2014-02-14 12:00:00 CET
2014-02-14 12:00:09 CET
REGULATED INFORMATION
Fingrid Oyj - Annual Financial Report
Fingrid Oyj's review of January – December 2013: profit improved, investments still at a high level
Helsinki, Finland, 2014-02-14 12:00 CET (GLOBE NEWSWIRE) -- Fingrid Oyj
Stock Exchange Release 14.2.2014 at 13.00 EET
Figures in brackets refer to the previous year, unless otherwise stated.
October - December 2013
-- The Group's turnover in October - December was 155 million euros (154
million).
-- Operating profit for the last quarter of the year was 36 million euros (38
million).
January - December 2013:
-- The Group's turnover in January - December was 543 million euros (522
million).
-- The Group's net profit was 115 million euros (95 million).
-- The Group's net profit for the financial period was 91 million euros (67
million).
-- The cash flow from the operations of the Group deducted by capital
expenditure was -68 million euros (-1 million).
-- The interest-bearing borrowings totalled 1,077 million euros (1,030
million).
-- Investments totalled 225 million euros (139 million).
-- The equity ratio was 29.5% (27.3%).
-- Earnings per share totalled 27,278 euros (20,159 euros).
Key figures
--------------------------------------------------------------------------------
-
1-12/13 1-12/12 change 10-12/ 10-12/ change
% 13 12 %
--------------------------------------------------------------------------------
Turnover M€ 543.1 522.1 4.0 155.1 153.7 0.9
--------------------------------------------------------------------------------
Capital expenditure, M€ 225.3 139.0 62.2 94.8 56.4 68.2
gross
--------------------------------------------------------------------------------
- % of turnover % 41.5 26.6 61.1 36.7
--------------------------------------------------------------------------------
Research and M€ 1.8 1.5 15.9 0.6 0.6 8.8
development expenses
--------------------------------------------------------------------------------
- % of turnover % 0.3 0.3 0.4 0.4
--------------------------------------------------------------------------------
Personnel, average 277 269 3.0
--------------------------------------------------------------------------------
Personnel at the end 287 275 4.4
of period
--------------------------------------------------------------------------------
Salaries and M€ 19.0 18.2 4.3 5.5 5.3 3.8
remunerations total
--------------------------------------------------------------------------------
Operating profit M€ 115.3 94.6 21.8 36.5 38.5 -5.2
--------------------------------------------------------------------------------
- % of turnover % 21.2 18.1 23.5 25.0
--------------------------------------------------------------------------------
Profit before taxes M€ 87.3 88.3 -1.2 30.3 35.0 -13.3
--------------------------------------------------------------------------------
- % of turnover % 16.1 16.9 19.6 22.8
--------------------------------------------------------------------------------
Profit for the M€ 90.7 67.0 35.3 47.5 26.7 77.9
financial period
--------------------------------------------------------------------------------
Comprehensive income M€ 86.1 73.2 17.5 43.4 27.5 58.0
--------------------------------------------------------------------------------
Return on investment % 6.3 5.6
--------------------------------------------------------------------------------
Return on equity % 15.0 12.4
--------------------------------------------------------------------------------
Equity ratio % 29.5 27.3
--------------------------------------------------------------------------------
Interest-bearing net M€ 1,076.7 1,030.3 4.5
liabilities
--------------------------------------------------------------------------------
Gearing 1.68 1.81
--------------------------------------------------------------------------------
Profit/share € 27,278 20,159 35.3 14,286 8,032 77.9
--------------------------------------------------------------------------------
Dividend/A shares € 2,018.2 5,115.89
6*
--------------------------------------------------------------------------------
Dividend/B shares € 2,018.2 2,018.26
6*
--------------------------------------------------------------------------------
Equity/share € 193,293 171,365 12.8
--------------------------------------------------------------------------------
Dividend payout ratio % 7.4* 25.4
A shares
--------------------------------------------------------------------------------
Dividend payout ratio % 7.4* 10.0
series B shares
--------------------------------------------------------------------------------
Number of shares 31
Dec.
--------------------------------------------------------------------------------
- Series A shares shares 2,078 2,078 - 2,078 2,078 -
--------------------------------------------------------------------------------
- Series B shares shares 1,247 1,247 - 1,247 1,247 -
--------------------------------------------------------------------------------
Total shares 3,325 3,325 - 3,325 3,325 -
--------------------------------------------------------------------------------
* The Board of Directors' proposal to the Annual General Meeting
Says Jukka Ruusunen, President of Fingrid, about the year 2013
Year 2013 was a year of many successes for Fingrid. The development in result
was strong and from an operational point of view the year was excellent. The
Group's turnover was 543 million euros and profit for the financial period was
91 million euros. The result for 2013 was improved by a rise in grid network
tariffs: grid revenue grew to 321 million euros. On the other hand, Nordic
congestion income decreased significantly.
Grid investments were once again high: we invested around 209 million euros in
the main grid. Investment portfolio management requires plenty of flexibility
throughout the various sectors of the organisation. In addition to its own
employees, Fingrid's service provider organisations also saw success.
Grid operational reliability in 2013 was excellent despite significant
challenges set by our large-scale investment programme. The new main grid
control centre demonstrated how well it functioned in its first year of
operations. Electricity markets in the Baltic Sea region also progressed thanks
to the EstLink 2 connection. EstLink 2 has already made market activity more
efficient and improved reliability in the supply of electricity in the area.
The benefits to society are significant. The project serves as a model for all
of Europe as to how cross-border cooperation can achieve great things when
people on both sides of the border strive to achieve the same goal.
A new Electricity Market Act came into effect in Finland in the autumn of 2013.
The act outlines the separation of the grid ownership in line with EU
requirements. The act has further specified the definition of grid and Fingrid
was given with new responsibilities relating to matters such as balance
services and the exchange of information on electricity markets. Fingrid's
customer base will multiply as a result of these new tasks, and the grid
network will extend to Helsinki in a few years' time.
Our development themes for 2013 were customer operations and responsibility.
We have put a new operating model, developed in close cooperation with our
customers, into use in our customer operations. Fingrid's Advisory Committee
has invested a significant amount of time and effort into the new model. With
regard to responsibility, we've developed responsible management and
concretised Fingrid's responsibility targets. Responsibility is an essential
part of a grid company's operations, and it is a central part of our strategy.
When it comes down to it, the most important thing is how our customers and
society see us.
Calculation principles
Information published in this review are based on Fingrid's audited financial
statements 2013, published in connection with this bulletin. In this financial
statements bulletin, Fingrid has followed the same principles as in the
financial statements for 2013.
Financial result
The Group's turnover was 543 million euros (522 million). Other operating
income was 4 million euros (4 million euros).
Grid revenue rose to 321 million euros (276 million euros) as a result of the
tariff increase of 15 per cent carried out at the beginning of the year.
Electricity consumption in Finland decreased by 1.5 per cent from 2012. Fingrid
transmitted the same amount of electricity in its grid as in the previous year,
i.e. 64.6 (64.2) TWh. The sales of imbalance power grew to 159 (151) million
euros. The increase in the sales of imbalance power was influenced by the rises
made in the balance service fees in 2013 to cover increased reserve purchasing
costs. Cross-border transmission income on the connection between Finland and
Russia and congestion income on the interconnection between Finland and Estonia
remained at the previous year's level. On the other hand, Fingrid's congestion
income on the interconnection between Finland and Sweden fell considerably due
to the market situation and reduced differences in the area prices of
electricity, and was 19 (44) million euros. European inter-TSO compensation
income declined slightly.
The costs of imbalance power decreased from the previous year to 121 (126)
million euros due to the reduced volume of regulating power. Loss energy costs
also fell by 6 million euros. The average price of loss energy purchases was
51.10 (52.86) euros per megawatt hour. Depreciation costs increased by 6
million euros as significant new capital investment projects were completed.
The costs of reserves, which safeguard the system security of the power system,
rose by 23 million euros during the period under review because the temporary
purchases of frequency controlled reserves in the hourly market in Finland and
from the other Nordic TSOs were more expensive than earlier. Additional
reserves were also purchased in order to improve frequency quality. Personnel-,
maintenance - and inter-TSO compensation costs remained more or less at the
level of the previous year.
Turnover and other operating income, M€
--------------------------------------------------------------------------------
-
1-12/1 1-12/1 change 10-12/1 10-12/1 change
3 2 % 3 2 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Grid service revenue 321 276 16.2 93 85 9.3
Sales of imbalance power 159 151 4.9 45 48 -6.0
Cross-border transmission 13 11 24.6 4 3 5.2
income
Finland-Estonia congestion 4 6 -42.8 1 1 30.3
income*
Finland-Sweden congestion 19 44 -58.0 6 8 -22.4
income
Peak load capacity income** 13 19 -28.5 2 5 -64.1
ITC income 8 10 -16.6 2 2 -10.5
Feed-in tariff for peat -
Other turnover 6 5 34.5 2 1 110.1
Other operating income 4 4 6.2 1 2 -59.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Turnover and other income 547 526 4.0 156 156 0.2
total
Costs, M€
--------------------------------------------------------------------------------
-
1-12/1 1-12/1 change 10-12/ 10-12/ change
3 2 % 13 12 %
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Purchase of imbalance power 121 126 -3.8 32 39 -17.8
Cost of loss energy 58 65 -9.8 15 17 -11.2
Depreciation 82 76 8.0 22 20 10.3
Cost of reserves 62 39 59.0 13 10 32.7
Personnel costs 23 22 3.2 6 7 -4.2
Maintenance costs 20 21 -6.2 5 6 -20.8
Cost of peak load capacity** 13 18 -28.6 2 5 -65.1
ITC charges 12 14 -16.9 3 3 -8.1
Estlink grid rents* 4 6 -44.5 1 1 6.6
Other costs 31 32 -1.3 9 9 0.6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Costs total 425 419 1.6 108 116 -7.2
Operating profit excluding the 122 107 13.6 48 39 21.9
change in the fair value of
commodity derivatives
Operating profit of Group 115 95 21.8 36 38 -5.2
--------------------------------------------------------------------------------
*Fingrid's income from the congestion income between Finland and Estonia was
3.7 million euros. The costs (grid rents between Finland and Estonia) were 3.5
million euros, which was paid to the owners of the Estlink 1 transmission
connection. The difference of 0.2 million euros received by Fingrid was created
during the trial period of the Estlink 2 connection in December 2012.
**The peak load capacity income and costs are related to the securing of the
sufficiency of electricity during peak consumption hours within the framework
of the Finnish Peak Load Capacity Act.
The operating profit of the Group was 115 (95) million euros. Of the change in
the fair value of commodity derivatives, -6 (-13) million euros was recognised
in the income statement. Consolidated profit for the year was 91 (67) million
euros. The consolidated total comprehensive income was 86 (73) million euros.
The financial position of the Group continued to be satisfactory. The net
financial costs excluding the changes in the fair value of derivatives were 19
(21) million euros. The net financial costs in accordance with IFRS were 29 (7)
million euros, including the change in the fair value of derivatives, which was
-10 (14) million euros. The effect of a decrease in the Finnish corporate tax
rate on the result for the period is 24.5 million euros. On 31 December 2013,
financial assets totalled 217 (214) and interest-bearing loans 1,294 (1,244)
million euros. The return on investment was 6.3 (5.6) per cent and return on
equity 15.0 (12.4) per cent. The equity ratio of the Group was 29.5 (27.3) per
cent at the end of the review period.
Turnover of the parent company was 530 (504) million euros and profit for the
financial year 65 (41) million euros.
Capital expenditure
Fingrid implemented its transmission network investment programme as planned,
which will safeguard the implementation of Finland's energy and climate
strategy, improve reliability, increase transmission capacity and support the
electricity market. Fingrid's annual capital expenditure in the transmission
system has been extensive for years. The company's gross capital expenditure in
2013 was 225 (139) million euros. Of this amount, a total of 209 (94) million
euros was used for the transmission grid and 4 (26) million euros for reserve
power.
IT-related capital expenditure was approximately 9 (11) million euros. Research
and development was allocated a total of 1.8 (1.5) million euros. Some 50
research and development projects were in progress. In terms of volume,
research work remained on the same level as in previous years. The focus of
research during the year was, among other things, the challenges presented to
the power system by renewable energy, as a result of which a new reserve type
was introduced. During the year, attention was also paid to how demand-side
flexibility could be promoted so that small consumers and other consumer groups
could get involved in it.
In 2013, Fingrid had several investment projects for ensuring system security
and the adequacy of transmission capacity in the future. EstLink 2, the joint
project by Fingrid and the Estonian transmission system operator Elering neared
completion. This link was taken into trial operation and its capacity was
successfully introduced into the market on 6 December 2013. The connection will
add about 650 MW of additional transmission capacity between Finland and
Estonia. The project was handed over on 7 January 2014. In December 2013,
Fingrid and Elering jointly purchased the Estlink 1 HVDC link from Nordic
Energy Link (NEL). Estlink 1's capacity is 350 MW, so the total transmission
capacity between Finland and Estonia will be 1,000 MW.
One of the biggest completed projects was the 400 kV transmission connection
between Yllikkälä and Huutokoski in Eastern Finland, which was finished in
2013. The Nurmijärvi - Hyvinkää - Hikiä project to strengthen the high-voltage
network in Southern Finland was also completed as planned in late 2013.
The transmission capacity in Western Finland will be boosted by the 400 kV
Ulvila-Kristinestad transmission connection, which will be completed by the end
of 2014. At the end of 2012, Fingrid made a significant investment decision, as
a result of which Ostrobothnia will be upgraded from the 220 kV voltage level
to 400 kV by 2016. The project includes, among other things, the 212-km, 400 kV
Hirvisuo-Pyhänselkä line stretching from Kokkola to Oulujoki, as well as
several substations. These will enable, for example, the large-scale connection
of wind power directly to the 400 kV transmission line and, at the same time,
the discontinuation of the ageing 220 kV line. In order to achieve the targets
for renewable energy, Finland has many wind power projects on the go, many of
which are located on the west coast.
In November 2013, Fingrid made decisions on contracts for the 400 kV
Hikiä-Forssa power transmission connection. The company also made the decision
to order three new transformers from Hyundai Heavy Industries Co., Ltd. of
South Korea. Sustainability audits were carried out in Hyundai's plant in South
Korea, in which the implementation of Fingrid's responsibility objectives in
the supply chain was examined.
Power system
Electricity consumption in Finland in 2013 totalled 83.9 (85.2) terawatt hours.
A total of 64.6 (64.2) TWh of electricity was transmitted in Fingrid's grid,
representing 77.0 (75.4) per cent of the electricity consumption in Finland.
The system security of the transmission grid was excellent with no major
disturbances occurring. The number of disturbances on the grid was at an
average level.
Electricity transmission between Finland and Sweden consisted mainly of imports
to Finland. Production capacity was limited by grid maintenance work in Sweden
and a cable fault in the Fenno-Skan 1 HVDC connection early in the year, as a
result of which maximum capacity had to be reduced while the cable was being
inspected. The results of the investigations may lead to these restrictions
becoming permanent. During 2013, 12.8 (14.8) TWh of electricity was imported
from Sweden to Finland, and 0.7 (0.4) TWh were exported from Finland to Sweden.
The electricity transmissions between Finland and Estonia were dominated by
exports from Finland to Estonia. The transmission capacity was available to the
market in the normal manner. The volume of electricity imports from Estonia to
Finland on the Estlink 1 connection was 0.5 (0.4) TWh, and 1.6 (1.5) TWh of
electricity was exported from Finland to Estonia. Commissioning tests that
started late in 2013 for the HVDC EstLink 2 connection between Finland and
Estonia increased transmission capacity by 650 MW, with total transmission
capacity between Finland and Estonia increasing to a total of 1,000 MW.
Electricity imports from Russia were at a low level. Almost the full
transmission capacity was made available. Electricity imports from Russia
totalled 4.7 (4.4) TWh. Technical testing was carried out to prepare for the
opening of bilateral trade in electricity between Finland and Russia.
Power system operation 1-12/13 1-12/12 10-12/13 10-12/12
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Electricity consumption in Finland TWh 83.9 85.2 22.2 23.3
Fingrid's transmission volume TWh 64.6 64.2 16.9 17.2
Fingrid's loss energy volume TWh 1.1 1.2 0.3 0.3
Electricity transmission Finland - Sweden
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Exports to Sweden TWh 0.7 0.4 0.0 0.2
Imports from Sweden TWh 12.8 14.8 3.7 3.2
Electricity transmission Finland - Estonia
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Exports to Estonia TWh 1.6 1.5 0.7 0.3
Imports from Estonia TWh 0.5 0.4 0.1 0.1
Electricity transmission Finland - Russia
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Imports from Russia TWh 4.7 4.4 1.3 1.4
Electricity market
The Finnish electricity market has arrived at a new stage. The market
fluctuations of neighbouring countries are affecting Finland more than they did
before. Among other things, this is influenced by an increase in transmission
connections, the Baltic countries joining the same electricity exchange area
and changes in the Russian market.
In June, Latvia and Lithuania joined the Nord Pool Spot electricity exchange as
offer areas. The prevailing direction of trade was from Finland to Estonia.
EstLink 2, which was taken into trial operation, tripled the transmission
capacity between the countries and is also significantly strengthening the
integration of the Nordic and Baltic markets.
The development of the internal European market was boosted when the north-west
European spot markets merged (in February 2014). This will create the largest
uniform electricity market in the world, covering the Nordic and Baltic
countries, western Central Europe and the United Kingdom. With regard to the
EU's third legislative package on the electricity market, ENTSO-E completed
proposals about three key market regulations.
Fingrid is developing new market services that are improving market efficiency.
The law concerning guarantees of origin has changed so that all sellers of
renewable energy must obtain a guarantee of origin. Until now, the system has
been voluntary. Fingrid will be responsible for maintaining the electronic
register of guarantees of origin from 1 March 2014. Fingrid is also starting
the development of electronic exchange of information on the market.
The Finnish, Norwegian and Swedish grid operators continued to implement their
joint imbalance settlement. A joint venture called eSett Oy was established for
the service, which will be launched in 2015.
In the Nordic electricity markets, the supply of hydroelectric power was
somewhat less than the previous year, which increased the price level of the
wholesale market. On the electricity exchange, the average price for spot
electricity (system price) was 38 (31) euros per MWh. Hydroelectric power was,
however, in plentiful supply and imports from Sweden and Norway to Finland
totalled 12.8 (14.9) TWh. Congestion in border transmission connections, grid
maintenance work in Sweden and a cable fault in Fenno-Skan 1 increased
Finland's area price to about 2 euros higher than the Swedish price. The
average Finnish area price was 41 (37) euros per MWh. From this difference in
price, 19 (44) million euros of so-called congestion income accumulated for the
company.
Import from Russia to Finland fluctuated greatly with the total volume being
4.7 (4.4) TWh.
Electricity market
--------------------------------------------------------------------------------
1-12/1 1-12/1 10-12/1 10-12/1
3 2 3 2
--------------------------------------------------------------------------------
Nord Pool system price, average €/MWh 38 31 36 37
--------------------------------------------------------------------------------
Area price Finland, average €/MWh 41 37 40 41
--------------------------------------------------------------------------------
Congestion income between Finland and Sweden, 37.2 88.5 12.4 16.0
million €*
--------------------------------------------------------------------------------
Congestion hours between Finland and Sweden %* 19.4 35.1 27.9 32.0
--------------------------------------------------------------------------------
Congestion income between Finland and Estonia, 7.4 12.9 1.9 1.5
million €*
--------------------------------------------------------------------------------
Congestion hours between Finland and Estonia 27.3 34.7 26.4 22.4
%*
--------------------------------------------------------------------------------
*The congestion income between Finland and Sweden as well as between Finland
and Estonia is divided between the relevant TSOs in equal proportions. The
income and costs of the transmission connections are presented in the tables
under Financial Result.
Financing
The financial position of the Group continued to be satisfactory.
The net financial costs excluding the changes in the fair value of derivatives
were 19 (21) million euros. Interest income was 1 (3) million euros. The net
financial costs in accordance with IFRS were 29 (7) million euros, including
the change in the fair value of derivatives, which was -10 (+14) million euros.
On 31 December 2013, financial assets amounted to 217 (214) million euros.
Interest-bearing debt totalled 1,294 (1,244) million euros, of which 975
(1,032) million euros were long-term and 319 (212) million euros were
short-term. Counterparty risk arising from the currency derivative contracts
and interest rate derivative contracts was 34 (77) million euros.
International rating agencies updated the company's credit ratings.
On 16 January 2013, Standard & Poor's Rating Services (S&P) revised Fingrid
Oyj's outlook from negative to stable. S&P affirmed Fingrid's long-term rating
AA-, short-term rating A-1+ and the senior unsecured debt rating AA-. On 8
November 2013, Fitch Ratings affirmed Fingrid Oyj's long-term Issuer default
rating of A, its short-term Issuer default rating of F1 and its senior
unsecured debt rating at A+, outlook stable. On 14 December 2012, Moody's
Investors Service affirmed Fingrid Oyj's issuer rating at A1, senior unsecured
debt rating at A1 and the short-term debt rating at P-1, outlook stable.
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 the share capital may be
increased or lowered without amending the articles of association. At present,
the share capital is 55,922,485.55 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 voting and dividend rights 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.
Personnel and remuneration systems
The Fingrid Group and Fingrid Oyj employed 287 (275) persons, including
temporary employees, at the end of the year. The number of permanent personnel
was 268 (261).
Of the personnel employed by the company, 25.4 (23.8) per cent were women and
74.6 (76.2) per cent were men at the end of the year. The average age of the
personnel was 44 (44).
During 2013, a total of 12,837 (9,528) hours were used for personnel training,
with an average of 46 (37) hours per person. Employee absences on account of
illness in 2013 accounted for 2 (2) per cent of the total working hours. In
addition to a compensation system, which is based on the requirements of each
position, Fingrid applies incentive bonus schemes.
Board of Directors and corporate management
Fingrid Oyj's Annual General Meeting took place in Helsinki on 27 May 2013.
Helena Walldén, M.Sc. (Tech.) was elected Chairman of the Board. Juha Majanen,
Budget Counsellor and the Head of Fiscal Policy Unit of the Ministry of
Finance, was elected Vice Chairman. The other members of the Board of Directors
are Sirpa Ojala, CEO of Digita Networks Oy, Matti Rusanen, Head of Listed
Securities, Ilmarinen Mutual Pension Insurance Company, and Esko Torsti, Head
of Non-listed Investments, Ilmarinen Mutual Pension Insurance Company.
The Board members until 27 May 2013 were Helena Wallden, Juha Majanen, Sirpa
Ojala, Esko Torsti and Esko Raunio LocalTapiola Mutual Pension Insurance
Company (currently Elo Mutual Pension Insurance Company).
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 27 May 2013
were Juha Majanen (Chairman), Esko Torsti and Helena Wallden. The members of
the audit committee from 27 May 2013 were Juha Majanen (Chairman), Esko Torsti
and Helena Wallden.
The remuneration committee from 27 May 2013 consisted of Helena Walldén
(Chairperson), Sirpa Ojala and Matti Rusanen. Until 27 May 2013, the members of
the remuneration committee were Helena Walldén (Chairperson) and Sirpa Ojala.
Jukka Ruusunen serves as President & CEO of the company.
A corporate governance statement, required by the Finnish Corporate Governance
Code, has been provided separately. The statement 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
The purpose of Fingrid Oyj's internal control, risk management and internal
audit is to ensure implementation of the company's strategy and that it is in
accordance with its corporate governance and control system, principals and
procedural guidelines. The company's internal control is based on the
principles approved by the Board of Directors, policies as well as
function-level and unit-level instructions approved by the executive management
group, risk management, financial reporting, transparency of processes and
procedures, as well as objective and independent internal audit.
Fingrid's risk management is based on the company's targets, strategy and on
the identification and assessment of risks concerning changes on the operating
environment. The impact of significant risks is assessed from a perspective of
both the company and society, because the company holds a significant position
in Finnish society. In order to manage risk, protective measures are if
necessary prepared and risk management is regularly reported on.
The company's Board of Directors is responsible for the organisation of
internal control, risk management and internal audit, and approves measures
related to them. The Board also decides on the corporate strategy and action
plan, and monitors their implementation. The executive management defines the
principles that govern operations for the approval of the Board, and also
enforces them. The Board obtains an annual report of the situation concerning
the company's operating risks and their management.
The company's internal control system and organisation of risk management and
responsibilities are defined so that internal control and risk management are
implemented and verified in the company comprehensively, efficiently and in
accordance with the targets set by the Board. Targets, methods and roles and
responsibilities related to the company's internal control and risk management
are described in documents of principles approved by the Board.
The CEO assisted by the executive management group is responsible for the
practical implementation of the company's risk management. The strategic risks
are identified as part of the company's annual strategy work. The company's
strategy presents the key risks at corporate level and their related risk
management. Risk monitoring, coordination and management are carried out in the
executive management Ggroup. The heads of units own the risks concerning
operations in their areas of responsibility, and are in charge of identifying,
assessing and managing risks, the efficiency of control measures and reporting
risks and non-conformities. Operative risk management is based on an annual
risk analysis carried out in connection with the drawing up of action plans,
and on the constant monitoring of risks. 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. The company applies a
comprehensive risk management system, which is being developed further.
Fingrid'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 company. Company's Board of Directors approves possible
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 company's internal audit examines risk management and internal control as a
party independent of the functions and processes. The internal auditor monitors
issues such as adherence to the guidelines of the company, acts and official
regulations, and reports his findings to the audit committee. The audit
committee of the Board of Directors examines the efficiency of internal control
and reports to the Board of Directors. The company's internal audit has been
outsourced to an independent external party. As part of internal control,
internal audit audited processes related to Fingrid's balance services,
financing, occupational safety, and comprehensive risk management. A
comprehensive audit plan for 2014 has been approved for internal audit.
The Board of Directors and the audit committee receive regular reports about
strategic risks, risks concerning financing and business counterparty risks.
The updated strategy is presented to the Board every August. The executive
management group receives regular reports about operative risks, risks
concerning financing and counterparty risks. Business units receive regular
reports about their own counterparty risks and operative risks.
If a significant risk or other significant unfavourable event is realised, if
necessary the effects and probability of the event is separately assessed.
Significant risks and factors of uncertainty for Fingrid and society
As part of its social responsibility, Fingrid has identified risks that have a
great impact on society. In selecting its strategic goals, Fingrid has taken
into account the management of risks affecting both society and the company.
The significant risks shared by Fingrid and society are major disturbance, lack
of confidence in the electricity market, environmental risk and electrical and
occupational safety risks.
One of the company's biggest business risks and the biggest risk in terms of
society is a major disturbance related to the functioning of the power system.
A widespread 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. Fingrid is prepared for a widespread
disturbance concerning Finland or the Nordic power system by making capital
investments in the transmission grid and in reserve power. In its strategy, the
company also focuses on the diverse utilisation of the operation control
system, expedited disturbance clearing and management of power shortage
situations. Fingrid also makes preparations for disturbance situations by means
of various reserves, procedural guidelines, contingency plans and exercises.
A loss of confidence in the electricity market is a significant risk for
Fingrid and society. This risk may be realised for example as a result of
insufficient transmission capacity or high prices of electricity. The company
aims to contribute to the integration of the European electricity market and to
secure the intensification of market mechanisms by constructing new
cross-border transmission connections whenever necessary and by publishing
market information which has a bearing on the transparency of the market.
From society's and Fingrid's point of view, the significant risks related to
environmental matters include environmental damage and failure to anticipate
environmental obligation set for operations. The impact of fuel- and oil leaks
on soil and water is seen as one of the most concrete risks. From the company's
point of view, a capital expenditure project delayed as a result of
environmental impact assessment can also be an environmental risk. The key
contingency measures for these environmental risks comprise proactive
assessment of environmental impact, monitoring of changes in legislation,
prevention of accidents by technical means, contractual terms related to
environmental issues and auditing.
Variations in weather and extreme weather phenomena related to climate change
may cause a need for new technical solutions, and they may influence the grid
operation and maintenance practices. Moreover, the construction of transmission
lines may become more complicated as a result of mild winters. All of these
factors can result in additional costs to the company.
From a point of view of society and Fingrid, electrical and occupational safety
risks are linked to the electrical safety of the transmission grid, especially
in connection with construction and repair work. The reason for a risk being
realised may be, for example, human error close to live components, an error or
accident occurring in construction work, damage or vandalism to live structures
or carelessness close to live components. The consequences of the realisation
of risk may be a serious hazardous situation or a hazardous situation
endangering many people, serious injury, sick leave, working incapacity,
invalidity or death. An event may also cause outages in the transmission of
electricity. Fingrid is constantly improving the safety of the transmission
grid by developing, for example, technical solutions, workshops, skills and
communications.
Significant risks for Fingrid
The most significant risks for Fingrid are an unfavourable trend in official
regulation, capital investments which have become unnecessary, unanticipated
capital investments, an unexpected increase in costs or reduction in income,
financing risks, personnel risks, reputation risks, risks related to
information technology and telecommunications and asset risks.
Fingrid's operations are subject to official regulation and supervised by the
Energy Authority. Risks related to an unfavourable trend in official
regulation, such as changes in the Finnish or European regulation or
legislation, can weaken the financial position of the company or its
opportunities to pursue the objectives related to the development of the
electricity market. The company aims to establish well-working co-operation and
interaction with the various stakeholders and to contribute actively to the
reports and task forces of authorities. Fingrid works within ENTSO-E, the
European Network of Transmission System Operators for Electricity, thus making
preparations for and contributing to changes in regulation.
Capital investments which have become unnecessary may be the result of issues
such as regional changes in electricity consumption, changes in electricity
production, changes in the international situation, changes in regulation or
technological changes. The objective is to avoid capital investments which have
become unnecessary by means of continuous dialogue and close co-operation with
customers, other transmission system operators and other stakeholders. Fingrid
draws up transparent, comprehensive and sustainable grounds for capital
investments, and updates the grid plans regularly. The company creates
flexibility in the capital investment programme and executes the projects in a
timely fashion.
Fingrid's major financial risks include an unforeseen increase in costs or
decrease in income. This could be caused by unexpected changes in market-based
costs. An increase in costs can be the result of the realisation of
counterparty risk, an increase in reserve costs, unexpected faults or sudden
changes in the area price of electricity. Correspondingly, a decrease in income
may be the result of a sharp decline in electricity consumption, realisation of
counterparty risk related to the service businesses, or a reduction in
transmission and congestion income. An unanticipated increase in costs or
decrease in income is restricted by enhancing financial control in the Group
and assessment of financial latitude. Fingrid can change the grid tariff
annually. Derivatives are used for hedging against changes in the price of
electricity. The counterparty risk related to obligations of parties having a
contractual relationship with Fingrid is limited contractually, by defining
limits and by regularly monitoring the financial position of the
counterparties.
The financial risks include currency risks, transaction risks, interest rate
risks, commodity risks, liquidity and refinancing risks and credit risks.
Financial risks can be caused by disturbances in the capital and money markets,
realisation of counterparty risks in terms of derivatives or investments, the
of realisation credit risks in operations or disturbances in payments traffic.
The risks are limited by means of a high and stable credit rating, and an even
maturity profile and diverse structure for sources of funding. The financial
risks are described in more detail in note 35 to the consolidated financial
statements (IFRS).
Personnel risks are related to maintaining competence. Personnel risks are
limited by the company's strategic long-term personnel planning, allocated
training programmes for personnel and high-quality communication with
stakeholders.
Reputation risk can be attributable to a number of reasons, such as serious
disturbances or accidents, changes in prices, expropriation of land areas or
delayed upgrades of the grid. These risks are reduced by means of effective
risk and change management as well as responsible, transparent and equitable
operations and active stakeholder efforts.
Risks related to information technology and telecommunications may be caused by
an accident in ICT hardware facilities, long-term inoperability of
telecommunications, or a serious failure in a critical ICT system where such a
failure poses a direct and significant impediment to the company's operations.
Such a situation may also be caused by human error or serious breach of data
security. The company aims to make contingencies for these risks so that it has
sufficient and solid ICT expertise and that ICT is secured in terms of the
facilities, telecommunications and systems. Contingency plans are drawn up for
the critical systems, and the company monitors and forecasts potential data and
cyber security threats.
Asset risks cover significant damage to Fingrid's assets, such as widespread
failures or failure in significant assets beyond repair. Other reasons for
asset risks can include significant and unanticipated factors, such as
demonstrations, earthquakes, natural disasters or war. Fingrid manages the
asset risk through means such as preventive maintenance management,
comprehensive insurance policies for the key grid components, detailed
definition of projects and maintenance management, stringent quality control
and the use of proven technology and suppliers.
Significant risks for society
Risks posed to society by Fingrid's operations are delayed capital investments
and long-term restrictions in transmission capacity.
The reason for delayed capital investments may be, for example, changes in the
economic situation or consumption and production, a postponement of the permit
process, lack of resources or strike. Such postponement may cause restrictions
in the electricity market whereby the market fails to develop or operate
efficiently. The company carefully plans and builds key projects to strengthen
the cross-border transmission connections and the grid, and takes into account
the long-term effects on the market.
Long-term transmission capacity restrictions may be caused by, for example,
technical failures or problems with power system security. Restrictions or
outages on power transmission may inflict economic disadvantage on customers
and society. The restrictions are controlled 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 timing the outages so, that they
impose a minimum of economic disadvantage on society.
Corporate responsibility
Fingrid's corporate responsibility management is founded on the company's
strategy. Corporate responsibility is guided by the Code of Conduct of the
company. The key objectives of corporate responsibility have been set by means
of assessing what is essential. Corporate responsibility perspectives and
targets are involved in strategic work and operational planning. Responsibility
objectives are also the basis for the remuneration of the executive management
group and personnel.
In 2013, responsibility perspectives were linked more strongly to the company's
processes, responsibility has been introduced as part of operational planning
and reporting guidelines have been further developed. Success is regularly
measured. In 2013, Fingrid succeeded, for example, in ensuring the system
security of the transmission grid, implementing and monitoring the responsible
operating model of the procurement chain. Furthermore the company succeeded
mitigating the negative impacts on land use and landscape, and making service
providers and contractors committed to environmentally responsible procedures.
Responsibility management and reporting takes into account the requirements of
state ownership, and other recommendations ensuring the company's good
governance. In reporting, the international GRI G3.0 reporting guidelines are
applied.
A future objective is to develop responsibility requirements throughout the
delivery chain, to monitor their attainment and intervene in possible problems.
Environmental matters
The transmission grid is part of the necessary basic structure of modern
society visible in our living environment. Power lines particularly impact land
use and the landscape, and have both positive and negative effects on nature
and biodiversity. The key environmental perspectives at substations and reserve
power plants concern the storage and handling of fuels and chemicals. When we
improve the transmission system, the goal is to achieve minimum electricity
transmission losses in a cost effective manner, thus enhancing energy
efficiency. We also regard a reduction in greenhouse gas emissions as a major
consideration. The efficient re-use and recycling of building and demolition
waste is important in all construction work.
Fingrid's environmental responsibility is controlled by the company's land use
and environmental policy. Environmental targets concern mitigating the impact
on land use and landscape and on ensuring that service providers are committed
to operating practices that are responsible from an environmental perspective.
Correct operating practices are ensured by means of contracts, training and
monitoring. Environmental matters are reported in the annual report and on the
website.
Fingrid's reserve power plants are subject to an environmental permit and
covered by the EU's emissions trading scheme. A total of 5,566 (21,317) units
(tCO2) of emission allowances were returned. Emissions trading had minor
financial significance for Fingrid.
In 2013, the operating model for waste management was renewed, which will
ensure that the waste re-use and recycling rate is kept as efficient as
possible. Fingrid has a total of 24,872 (26,214) 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. 1.7 (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 32 (29) 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.
Legal proceedings and proceedings by authorities
Pending are procedures in accordance with EC Regulation 714/2009 on conditions
for access to the network for cross-border exchanges in electricity and the new
Finnish Electricity Market Act (588/2013). The EC Regulation requires national
regulating authorities to make a decision on certifying the independence of
transmission grid owners. In addition to this, the new Electricity Market Act
requires Fingrid to apply for a new electricity network licence from the Energy
Authority within one month of when the Energy Authority's decision on
certification of the independence of the grid owner has entered into force.
Fingrid appealed to the Market Court against the decision of the Energy
Authority on 23 November 2011: the confirmation of methods concerning the
setting of the grid owner's income from grid operations and payments for
transmission service for the control period starting 1 January 2012 and ending
on 31 December 2015. The Market Court ejected Fingrid's appeal on 21 December
2012. Fingrid has appealed the decision of the Market Court to the Supreme
Administrative Court on 21 January 2013 .
Events after the closing of the financial year and estimate of future outlook
At the end of 2013, commissioning tests of the direct current connection
between Finland and Estonia, EstLink 2, were begun. The connection was taken
into commercial use on 7 February 2014, when it was handed over to the clients.
The connection is jointly owned by the Finnish and Estonian main grid companies
Fingrid and Elering.
The company increased its transmission grid tariffs by eight per cent from 1
January 2014; consequently, Fingrid Group's profit for the financial period
2014 excluding the changes in the fair value of derivatives and before taxes is
expected to improve from the previous year. The uncertainty involved in reserve
costs, congestion income and in cross-border income on the interconnections
from Russia makes it difficult to anticipate Fingrid's financial result for the
entire year. Fingrid will continue the implementation of its long-term
investment programme of some 1.5 billion euros. If necessary, the company will
increase the amount of external funding in order to finance investments. The
company's ability to take care of its liabilities is expected to remain stable.
Fingrid has decided to harmonise the accounting principles for derivatives and,
from the beginning of the year 2014, has ceased IFRS-based hedge accounting for
electricity derivatives.
The Board of Director's Proposal For The Distribution of Profit
Fingrid Oyj's distributable funds in the financial statements are
104,202,141.17 euros. Since 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
- 97,491,426.67 euros to be carried over as unrestricted equity.
Annual General Meeting 2014
Fingrid Oyj's Annual General Meeting is planned to take place on 6 May 2014 in
Helsinki.
Helsinki, 14 February 2014
Fingrid Oyj
Board of Directors
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1 Jan - 31 1 Jan - 31
Dec 2013 Dec 2012
--------------------------------------------------------------------------------
Notes 1,000 € 1,000 €
--------------------------------------------------------------------------------
TURNOVER 2 543,088 522,064
Other operating income 3 4,071 3,835
Raw materials and consumables used 4 -269,526 -267,103
Employee benefits expenses 5 -22,847 -22,135
Depreciation 6 -81,704 -75,665
Other operating expenses 7, 8, -57,802 -66,376
9
--------------------------------------------------------------------------------
OPERATING PROFIT 115,280 94,621
Finance income 10 1,249 3,126
Finance costs 10 -29,986 -10,293
--------------------------------------------------------------------------------
Finance income and costs -28,736 -7,167
Portion of profit of associated companies 709 845
PROFIT BEFORE TAXES 87,253 88,299
Income taxes 11 3,446 -21,269
--------------------------------------------------------------------------------
PROFIT FOR THE FINANCIAL YEAR 90,699 67,029
================================================================================
OTHER COMPREHENSIVE INCOME
Items that may subsequently be reclassified to
profit and loss
Cash flow hedges 12 -3,992 6,112
Translation reserve 12 -646 92
Available-for-sale financial assets 12 -2 1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 86,059 73,235
================================================================================
Profit attributable to:
Equity holders of parent company 90,699 67,029
Total comprehensive income attributable to:
Equity holders of the company 86,059 73,235
Earnings per share, € 13 27,278 20,159
Earnings per share for profit attributable to
the equity holders of the parent company:
Undiluted earnings per share, € 13 27,278 20,159
Diluted earnings per share, € 13 27,278 20,159
Income tax related to other comprehensive income is presented in notes 12.
Notes are an integral part of the financial statements.
CONSOLIDATED BALANCE SHEET
ASSETS 31 Dec 2013 31 Dec 2012
---------------------------------------------------------------------------
Notes 1,000 € 1,000 €
---------------------------------------------------------------------------
NON-CURRENT ASSETS
Intangible assets:
Goodwill 15 87,920 87,920
Other intangible assets 16 92,751 91,085
---------------------------------------------------------------------------
180,671 179,005
Property, plant and equipment: 17
Land and water areas 14,224 13,933
Buildings and structures 142,061 126,385
Machinery and equipment 582,317 527,112
Transmission lines 788,389 684,187
Other property, plant and equipment 8,525 8,188
Advance payments and purchases in progress 87,910 124,870
---------------------------------------------------------------------------
1,623,426 1,484,674
Investments: 18
Equity investments in associated companies 10,416 8,292
Available-for-sale investments 300 302
---------------------------------------------------------------------------
10,716 8,594
Receivables:
Derivative instruments 30 42,337 81,678
Deferred tax assets 27 13,643 21,683
Other receivables 20 4,313
---------------------------------------------------------------------------
60,293 103,361
TOTAL NON-CURRENT ASSETS 1,875,107 1,775,634
---------------------------------------------------------------------------
CURRENT ASSETS
Inventories 19 11,397 10,443
Derivative instruments 30 2,128 3,884
Trade receivables and other receivables 21 76,021 88,251
Financial assets recognised in 22 194,973 207,426
income statement at fair value
Cash and cash equivalents 23 22,339 6,411
TOTAL CURRENT ASSETS 306,858 316,415
---------------------------------------------------------------------------
TOTAL ASSETS 2,181,965 2,092,049
===========================================================================
===========================================================================
Notes are an integral part of the financial statements.
CONSOLIDATED BALANCE SHEET
----------------------------------------------------------------------
EQUITY AND LIABILITIES 31 Dec 2013 31 Dec 2012
Notes 1,000 € 1,000 €
----------------------------------------------------------------------
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
OF THE PARENT COMPANY
Share capital 26 55,922 55,922
Share premium account 26 55,922 55,922
Revaluation reserve 26 -11,559 -7,565
Translation reserve 26 -3 643
Retained earnings 26 542,416 464,856
----------------------------------------------------------------------
TOTAL EQUITY 642,699 569,788
----------------------------------------------------------------------
NON-CURRENT LIABILITIES
Deferred tax liabilities 27 119,775 152,579
Borrowings 28 975,295 1,032,199
Provisions 29 1,735 1,869
Derivative instruments 30 38,757 30,127
----------------------------------------------------------------------
1,135,561 1,216,773
CURRENT LIABILITIES
Borrowings 28 318,695 211,932
Derivative instruments 30 15,508 10,770
Trade payables and other liabilities 31 69,500 82,786
----------------------------------------------------------------------
403,704 305,488
TOTAL LIABILITIES 1,539,265 1,522,261
----------------------------------------------------------------------
TOTAL EQUITY AND LIABILITIES 2,181,965 2,092,049
======================================================================
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 Revalua Transla Retaine Total
capita premium tion tion d equity
l account reserve reserve earning
s
--------------------------------------------------------------------------------
Balance at 1 Jan 55,922 55,922 -13,679 551 408,586 507,304
2012
--------------------------------------------------------------------------------
Comprehensive
income
Profit or loss 26 67,029 67,029
Other comprehensive
income
Cash flow hedges 12 6,112 6,112
Translation reserve 12 92 92
Items related to 12 1 1
long-term asset
items
available-for-sale
--------------------------------------------------------------------------------
Total other 6,113 92 6,205
comprehensive
income adjusted by
tax effects
--------------------------------------------------------------------------------
Total comprehensive income 6,113 92 67,029 73,235
--------------------------------------------------------------------------------
Transactions with
owners
Dividends relating 26 -10,751 -10,751
to 2011
--------------------------------------------------------------------------------
Balance at 31 Dec 55,922 55,922 -7,565 643 464,865 569,788
2012
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Balance at 1 Jan 55,922 55,922 -7 565 643 464,865 569,788
2013
--------------------------------------------------------------------------------
Comprehensive
income
Profit or loss 26 90,699 90,699
Other comprehensive
income
Cash flow hedges 12 -3,992 -3,992
Translation reserve 12 -646 -646
Items related to 12 -2 -2
long-term asset
items
available-for-sale
--------------------------------------------------------------------------------
Total other -3,994 -646 - 4,640
comprehensive
income adjusted by
tax effects
--------------------------------------------------------------------------------
Total comprehensive -3,994 -646 90,699 86,059
income
--------------------------------------------------------------------------------
Transactions with
owners
Dividends relating 26 -13,148 -13,148
to 2012
--------------------------------------------------------------------------------
Balance at 31 Dec 2013 55,922 55,922 -11,559 -3 542,416 642,699
--------------------------------------------------------------------------------
Notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT 1 Jan - 31 Dec 1 Jan - 31 Dec
2013 2012
Notes 1,000 € 1,000 €
--------------------------------------------------------------------------------
Cash flow from operating activities:
Profit for the financial year 26 90,699 67,029
Adjustments:
Business transactions not involving a 36 85,818 86,206
payment transaction
Interest and other finance costs 29,986 10,293
Interest income -1,243 -3,120
Dividend income -7 -6
Taxes -3,446 21,269
Financial assets recognised at fair 25 -488
value
Changes in working capital:
Change in trade receivables and other 10,597 -22,712
receivables
Change in inventories -954 -3,736
Change in trade payables and other -6,572 22,742
liabilities
Change in provisions 29 -134 -29
Interests paid -25,078 -21,787
Interests received 1,218 3,556
Taxes paid 11 -22,071 -14,586
--------------------------------------------------------------------------------
Net cash flow from operating activities 158,838 144,633
Cash flow from investing activities:
Purchase of property, plant and 17 -222,272 -139,611
equipment
Purchase of intangible assets 16 -4,699 -5,106
Purchase of other assets 18 -2,001 0
Proceeds from sale of property, plant 17 3,980 612
and equipment
Dividends received 10 306 1,335
Interests paid 10 - 1,681 -3,136
--------------------------------------------------------------------------------
Net cash flow from investing activities -226,367 -145,905
Cash flow from financing activities:
Withdrawal of loans 528,640 643,535
Repayment of loans -444,489 -621,516
Dividends paid 26 -13,148 -10,751
--------------------------------------------------------------------------------
Net cash flow from financing activities 71,003 11,269
Net change in cash and cash equivalents 3,474 9,996
Cash and cash equivalents 1 Jan 213,837 203,841
Cash and cash equivalents 31 Dec 22, 23 217,311 213,837
--------------------------------------------------------------------------------
Notes are an integral part of the financial statements.
CONSOLIDATED KEY 2013 2012 2011 2010 2009
INDICATORS
--------------------------------------------------------------------------------
IFRS IFRS IFRS IFRS IFRS
--------------------------------------------------------------------------------
Extent of operations
Turnover million 543,1 522.1 438.5 456.3 358.9
€
Capital expenditure, million 225,3 139.0 244.4 144.1 135.6
gross €
- of turnover % 41,5 26.6 55.7 31.6 37.8
Research and million 1,8 1.5 1.8 1.6 1.3
development expense €
- of turnover % 0,3 0.3 0.4 0.3 0.4
Personnel, average 277 269 263 260 251
Personnel, end of 287 275 266 263 260
year
Salaries and bonuses, million 19,0 18.2 17.2 17.2 16.0
total €
Profitability
Operating profit million 115,3 94.6 56.6 74.4 50.8
€
- of turnover % 21,2 18.1 12.9 16.3 14.1
Profit before taxes million 87,3 88.3 34.2 56.3 33.2
€
- of turnover % 16,1 16.9 7.8 12.3 9.3
Return on investment % 6,3 5.6 3.6 5.1 3.9
(ROI)
Return on equity % 15,0 12.4 6.5 8.7 5.7
(ROE)
Financing and
financial position
Equity ratio % 29,5 27.3 25.7 28.6 27.2
Interest-bearing net million 1076,7 1,030.3 1,020.2 855.2 797.5
borrowings €
Share-specific
indicators
Earnings per share € 27,277.9 20,159.2 9,924.1 12,561.9 7,417.4
Dividend, series A € 2,018.26 5,115.89 3,962.52 2,018.26 2,022.29
shares *
Dividend, series B € 2,018.26 2,018.26 2,018.26 2,018.26 2,022.29
shares *
Dividend payout % 7,4 25.4 39.9 16.1 27.3
ratio, A-shares
Dividend payout % 7,4 10.0 20.3 16.1 27.3
ratio, B-shares
Equity per share € 193,293 171,365 152,573 154,654 134,676
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 investment, % = (profit before taxes + interest and other finance
costs) / ((balance sheet total - non-interest bearing liabilities (average for
the year)) x 100
Return on equity, %= profit for the financial year / shareholders' equity
(average for the year) x 100
Equity ratio, %= shareholders' equity / (balance sheet total - advances
received) x 100
Earnings per share, €= profit for the financial year / average number of shares
Dividends per share, € = dividends for the financial year / average number of
shares
Dividend payout ratio, % = (dividend / share ) / (earnings / share)
Equity per share, € = shareholders' equity / number of shares at closing date
Interest-bearing net borrowings, € = interest-bearing borrowings - cash and
cash equivalents
Net gearing ratio, % = (interest-bearing borrowings - cash and cash
equivalents) / shareholders' equity x 100
KEY INDICATORS PER QUARTER
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Q4/201 Q3/201 Q2/201 Q1/201 Q4/201 Q3/201 Q2/201 Q1/201
3 3 3 3 2 2 2 2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Turnover M€ 155.1 107.8 109.5 170.6 153.7 106.0 92.7 169.6
Operating M€ 36.5 9.9 -10.2 79.1 38.5 7.1 -5.1 54.2
profit
Operating % 23.5 9.2 -9.3 46.4 25.0 6.7 -5.5 32.0
profit
Q4/201 Q3/201 Q2/201 Q1/201 Q4/201 Q3/201 Q2/201 Q1/201
1 1 1 1 0 0 0 0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Turnover M€ 107.9 88.0 91.0 151.6 138.0 85.6 87.5 145.2
Operating M€ 17.1 -4.3 2.0 41.7 23.1 4.5 5.9 40.9
profit
Operating % 15.8 -4.8 2.2 27.5 16.7 5.3 6.8 28.1
profit
INVESTMENTS, M€
-------------------------------------------------
1-12/2013 1-12/2012
-------------------------------------------------
-------------------------------------------------
Grid investments 208.5 94.4
Substations 95.3 44.0
Transmission lines 113.2 50.4
Investments in gas turbines 4.2 25.6
Existing gas turbine plants 0.4 2.3
New gas turbine plants 3.8 23.3
Other investments 12.6 19.0
ICT 9.4 10.7
Other 3.2 8.3
-------------------------------------------------
-------------------------------------------------
Total investments 225.3 139.0
RESEARCH AND DEVELOPMENT EXPENSES, M€
----------------------------------------------------------- 1-12/2013 1-12/2012
-----------------------------------------------------------
Research and development expenses 1.8 1.5
PERSONNEL
---------------------------------
1-12/2013 1-12/2012
---------------------------------
---------------------------------
Average 277 269
At year-end 287 275
COMMITMENTS AND CONTINGENT LIABILITIES, 1,000 € 2013 2012
-------------------------------------------------------------------------
Pledges
Pledge covering property lease agreements 9 47
Pledged account in favour of the Customs Office 280 280
Pledged account covering electricity exchange purchases 4,313
-------------------------------------------------------------------------
4,601 327
Unrecorded investment commitments 137,441 217,193
Other financial liabilities
Counterguarantee in favour of an associated company 1,700 1,700
Rent security deposit, guarantee 38
Credit facility commitment fee and commitment fee:
Commitment fee for the next year 565 459
Commitment fee for subsequent years 1,170 1,218
-------------------------------------------------------------------------
3,473 3,378
DERIVATIVE INSTRUMENTS, 1 000 €
--------------------------------------------------------------------------------
- 2013
--------------------------------------------------------------------------------
Interest rate and currency derivatives Fair Fair Fair net Nominal
value value value value
Pos. Neg. 31.12.13 31.12.13
31.12. 31.12.1
13 3
--------------------------------------------------------------------------------
39,830 -9,225 30,605 366,033
--------------------------------------------------------------------------------
Cross-currency swaps -872 -872 135,347
--------------------------------------------------------------------------------
Forward contracts 11,939 -8,036 3,904 471,000
--------------------------------------------------------------------------------
Interest rate swaps 350,000
--------------------------------------------------------------------------------
Interest rate options, bought 51,770 -18,133 33,637 1,322,381
================================================================================
--------------------------------------------------------------------------------
Electricity derivatives Fair Fair Fair net Nominal
value value value value
Pos. Neg. 31.12.13 31.12.13
31.12. 31.12.1
13 3
--------------------------------------------------------------------------------
Electricity forward contracts, designated -18,091 -18,091 1.76
as hedge accounting NASDAQ OMX
Commodities
--------------------------------------------------------------------------------
Electricity forward contracts, not -20,117 -20,117 2.21
designated as hedge accounting NASDAQ OMX
Commodities
--------------------------------------------------------------------------------
Total -38,208 -38,208 3.97
--------------------------------------------------------------------------------
DERIVATIVE INSTRUMENTS, 1 000 €
--------------------------------------------------------------------------------
-
2012
--------------------------------------------------------------------------------
Interest rate and currency derivatives Fair Fair Fair net Nominal
value value value value
Pos. Neg. 31.12.12 31.12.12
31.12.1 31.12.1
2 2
--------------------------------------------------------------------------------
78,713 -6,621 72,092 418,578
--------------------------------------------------------------------------------
Cross-currency swaps -90 -90 2,837
--------------------------------------------------------------------------------
Forward contracts 15,032 -9,733 5,299 406,000
--------------------------------------------------------------------------------
Interest rate swaps 2 2 810,000
--------------------------------------------------------------------------------
Interest rate options, bought 93,747 -16,444 77,303 1,637,415
================================================================================
--------------------------------------------------------------------------------
Electricity derivatives Fair Fair Fair net Nominal
value value value value
Pos. Neg. 31.12.12 31.12.12
31.12.1 31.12.1
2 2
--------------------------------------------------------------------------------
Electricity forward contracts, designated -16,844 -16,844 2.68
as hedge accounting NASDAQ OMX
Commodities
--------------------------------------------------------------------------------
Electricity forward contracts, not -10,450 -10,450 1.20
designated as hedge accounting NASDAQ
OMX Commodities
--------------------------------------------------------------------------------
Total -27,294 -27,294 3.88
--------------------------------------------------------------------------------
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 2013.
Maturity of derivative contracts
Nominal value, 2014 2015 2016 2017 2018 2018+ Total
1,000 €
--------------------------------------------------------------------------------
Interest rate 36,000 30,000 70,000 30,000 105,000 200,000 471,000
swaps
Interest rate 130,000 220,000 350,000
options
Cross-currency 40,081 90,714 148,081 51,285 35,872 366,033
swaps
Forward 134,702 645 135,347
contracts
--------------------------------------------------------------------------------
Total 340,784 341,359 218,081 81,285 105,000 235,872 1,322,381
================================================================================
TWh 2014 2015 2016 2017 2018 2018+ Total
--------------------------------------------------------------------------------
Electricity 1.25 1.14 0.79 0.53 0.26 3.97
derivatives
--------------------------------------------------------------------------------
Total 1.25 1.14 0.79 0.53 0.26 3.97
================================================================================
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
--------------------------------------------------------------------------------
LocalTapiola Mutual Pension Insurance 150 4.51 2.01
Company
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
LocalTapiola General Mutual Insurance 50 1.50 0.67
Company
--------------------------------------------------------------------------------
LocalTapiola Mutual Life Assurance Company 47 1.41 0.63
--------------------------------------------------------------------------------
If P&C Insurance Company Ltd 25 0.75 0.33
--------------------------------------------------------------------------------
ImatranSeudunSähköOy 10 0.30 0.13
--------------------------------------------------------------------------------
Fennia Life Insurance Company 6 0.18 0.08
--------------------------------------------------------------------------------
Total 3,325 100.00 100.00
--------------------------------------------------------------------------------
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