2016-07-27 10:00:01 CEST
2016-07-27 10:00:01 CEST
REGULATED INFORMATION
Fingrid Oyj - Half Year financial report
Fingrid Group's Half Year financial report 1 January - 30 June 2016
Helsinki, Finland, 2016-07-27 10:00 CEST (GLOBE NEWSWIRE) -- Fingrid Oyj
Half Year financial report 27 July 2016 at 11.00 EET
The consolidated financial statements have been drawn up in accordance with the
International Financial Reporting Standards (IFRS). Unless otherwise indicated,
the figures in parentheses refer to the same period of the previous year.
Financial development in January - June 2016
-- The Group’s turnover in January - June was EUR 297.3 (293.1) million
-- The Group’s operating profit was EUR 100.4 (82.1) million
-- Group profit for the period was EUR 77.4 (52.3) million
-- Cash flow from the Group’s operations, after capital expenditure, was EUR
73.4 (46.1) million
-- Interest-bearing net borrowing amounted to EUR 1,041.0 (1,067.2) million
-- Capital expenditure totalled EUR 75.4 (67.8) million
-- The equity ratio was 33.5 (31.8) per cent
-- Earnings per share totalled EUR 23,285 (15,744)
Financial development in April - June 2016
-- The Group’s turnover in April - June was EUR 113.4 (113.2) million
-- The Group’s operating profit for April - June was EUR 26.3 (9.3) million
-- Group profit for the April-June period was EUR 18.5 (-3.0) million
-- Cash flow from the Group's operations for April - June, after capital
expenditure, was EUR -19.0 (-6.3) million
-- Capital expenditure for April-June totalled EUR 48.1 (43.8) million
KEY 1-6/16 1-6/15 change 4-6/16 4-6/15 change 1-12/15
FIGUR % %
ES
--------------------------------------------------------------------------------
Turnov €M 297.3 293.1 1.4 113.4 113.2 0.2 600.2
er
--------------------------------------------------------------------------------
Capita €M 75.4 67.8 11.2 48.1 43.8 9.9 147.5
l
expen
diture
,
gross
--------------------------------------------------------------------------------
- of % 25.4 23.1 42.4 38.7 24.6
turno
ver
--------------------------------------------------------------------------------
Resear €M 1.2 0.8 47.8 0.6 0.4 42.5 1.8
ch and
devel
opment
expen
ses
--------------------------------------------------------------------------------
- of % 0.4 0.3 0.5 0.4 0.3
turno
ver
--------------------------------------------------------------------------------
Averag 332 319 4.1 343 325 5.5 319
e
numbe
r of
emplo
yees
--------------------------------------------------------------------------------
Number 355 332 6.9 355 332 6.9 315
of
emplo
yees
at
end
of
perio
d
--------------------------------------------------------------------------------
Salari €M 11.5 11.2 3.1 5.9 5.7 3.6 21.3
es and
bonus
es,
total
--------------------------------------------------------------------------------
Operat €M 100.4 82.1 22.3 26.3 9.3 182.2 162.6
ing
profi
t
--------------------------------------------------------------------------------
- of % 33.8 28.0 23.1 8.2 27.1
turno
ver
--------------------------------------------------------------------------------
Profit €M 96.7 65.4 47.8 23.1 -3.7 719.7 129.3
befor
e
taxes
--------------------------------------------------------------------------------
- of % 32.5 22.3 20.4 -3.3 21.5
turno
ver
--------------------------------------------------------------------------------
Profit €M 77.4 52.3 47.9 18.5 -3.0 709.4 103.6
for
the
perio
d
--------------------------------------------------------------------------------
Compre €M 80.5 55.4 45.3 20.0 -1.6 1,341.6 109.1
hensiv
e
incom
e for
the
perio
d
--------------------------------------------------------------------------------
Equity % 33.5 31.8 33.5 31.8 33.5
ratio
--------------------------------------------------------------------------------
Intere €M 1,041.0 1,067.2 -2.5 1,041.0 1,067.2 1,026.6
st-bea
ring
net
borro
wings
--------------------------------------------------------------------------------
Net 1.5 1.6 1.5 1.6 1.4
geari
ng
--------------------------------------------------------------------------------
Earnin € 23,285.31 15,744.04 47.9 5,555.21 -911.57 709.4 31,150.79
gs per
share
--------------------------------------------------------------------------------
Divide € 33,686.24
nd,
Serie
s A
share
s
--------------------------------------------------------------------------------
Divide € 16,038.49
nd,
Serie
s B
share
s
--------------------------------------------------------------------------------
Equity € 210,971 197,687 6.7 213,822
per
share
--------------------------------------------------------------------------------
Number
of
share
s
--------------------------------------------------------------------------------
– qty 2,078 2,078 2,078 2,078 2,078
Serie
s A
share
s
--------------------------------------------------------------------------------
– qty 1,247 1,247 1,247 1,247 1,247
Serie
s B
share
s
--------------------------------------------------------------------------------
Total qty 3,325 3,325 3,325 3,325 3,325
--------------------------------------------------------------------------------
Jukka Ruusunen, President & CEO: “The national grid is preparing for major
changes in power system: record number of construction projects underway –
electricity markets in need of an overhaul”
The electricity system of the future will pose new requirements for the
national grid. As part of its operations to develop the grid system, Fingrid
currently has an extensive, 260-million-euro investment programme underway in
western Finland. The programme consists of 29 sub-projects, of which 17 are
being implemented this year. By reinforcing our electricity network, we will
secure the regional supply of electricity and make it possible to connect more
wind and nuclear power to the grid. The programme reached a major milestone in
April when a high-capacity transmission line extending from Kristiinankaupunki
to Vaasa and further on to Kokkola was commissioned.
The earliest parts of Finland’s national grid have been in use for nearly 90
years. The oldest transmission line, referred to as the ‘Iron Lady’, runs
between southeast and southwest Finland. This line is under gradual
modernisation for a total investment cost of EUR 135 million. In March, 80
kilometres of power line were taken into use as a part of this project, between
Hikiä in Hausjärvi and Forssa. In the next phase, the work will continue west
of Forssa, towards Lieto, and will involve the modernisation of nearly 70
kilometres of power line.
As a transmission system operator, we are currently deeply concerned about the
state of the electricity market. The market faces major challenges as a
consequence of the considerable support schemes for renewable energy. The
energy surplus of the northern European electricity market can be felt
throughout the Baltic Sea area and is artificially pushing down prices.
The market price of wholesale electricity has plummeted, which has forced
production capacity out of the market. Achieving a reliable, cost-effective and
low-carbon energy system requires a more market-driven approach. The impacts of
subsidies need to be reduced and mechanisms harmonised throughout the Baltic
Sea area in order to allow markets to function. We studied various
possibilities to re-invigorate the electricity market during the spring and
published a discussion paper on the topic. The paper presents concrete
market-based alternatives for the transition period before the adoption of new
future technologies.
Fingrid Group’s Interim Report 1.1. - 30.6.2016
Accounting principles
Group’s interim report has been drawn up in accordance with the standard IAS 34
Interim Financial Reporting. In preparing this report, where the recognition of
congestion income is concerned, Fingrid changed its accounting principles from
those applied in its annual financial statements for 2015. The change was
implemented as of the beginning of 2016. In other respects, the interim report
complies with the same accounting principles as those used for Fingrid’s 2015
financial statements.
As a consequence of the change in the regulation governing Fingrid’s grid
pricing, the company will include the congestion income received after 1
January 2016 as accruals in the “other liabilities” balance sheet item. Of the
accruals, congestion income will be recognised in the income statement as other
operating income when their corresponding costs, as defined in the regulation,
accrue as annual expenses in the income statement. Alternatively, they are
entered in the balance sheet against investments, as defined by regulation, to
lower the acquisition cost of property, plant and equipment, which lowers the
depreciation of the property, plant and equipment in question.
Financial result
The Group’s second quarter turnover was EUR 113.4 (113.2) million. Grid service
income in Q2 totalled EUR 70.2 (60.3) million. Other operating income totalled
EUR 5.9 (1.1) million. Costs during the period amounted to EUR 106.3 (101.5)
million.
The Group’s turnover for January–June was EUR 297.3 (293.1) million. Grid
service income increased during the first six months of 2016 to EUR198.0
(175.7) million, as a result of the change in grid pricing enacted at the start
of the year and due to the growth in electricity consumption. Other operating
income totalled EUR 8.3 (1.9) million. The increase in the other operating
income resulted from a EUR 3.7 million profit from sales of property, plant and
equipment and from EUR 3.5 million in recognised congestion income. The total
costs between January and June amounted to EUR 215.5 (205.4) million.
Between January and June, electricity consumption totalled 43.5 (42.3) terawatt
hours. Imbalance power sales amounted to EUR 74.6 (69.7) million. The growth in
the imbalance power sales resulted from increase in the volume of imbalance
power and higher imbalance power prices. Cross-border transmission income from
the connection between Finland and Russia increased to EUR 10.8 (7.1) million.
This was due to the new tariff structure that was introduced as well as
increased imports from Russia.
Fingrid’s congestion income from the connections between Finland and Sweden
increased to EUR 29.9 (24.3) million as a result of the low price level for
electricity in Sweden. Fingrid’s congestion income from the links between
Finland and Estonia amounted to EUR 2.3 (3.2) million. As a consequence of the
change in the way congestion income is recognised, it will no longer be
reported in Fingrid’s turnover as of the beginning of 2016.
Imbalance power costs increased from the previous year’s level to EUR 58.2
(47.9) million, due to the increase in the volume and price of imbalance power.
Loss energy costs amounted to EUR 30.7 (30.9) million. At the end of June,
approximately 100 (96) per cent of Fingrid’s projected loss energy procurement
for the remainder of 2016 was hedged at an average price of EUR 35.9 (39.9) per
megawatt hour.
The cost of reserves to safeguard the grid’s system security decreased to EUR
24.1 (29.4) million. The reason for the decreased cost was an interruption in
the procurement of the automatic frequency control reserve as well as the lower
procurement cost of frequency controlled reserves for normal operation and
disturbances due to high availability on the markets. Depreciation amounted to
EUR 48.2 (46.2) million. Grid maintenance costs grew to EUR 9.5 (7.1) million,
due to higher spending on cutting down trees along power line right-of-ways and
preventive maintenance on power lines compared to the same period in 2015.
Personnel costs grew as a consequence of the increased number of personnel and
were EUR 14.3 (13.5) million.
Turnover and other income 1-6/16 1-6/15 change % 4-6/16 4-6/15 change %
(€M)
--------------------------------------------------------------------------------
Grid service income 198 176 12.7 70 60 16.3
--------------------------------------------------------------------------------
Imbalance power sales 75 70 7.0 33 30 11.1
--------------------------------------------------------------------------------
ITC income 8 7 15.7 3 3 29.0
--------------------------------------------------------------------------------
Cross-border transmission 11 7 51.2 4 1 151.5
income
--------------------------------------------------------------------------------
Finland-Estonia congestion 0 3 -100.0 0 3 -100.0
income*
--------------------------------------------------------------------------------
Finland-Sweden congestion 0 24 -100.0 0 13 -100.0
income*
--------------------------------------------------------------------------------
Peak load capacity income** 3 4 -13.5 2 2 -13.2
--------------------------------------------------------------------------------
Other turnover 3 2 16.4 1 1 43.4
--------------------------------------------------------------------------------
Other operating income 8 2 336.5 6 1 432.8
--------------------------------------------------------------------------------
Turnover and other income 306 295 3.6 119 114 4.4
total
--------------------------------------------------------------------------------
Costs (€M) 1-6/16 1-6/15 change 4-6/16 4-6/15 change
% %
--------------------------------------------------------------------------------
Purchase of imbalance power 58 48 21.4 25 20 25.2
--------------------------------------------------------------------------------
Loss energy costs 31 31 -0.6 14 15 -6.2
--------------------------------------------------------------------------------
Depreciation 48 46 4.2 24 23 4.9
--------------------------------------------------------------------------------
Cost of reserves 24 29 -18.0 13 17 -22.6
--------------------------------------------------------------------------------
Personnel costs 14 13 6.1 7 7 7.2
--------------------------------------------------------------------------------
Peak load capacity costs** 3 4 -14.6 2 2 -16.9
--------------------------------------------------------------------------------
Maintenance costs 9 7 33.8 6 4 32.8
--------------------------------------------------------------------------------
ITC charges 6 5 18.1 3 1 90.9
--------------------------------------------------------------------------------
Other costs 22 22 -0.5 12 11 6.3
--------------------------------------------------------------------------------
Costs total 216 205 4.9 106 101 4.7
--------------------------------------------------------------------------------
Operating profit, excl. the 90 90 0.5 13 13 1.4
change in the fair value of
commodity derivatives
--------------------------------------------------------------------------------
Consolidated operating profit, 100 82 22.3 26 9 182.2
IFRS
--------------------------------------------------------------------------------
*A change was made in how congestion income is reported, and it is not reported
in the turnover as of the beginning of 2016.
** Peak load capacity income and costs are related to the securing of
sufficient electricity supply during peak consumption hours in compliance with
the Finnish Peak Load Capacity Act.
The Group’s operating profit for the second quarter was EUR 26.3 (9.3) million.
Profit before taxes was EUR 23.1 (-3.7) million. Profit for the period was EUR
18.5 (-3.0) million and the comprehensive income was EUR 20.0 (-1.6) million.
The Group’s net cash flow from operations, with net capital expenditure
deducted, was -19.0 (-6.3) million euros in the period under review.
The Group’s operating profit in the first six months of the year was EUR 100.4
(82.1) million. Profit before taxes was EUR 96.7 (65.4) million. The biggest
differences from the corresponding period last year are explained by changes in
the market value of derivatives (EUR +30.2 million), the growth in grid service
income (EUR +22.3 million), and the elimination of congestion income from the
turnover (EUR -27.5 million), due to the change in how congestion income is
reported. Profit for the review period was EUR 77.4 (52.3) million and
comprehensive income was EUR 80.5 (55.4) million. The Group’s net cash flow
from operations, with net capital expenditure deducted, was EUR 73.4 (46.1)
million in the first six months of the year. The equity ratio was 33.5 (31.8)
per cent at the end of the review period.
The Group’s profit for the review period is characterised by seasonal
fluctuations, which is why the profit for the entire year cannot be directly
estimated on the basis of profit from the period under review.
Investments and maintenance
The extensive project to develop the grid system in western Finland, totaling
EUR 260 million, is proceeding according to the investment programme. A new 110
kilovolt substation in Siikajoki, the 400 kilovolt Tuovila substation in Vaasa
and Hirvisuo transformer substation in Kokkola were started up during the
period under review. Simultaneously, the previously built 400 kilovolt
transmission line between Kristiinankaupunki and Kokkola, which had only been
used at 200 kilovolt, was also commenced in its entirety. Work on the new 400
kilovolt transmission line along Finland’s western coast, from Kokkola to the
Oulu region, will be started up later this year. Fingrid decided to add another
transformer to the Hirvisuo substation. The investment cost of the new
transformer, to be completed in 2018, will amount to approximately EUR 7
million.
The EUR 130 million modernisation project on Finland’s oldest transmission
line, the ‘Iron Lady’ from Imatra to Turku, is proceeding as planned. Fingrid
decided on an investment to modernise the 82-kilometre Yllikkälä–Koria section
of the Iron Lady between Lappeenranta and Kouvola. The project’s investment
costs will amount to some EUR 14 million and it will be completed in 2018.
Fingrid has decided to modernise a 51-kilometre-long transmission line between
Hämeenlinna and Valkeakoski. The project, valued at roughly EUR 9.5 million,
includes the dismantling of the aged and worn out power line supported by
wooden towers and replacing it with a new line. The project is due for
completion in 2018.
Fingrid is planning to build a new Vuoksi substation and a roughly
24-kilometre-long Lempiälä–Vuoksi transmission line between Lappeenranta and
Imatra. The investment of EUR 20 million will be accelerated due to an
extension to Kemira’s industrial plant in Joutseno. The project is due for
completion in 2018.
Fingrid declared a public competition to brainstorm development ideas for
improving the grid system’s maintenance and repair work. A total of 36
competition entries were received, from which four feasible ideas were
selected. The brainstorming competition represented a big step towards
Fingrid’s goal of more open innovation activities.
Power system
Between April and June, electricity consumption in Finland totalled 18.7 (18.8)
terawatt hours. Inter-TSO transmission in the same period amounted to 1.2 (1.6)
terawatt hours. The total electricity transmission in Finland was 19.8 (20.4)
terawatt hours. Fingrid transmitted a total of 16.1 (15.9) terawatt hours in
its grid, representing 81.1 (78.0) per cent of the total electricity
transmission in Finland. During this period, Fingrid transmitted 14.9 (14.4)
terawatt hours of electricity to its customers which amounts to 79.7 (76.2) per
cent of Finland’s total consumption.
In January–June, electricity consumption in Finland amounted to 43.5 (42.3)
terawatt hours. Inter-TSO transmission in the same period amounted to 2.6 (2.9)
terawatt hours. The total electricity transmission in Finland was 46.0 (45.1)
terawatt hours. Fingrid transmitted a total of 35.3 (33.9) terawatt hours in
its grid, representing 76.8 (75.0) per cent of the total electricity
transmission in Finland. During this period, Fingrid transmitted 32.7 (31.0)
terawatt hours of electricity to its customers which amounts to 75.3 (73.3) per
cent of Finland’s total consumption.
Between April and June, 3.9 (4.1) terawatt hours of electricity were imported
from Sweden to Finland, and 0.1 (0.1) terawatt hours were exported from Finland
to Sweden. In January–June, 8.9 (8.3) terawatt hours of electricity were
imported from Sweden to Finland and 0.1 (0.11) terawatt hours were exported
from Finland to Sweden. The most significant event affecting international
transmission capacity was the pre-planned maintenance work on the 400 kV
Letsi–Petäjäskoski cross-border power line between 17 April and 27 April 2016,
during which time the power line was out of operation and the transmission
capacity was limited.
In April–June, 1.1 (1.4) terawatt hours were exported to Estonia. In
January–June, 2.4 (2.6) terawatt hours were exported to Estonia. The EstLink 2
DC connection was out of operation for two weeks in early April, between 1
April and 15 April 2016, due to pre-planned maintenance work.
Between April and June, 1.3 (0.5) terawatt hours of electricity were imported
from Russia to Finland and between January and June imports totalled 3.0 (2.6)
terawatt hours. Transmission capacity from Russia to Finland was fully
available during the reporting period, with the exception of some short
disturbances. Due to a fault at the Vyborg DC station, the transmission
capacity from Finland to Russia was not available between 1 May and 3 June
2016. Electricity imports from Russia were relatively low, as in the previous
year. There are major intraday variations in import volumes, however.
There were no major disturbances with extensive consequences in the grid during
the period under review.
Power system operation 1-6/16 1-6/15 4-6/16 4-6/15
--------------------------------------------------------------------------------
Electricity consumption in Finland, TWh 43.5 42.3 18.7 18.8
--------------------------------------------------------------------------------
TSO transmission in Finland, TWh 2.6 2.9 1.2 1.6
--------------------------------------------------------------------------------
Transmission within Finland, TWh 46.0 45.1 19.8 20.4
--------------------------------------------------------------------------------
Fingrids electrity transmission volume, TWh 35.3 33.9 16.1 15.9
--------------------------------------------------------------------------------
Fingrid's electricity transmission to customers, 32.7 31.0 14.9 14.4
TWh
--------------------------------------------------------------------------------
Fingrid’s loss energy volume, TWh 0.7 0.7 0.3 0.3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Electricity transmission Finland - Sweden
Exports to Sweden TWh 0.1 0.1 0.1 0.1
--------------------------------------------------------------------------------
Imports from Sweden, TWh 8.9 8.3 3.9 4.1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Electricity transmission Finland - Estonia
Exports to Estonia, TWh 2.4 2.6 1.1 1.4
--------------------------------------------------------------------------------
Imports from Estonia, TWh 0.1 0.0 0.0 0.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Electricity transmission Finland - Russia
Exports to Russia, TWh 0.02 0.02
--------------------------------------------------------------------------------
Imports from Russia, TWh 3.0 2.6 1.3 0.5
--------------------------------------------------------------------------------
Electricity market
In the second quarter of the year, the average day-ahead Nordic market price
(system price) of electricity between April and June was EUR 23.94 (20.71) per
megawatt hour and the area price for Finland was EUR 30.21 (25.83) per megawatt
hour. In January–June, the average day-ahead market price for the Nordics was
EUR 23.97 (24.40) per megawatt hour and Finland’s area price was EUR 30.32
(28.95) per megawatt hour.
Between April and June, congestion income between Finland and Sweden totalled
EUR 20.0 (26.6) million. The decrease in congestion income was affected by a
lower area price difference between Finland and Sweden, which was partly a
result of Nordic water levels returning to more normal values.
In May, Fingrid published a discussion paper concerning the challenges on the
electricity markets and possible solutions to them. The paper, titled
“Electricity markets need fixing – What can we do?”, spurred public debate on
energy policies in general and on the necessity of subsidy mechanisms for
renewable energy for instance. The public consultation related to the
discussion paper and its solution proposals will remain open until
mid-September 2016.
Electricity market 1-6/16 1-6/15 4-6/16 4-6/15
--------------------------------------------------------------------------------
Nord Pool system price, average €/MWh 23.97 24.40 23.94 20.71
--------------------------------------------------------------------------------
Area price Finland, average €/MWh 30.32 28.95 30.21 25.83
--------------------------------------------------------------------------------
Congestion income between Finland and Sweden, 59.8 48.6 20.0 26.6
€M*
--------------------------------------------------------------------------------
Congestion hours between Finland and Sweden %* 46.3 35.0 37.4 31.2
--------------------------------------------------------------------------------
Congestion income between Finland and Estonia, 4.6 6.3 1.1 5.6
€M*
--------------------------------------------------------------------------------
Congestion hours between Finland and Estonia %* 17.8 18.4 14.8 30.1
--------------------------------------------------------------------------------
* The congestion income between Finland and Sweden and between Finland and
Estonia is divided equally between the relevant TSOs. The income and costs of
the transmission connections are presented in the tables in the financial
result section.
In the second quarter of the year, Fingrid used EUR 1.5 (1.7) million for
countertrade. The biggest costs were caused by the countertrade carried out to
maintain system security in the Ostrobothnia region in connection with
investment projects requiring interruptions in the power supply.
In the first half of the year, Fingrid used EUR 2.6 (2.7) million for
countertrade.
Countertrade 1-6/16 1-6/15 4-6/16 4-6/15
--------------------------------------------------------------------------------
Countertrade between Finland and Sweden, €M 1.0 0.5 0.0 0.3
--------------------------------------------------------------------------------
Countertrade between Finland and Estonia, €M 0.1 0.7 0.0 0.7
--------------------------------------------------------------------------------
Countertrade between Finland's internal 1.5 1.4 1.5 0.6
connections, €M
--------------------------------------------------------------------------------
Total countertrade, €M 2.6 2.7 1.5 1.7
--------------------------------------------------------------------------------
Financing
The company’s credit rating remained high, reflecting the company’s strong
overall financial situation and debt service capacity. The Group’s net
financial costs between April and June were EUR 3.2 (13.0) million. Between
January and June the Group’s net financial costs amounted to EUR 4.0 (16.9)
million, including the change in the fair value of derivatives of EUR 5.5
million positive (EUR 6.9 million negative).
Interest-bearing borrowings totalled EUR 1,120.5 (1,176.2) million, of which
non-current borrowings accounted for EUR 800.3 (951.5) million and current
borrowings for EUR 320.2 (224.7) million.
The company’s liquidity remained good. Financial and cash assets recognised at
fair value through profit or loss on 30 June 2016 were EUR 79.6 (109.1)
million. The company additionally has an undrawn revolving credit facility of
EUR 300 million to secure liquidity and a total of EUR 50 million in
uncommitted overdraft facilities.
The change in the fair value of electricity derivatives during the period under
review includes EUR 3.6 million from a dismantled hedge reserve resulting from
the discontinuation of hedge accounting, as an item reducing the Group’s
result.
The counterparty risk arising from derivative contracts relating to financing
was EUR 15 (23) million. Fingrid’s foreign exchange and commodity price risks
are generally full hedged.
Personnel
The total number of personnel employed by the Group averaged 332 (319), of
which 284 (283) were in a permanent employment relationship.
Other matters
Fingrid's annual general meeting (AGM) was held in Helsinki on 6 April 2014.
The AGM approved the financial statements for 2015, confirmed the income
statement and balance sheet, and discharged the members of the Board of
Directors and the CEO from liability.
The AGM elected Fingrid’s Board of Directors for the term that ends at the
close of the next Annual General Meeting. Juhani Järvi was appointed Chairman
of Fingrid’s Board of Directors. The other Board members are Juha Majanen,
(Vice Chairman), Esko Torsti, and Sanna Syri, as well as Anu Hämäläinen, who
was elected as a new Board member at the AGM.
The AGM decided on a dividend payment of EUR 33,686.24 for each Series A share
and EUR 16,038.49 for each Series B share, representing a total dividend payout
of EUR 90,000,003.75.
PricewaterhouseCoopers Oy, which appointed Jouko Malinen as the principal
auditor, was elected as the auditor of the company.
Auditing
The consolidated figures in this Interim Report are unaudited.
Events after the review period and outlook for the rest of the year
Fingrid Group’s profit for the 2016 financial period, excluding changes in the
fair value of derivatives and before taxes, is expected to decline from the
previous year. Grid service pricing for 2016 is set in such a way as to balance
out the surplus that was generated in the previous regulatory period with a
corresponding deficit. Comparability is also affected by the different way of
recognising congestion income as of the start of 2016. Results forecasts for
the full year are complicated especially by the uncertainty related to grid
income, ITC income and cross-border transmission income, and to reserve and
loss energy costs. In the Nordic countries, these are dependent on temperature
variations as well as changes in precipitation and water levels, which affect
electricity consumption and electricity prices in Finland and its nearby areas,
and thereby also the volume of electricity transmission in the grid. The
company’s debt service capacity is expected to remain stable.
Notes: Tables for Fingrid’s Interim Report 1.1.-30.6.2016
Further information: Jukka Ruusunen, President & CEO, tel. +358 30 395 5140 or
+358 40 593 8428
Jan Montell, Chief Financial Officer, tel. +358 30 395 5213 or +358 40 592 4419
Notes: Tables for Fingrid’s Interim Report 1.1.-30.6.2016
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT
OFCOMPREHENSIVE INCOME
€M 1-6/20 1-6/20 Change 4-6/20 4-6/20 Change 1-12/2
16 15 16 15 015
--------------------------------------------------------------------------------
Turnover 297.3 293.1 4.2 113.4 113.2 0.2 600.2
--------------------------------------------------------------------------------
Other operating income 8.3 1.9 6.4 5.9 1.1 4.8 5.2
--------------------------------------------------------------------------------
Depreciation -48.2 -46.2 -2.0 -24.5 -23.3 -1.1 -94.1
--------------------------------------------------------------------------------
Operating expenses -157.0 -166.6 9.7 -68.6 -81.7 13.1 -348.7
--------------------------------------------------------------------------------
Operating profit 100.4 82.1 18.3 26.3 9.3 17.0 162.6
--------------------------------------------------------------------------------
Finance income and costs -4.0 -16.9 12.9 -3.2 -13.0 9.8 -33.7
--------------------------------------------------------------------------------
Share of profit of 0.3 0.2 0.1 0.1 0.0 0.1 0.4
assoc. companies
--------------------------------------------------------------------------------
Profit before taxes 96.7 65.4 31.3 23.1 -3.7 26.8 129.3
--------------------------------------------------------------------------------
Income taxes -19.3 -13.1 -6.2 -4.6 0.7 -5.3 -25.7
--------------------------------------------------------------------------------
Profit for the period 77.4 52.3 25.1 18.5 -3.0 21.5 103.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Other comprehensive
income
--------------------------------------------------------------------------------
Cash flow hedges 2.9 2.9 0.0 1.4 1.4 0.0 5.8
--------------------------------------------------------------------------------
Translation reserve 0.2 0.2 0.0 0.1 0.0 0.1 -0.3
--------------------------------------------------------------------------------
Items related to
long-term asset
--------------------------------------------------------------------------------
Items available for sale 0.0 0.0 0.0 0.0 0.0 0.0 0.0
--------------------------------------------------------------------------------
Total comprehensive 80.5 55.4 25.1 20.0 -1.6 21.6 109.1
income for the review
period
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Profit attributable to:
--------------------------------------------------------------------------------
Shareholders of the 77.4 52.3 25.1 18.5 -3.0 21.5 103.6
company
--------------------------------------------------------------------------------
Comprehensive income
attributable to:
--------------------------------------------------------------------------------
Shareholders of the 80.5 55.4 25.1 20.0 -1.6 21.6 109.1
company
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Earnings per share on
profit attributable to
--------------------------------------------------------------------------------
shareholders of the 23,285 15,744 7,541 5,555 -912 6,467 31,151
parent company (EUR)*:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
* no dilution effect
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET, €M 1-6/201 1-6/201 Change 1-12/201
6 5 5
--------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------
Non-current assets
--------------------------------------------------------------------------------
Goodwill 87.9 87.9 0.0 87.9
--------------------------------------------------------------------------------
Intangible assets 95.1 95.1 0.0 95.4
--------------------------------------------------------------------------------
Property, plant and equipment 1,704.2 1,647.7 56.5 1,677.0
--------------------------------------------------------------------------------
Investments 9.9 10.4 -0.5 10.2
--------------------------------------------------------------------------------
Derivatives 36.0 33.7 2.4 32.1
--------------------------------------------------------------------------------
Receivables 16.3 12.4 3.9 19.0
--------------------------------------------------------------------------------
Total non-current assets 1,949.5 1,887.2 62.3 1,921.6
--------------------------------------------------------------------------------
Current assets
--------------------------------------------------------------------------------
Inventories 12.1 12.7 -0.6 12.7
--------------------------------------------------------------------------------
Derivatives 3.2 6.6 -3.5 3.4
--------------------------------------------------------------------------------
Receivables 51.4 54.9 -3.5 69.9
--------------------------------------------------------------------------------
Financial assets recognised in income
--------------------------------------------------------------------------------
statement at fair value 53.9 92.5 -38.5 93.5
--------------------------------------------------------------------------------
Cash and cash equivalents and financial 25.6 16.6 9.1 23.4
assets
--------------------------------------------------------------------------------
Total current assets 146.3 183.3 -37.1 202.8
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Total assets 2,095.7 2,070.6 25.2 2,124.4
--------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY AND LIABILITIES
--------------------------------------------------------------------------------
Equity attributable to shareholders of the
parent company
--------------------------------------------------------------------------------
Shareholders' equity 701.5 657.3 44.2 711.0
--------------------------------------------------------------------------------
Non-current liabilities
--------------------------------------------------------------------------------
Interest-bearing 800.3 951.5 -151.2 907.2
--------------------------------------------------------------------------------
Derivatives 43.8 44.5 -0.7 47.0
--------------------------------------------------------------------------------
Non-interest-bearing 129.4 123.2 6.2 126.9
--------------------------------------------------------------------------------
Total non-current liabilities 973.5 1,119.2 -145.7 1,081.1
--------------------------------------------------------------------------------
Current liabilities
--------------------------------------------------------------------------------
Interest-bearing 320.2 224.7 95.5 236.2
--------------------------------------------------------------------------------
Derivatives 19.3 12.5 6.8 30.3
--------------------------------------------------------------------------------
Non-interest-bearing 81.2 56.8 24.4 65.8
--------------------------------------------------------------------------------
Total current liabilities 420.7 294.0 126.7 332.4
--------------------------------------------------------------------------------
Total shareholders' equity and liabilities 2,095.7 2,070.6 25.2 2,124.4
--------------------------------------------------------------------------------
Consolidated statement of changes in total equity, €M
--------------------------------------------------------------------------------
-
--------------------------------------------------------------------------------
Equity attributable to Share Share Revalua Transla Retain Shareho
shareholders tion tion ed lders’
of the parent company capita premium reserve reserve earnin equity
l account s gs total
--------------------------------------------------------------------------------
Balance on 1 January 2015 55.9 55.9 -11.5 -0.4 567.0 666.9
--------------------------------------------------------------------------------
Comprehensive income for
the review period
--------------------------------------------------------------------------------
Profit or loss 52.3 52.3
--------------------------------------------------------------------------------
Other comprehensive income
--------------------------------------------------------------------------------
Cash flow hedges 2.9 2.9
--------------------------------------------------------------------------------
Translation reserve 0.2 0.2
--------------------------------------------------------------------------------
Items related to long-term 0.0 0.0
asset items available for
sale
--------------------------------------------------------------------------------
Total other comprehensive 2.9 0.2 3.1
income adjusted by tax
effects
--------------------------------------------------------------------------------
Total comprehensive income 2.9 0.2 52.3 55.4
--------------------------------------------------------------------------------
Transactions with owners
--------------------------------------------------------------------------------
Dividend relating to 2014 -65.0 -65.0
--------------------------------------------------------------------------------
Balance on 30 June 2015 55.9 55.9 -8.6 -0.3 554.4 657.3
--------------------------------------------------------------------------------
Comprehensive income for
the review period
--------------------------------------------------------------------------------
Profit or loss 51.2 51.2
--------------------------------------------------------------------------------
Other comprehensive income
--------------------------------------------------------------------------------
Cash flow hedges 2.9 2.9
--------------------------------------------------------------------------------
Translation reserve -0.5 -0.5
--------------------------------------------------------------------------------
Items related to long-term 0.0 0.0
asset items available for
sale
--------------------------------------------------------------------------------
Total other comprehensive 2.9 -0.5 2.4
income adjusted by tax
effects
--------------------------------------------------------------------------------
Total comprehensive income 2.9 -0.5 51.2 53.7
--------------------------------------------------------------------------------
Balance on 1 January 2016 55.9 55.9 -5.7 -0.7 605.6 711.0
--------------------------------------------------------------------------------
Comprehensive income for
the review period
--------------------------------------------------------------------------------
Profit or loss 77.4 77.4
--------------------------------------------------------------------------------
Other comprehensive income
--------------------------------------------------------------------------------
Cash flow hedges 2.9 2.9
--------------------------------------------------------------------------------
Translation reserve 0.2 0.2
--------------------------------------------------------------------------------
Items related to long-term 0.0 0.0
asset items available for
sale
--------------------------------------------------------------------------------
Total other comprehensive 2.9 0.2 3.1
income adjusted by tax
effects
--------------------------------------------------------------------------------
Total comprehensive income 2.9 0.2 77.4 80.5
--------------------------------------------------------------------------------
Transactions with owners
--------------------------------------------------------------------------------
Dividend relating to 2015 -90.0 -90.0
--------------------------------------------------------------------------------
Balance on 30 June 2016 55.9 55.9 -2.8 -0.5 593.0 701.5
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT, €M 1-6/201 1-6/201 Change 1-12/201
6 5 5
--------------------------------------------------------------------------------
Cash flow from operating activities
--------------------------------------------------------------------------------
Profit for the review period 77.4 52.3 25.1 103.6
--------------------------------------------------------------------------------
Adjustments 57.2 83.2 -25.9 175.2
--------------------------------------------------------------------------------
Changes in working capital 41.5 -10.6 52.0 -19.7
--------------------------------------------------------------------------------
Interest paid -14.1 -14.3 0.1 -23.7
--------------------------------------------------------------------------------
Interest received 0.3 0.7 -0.4 0.8
--------------------------------------------------------------------------------
Taxes paid -23.5 -11.6 -11.9 -20.5
--------------------------------------------------------------------------------
Net cash flow from operating activities 138.8 99.8 39.0 215.7
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flow from investing activities
--------------------------------------------------------------------------------
Purchase of property, plant and equipment -69.4 -67.2 -2.2 -150.4
--------------------------------------------------------------------------------
Purchase of intangible assets -1.2 -1.7 0.4 -3.4
--------------------------------------------------------------------------------
Purchase of other assets
--------------------------------------------------------------------------------
Proceeds from sale of other assets 0.2 0.5 -0.3 0.8
--------------------------------------------------------------------------------
Proceeds from sale of property, plant and 5.6 0.2 5.4 5.1
equipment
--------------------------------------------------------------------------------
Loans granted -0.9
--------------------------------------------------------------------------------
Dividend received 0.6 0.6 0.0 0.6
--------------------------------------------------------------------------------
Contributions received 15.0 -15.0 15.0
--------------------------------------------------------------------------------
Interest paid -1.2 -1.1 0.0 -1.7
--------------------------------------------------------------------------------
Net cash flow from investing activities -65.4 -53.7 -11.7 -135.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flow from financing activities
--------------------------------------------------------------------------------
Proceeds from non-current financing 107.4
(liabilities)
--------------------------------------------------------------------------------
Payments of non-current financing -15.7 -65.1 49.4 -104.2
(liabilities)
--------------------------------------------------------------------------------
Change in current financing (liabilities) -5.0 13.8 -18.8 -81.0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Dividends paid -90.0 -65.0 -25.0 -65.0
--------------------------------------------------------------------------------
Net cash flow from financing activities -110.7 -116.3 5.7 -142.8
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Change in cash and cash equivalents and -37.3 -70.2 32.9 -62.0
financial assets
--------------------------------------------------------------------------------
Cash and cash equivalents 1 Jan 116.9 179.3 -62.4 179.3
--------------------------------------------------------------------------------
Cash and cash equivalents 31 Mar. 79.6 109.1 -29.5 117.2
--------------------------------------------------------------------------------
QUARTERLY FIGURES
--------------------------------------------------------------------------
Q2/2016 Q1/2016 Q4/2015 Q3/2015 Q2/2015 Q1/2015
--------------------------------------------------------------------------
Turnover €M 113.4 183.9 172.5 134.6 113.2 179.9
--------------------------------------------------------------------------
Operating profit €M 26.3 74.2 57.4 23.1 9.3 72.8
--------------------------------------------------------------------------
Operating profit % 23.1 40.3 33.3 17.1 8.2 40.5
--------------------------------------------------------------------------
INVESTMENTS, €M 1-6/2016 1-6/2015 Change 1-12/2015
------------------------------------------------------------------
Grid investments 69.9 62.6 7.3 138.4
------------------------------------------------------------------
Substations 41.5 32.5 9.0 77.1
------------------------------------------------------------------
Transmission lines 28.4 30.0 -1.7 61.3
------------------------------------------------------------------
------------------------------------------------------------------
Gas turbine investments 0.8 0.4 0.4 0.7
------------------------------------------------------------------
Existing gas turbine plants 0.8 0.8 0.3
------------------------------------------------------------------
New gas turbine plants 0.4 -0.4 0.4
------------------------------------------------------------------
------------------------------------------------------------------
Other investments 4.7 4.8 -0.1 8.4
------------------------------------------------------------------
ICT 4.7 4.8 -0.1 8.4
------------------------------------------------------------------
------------------------------------------------------------------
Total investments 75.4 67.8 7.6 147.5
------------------------------------------------------------------
RESEARCH AND DEVELOPMENT EXPENSES, €M 1-6/2016 1-6/2015 Change 1-12/2015
----------------------------------------------------------------------------
Research and development expenses 1.2 0.8 0.4 1.8
----------------------------------------------------------------------------
DERIVATIVE CONTRACTS, €M
--------------------------------------------------------------------------------
-----------------------
30 June 2016 30 June 2015
31 Dec 2015
--------------------------------------------------------------------------------
----------------------
Intere Fair Fair Net Nomina Fair Fair Net Nomina Fair
Fair Net Nomina
st and value value fair l value value fair l value
value fair l
curre pos. neg. value value pos. neg. value value pos.
neg. value value
ncy
deriv
atives
--------------------------------------------------------------------------------
----------------------
Curren 13 -20 -7 331 25 -12 13 249 15
-20 -5 341
cy
swaps
--------------------------------------------------------------------------------
----------------------
Forwar 0 0 3 0 0 1
0 0 5
d
contr
acts
--------------------------------------------------------------------------------
----------------------
Intere 30 -10 21 430 21 -12 10 460 24
-9 15 430
st
rate
swaps
--------------------------------------------------------------------------------
----------------------
Call 1 1 459 0 0 130 1
1 359
optio
ns.
bough
t
--------------------------------------------------------------------------------
----------------------
Total 44 -30 15 1,223 47 -24 23 840 40
-30 11 1,135
================================================================================
======================
Electr Fair Fair Net Volume Fair Fair Net Volume Fair
Fair Net Volume
icity value value fair TWh value value fair TWh value
value fair TWh
deriv pos. neg. value pos. neg. value pos.
neg. value
atives
--------------------------------------------------------------------------------
----------------------
Electr 1 -36 -35 4.12 0 -36 -36 4.13
-49 -49 4.22
icity
forwa
rd
contr
acts,
NASDA
Q OMX
Commo
dities
--------------------------------------------------------------------------------
----------------------
Total 1 -36 -35 4.12 0 -36 -36 4.13
-49 -49 4.22
================================================================================
======================
The Group terminated hedge accounting for electricity derivatives at the start
of 2014. As a result, the entire change in the fair value of the derivatives in
question was recorded and will, in future as well, be recorded in the income
statement. The hedge fund in the balance sheet will be dismantled in the income
statement during 2015 and 2016 in fixed instalments such that it decreases the
result by EUR 11.6 million.
Fair value hierarchy of financial instruments, €M 30 June 2016
--------------------------------------------------------------------------------
Level 1 Level 2 Level 3
--------------------------------------------------------------------------------
Financial assets recognised at fair value
--------------------------------------------------------------------------------
Available-for-sale investments 0
--------------------------------------------------------------------------------
Interest and currency derivatives 44
--------------------------------------------------------------------------------
Financial assets recognised at fair value 30 24
--------------------------------------------------------------------------------
Financial assets recognised in the income statement 30 69
at fair value
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial liabilities held at fair value
--------------------------------------------------------------------------------
Interest and currency derivatives, liabilities 30
--------------------------------------------------------------------------------
Electricity forward contracts. NASDAX OMX Commodities 36
--------------------------------------------------------------------------------
Total financial liabilities held at fair value 36 30
--------------------------------------------------------------------------------
In the presentation of fair value, assets and liabilities measured at fair
value are categorised into a three-level hierarchy. 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 that is significant to
the overall fair value measurement.
Level 1: inputs are publicly quoted in active markets.
Level 2: inputs are not publicly quoted and are based on observable market
parameters either directly or indirectly.
Level 3: inputs are not publicly quoted and are unobservable market parameters.
Commitments Contingent liabilities, 30 June 30 June Change 31 Dec
€M 2016 2015 2015
--------------------------------------------------------------------------------
Pledged cash assets 0 1 -1 1
--------------------------------------------------------------------------------
Rental liabilities 25 27 -2 26
--------------------------------------------------------------------------------
Right-of-use agreements for reserve 85 95 -10 89
power plants
--------------------------------------------------------------------------------
Credit facility commitment fees 1 1 0 1
--------------------------------------------------------------------------------
Total 112 124 -12 118
--------------------------------------------------------------------------------
Investment commitments 102 147 -45 124
--------------------------------------------------------------------------------
Other financial liabilities
--------------------------------------------------------------------------------
Changes in property, plant and 30 June 30 June Change 31 Dec
equipment, €M 2016 2015 2015
--------------------------------------------------------------------------------
Carrying amount at beginning of 1,677 1,640 37 1,640
period
--------------------------------------------------------------------------------
Increases 73 52 21 133
--------------------------------------------------------------------------------
Decreases 2 1 1 -3
--------------------------------------------------------------------------------
Depreciation and amortisation -47 -46 -2 -93
expense
--------------------------------------------------------------------------------
Carrying amount at end of period 1,704 1,648 56 1,677
--------------------------------------------------------------------------------
Transactions with associated 30 June 30 June Change 31 Dec
companies, €M 2016 2015 2015
--------------------------------------------------------------------------------
Sales 0 3 -3 1
--------------------------------------------------------------------------------
Interest income 0 0 0 0
--------------------------------------------------------------------------------
Purchases 19 18 1 40
--------------------------------------------------------------------------------
Trade receivables 0 4 -4 3
--------------------------------------------------------------------------------
Trade payables 0 0 0 0
--------------------------------------------------------------------------------
Loan receivables 3 2 1 3
--------------------------------------------------------------------------------
Transactions with owners, €M 30 June 2016 30 June 2015 Change 31 Dec 2015
-----------------------------------------------------------------------------
Owners
-----------------------------------------------------------------------------
Purchases 6 6 1 6
-----------------------------------------------------------------------------
Trade payables 0 0 0 0
-----------------------------------------------------------------------------
Other related parties
-----------------------------------------------------------------------------
Sales 28 13 16 29
-----------------------------------------------------------------------------
Purchases 30 29 1 70
-----------------------------------------------------------------------------
Trade receivables 2 2 0 1
-----------------------------------------------------------------------------
Trade payables 2 2 0 2
-----------------------------------------------------------------------------
Accounting principles
This Interim Report has been drawn up in accordance with standard IAS 34,
Interim Financial Reporting. In preparing this report, where the recognition of
congestion income is concerned, Fingrid changed its accounting principles from
those applied in its annual financial statements for 2015. The change was
implemented as of the beginning of 2016. In other respects, the interim report
complies with the same accounting principles as those used for Fingrid’s 2015
financial statements. As a consequence of the change in the regulation
governing the reasonableness of Fingrid’s grid pricing, the company will
include the congestion income received after 1 January 2016 as accruals in the
“other liabilities” balance sheet item. Of the accruals, congestion income will
be recognised in the income statement as other operating income when their
corresponding costs, as defined in the regulation, accrue as annual expenses in
the income statement. Alternatively, they are entered in the balance sheet
against investments, as defined by regulation, to lower the acquisition cost of
property, plant and equipment, which lowers the depreciation of the property,
plant and equipment in question.
Segment reporting
The entire business of the Fingrid Group is deemed to comprise transmission
grid operation in Finland with system responsibility, constituting a single
segment. There are no material differences in the risks and profitability of
individual products and services. For that reason, segment reporting in
accordance with the IFRS 8 standard is not presented.
Corporate restructuring
On 16 February 2016, Fingrid established Fingrid Datahub Oy. The task of the
subsidiary, wholly owned by Fingrid, is to implement a centralised information
exchange system for the electricity markets, in which the exchange of
information between retail sellers and transmission system operators is
concentrated into a single service.
Seasonal fluctuations
The Group’s operations are characterised by substantial seasonal fluctuations.
General clause
Certain statements in this report are forward-looking and are based on the
current views of the company’s management. Due to their nature, they contain
some risks and uncertainties and are subject to general changes in the economy
and the business sector.
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