------------------------------------------------------------------
Commodity risk
The company is exposed to price and volume risk through transmission losses.
Loss energy purchases are hedged in accordance with the loss energy purchasing
principles accepted by the Board of Directors. The time span of price hedging
is five years, divided into three parts: basic, budgetary and operative
hedging. Moreover, the company has a loss energy purchasing policy for hedging
and for physical electricity purchases and operative instructions, instructions
for price hedging and control room instructions. For the price hedging of loss
energy purchases the company mainly uses NASDAQ OMX Commodities quoted
products. The company can also use OTC products, corresponding products at
NASDAQ OMX Commodities, these products are settled at the power exchange.
If the market prices of electricity derivatives had been 20 % higher or lower
on the closing date, the change in the fair value of electricity derivatives
would have been 31.2 million euros higher or lower (39.9 million euros in
2010).
Liquidity risk and refinancing risk
Fingrid is exposed to liquidity and refinancing risk deriving from redemption
of loans, payments and fluctuations in cash flow from operating activities.
The liquidity of the company must be arranged so that 100 % of the refinancing
need for the next 12 months is covered by means of liquid assets and available
long-term committed credit lines; however, so that the refinancing need may not
account for more than 45 % of the total amount of the company's debt financing.
As back-up for the liquidity the company has a revolving credit facility of
250 million euros. The revolving credit facility will mature on 18 April 2016.
The revolving credit facility has not been drawn.
The company's funding is carried out through debt issuance programmes. The
company operates in the international capital market by issuing bonds under the
Medium Term Note Programme: The Programme size is 1.5 billion euros. Short-term
funding is arranged through commercial paper programmes; a Euro Commercial
Paper Programme of 600 million euros and a domestic commercial paper programme
of 150 million euros. The refinancing risk is reduced by an even maturity
profile so that the refinancing need over periods of 12 months in excess of one
year must not exceed 30 % of the company's amount of debt financing.
Contractual repayments and interest costs of borrowings are presented in the
next table. The interest rate percentages of variable-interest loans are
defined using the zero coupon curve. The repayments and interest amounts are
undiscounted values. Finance costs relating to cross-currency swaps, interest
rate swaps and forward contracts are often paid in net amounts depending on
their nature. In the following table, they are presented in gross amounts.
Fingrid's existing loan agreements, debt or commercial paper programmes are
uncollateralized. These agreements or programmes do not include any financial
covenants related to the financial key indicators.
Contractual repayments and interest costs of borrowings and payments and
receivables of financial derivatives, which are paid in cash 1,000 €
31 Dec 2012 2013 2014 2015 2016 2016+ Total
2011
--------------------------------------------------------------------------------
Bonds - 162,517 110,571 101,561 101,412 149,085 157,369 782,515
repay
ments
- 24,705 19,751 16,464 14,210 12,072 8,401 95,603
inter
est
costs
Loans - 9,156 11,156 4,000 16,424 20,710 172,866 234,312
from repay
financ ments
ial
institu - 6,502 5,251 5,417 5,918 5,470 27,110 55,668
tions inter
est
costs
Commerc - 207,168 207,168
ial repay
papers ments
- 812 812
inter
est
costs
Cross-c - 108,685 36,624 45,296 94,077 151,129 80,512 516,324
urrency payme
swaps nts
Interes - 6,623 4,810 3,329 2,804 2,375 510 20,451
t rate payme
swaps nts
Forward - 25,084 25,084
contra payme
cts nts
Guarant - 1,700 1,700
ee payme
commit nts
ment*
Total 552,952 188,164 176,067 234,845 340,841 446,768 1,939,637
--------------------------------------------------------------------------------
Cross-c - 130,332 47,934 55,110 111,544 158,894 89,208 593,022
urrency recei
swaps vables
Interes - 6,086 3,767 3,078 2,769 2,567 921 19,188
t rate recei
swaps vables
Forward - 24,679 24,679
contra recei
cts vables
Total 161,097 51,701 58,188 114,313 161,461 90,129 636,889
--------------------------------------------------------------------------------
Grand 391,856 136,462 117,879 120,532 179,380 356,639 1,302,748
total
================================================================================
*Counterguarantee in favour of an associated company. No payment claims have
been presented to Fingrid.
31 Dec 2011 2012 2013 2014 2015 2015+ Total
2010
--------------------------------------------------------------------------------
Bonds - 97,612 158,994 110,371 101,314 99,220 193,319 760,830
repay
ments
- 19,783 19,224 17,421 14,616 11,095 17,101 99,240
inter
est
costs
Loans - 7,156 9,156 11,156 4,000 16,424 173,576 221,469
from repay
financ ments
ial
institu - 5,543 5,757 6,145 6,256 6,486 31,746 61,933
tions inter
est
costs
Commerc - 94,559 94,559
ial repay
papers ments
- 441 441
inter
est
costs
Cross-c - 33,729 105,101 38,878 46,613 93,957 121,436 439,715
urrency payme
swaps nts
Interes - 4,142 4,353 4,222 2,277 1,829 2,037 18,860
t rate payme
swaps nts
Forward - 1,501 1,501
contra payme
cts nts
Guarant - 1,700 1,700
ee payme
commit nts
ment*
--------------------------------------------------------------------------------
Total 266,166 302,586 188,194 175,076 229,011 539,215 1,700,248
--------------------------------------------------------------------------------
Cross-c - 40,966 122,059 44,602 51,635 105,320 130,876 495,457
urrency recei
swaps vables
Interes - 3,811 3,941 3,573 2,429 1,941 1,842 17,537
t rate recei
swaps vables
Forward - 1,743 1,743
contra recei
cts vables
--------------------------------------------------------------------------------
Total 46,520 126,000 48,175 54,064 107,261 132,718 514,737
--------------------------------------------------------------------------------
Grand 219,646 176,586 140,019 121,012 121,750 406,497 1,185,511
total
*Counterguarantee in favour of an associated company. No payment claims have
been presented to Fingrid.
Credit risk
Credit risk arises from a counterparty not fulfilling its contractual
commitments towards Fingrid. Such commitments arise in the company's operations
and financial activities.
Credit risk in operations
The company measures and monitors its counterparty risks as part of business
monitoring and reporting. The credit rating and payment behaviour of all
counterparties and suppliers are regularly monitored. The company has no
significant credit risk concentrations. The company did not incur credit losses
or rearrange the terms of trade receivables during the financial year.
Credit risk in financing
The company is exposed to credit risk through derivative agreements and
financial investments. The company only has derivatives outstanding and invests
its funds within the permitted risk limits. There is an upper limit in euros
for each counterparty. The company signs the International Swap Dealers
Association's (ISDA) Master Agreement with each counterparty before entering
into a derivative transaction. The company has not received any collaterals
decreasing the credit risks covering the financial assets or derivative
contracts. The counterparty risks of financial instruments did not incur any
losses during the financial year.
35. OPERATING CASH FLOW ADJUSTMENTS, 1,000 € 2011 2010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Business transactions not involving a payment transaction
Depreciation 67,879 66,813
Capital gains/losses (-/+) on property, plant and equipment and 104 -404
intangible assets
Portion of profit of associated companies -193 -384
Gains/losses from the valuation of assets and liabilities 4,971 -2,349
recognised in income statement at fair
value
--------------------------------------------------------------------------------
Total 72,761 63,677
================================================================================
36. RELATED PARTY TRANSACTIONS
The State of Finland acquired in 2011 approx. 81 per cent of the shares held
previously by Fortum and Pohjolan Voima. After the share transaction, the
holding of the State of Finland in Fingrid is 53.1 per cent. Related party
transactions cover transactions concluded with entities where the State of
Finland has a holding in excess of 50%.
Fingrid Group's related parties comprise the addition of associated companies
Porvoon Alueverkko Oy and Nord Pool Spot AS and top management with its related
parties. The top management is composed of the Board of Directors, President,
and management team.
The company has not lent money to the top management, and the company has no
transactions with the top management. Fingrid Oyj has granted Porvoon
Alueverkko Oy a counter guarantee of 1.7 million euros.
Business with related parties is conducted at market prices.
Employee benefits of top management, 1,000 € 2011 2010
----------------------------------------------------------------
Salaries and other short-term employee benefits 1,564 1,376
Transactions with associated companies, 1,000 € 2011 2010
----------------------------------------------------------------
Sales 4,290 4,155
Purchases 62,510 71,154
Receivables 708 3,219
Liabilities 120 324
Transactions with related parties, 1,000 € 2011 2010
----------------------------------------------------------------
Owners: 49,911 106,742
Sales
Purchases 32,961 72,631
Receivables 8,341
Liabilities 1,738
Other related parties:
Sales 36,356
Purchases 34,399
Receivables 6,125
Liabilities 4,946
General procurement principles
The group follows three alternative procurement methods when purchasing goods
or services. When the costs and value of the purchase are less than 30,000
euros, an oral call for bid is usually made in addition to a written order or a
purchasing contract. When the estimated value of the procurement exceeds 30,000
euros but is below the values applied to public procurements, the procurement
is subjected to competitive bidding by requesting written bids from the
supplier candidates. When the limits for public procurements concerning Fingrid
(approx. 0.4 million euros for goods and services and approx. 5 million euros
for construction projects) are exceeded, the company follows the public
procurement procedure applied to special areas.
37. EMISSION RIGHTS
Fingrid was granted emission rights in total 126.3 thousand tonnes for the
years 2008-2012, of which Olkiluoto power station was granted a share of 112.3
thousand tonnes. As a rule, the emission rights held by Fingrid at 31 December
correspond at least to the annual CO2 emissions.
2011 2010
tCO2 tCO2
Emission rights received free of charge 25,261 25,261
Emission volumes, Olkiluoto 526 674
Emission volumes, other power plants total 1,908 2,218
Sales of emission rights 9,000
38. EVENTS AFTER CLOSING DATE
The Group management is not aware of such essential events after the closing
date that would affect the financial statements.
PARENT COMPANY FINANCIAL STATEMENTS (FAS)
--------------------------------------------------------------------------------
PARENT COMPANY PROFIT AND LOSS Notes 1 Jan - 31 Dec 2011 1 Jan - 31 Dec
ACCOUNT € 2010 €
--------------------------------------------------------------------------------
TURNOVER 2 433,829,531.17 455,655,341.59
Other operating income 3 2,975,592.24 6,977,724.05
Materials and services 4 -236,927,584.93 -252,934,683.61
Staff expenditure 5 -20,333,921.19 -20,385,296.72
Depreciation and amortisation 6 -77,448,711.28 -76,334,772.29
expense
Other operating expenses 7, 8 -50,141,675.40 -50,392,640.16
--------------------------------------------------------------------------------
OPERATING PROFIT 51,953,230.61 62,585,672.86
Finance income and costs 9 -24,011,192.98 -14,238,443.93
--------------------------------------------------------------------------------
PROFIT BEFORE EXTRAORDINARY 27,942,037.63 48,347,228.93
ITEMS
PROFIT BEFORE PROVISIONS AND 27,942,037.63 48,347,228.93
TAXES
Provisions 10 1,817,115.05 -39,918,607.06
Income taxes 11 -7,715,876.02 -2,206,584.38
--------------------------------------------------------------------------------
PROFIT FOR THE FINANCIAL YEAR 22,043,276.66 6,222,037.49
================================================================================
Notes are an integral part of the financial statements.
PARENT COMPANY BALANCE SHEET
ASSETS Notes 31 Dec 2011 31 Dec 2010
€ €
--------------------------------------------------------------------------------
NON-CURRENT ASSETS
Intangible assets
Goodwill 12 36,454,732.95 42,887,921.11
Other non-current expenses 13 88,331,632.26 73,829,424.65
--------------------------------------------------------------------------------
124,786,365.21 116,717,345.76
Tangible assets 14
Land and water areas 13,671,030.45 13,508,605.63
Buildings and structures 98,298,091.08 82,942,332.94
Machinery and equipment 448,490,783.67 401,268,462.18
Transmission lines 671,539,513.14 607,095,469.42
Other tangible assets 117,516.35 117,516.35
Advance payments and purchases in 162,317,923.59 142,767,394.87
progress
--------------------------------------------------------------------------------
1,394,434,858.28 1,247,699,781.39
Investments 15
Equity investments in Group 504,563.77 504,563.77
companies
Equity investments in associated 6,641,360.21 6,641,360.21
companies
Other shares and equity investments 1,134,892.55 913,125.03
--------------------------------------------------------------------------------
8,280,816.53 8,059,049.01
TOTAL NON-CURRENT ASSETS 1,527,502,040.02 1,372,476,176.16
--------------------------------------------------------------------------------
CURRENT ASSETS
Inventories 16 6,706,182.09 6,100,556.12
Receivables
Current receivables
Trade receivables 44,109,058.75 45,300,257.51
Receivables from Group companies 104,809.25 276,750.00
Receivables from associated 17 707,752.76 3,218,535.01
companies
Other receivables 53,228.12 43,066.26
Prepayments and accrued income 18, 19 27,355,285.45 28,514,948.37
--------------------------------------------------------------------------------
72,330,134.33 77,353,557.15
Financial assets 20 201,305,951.47 217,467,915.94
Cash in hand and bank receivables 20 1,454,207.08 3,779,895.40
TOTAL CURRENT ASSETS 281,796,474.97 304,701,924.61
--------------------------------------------------------------------------------
TOTAL ASSETS 1,809,298,514.99 1,677,178,100.77
================================================================================
Notes are an integral part of the financial statements.
PARENT COMPANY BALANCE SHEET
SHAREHOLDERS' EQUITY AND LIABILITIES Notes 31 Dec 2011 31 Dec 2010 € €
--------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY 21
Share capital 55,922,485.55 55,922,485.55
Share premium account 55,922,485.55 55,922,485.55
Profit from previous financial years 497,917.81 986,578.59
Profit for the financial year 22,043,276.66 6,222,037.49
--------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 134,386,165.57 119,053,587.18
--------------------------------------------------------------------------------
ACCUMULATED PROVISIONS 22 434,541,613.33 436,358,728.38
--------------------------------------------------------------------------------
PROVISIONS FOR LIABILITIES AND 29 1,897,446.78 1,898,946.78
CHARGES
--------------------------------------------------------------------------------
LIABILITIES
Non-current liabilities
Bonds 23, 24 591,622,542.18 630,558,105.45
Loans from financial institutions 225,156,064.52 214,312,494.90
--------------------------------------------------------------------------------
816,778,606.70 844,870,600.35
Current liabilities
Bonds 23 148,735,179.54 98,200,000.00
Loans from financial institutions 9,156,429.94 7,156,430.08
Trade payables 23,340,117.28 30,804,861.93
Liabilities to Group companies 25 459,625.50 586,368.95
Liabilities to associated companies 26 120,118.18 324,440.99
Other liabilities 27 211,878,601.87 98,824,331.09
Accruals 28 28,004,583.30 39,099,805.04
--------------------------------------------------------------------------------
421,694,682.61 274,996,238.08
TOTAL LIABILITIES 1,238,473,289.31 1,119,866,838.43
--------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY AND 1,809,298,514.99 1,677,178,100.77
LIABILITIES
================================================================================
Notes are an integral part of the financial statements.
PARENT COMPANY CASH FLOW STATEMENT
-------------------------------------------------------------------------------- Notes 1 Jan - 31 Dec 1 Jan - 31 Dec
2011 2010
€ €
--------------------------------------------------------------------------------
Cash flow from operating activities:
Profit for the financial year 21 22,043,276.66 6,222,037.49
Adjustments:
Business transactions not involving a 31 75,735,593.41 115,810,485.26
payment transaction
Interest and other finance costs 31,456,287.80 22,012,788.21
Interest income -7,233,286.64 -7,713,629.23
Dividend income -211,808.18 -60,715.05
Taxes 7,715,876.02 2,206,584.38
Changes in working capital:
Change in trade receivables and other 2,630,494.62 -6,984,934.21
receivables
Change in inventories -605,625.97 -685,809.33
Change in trade payables and other -14,230,928.03 3,086,305.82
liabilities
Change in provisions -1,500.00 -22,500.00
Interests paid -24,250,843.24 -23,219,684.77
Interests received 2,898,710.93 5,835,751.33
Taxes paid 11 -2,343,505.78 -1,761,915.96
--------------------------------------------------------------------------------
Net cash flow from operating activities 93,602,741.60 114,724,763.94
Cash flow from investing activities:
Purchase of tangible assets 14 -221,489,627.11 -138,106,461.73
Purchase of intangible assets 13 -21,235,186.68 -4,563,487.45
Investments in other assets 15 -221,767.52 -23,685.92
Proceeds from sale of tangible assets 14 50,000.00 903,900.00
Dividends received 9 211,808.18 60,715.05
Contributions reveived 142,500.00 15,000,000.00
--------------------------------------------------------------------------------
Net cash flow from investing activities -242,542,273.13 -126,729,020.05
Cash flow from financing activities:
Withdrawal of short-term loans 620,754,894.13 474,878,862.04
Repayment of short-term loans -507,247,826.61 -601.994.983.73
Withdrawal of long-term loans 129,183,417.22 256,519,369.47
Repayment of long-term loans -105,527,907.73 -92,730,348.73
Dividends paid 21 -6,710,698.27 -6,724,119.67
--------------------------------------------------------------------------------
Net cash flow from financing activities 130,451,878.74 29,948,779.38
Net change in cash and cash equivalents -18,487,652.79 17,944,523.27
Cash and cash equivalents 1 Jan 221,247,811.34 203,303,288.07
Cash and cash equivalents 31 Dec 20 202,760,158.55 221,247,811.34
--------------------------------------------------------------------------------
Notes are an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS OF PARENT COMPANY
1. ACCOUNTING PRINCIPLES
Fingrid Oyj's financial statements have been drawn up in accordance with
Finnish Accounting Standards (FAS). The items in the financial statements are
valued at original acquisition cost.
Foreign currency transactions
Commercial flows and financial items denominated in foreign currencies are
booked at the foreign exchange mid-rate quoted by the European Central Bank
(ECB) at the transaction value date. Interest-bearing liabilities and assets
and the derivatives hedging these items are valued at the mid-rate quoted by
ECB at the closing day. Realised foreign exchange gains and losses of
interest-bearing liabilities and assets and of the related derivatives are
booked under finance income and costs at maturity. The realised foreign
exchange rate differences of derivatives hedging commercial flows adjust the
corresponding item in the income statement.
Interest rate and currency derivatives
In accordance with the financial policy, interest rate and cross-currency
swaps, foreign exchange forwards and interest rate options are used for hedging
Fingrid's interest and foreign exchange exposure of balance sheet items,
interest flows and commercial flows. The accounting principles for derivatives
are the same as for the underlying items. The interest flow of interest rate
and cross-currency swaps and interest rate options is accrued and booked under
interest income and expenses. The interest portion of forward foreign exchange
contracts hedging the interest-bearing liabilities and assets is accrued over
their maturity and booked under finance income and costs. Up-front paid or
received premiums for interest rate options are accrued over the hedging
period.
Electricity derivatives
Fingrid hedges the loss energy purchases by using bilateral contracts and
electricity exchange products, such as forwards, futures and options. The price
differentials arising from these contracts are booked at maturity adjusting the
loss energy purchases in the income statement. Up-front paid or received
premiums for options are accrued over the hedging period.
Research and development expenses
Research and development expenses are entered as annual expenses.
Valuation of fixed assets
Fixed assets are capitalised under immediate acquisition cost. Planned
straight-line depreciation on the acquisition price is calculated on the basis
of the economic lives of fixed assets. Depreciation on fixed assets taken into
use during the financial year is calculated asset-specifically from the month
of introduction.
The depreciation periods are as follows:
Goodwill
20 years
Other non-current expenses
Rights of use to line areas
30-40 years
Other rights of use according to economic lives, maximum
10 years
Computer systems
3 years
Buildings and structures
Substation buildings and separate buildings
40 years
Substation structures
30 years
Buildings and structures at gas turbine power plants
20-40 years
Separate structures
15 years
Transmission lines
Transmission lines 400 kV
40 years
Direct current lines
40 years
Transmission lines 110-220 kV
30 years
Creosote-impregnated towers and related disposal expenses*
30 years
Aluminium towers of transmission lines (400 kV)
10 years
Optical ground wires
10-20 years
Machinery and equipment
Substation machinery
10-30 years
Gas turbine power plants
20 years
Other machinery and equipment
3-5 years
* The disposal expenses are discounted at present value and added to the value
of fixed assets and booked under provisions for liabilities and charges.
Goodwill is depreciated over a 20-year period, since power transmission
operation is a long-term business in which income is accrued over several
decades.
Emission rights
Emission rights are treated in accordance with the net procedure in conformance
with statement 1767/2005 of the Finnish Accounting Board.
Valuation of inventories
Inventories are entered according to the FIFO principle at the acquisition
cost, or at the lower of replacement cost or probable market price.
Cash in hand, bank receivables and financial securities
Cash in hand and bank receivables include cash assets and bank balances.
Financial securities include certificates of deposit, commercial papers,
treasury bills and investments in short-term money-market funds. Quoted
securities and comparable assets are valued at the lower of original
acquisition cost or probable market price.
Interest-bearing liabilities
Fingrid's non-current interest-bearing liabilities consist of loans from
financial institutions and bonds issued under the international and domestic
Debt Issuance Programmes. The current interest-bearing liabilities consist of
commercial papers issued under the domestic and international programmes and of
the current portion of noncurrent debt and bonds maturing within a year. The
outstanding notes under the programmes are denominated in euros and foreign
currencies. Fingrid has both fixed and floating rate debt and debt with
interest rate structures. The interest is accrued over the maturity of the
debt. The differential of a bond issued over or under par value is accrued over
the life of the bond. The arrangement fees of the revolving credit facilities
are as a rule immediately entered as expenses and the commitment fees are
accrued over the maturity of the facility.
Financial risk management
The principles applied to the management of financial risks are presented in
the notes of the Group under item 34.
Income taxes
The taxes include the accrued tax corresponding to the profit of the financial
year as well as adjustments of taxes for previous financial years.
Deferred taxes
Deferred tax assets and liabilities are not recorded in the profit and loss
statement or balance sheet. Information concerning these is presented in the
notes.
2. REVENUE BY BUSINESS AREAS
----------------------------
The business of Fingrid Oyj comprises entirely transmission grid business with
system responsibility. Because of this there is no division of revenue into
separate business areas.
REVENUE, 1, 000 € 2011 2010
---------------------------------------------------------
Grid service revenue 210,207 211,464
Sale of imbalance power 145,861 159,812
Cross-border transmission 22,399 23,865
ITC income 22,181 19,298
Peak load capacity 2,510 13,962
Estlink congestion income 9,632 9,465
Nordic congestion income 15,765 9,045
Service fee for feed-in tariff 225
Income from peak load capacity services 85
Other operating revenue 5,188 8,520
---------------------------------------------------------
Total 433,830 455,655
=========================================================
3. OTHER OPERATING INCOME, 1,000 € 2011 2010
------------------------------------------------
Rental income 1,740 1,632
Contributions received 205 138
Other income 1,031 5,207
------------------------------------------------
Total 2,976 6,978
================================================
4. MATERIALS AND SERVICES, 1,000 € 2011 2010
---------------------------------------------------------------------
Purchases during the financial year 162,748 177,788
Loss energy purchases 62,590 65,212
Change in inventories, increase (-) or decrease (+) -606 -686
---------------------------------------------------------------------
Materials and supplies 224,732 242,314
Grid service charges 53 49
Other external services 12,142 10,571
---------------------------------------------------------------------
Services 12,195 10,620
Total 236,928 252,935
=====================================================================
5. STAFF EXPENDITURE, 1,000 € 2011 2010
--------------------------------------------------------------------------------
Salaries and bonuses 17,213 17,177
Pension expenses 2,356 2,435
Other additional personnel expenses 765 773
--------------------------------------------------------------------------------
Total 20,334 20,385
================================================================================
Salaries and bonuses of the members of the Board of Directors 436 385
and President
--------------------------------------------------------------------------------
Helena Walldén, Chairman (since 3.5.2011) 24
Arto Lepistö, Vice Chairman (since 3.5.2011, Board member 23.3. 23 19
2006-)
Elina Engman, Member of the Board (since 3.5.2011 11
Timo Kärkkäinen, Member of the Board (since 3.5.2011) 13
Esko Raunio, Member of the Board (since 3.5.2011) 10
Antti Riivari, Deputy Member of the Board (since 3.5.2011) 4
Timo Ritonummi, Deputy Member of the Board (Board member 5 5 3.5.2001-)
Marja Hanski, Deputy Member of the Board (since 3.5.2011) 4
Mikko Räsänen, Deputy Member of the Board (since 3.5.2011) 4
Jari Eklund, Deputy Member of the Board (since 3.5.2011) 4
Jarmo Väisänen, Member of the Board (3-13.5.2011) 0
Jarmo Kilpelä, Member of the Board (3-13.5.2011) 0
Ilpo Nuutinen, Deputy Member of the Board (3-13.5. 2011) 0
Petri Vihervuori, Deputy Member of the Board (3-13.5. 2011) 0
Lauri Virkkunen, Chairman (1.7.2010-3.5.2011) 8 11
Timo Karttinen, First Deputy Chairman (until 3.5. 2011) 7 17
Risto Autio, Member of the Board (until 3.5.2011) 4 13
Ari Koponen, Member of the Board (until 3.5.2011) 4 12
Ritva Nirkkonen, Member of the Board (until 3.5.2011) 4 13
Anja Silvennoinen, Member of the Board (until 3.5.2011) 4 12
Jorma Tammenaho, Deputy Member of the Board (until 3.5.2011) 2 5
Jussi Hintikka, Deputy Member of the Board (until 31.12.2010) 5
Pekka Kettunen, Deputy Member of the Board (until 3.5.2011) 2 5
Kari Koivuranta, Deputy Member of the Board (until 3.5.2011) 2 5
Jukka Mikkonen, Depupty Member of the Board (until 3.5. 2011) 2 5
Juha Laaksonen, Deputy Member of the Board (until 3.5.2011) 2 5
Timo Rajala, Chairman (until 30.6.2010) 9
Minna Korkeaoja, Deputy Member of the Board (1.1.-3.5.2011 2
Jukka Ruusunen, President and CEO 293 241
Number of salaried employees in the company during the financial
year:
Personnel, average 263 260
Personnel, 31 Dec 266 263
6. DEPRECIATION ACCORDING TO PLAN, 1,000 € 2011 2010
-----------------------------------------------------------------------
Goodwill 6,433 6,433
Other noncurrent expenses 6,733 6,409
Buildings and structures 4,050 3,667
Machinery and equipment 32,405 32,537
Transmission lines 27,827 27,289
-----------------------------------------------------------------------
Total* 77,449 76,335
=======================================================================
*Depreciation on the electricity grid (notes 13 and 14) 63,821 63,275
7. OTHER OPERATING EXPENSES, 1,000 € 2011 2010
-----------------------------------------------------------------
Contracts, assignments etc. undertaken externally 31,808 32,606
Grid rents 9,603 9,860
Other rental expenses 1,935 1,684
Other expenses 6,796 6,243
-----------------------------------------------------------------
Total 50,142 50,393
=================================================================
8. AUDITORS FEES, 1,000 € 2011 2010
-------------------------------------
Auditing fee 32 42
Other fees 6 46
-------------------------------------
Total 38 88
=====================================
9. FINANCE INCOME AND COSTS, 1,000 € 2011 2010
----------------------------------------------------------------------
Dividend income from Group companies -1 -56
Dividend income from others -212 -4
Interest and other finance income from Group companies
Interest and other finance income from others -7,233 -7,714
----------------------------------------------------------------------
-7,446 -7,774
Interest and other finance costs to Group companies 7 2
Interest and other finance costs to others 31,449 22,010
----------------------------------------------------------------------
31,456 22,013
Total 24,011 14,238
======================================================================
10. PROVISIONS, 1,000 € 2011 2010
-----------------------------------------------------------------
Difference between depreciation according to plan -1,817 39,919
and depreciation carried out in taxation
=================================================================
11. INCOME TAXES, 1,000 € 2011 2010
--------------------------------------------------------------
Income taxes for the financial year 7,716 2,207
Total 7,716 2,207
==============================================================
Deferred tax assets and liabilities, 1,000 €
--------------------------------------------------------------
Deferred tax assets
On temporary differences 493 494
--------------------------------------------------------------
493 494
Deferred tax liabilities
On temporary differences 404 422
On provisions 106,463 113,453
--------------------------------------------------------------
106,867 113,875
Total 106,373 113,382
==============================================================
12. GOODWILL, 1,000 € 2011 2010
----------------------------------------------------------------------------
Cost at 1 Jan 128,664 128,664
----------------------------------------------------------------------------
Cost at 31 Dec 128,664 128,664
Accumulated depreciation according to plan 1 Jan -85,776 -79,343
Depreciation according to plan 1 Jan - 31 Dec -6,433 -6,433
----------------------------------------------------------------------------
Carrying amount 31 Dec 36,455 42,888
----------------------------------------------------------------------------
Accumulated depreciation difference 1 Jan -42,888 -49,321
Increase in depreciation difference reserve 1 Jan - 31 Dec
Decrease in depreciation difference reserve 1 Jan - 31 Dec 6,433 6,433
----------------------------------------------------------------------------
Accumulated depreciation in excess of plan 31 Dec -36,455 -42,888
----------------------------------------------------------------------------
13. OTHER NON-CURRENT EXPENSES, 1,000 € 2011 2010
----------------------------------------------------------------------------
Cost at 1 Jan 141,001 136,473
Increases 1 Jan - 31 Dec 21,235 4,622
Decreases 1 Jan - 31 Dec -95
----------------------------------------------------------------------------
Cost at 31 Dec 162,236 141,001
Accumulated depreciation according to plan 1 Jan -67,171 -60,798
Decreases, depreciation according to plan 1 Jan - 31 Dec 36
Depreciation according to plan 1 Jan - 31 Dec -6,733 -6,409
----------------------------------------------------------------------------
Carrying amount 31 Dec* 88,332 73,829
----------------------------------------------------------------------------
Accumulated depreciation difference 1 Jan -59,326 -61,766
Increase in depreciation difference reserve 1 Jan - 31 Dec -5,542 -4,433
Decrease in depreciation difference reserve 1 Jan - 31 Dec 6,733 6,873
----------------------------------------------------------------------------
Accumulated depreciation in excess of plan 31 Dec -58,135 -59,326
----------------------------------------------------------------------------
*Net capital expenditure in electricity grid, 1,000 € 2011 2010
----------------------------------------------------------------------------
Carrying amount 31 Dec 86,763 72 067
Carrying amount 1 Jan -72,067 -73 747
Depreciation according to plan 1 Jan - 31 Dec 5,887 5,811
Decreases 1 Jan - 31 Dec 59
----------------------------------------------------------------------------
Total 20,583 4,189
============================================================================
14. TANGIBLE ASSETS, 1,000 € 2011 2010
--------------------------------------------------------------------------------
Land and water areas
Cost at 1 Jan 13,509 11,410
Increases 1 Jan - 31 Dec 162 2,098
--------------------------------------------------------------------------------
Cost at 31 Dec 13,671 13,509
--------------------------------------------------------------------------------
Buildings and structures
Cost at 1 Jan 105,946 96,164
Increases 1 Jan - 31 Dec 19,432 9,783
Decreases 1 Jan - 31 Dec -43 0
--------------------------------------------------------------------------------
Cost at 31 Dec 125,336 105,946
Accumulated depreciation according to plan 1 Jan -23,004 -19,337
Decreases, depreciation according to plan 1 Jan - 31 Dec 17
Depreciation according to plan 1 Jan - 31 Dec -4,050 -3,667
--------------------------------------------------------------------------------
Carrying amount 31 Dec 98,298 82,942
--------------------------------------------------------------------------------
Accumulated depreciation difference 1 Jan -9,614 -9,577
Increase in depreciation difference reserve 1 Jan - 31 -4,373 -3,704
Dec
Decrease in depreciation difference reserve 1 Jan - 31 4,062 3,667
Dec
--------------------------------------------------------------------------------
Accumulated depreciation in excess of plan 31 Dec -9 925 -9,614
--------------------------------------------------------------------------------
Machinery and equipment
Cost at 1 Jan 664,281 640,486
Increases 1 Jan - 31 Dec 79,755 23,799
Decreases 1 Jan - 31 Dec -255 -4
--------------------------------------------------------------------------------
Cost at 31 Dec 743,781 664,281
Accumulated depreciation according to plan 1 Jan -263,013 -230,476
Decreases, depreciation according to plan 1 Jan - 31 Dec 127 0
Depreciation according to plan 1 Jan - 31 Dec -32,405 -32,537
--------------------------------------------------------------------------------
Carrying amount 31 Dec 448,491 401,268
--------------------------------------------------------------------------------
Accumulated depreciation difference 1 Jan -104,170 -89,485
Increase in depreciation difference reserve 1 Jan - 31 -29,028 -47,222
Dec
Decrease in depreciation difference reserve 1 Jan - 31 32,509 32,537
Dec
--------------------------------------------------------------------------------
Accumulated depreciation in excess of plan 31 Dec -100,690 -104,170
--------------------------------------------------------------------------------
Transmission lines
Cost at 1 Jan 896,062 869,600
Increases 1 Jan - 31 Dec 92,271 27,130
Decreases 1 Jan - 31 Dec -668
--------------------------------------------------------------------------------
Cost at 31 Dec 988,334 896,062
Accumulated depreciation according to plan 1 Jan -288,967 -261,908
Decreases, depreciation according to plan 1 Jan - 31 Dec 230
Depreciation according to plan 1 Jan - 31 Dec -27,827 27,289
--------------------------------------------------------------------------------
Carrying amount 31 Dec 671,540 607,095
--------------------------------------------------------------------------------
Accumulated depreciation difference 1 Jan -220,360 -186,290
Increase in depreciation difference reserve 1 Jan - 31 -36,804 -61,472
Dec
Decrease in depreciation difference reserve 1 Jan - 31 27,827 27,402
Dec
--------------------------------------------------------------------------------
Accumulated depreciation in excess of plan 31 Dec -229,337 -220,360
--------------------------------------------------------------------------------
Other tangible assets
Cost at 1 Jan 118 118
--------------------------------------------------------------------------------
Cost at 31 Dec 118 118
--------------------------------------------------------------------------------
Advance payments and purchases in progress
Cost at 1 Jan 142,767 69,384
Increases 1 Jan - 31 Dec 224,097 127,274
Decreases 1 Jan - 31 Dec -204,546 -53,890
--------------------------------------------------------------------------------
Cost at 31 Dec 162,318 142,767
--------------------------------------------------------------------------------
Total* 1,394,435 1,247,700
================================================================================
* Net capital expenditure in electricity grid, 1,000 € 2011 2010
--------------------------------------------------------------------------------
Carrying amount 31 Dec 1,228,861 1,144,803
Carrying amount 1 Jan -1,144,803 -1,098,811
Depreciation according to plan 1 Jan - 31 Dec 57,935 57,464
Decreases 1 Jan - 31 Dec 154 442
--------------------------------------------------------------------------------
Total 142,147 103,898
================================================================================
15. INVESTMENTS, 1,000 € 2011 2010
--------------------------------------------------------
Equity investments in Group companies
Cost at 1 Jan 505 505
--------------------------------------------------------
Cost at 31 Dec 505 505
--------------------------------------------------------
Equity investments in associated companies
Cost at 1 Jan 6,641 6,641
--------------------------------------------------------
Cost at 31 Dec 6,641 6,641
--------------------------------------------------------
Other shares and equity investments
Cost at 1 Jan 913 850
Increases 1 Jan - 31 Dec 222 66
Decreases 1 Jan - 31 Dec -3
--------------------------------------------------------
Cost at 31 Dec 1,135 913
--------------------------------------------------------
Total 8,281 8,059
========================================================
16. INVENTORIES, 1,000 € 2011 2010
--------------------------------------
Materials and supplies 6,642 5,542
Work in progress 65 559
--------------------------------------
Total 6,706 6,101
======================================
17. RECEIVABLES FROM ASSOCIATED COMPANIES, 2011 2010
1,000 €
-------------------------------------------------------
Current:
Trade receivables 708 3,219
-------------------------------------------------------
Total 708 3,219
=======================================================
18. PREPAYMENTS AND ACCRUED INCOME, 1,000 € 2011 2010
-----------------------------------------------------------
Interests and other financial items 21,650 24,043
Accruals of sales and purchases 5,502 4,267
Other 203 205
-----------------------------------------------------------
Total 27,355 28,515
===========================================================
19. UNRECORDED EXPENSES AND PAR VALUE 2011 2010
DIFFERENTIALS ON THE ISSUE OF LOANS INCLUDED IN PREPAYMENTS AND
ACCRUED INCOME, 1,000 €
--------------------------------------------------------------------------------
Par value differentials 2,167 2,588
================================================================================
20. CASH AND CASH EQUIVALENTS, 1,000 € 2011 2010
--------------------------------------------------------
Certificates of deposit 99,206 99,484
Commercial papers 102,100 117,984
--------------------------------------------------------
--------------------------------------------------------
201,306 217,468
Cash in hand and bank receivables 152 1 111
Pledged accounts 1,302 2,669
--------------------------------------------------------
1,454 3,780
Total 202,760 221,248
========================================================
21. SHAREHOLDERS' EQUITY, 1,000 € 2011 2010
-------------------------------------------------------------
Share capital 1 Jan 55,922 55,922
Share capital 31 Dec 55,922 55,922
Share premium account 1 Jan 55,922 55,922
Share premium account 31 Dec 55,922 55,922
Profit from previous financial years 1 Jan 7,209 7,711
Dividend distribution -6,711 -6,724
Profit from previous financial years 31 Dec 498 987
Profit for the financial year 22,043 6,222
Shareholders' equity 31 Dec 134,386 119,054
=============================================================
Distributable shareholders' equity 22,541 7,209
Number of shares, qty Series Series Total
A shares B shares
------------------------------------------------
1 Jan 2011 2,078 1,247 3,325
------------------------------------------------
31 Dec 2011 2,078 1,247 3,325
======================--------------------------
Series A shares confer three votes each at a shareholders' meeting and series B
shares one vote each. When electing members of the Board of Directors, series A
share confers 10 votes each at a shareholders' meeting and each series B share
one vote each.
Series B shares have the right before series A shares to obtain the annual
dividend specified below from the funds available for profit distribution.
After this, a corresponding dividend is distributed to series A shares. If the
annual dividend cannot be distributed in some year, the shares confer a right
to receive the undistributed amount from the funds available for profit
distribution in the subsequent years; however so that series B shares have the
right over series A shares to receive the annual dividend and the undistributed
amount. Series B shares have no right to receive any other dividend.
The shareholders' meeting decides on the annual dividend.
The determination of the dividend: the amount of the annual dividend is
calculated on the basis of calendar years so that the subscription price of a
share, added by amounts paid in conjunction with potential increases of share
capital and reduced by potential amounts paid in refunds of equity, is
multiplied by the dividend percentage; however so that the minimum dividend is
6%. The dividend percentage is defined on the basis of the yield of the 30-year
German Government Bond.
The dividend proposal for series B shares for 2011 is 6.0 per cent.
There are no minority interests.
22. ACCUMULATED PROVISIONS, 1,000 € 2011 2010
--------------------------------------------------------------------------------
Accumulated depreciation in excess of plan, the difference 434,542 436,359
between depreciation
according to plan and depreciation carried out in taxation
================================================================================
23. BONDS, 1,000 € 2010 2010
--------------------------------------------------------------------------------
International: Maturity Interest
date
EUR 10,000 16.03.2011 3.625 % 10,000
EUR 25,000 23.03.2011 variable interest 25,000
EUR 15,000 24.03.2011 variable interest 15,000
EUR 20,000 07.04.2011 variable interest 20,000
EUR 25,000 16.03.2012 variable interest 25,000 25,000
EUR 25,000 12.04.2012 variable interest 25,000 25,000
EUR 10,000 16.04.2013 variable interest 10,000 10,000
EUR 20,000 28.04.2013 variable interest 20,000 20,000
EUR 20,000 15.10.2013 4.30 % 20,000 20,000
EUR 24,000 02.07.2014 variable interest 24,000 24,000
EUR 18,000 11.11.2014 variable interest 18,000 18,000
EUR 8,000 11.11.2014 variable interest 8,000 8,000
EUR 10,000 20.11.2014 3.26 % 10,000 10,000
EUR 20,000 11.04.2017 variable interest 20,000 20,000
EUR 25,000 11.04.2017 variable interest 25,000 25,000
EUR 30,000 15.06.2017 3.07 % 30,000 30,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
235,000 305,000
FIM 160,000 19.08.2013 5.20 % 26,910 26,910
--------------------------------------------------------------------------------
26,910 26,910
JPY 3,000,000 05.07.2011 1.31 % * 28,200
JPY 3,000,000 25.07.2012 1.3575 % ** 25,400 25,400
JPY 3,000,000 20.04.2015 1.45 % 21,563 21,563
JPY 500,000 22.06.2017 1.28 % 4,507 4,507
--------------------------------------------------------------------------------
51,470 79,670
RIVIT POIS
CHF 39,000 22.05.2012 2.475 % 25,000 25,000
--------------------------------------------------------------------------------
25,000 25,000
NOK 170,000 19.11.2014 4.68 % 20,166 20,166
NOK 200,000 17.10.2016 5.15 % 24,620 24,620
NOK 200,000 11.04.2017 5.16 % 24,620 24,620
NOK 200,000 10.11.2017 5.12 % 23,725 23,725
NOK 200,000 12.11.2019 5.37 % 23,725 23,725
--------------------------------------------------------------------------------
116,856 116,856
SEK 225,000 03.04.2012 variable interest 24,194 24,194
SEK 225,000 11.04.2012 variable interest 24,142 24,142
SEK 100,000 21.03.2013 variable interest 10,560 10,560
SEK 200,000 03.04.2013 3.70 % 21,305 21,305
SEK 175,000 04.04.2014 4.30 % 18,811 18,811
SEK 300,000 15.06.2015 3.195 % 31,168 31,168
SEK 100,000 17.06.2015 3.10 % 10,417 10,417
SEK 220,000 01.12.2015 interest rate 24,336 24,336
structure
SEK 100,000 15.01.2016 3.297 % 10,390 10,390
SEK 500,000 18.10.2016 variable interest 54,900
SEK 500,000 18.10.2016 3.50 % 54,900
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
285,122 175,321
Bonds, long-term 591,622 630,557
total
Bonds, short-term 148,736 98,200
total
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total 740,358 728,757
================================================================================
*call option not exercised 5 July 2004
**call option not exercised 25 July 2006
24. LOANS FALLING DUE FOR PAYMENT IN FIVE YEARS OR 2011 2010
MORE, 1,000 €
--------------------------------------------------------------------
Bonds 151,577 186,586
Loans from financial institutions 172,866 173,576
--------------------------------------------------------------------
Total 324,443 360,162
====================================================================
25. LIABILITIES TO GROUP COMPANIES, 1,000 € 2011 2010
-------------------------------------------------------
Current:
Other debts 460 586
-------------------------------------------------------
Total 460 586
=======================================================
26. LIABILITIES TO ASSOCIATED COMPANIES, 1,000 € 2011 2010
------------------------------------------------------------
Current:
Trade payables 120 324
------------------------------------------------------------
Total 120 324
============================================================
27. OTHER LIABILITIES, 1,000 € 2011 2010
-----------------------------------------------------------------------------
Current:
Other loans / Commercial papers (international and domestic) 207,405 94,559
Value added tax 2,481 3,051
Electricity tax 1,507 616
Other debts 485 598
-----------------------------------------------------------------------------
Total 211,879 98,824
=============================================================================
28. ACCRUALS, 1,000 € 2011 2010
----------------------------------------------------------
Current:
Interests and other financial items 13,136 12,658
Salaries and additional personnel expenses 3,351 4,409
Accruals of sales and purchases 11,517 22,032
----------------------------------------------------------
Total 28,005 39,100
==========================================================
29. PROVISIONS FOR LIABILITIES AND CHARGES, 1,000 € 2011 2010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Creosote-impregnated and CCA-impregnated wooden towers, disposal 1,897 1,898
expenses
--------------------------------------------------------------------------------
Total 1,897 1,898
================================================================================
30. COMMITMENTS AND CONTINGENT LIABILITIES, 1,000 € 2011 2010
-----------------------------------------------------------------------
Rental liabilities
Liabilities for the next year 1,999 2,038
Liabilities for subsequent years 24,096 25,667
-----------------------------------------------------------------------
26,095 27,706
Pledges
Pledge covering property lease agreements 47 46
Pledged account in favour of the Customs Office 150 150
Pledged account covering electricity exchange purchases 127 1,878
-----------------------------------------------------------------------
323 2,074
Other financial commitments
Counterguarantee in favour of an associated company 1,700 1,700
Credit facility commitment fee and commitment fee:
Commitment fee for the next year 401 120
Commitment fee for subsequent years 1,584 89
-----------------------------------------------------------------------
3,685 1,908
31. OPERATING CASH FLOW ADJUSTMENTS, 1,000 € 2011 2010
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Business transactions not involving a payment transaction
Depreciation 77,449 76,335
Increase or decrese in accumulated depreciation difference -1,817 39,919
Capital gains/losses (-/+) on tangible and intangible assets 104 -404
Other -39
-----------------------------------------------------------------------------
Total 75,736 115,810
=============================================================================
32. LEGAL PROCEEDINGS AND PROCEEDINGS BY AUTHORITIES
There are no ongoing legal proceedings or proceedings by authorities that would
have a material impact on the business of the company. In relation to
transmission line projects there are many times complaints made to different
instances of justice. According to the management of the company there are no
ongoing legal proceedings or other such legal proceedings relating to other
areas, which final outcome would have a material impact on the financial
position of the Group.In December 2008 the Market Court reached a decision
concerning Fingrid's appeal to the Energy Market Authority´s decision 13
December 2007 "Determination of the methodology for the assessment of the
return of the grid owners' grid operations transmission services pricing for
the review period starting on 1 January 2008 and ending on 31 December 2011".
The Market Court partly changed the Energy Market Authority's decision
according to Fingrid's appeal. The Energy Market Authority in turn appealed the
decision to the Supreme Administrative Court. The Supreme Administrative Court
partly approved the Energy Market Authority's appeal.
Fingrid has lodged an appeal with the Market Court against a decision issued by
the Energy Market Authority on 23 November 2011 (record number 831/430/2011),
concerning the confirmation of the methodology for the assessment of the return
of the grid owner's grid operations and of the fees levied for the transmission
service for the review period starting on 1 January 2012 and finishing on 31
December 2015.
33. SEPARATION OF BUSINESSES IN ACCORDANCE WITH THE ELECTRICITY MARKET ACT
Imbalance power and regulating power
Each electricity market party must ensure that its electricity balance is in
balance by making an agreement with either Fingrid or some other party. Fingrid
buys and sells imbalance power in order to balance the hourly power balance of
an electricity market party (balance provider). Imbalance power trade and
pricing of imbalance power are based on a balance service agreement with equal
and public terms and conditions.
Fingrid is responsible for the continuous power balance in Finland by buying
and selling regulating power in Finland. The balance providers can participate
in the Nordic balancing power market by submitting bids of their available
capacity. The terms and conditions of participation in the regulating power
market and the pricing of balancing power are based on the balance service
agreement.
Management of balance operation
In accordance with a decision by the Energy Market Authority, Fingrid Oyj shall
separate the duties pertaining to national power balance operation from the
other businesses by virtue of Chapter 7 of the Electricity Market Act.
The profit and loss account of the balance operation unit is separated by means
of cost accounting as follows:
Income direct
Separate costs direct
Production costs matching principle
Administrative costs matching principle
Depreciation matching principle in
accordance with Fingrid Oyj's depreciation principles
Finance income and costs on the basis of imputed debt
Income taxes based on result
The average number of personnel during 2011 was 16 (16). The operating profit
was -1.5 (1.8) per cent of turnover.
MANAGEMENT OF BALANCE OPERATION, SEPARATED 1 Jan - 31 Dec 1 Jan - 31 Dec
PROFIT AND LOSS ACCOUNT 2011 2010
1,000 € 1,000 €
--------------------------------------------------------------------------------
TURNOVER* 154,927 167,073
Other operating income 12
Materials and services* -153,735 -160,913
Staff expenditure -1,388 -1,202
Depreciation and amortisation expense -733 -943
Other operating expenses -1,477 -1,000
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OPERATING PROFIT -2,393 3,015
PROFIT BEFORE PROVISIONS AND TAXES -2,393 3,015
Provisions 43 173
Income taxes -829
--------------------------------------------------------------------------------
PROFIT FOR THE FINANCIAL YEAR -2 350 2,359
================================================================================
*Turnover includes 8.5 (6.5) million euros of sales of imbalance power to
balance provider Fingrid Oyj, and Materials and services includes 8.0 (6.8 )
million euros of its purchases.
MANAGEMENT OF BALANCE OPERATION, SEPARATED BALANCE SHEET
ASSETS 31 Dec 2011 31 Dec 2010
1,000 € 1,000 €
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NON-CURRENT ASSETS
Intangible assets
Other non-current expenses 232 630
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Tangible assets
Machinery and equipment 463 673
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463 673
TOTAL NON-CURRENT ASSETS 695 1,303
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CURRENT ASSETS
Current receivables
Trade receivables 8,654 4,480
Receivables from Group companies 4,307
Other receivables 770 7,958
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13,731 12,438
Cash in hand and bank receivables 1 1
TOTAL CURRENT ASSETS 13,732 12,439
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TOTAL ASSETS 14,427 13,741
=====================================================================
SHAREHOLDERS' EQUITY AND LIABILITIES 31 Dec 2011 31 Dec 2010
1,000 € 1,000 €
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SHAREHOLDERS' EQUITY
Share capital 32 32
Share premium account 286 286
Profit from previous financial years 13,697 11,338
Profit for the financial year -2,350 2,359
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TOTAL SHAREHOLDERS' EQUITY 11,665 14,015
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ACCUMULATED PROVISIONS -506 -463
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LIABILITIES
Current liabilities 3,268
Liabilities to Group companies
Other liabilities 190
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3,268 190
TOTAL LIABILITIES 3,268 190
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TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 14,427 13,741
====================================================================
Transmission system operation
Transmission system operation is deemed to cover the entire business of Fingrid
Oyj, including system responsibility, which in turn includes balance operation.
Therefore, Fingrid Oyj's financial statements represent the financial
statements of transmission system operation.
34. KEY INDICATORS OF TRANSMISSION SYSTEM OPERATION 2011 2010
--------------------------------------------------------------------------
Return on investment (ROI) in transmission system operation, % 3.8 4.8
Return on = profit before extraordinary items + interest and other x 100
investmen finance costs + interest portions of leasing fees and
t, % rents of electricity grid
------------------------------------------------------------
balance sheet total - non-interest-bearing liabilities +
leasing and rent liabilities related to electricity grid
(average for the year))
35. EMISSION RIGHTS
Fingrid was granted emission rights totaling 126.3 thousand tonnes for the
years 2008 - 2012, of which Olkiluoto power station was granted a share of
112.3 thousand tonnes. As a rule, the emission rights held by Fingrid at 31
December correspond at least to the annual CO2 emissions.
2011 2010
tCO2 tCO2
Emission rights received free of charge 25,261 25,261
Emission volumes, Olkiluoto 526 674
Emission volumes, other power plants total 1,908 2,218
Sales of emission rights 9,000
3. Signatures for the annual review and for the financial statements
Helsinki, 16 February 2012
Helena Walldén Arto Lepistö
Chairman 1st Deputy Chairman
Elina Engman Timo Kärkkäinen
Esko Raunio Jukka Ruusunen
President & CEO
Auditor's notation
The financial statements for the financial year 2011 have been prepared in
accordance with Generally Accepted Accounting Principles. A report on the audit
carried out has been submitted today.
Helsinki, 17 February 2012
PricewaterhouseCoopers Oy
Authorised Public Accountants
Juha Tuomala, Authorised Public Accountant
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