2017-02-17 10:00:03 CET
2017-02-17 10:00:03 CET
REGULATED INFORMATION
Fingrid Oyj - Financial Statement Release
Fingrid Group’s Financial Statements Bulletin January–December 2016.
Strong financials - transformation of the power system advances
Helsinki, Finland, 2017-02-17 10:00 CET (GLOBE NEWSWIRE) -- Fingrid Oyj
Annual Financial Report 17.2.2017 at 11:00 EET
Fingrid’s 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 October - December 2016
-- The Group’s turnover in October - December was EUR 178.0 (172.5) million
-- The Group’s operating profit in October - December was EUR 67.4 (57.4)
million
-- The Group’s profit in October - December was EUR 46.4 (36.2) million
-- Cash flow from the Group’s operations, after capital expenditure, in
October - December was EUR 10.6 (14.6) million
-- Capital expenditure in October - December amounted to EUR 40.1 (47.1)
million
Financial development in January - December 2016
-- The Group’s turnover in January - December was EUR 586.1 (600.2) million
-- The Group’s operating profit was EUR 192.0 (162.6) million
-- The consolidated profit for the year was EUR 138.7 (103.6) million
-- Cash flow from the Group’s operations, after capital expenditure, was EUR
93.6 (80.3) million
-- Interest-bearing net borrowings totalled EUR 1,028.0 (1,026.9) million
-- Capital expenditure totalled EUR 146.7 (147.5) million
-- The equity ratio was 36.4 (33.5) per cent
-- Earnings per share totalled EUR 41,706 (31,151)
KEY FIGURES 1-12/16 1-12/15 change 10-12/16 10-12/15 change
% %
--------------------------------------------------------------------------------
Turnover €M 586.1 600.2 -2.3 178.0 172.5 3.2
--------------------------------------------------------------------------------
Capital €M 146.7 147.5 -0.5 40.1 47.1 -14.8
expenditure,
gross
--------------------------------------------------------------------------------
- of turnover % 25.0 24.6 22.5 27.3
--------------------------------------------------------------------------------
Research and €M 2.4 1.8 31.3 0.8 0.7 12.1
development
expenses
--------------------------------------------------------------------------------
- of turnover % 0.4 0.3 0.5 0.4
--------------------------------------------------------------------------------
Average number 336 319 5.4 334 315 6.0
of employees
--------------------------------------------------------------------------------
Number of 334 315 6.0 334 315 6.0
employees at
end of period
--------------------------------------------------------------------------------
Salaries and €M 22.7 21.3 6.6 6.4 5.6 15.2
bonuses, total
--------------------------------------------------------------------------------
Operating €M 192.0 162.6 18.1 67.4 57.4 17.5
profit
--------------------------------------------------------------------------------
- of turnover % 32.8 27.1 37.9 33.3
--------------------------------------------------------------------------------
Profit before €M 173.9 129.3 34.4 58.0 45.1 28.6
taxes
--------------------------------------------------------------------------------
- of turnover % 29.7 21.5 32.6 26.2
--------------------------------------------------------------------------------
Profit for the €M 138.7 103.6 33.9 46.4 36.2 28.2
period
--------------------------------------------------------------------------------
Comprehensive €M 144.8 109.1 32.7 47.7 37.5 27.2
income for the
period
--------------------------------------------------------------------------------
Return on % 10.4 8.7
investments
(ROI)
--------------------------------------------------------------------------------
Return on % 18.8 15.0
equity (ROE)
--------------------------------------------------------------------------------
Equity ratio % 36.4 33.5 36.4 33.5
--------------------------------------------------------------------------------
Interest-bearin €M 1,028.0 1,026.9 0.1 1,028.0 1,026.9
g net
borrowings
--------------------------------------------------------------------------------
Net gearing 1.3 1.4 1.3 1.4
--------------------------------------------------------------------------------
Earnings per € 41,706.12 31,150.79 33.9 13,942.38 10,872.71 28.2
share
--------------------------------------------------------------------------------
Dividend, € 37536.09 33,686.24
Series A *
shares
--------------------------------------------------------------------------------
Dividend, € 16038.49 16,038.49
Series B *
shares
--------------------------------------------------------------------------------
Equity per € 230,301 213,822 7.7
share
--------------------------------------------------------------------------------
Dividend payout % 90.0 108.1
ratio, A
shares
--------------------------------------------------------------------------------
Dividend payout % 38.5 51.5
ratio, B
shares
--------------------------------------------------------------------------------
Number of
shares
--------------------------------------------------------------------------------
– Series A qty 2,078 2,078 2,078 2,078
shares
--------------------------------------------------------------------------------
– Series B qty 1,247 1,247 1,247 1,247
shares
--------------------------------------------------------------------------------
Total qty 3,325 3,325 3,325 3,325
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
*The Board of Directors’ proposal to the
Annual General Meeting
Jukka Ruusunen, President & CEO of Fingrid, on the year 2016:
The journey towards a new, more electricity-dominated energy system continues
to gain momentum. During 2016, two important records were broken in the Finnish
electricity system. In early January, the consumption of electricity throughout
Finland reached the level of 15,100 megawatts.
Another national record was broken in August, when the production of wind power
in Finland exceeded 1,200 megawatts. Later in the year, it even reached 1,300
megawatts. This is concrete proof of how wind power is gaining importance in
our power system. Wind forecasts are an increasingly important daily tool for
Fingrid’s control room.
All in all, 2016 was a very busy and successful year for us. System security of
the transmission grid stayed at an excellent level. We also succeeded in
serving the electricity market by securing the efficient use of transmission
capacity. Power flowed freely from one country to another, driven by price
signals. We have made major efforts to improve the reliability of cross-border
transmission connections, and this work is now bearing fruit: there are
significantly fewer and shorter disturbances.
We have put forth ideas about how to control the future power system. We are
strong proponents of a market-based system, and we believe the best solutions
will be found when the operators, driven by market prices, can make decisions
based on their own priorities. Demand side management is one area where answers
are being sought to respond to rapid changes in the production or consumption
of electricity, even within seconds.
Fingrid plays an active part in this development. Pilot schemes are rapidly
advancing to practical, commercial solutions. Roughly half of our new frequency
controlled reserves for disturbances come from demand side management and the
other half from electricity production. This doubles the amount of demand side
management compared with the previous year. We seek to promote consumers’
possibilities to actively participate in the electricity market by developing a
real-time market, by building the datahub to support the markets and by
actively participating in the work of the national smart grid working group.
Fingrid has carried out capital investments at a brisk pace. In 2016 we had 27
substation projects and 13 transmission line projects underway. It is an
indication of the organisation’s excellent capabilities that all the projects
have progressed according to the set schedules and budget. Furthermore, we have
maintained excellent cost efficiency, as proven by the great results in
international benchmarking studies. The flagship of our capital investments is
the 400 kilovolt ‘Coastal Power Line’ from Pori to Oulu, Fingrid’s all-time
biggest investment, costing EUR 260 million and completed at the end of the
year. This transmission connection will play a key role when building up a more
environmentally sustainable power system not just in Finland, but in all of the
Baltic Sea area. The next mega project is already ahead of us: in late 2016 we
agreed with our Swedish colleagues on building an AC transmission connection
between our countries. This is a project of national importance.
Making the new energy system of the future a reality requires international
cooperation, where the overall rules are laid down in Brussels. Concrete
co-operation with the other Nordic countries and the Baltics is reflected daily
in our operations. Even if there are bumps in the road at times, the
collaboration constantly produces new solutions that help to maintain high
levels of system security and promote well-functioning markets. In the Baltic
Sea region, this has for a long time been based on close inter-TSO
co-operation. In future, political decision makers should bear their
responsibility for this work better.
Our finances are in good shape, despite significant capital expenditure and
operational development in recent years. Fingrid’s profitability was stronger
than projected. The consolidated turnover amounted to EUR 586.1 (600.2) million
and profit for the financial period was EUR 138.7 (103.6) million. The
financial result was positively impacted by raises in grid pricing, increased
consumption of electricity and cross-border transmission as well as decreased
loss power and reserve costs.
Accounting principles
The information published in this report is based on Fingrid’s audited
financial statements for 2016, published in connection with this bulletin.
Financial result
In preparing these consolidated financial statements, the Group has followed
the same standards as in 2015.
The Group’s turnover was EUR 586.1 (600.2) million. Grid service income
increased to EUR 382.4 (333.0) 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. Electricity consumption totalled 85.1 (82.5) terawatt hours.
Fingrid transmitted 68.6 (67.9) terawatt hours of electricity in its grid,
which represents 77.5 (77.1) per cent of all electricity transmitted in
Finland. Imbalance power sales amounted to EUR 153.9 (137.1) million. The
growth in imbalance power sales resulted from an 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 24.0
(11.2) million. This was due to the new dynamic tariff structure that was
introduced as well as to increased imports from Russia. Fingrid’s congestion
income from connections between Finland and Sweden declined to EUR 37.5 (86.8)
million due to weakened hydrological conditions, which significantly decreased
the number of congestion hours. Fingrid’s congestion income from the links
between Finland and Estonia amounted to EUR 2.4 (4.2) million. Congestion
income will no longer be reported in Fingrid’s turnover as of the beginning of
2016. Other operating income totalled EUR 12.7 (5.2) million. The growth in
other operating income mainly resulted from the EUR 6.3 million in recognised
congestion income, in compliance with the regulation concerning the costs from
maintaining cross-border capacity and countertrade.
The Group’s total costs amounted to EUR 442.2 (418.6) million. Imbalance power
costs increased from the previous year’s level to EUR 121.7 (98.2) million, due
to the increase in the volume and price of imbalance power. Loss power costs
amounted to EUR 57.6 (68.6) million. The declining loss power costs have been
affected by the lower price of loss power procurement and the slightly lower
volume of loss power. The average price of loss power procurement was EUR 43.87
(48.22) per megawatt hour. The cost of reserves to safeguard the grid’s system
security decreased to EUR 50.5 (54.7) million. The reason for the decreased
cost was an interruption in the procurement of the automatic frequency control
reserve until August, 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 99.2 (94.1) million.
Grid maintenance costs grew to EUR 24.1 (19.2) million. The maintenance costs
were increased by the periodical felling of trees around substations and the
trimming of trees at the edges of transmission line right-of-ways. Personnel
costs increased as the payroll expanded, due to new operations and increased
statutory duties and due to higher employer contributions in additional
personnel expenses, and amounted to EUR 28.6 (25.8) million.
Turnover and other operating income, Jan-Dec/1 Jan-Dec/1 Oct-Dec/1 Oct-Dec/1
€ million 6 5 6 5
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Grid service revenue 382.4 333.0 113.1 100.8
Sales of imbalance power 153.9 137.1 47.4 37.9
Cross-border transmission income 24.0 11.2 10.0 2.9
Finland-Estonia congestion income* 4.2 0.8
Finland-Sweden congestion income* 86.8 22.0
Peak load capacity income** 7.0 7.6 1.8 1.8
ITC income 13.2 15.3 3.8 4.5
Other turnover 5.6 5.1 2.0 1.8
Other operating income 12.7 5.2 2.0 3.0
--------------------------------------------------------------------------------
Turnover and other income total 598.8 605.4 180.0 175.5
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Costs, € million Jan-Dec Jan-Dec Oct-Dec Oct-Dec
/16 /15 /16 /15
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Purchase of imbalance power 121.7 98.2 37.5 29.6
Cost of loss energy 57.6 68.6 12.8 17.8
Depreciation 99.2 94.1 25.4 24.2
Cost of reserves 50.5 54.7 13.8 12.6
Personnel costs 28.6 25.8 8.4 6.8
Maintenance management costs 24.1 19.2 9.1 7.9
Cost of peak load capacity** 6.6 7.2 1.6 1.4
ITC charges 12.6 9.4 4.2 2.0
Estlink grid rents
Other costs 41.1 41.3 10.5 11.4
--------------------------------------------------------------------------------
Costs total 442.2 418.6 123.4 113.7
--------------------------------------------------------------------------------
Operating profit excluding the change in the 156.6 186.8 56.6 61.9
fair value of commodity derivatives
--------------------------------------------------------------------------------
Operating profit of Group, IFRS 192.0 162.6 67.4 57.4
--------------------------------------------------------------------------------
* Due to a change in congestion income reporting, congestion income 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 was EUR 192.0 (162.6) million. To recognise
changes in the fair value of electricity derivatives and the currency
derivatives related to capital expenditure and other operating expenses, EUR
35.4 (-24.3) million was recorded in operating profit.
Net financial costs in accordance with IFRS were EUR 18.7 (33.7) million,
including a change of EUR -0.3 (-13.3) million in the fair value of financial
derivatives.
The Group’s profit before taxes was EUR 173.9 (129.3) million. The biggest
differences from the last year are explained by changes in the market value of
derivatives (EUR +72.7 million), the growth in grid service income (EUR +49.4
million), and a change in the reporting of congestion income (effect EUR -84.6
million). The profit for the year was EUR 138.7 (103.6) million. The equity to
total assets ratio increased and was 36.4 (33.5) per cent at the end of the
review period.
The parent company’s turnover was EUR 581.4 (592.4) million, profit for the
financial year EUR 103.9 (123.7) million and the distributable funds EUR 176.0
million.
By the company’s own calculations, the return according to the regulatory model
that governs grid operations amounts to a deficit of around EUR 40 million for
2016.
Capital expenditure and maintenance
Fingrid’s grid investment programme improves system security and promotes the
electricity markets as well as the implementation of the national energy and
climate strategy. The annual capital expenditure in the grid has remained
extensive.
The company’s total capital expenditure in 2016 amounted to EUR 146.7 (147.5)
million. Of that amount, a total of EUR 135.8 (138.4) million was invested in
the transmission grid and EUR 3.3 (0.7) million in reserve power. ICT
investments totalled EUR 7.5 (8.4) million. A total of EUR 2.4 (1.8) million
was used for R&D projects during the year under review.
At the end of 2016, Fingrid had thirteen 400 kilovolt substation sites and 67
kilometres of 400 kilovolt power line contracts as well as a significant number
of 110 kilovolt substation and power line projects under construction.
Fingrid’s all-time biggest investment, the 400 kilovolt ‘Coastal Power Line’
transmission connection from Pori to Oulu was completed at the end of 2016.
With the completion of this power line on the western coast of Finland, there
are now three 400 kilovolt transmission links connecting the northern and
southern parts of the country. The project, which cost a total of EUR 260
million, was carried out according to plan over a span of ten years. The
transmission link serves the wind farms that have been built in western coastal
areas and which will be followed by more in the future. Several existing and
planned nuclear power stations are also located close to this line. The new
connection furthermore improves the cross-border transmission between Sweden
and Finland. The investments carried out by Fingrid also help prepare for the
new AC link to be built between the countries by 2025. Thanks to the Coastal
Power Line, Finland’s future as a single price region is now more secure. The
voltage upgrade will also decrease transmission losses. This multi-year project
was a major challenge for both Fingrid personnel and our suppliers. The
employment impact of the project amounted to approximately 1,000 man-years. A
large part of the congestion income collected by Fingrid was allocated to this
major investment.
Overall, the Coastal Power Line consisted of three extensive projects:
-- A 400 and 110 kilovolt transmission line connection from Seinäjoki to
Vaasa, and a new transformer substation in Nivala were completed in 2011.
-- A 400 kilovolt connection from Ulvila to Kristinestad was completed in the
second stage of the power line project October 2014.
-- In the final phase, a 400 kilovolt power line connection from Kokkola
(Hirvisuo) to Muhos (Pyhänselkä) was completed in late 2016.
Overall, the Coastal Power Line includes 380 kilometres of new 400 kilovolt
power line, nine new substations and several smaller substation extensions.
This provides 600–800 megawatts of entirely new transmission capacity between
northern and southern Finland.
The roughly EUR 130 million modernisation project on Finland’s oldest
transmission line, dubbed the ‘Iron Lady’ and running from Imatra to Turku,
proceeded as planned during the year under review. The Hikiä–Forssa section of
this major project was completed and commissioned in March. Modernisation of
the Iron Lady continues between Lieto and Forssa. Work on the Yllikkälä–Koria
section also started, between Lappeenranta and Kouvola. Furthermore, a decision
was made to renew the transmission line between Hikiä and Orimattila and to
build a new substation in Orimattila. The Iron Lady project is expected to be
fully completed by 2020.
With the aim of securing the electricity supply for both residents of the
Helsinki region and functions that are vital to society, Fingrid will reinforce
the Espoo substation and the Länsisalmi substation in Vantaa. These substation
upgrades and extensions, which cost nearly EUR 9 million for Espoo and roughly
EUR 18.5 million for Vantaa Länsisalmi, started in 2016 and will be completed
in 2017. The supply of electricity from the main grid to Helsinki and Vantaa
takes place via the Länsisalmi and Tammisto transformer substations, serving
around 800,000 people. Increasing electricity consumption and changes taking
place in the production of electricity in Helsinki necessitate upgrades in
supply capacity. The extension of the Espoo substation will improve the system
security of the transmission facilities in western Uusimaa, the region west of
the capital area. Local electricity production has decreased while consumption
is constantly increasing.
Fingrid has, over the last two years, made major investments to develop the
transmission grid in Lapland by building or upgrading a total of six
substations. These measures were necessary due to increasing local consumption
and due to new wind power capacity. During the year under review, the
substation at Vajukoski and Petäjäskoski received new transformers and the
existing systems were upgraded and extended. The Vajukoski transformer
substation, north of Sodankylä, serves both hydropower production and mining
industry and links up with the Norwegian transmission grid via Ivalo. The
Petäjäskoski transformer substation, a major link between Lapland’s 220
kilovolt and 400 kilovolt main transmission networks, also received an entirely
new 220 kilovolt gas-insulated switchgear. Extensive upgrades were additionally
carried out at the Taivalkoski and Ossauskoski substations. The total capital
expenditure amounted roughly to EUR 43 million.
Several investment decisions were made during the year, many of which proceeded
to the implementation stage.
The Inkoo substation that was built in the 1970s secures the electricity supply
in western Uusimaa. An investment decision was made to modernise the ageing
substation, and the project is due for completion in 2018. To secure the supply
of electricity in the Hämeenlinna and Valkeakoski areas, Fingrid decided to
modernise a 51-kilometre transmission line between the cities. Aged and worn
out pylons and transmission lines will be dismantled and replaced with a new
line. The project is due for completion in 2018.
Several of the investments are related to enabling or improving the operating
conditions of industry. An upgrade on the Vuoksi substation and the roughly
24-kilometre Lempiälä–Vuoksi transmission line is planned between Lappeenranta
and Imatra. The investment will be carried out sooner than originally planned,
due to an extension to Kemira’s industrial plant in Joutseno, and it is due for
completion in 2018. The electricity supply for the new bioproduct mill in
Äänekoski will be secured with the construction of a new 110 kilovolt
transmission line between Äänekoski’s Koivisto and Laukaa’s Vihtavuori
substations, due for completion in late 2017. Olkiluoto’s 400 kilovolt
switching station, which is outdated and has insufficient system security, will
be modernised. The Olkiluoto substation is one of the most important grid
nodes, with three nuclear power plants connected to it. The project is due for
completion in 2019.
Fingrid’s Huutokoski reserve power plant will undergo a EUR 15 million upgrade.
The Huutokoski plant, located in Joroinen, is one of the ten reserve power
plants owned by Fingrid which are tasked to support a sufficient supply of
electricity in Finland during major disturbances in the power system. The
upgrade project includes the modernisation of obsolete systems to secure
reliable operation for the next 20 years as well as significant environmental
investments. The systems to be modernised include fuel tanks and fuel systems,
extinguishing systems, the plant’s internal electrical and automation systems
as well as the plant’s own reserve power systems.
In 2006, Fingrid launched a project aimed at building a complete, modern IT
system to support asset management operations. Thanks to system integrations,
all the master data of the transmission grid assets is now in a single
application. The overall project combined both modern ICT technology and
in-house knowledge, and transformed operational procedures. Thanks to advanced
technology, significant efficiency improvements were achieved in asset
management. The ELVIS IT system project tasked to support asset management and
use of the assets was completed in 2016.
Major improvements have been achieved in the reliability of cross-border
transmission connections and Fingrid now has more expert resources on DC
transmission connections. A 24/7 back-up system was taken into use in HVDC
operations as of the beginning of 2016. During the year under review,
disturbance clearing has been accelerated, individual disturbances have been
prevented proactively and measures to secure the reliability and availability
of the HVDC connections have been implemented much faster than in previous
years. The total duration of interruptions in 2016 remained at around 10% of
the 2014 and 2015 levels. The number of interruptions was halved from 2014 and
2015.
By international standards, Fingrid’s maintenance management is world-class.
The company was one of the best operators in the International Transmission
Operations and Maintenance Study (ITOMS) for the 11th consecutive time. Lloyd's
Register audited Fingrid’s asset management operations and awarded Fingrid a
certificate for compliance with the ISO 55001 standard.
In 2016, Fingrid’s personnel had no accidents resulting in absence from work
(2015: 1), in other words, the zero accidents target was achieved. Suppliers’
personnel had 12 (13) accidents resulting in absence from work, three of which
resulted in an absence of more than 30 days. The suppliers’ and Fingrid’s
combined accident frequency rate decreased somewhat from the previous year.
The occupational safety development project continued, with a focus on
implementing occupational safety models and tools and improving safety
attitudes. On-line training was introduced in early 2016 and used by more than
1,700 people during the year. A safety observation campaign was carried out
with suppliers and Fingrid's own personnel. Work was also continued to develop
a mobile reporting system for occupational safety, quality and environmental
issues, on-line training and Fingrid’s safety management system.
Power system
In 2016, electricity consumption in Finland amounted to 85.1 (82.5) terawatt
hours. A total of 68.6 (67.9) terawatt hours of electricity was transmitted in
Fingrid’s grid, representing 77.5 (77.1) per cent of the total transmission
volume in Finland (consumption and inter-TSO).
Electricity import and production capacity was well sufficient to cover the
peak consumption, which amounted to a maximum of 15,100 (13,500) megawatts. The
peak consumption was at an all-time record high in Finland. During the
consumption peaks early in the year, electricity production in Finland totalled
approximately 10,800 (11,200) megawatts.
Electricity transmissions between Finland and Sweden consisted mostly of large
imports to Finland. During 2016, 15.7 (17.8) terawatt hours of electricity was
imported from Sweden to Finland, and 0.3 (0.2) terawatt hours were exported
from Finland to Sweden.
The electricity transmission between Finland and Estonia was dominated by
exports from Finland to Estonia, which amounted to 3.1 (5.0) terawatt hours.
The electricity imports from Russia increased by approximately 50 per cent.
Nearly the full transmission capacity was available. Electricity imports from
Russia totalled 5.9 (3.9) terawatt hours.
With a transmission reliability rate of 99.9998 per cent, the reliability of
the transmission grid was at an excellent level during the year under review.
The number of disturbances due to thunder exceeded the average, and the
resulting multi-phase disturbances were detrimental to the process industry.
Otherwise the number of disturbances remained at the normal level. Increased
resources were allocated on determining the DC transmission links’
susceptibility to disturbances. Thanks to this, no disturbances requiring
extensive repairs occurred in the DC links during 2016, and also less
significant disturbances were cleared more quickly than in previous years. The
total duration of interruptions due to disturbances in DC links in 2016
remained at around 10% of the 2014 and 2015 levels, and the number of
interruptions was halved from the 2014 and 2015 figures.
Transmission outages in connection with investment projects mostly affected
Ostrobothnia and northern Ostrobothnia. The outages were challenging and
required careful advance planning and good cooperation with our customers. The
outages were handled successfully.
Counter trade Jan-Dec/ Jan-Dec/ Oct-Dec/ Oct-Dec/
16 15 16 15
--------------------------------------------------------------------------------
Counter-trade between Finland and 2.5 0.8 0.3 0.2
Sweden, €M
--------------------------------------------------------------------------------
Counter-trade between Finland and 0.1 0.8 0.0 0.0
Estonia, €M
--------------------------------------------------------------------------------
Counter-trade between Finland's internal 1.2 2.2 0.3 0.6
connections, €M
--------------------------------------------------------------------------------
Total counter-trade, €M 3.9 3.8 0.6 0.9
--------------------------------------------------------------------------------
Reserves required to maintain the power balance of the electricity system were
procured from Finland, the other Nordic countries, the Baltic countries and
Russia. Countertrade costs totalled EUR 3.9 (3.8) million. Countertrade refers
to special adjustments made in the management of electricity transmission which
are used to eliminate short-term bottlenecks (an area where electricity
transmission is congested) from the grid. Fingrid guarantees the cross-border
transmission it has confirmed by carrying out countertrades, i.e. purchasing
and selling electricity, up until the end of the 24-hour usage period. The need
for countertrade can arise from, for example, a power outage or disruption in a
power plant or in the grid.
An outage in a connection point in the grid caused by a disturbance in
Fingrid’s electricity network lasted an average of 2.1 minutes, which is
clearly shorter than the ten-year average of 3.3 minutes. The estimated cost of
the disturbances was EUR 3.5 (4.1) million.
Power system operation Jan-Dec/ Jan-Dec/ Oct-Dec/ Oct-Dec/
16 15 16 15
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Electricity consumption in Finland TWh 85.1 82.5 23.2 22.1
TSO transmission in Finland, TWh 3.5 5.5 0.4 1.4
Transmission within Finland, TWh 88.6 88.0 23.6 23.5
Fingrid's transmission volume TWh 68.6 67.9 17.4 17.7
Fingrid's electricity transmission to 64.9 62.3 16.8 16.3
customers, TWh
Fingrid's loss energy volume TWh 1.3 1.4 0.3 0.3
Electricity transmission Finland -
Sweden
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Exports to Sweden TWh 0.3 0.2 0.2 0.1
Imports from Sweden TWh 15.7 17.8 2.8 4.7
Electricity transmission Finland -
Estonia
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Exports to Estonia TWh 3.1 5.0 0.2 1.2
Imports from Estonia TWh 0.7 0.0 0.5 0.0
Electricity transmission Finland -
Russia
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Imports from Russia TWh 5.9 3.9 1.9 1.0
Electricity market
The average market price of spot electricity on the electricity exchange
(system price) was EUR 26.91 (20.98) per megawatt hour. The price level in the
Nordic electricity markets trended downwards for an extended period during the
first half of 2016, but rebounded during the summer. The drivers behind the
price increase include weakened hydrological conditions as well as price hikes
in fossil fuels and emission rights.
In 2016, prices on the Finnish wholesale market were higher than they were in
other Nordic countries. The overall increase in Nordic prices made the price
disparity between Finland and Sweden less pronounced and, as a result,
congestion hours between Finland and Sweden decreased significantly during the
latter half of the year. In addition to the increased Nordic price level,
another reason for the decrease in congestion hours and decreased price
disparity was the completion of the NordBalt transmission link between Sweden
and Lithuania during the first half of 2016.
Fingrid accrued EUR 37.5 (86.8) million in congestion income from the
cross-border power lines between Finland and Sweden. EUR 29.9 (24.3) million of
this was accrued during the first half of 2016 and EUR 7.6 (62.5) million
during the second half of the year. The links between Finland and Estonia
generated EUR 2.4 (4.2) million in congestion income. All the congestion income
accrued by Fingrid during 2016 was used for maintaining cross-border
transmission capacity and for upgrade investments.
The imports from Russia increased to 5.9 (3.9) terawatt hours. Despite the
increase, electricity imports from Russia to Finland have decreased
significantly in recent years, and the hourly import volumes from Russia have
varied considerably. In addition to Russia’s capacity mechanism, the reduction
in electricity trade is attributed to increased electricity prices in the
country.
In spring, Fingrid published a discussion paper on the challenges of the
electricity market and various alternative solutions to them entitled
“Electricity market needs fixing – What can we do?”, which sparked a lively
debate. Fingrid’s consultation request was responded to by a total of 36
industry operators, associations, research institutions and private citizens.
During the second half of the year, Fingrid published a summary of the
feedback, which contained suggestions for various routes to a market-based
green electricity system.
The operating capacity of the electricity market and the sufficiency of
electricity supply became national topics due to the bitter cold of January
2016. As the consumption of electricity broke records, the topics of meeting
consumption needs and national self-sufficiency in terms of electricity were
widely debated.
Roughly half of the cross-border transmission capacity between Finland and
Sweden is provided by the Fenno-Skan links, i.e. high-voltage DC connections.
Several measures were started by Fingrid early in 2016 to improve the
reliability of cross-border transmission capacity. Thanks to the improvements,
it was possible to keep interruptions very brief, and the availability of the
connections has been clearly better compared to previous years.
Fingrid Datahub Oy, a company focused on the transfer of retail market
information, was established on 16 February 2016. The task of the subsidiary,
wholly owned by Fingrid, is to implement a centralised information exchange
system for the electricity markets, i.e. a datahub, in which the exchange of
information between retail sellers and distribution system operators is
concentrated into a single service. This makes the exchange of information in
the retail electricity market more straightforward and efficient. Data exchange
among retail markets is needed in managing the various business processes of
the electricity markets, such as balance settlement, an end user’s change of
address and a change of seller, for example. The system will facilitate the
processing of measurement data, simplify and speed up client agreement events
and improve the reliability of the service.
The implementation of European network codes required by the European Union
proceeded in Finland, as Fingrid established a network code forum that is open
to all market parties. The forum promotes public debate on all matters related
to network codes and aims to gather the views of stakeholders as well as to
complement the public hearing processes related to implementing the network
codes. The network code forum convened three times during the year under
review.
The Finnish, Norwegian and Swedish TSOs continued with the switchover to shared
Nordic balance settlement. The jointly owned company eSett Oy, which Fingrid
owns one third of, aims to start up operations in spring 2017.
In September, the Ministry of Economic Affairs and Employment set up a working
group to look into the role of smart grids in the electricity market. The aim
of the working group is to forge a common vision of future smart grids and to
propose concrete measures for using smart grids as a means of increasing
customers’ opportunities to participate in the electricity market and
contribute to maintaining a secure supply of electricity. The members of the
working group broadly represent the stakeholders in the sector, including
active participation by Fingrid.
Electricity market Jan-Dec/ Jan-Dec/ Oct-Dec/ Oct-Dec/
16 15 16 15
--------------------------------------------------------------------------------
Nord Pool system price, average €/MWh 26.91 20.98 34.42 21.92
--------------------------------------------------------------------------------
Area price Finland, average €/MWh 32.45 29.66 37.48 30.59
--------------------------------------------------------------------------------
Congestion income between Finland and 75.0 173.5 3.9 44.1
Sweden, € million*
--------------------------------------------------------------------------------
Congestion hours between Finland and 32.7 47.1 10.9 47.4
Sweden %**
--------------------------------------------------------------------------------
Congestion income between Finland and 4.7 8.4 0.1 1.6
Estonia, € million*
--------------------------------------------------------------------------------
Congestion hours between Finland and 9.7 12.0 2.8 9.1
Estonia %
--------------------------------------------------------------------------------
* 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 under ‘Financial
result’. Congestion income is used for investments aimed at eliminating the
cause of congestion.
** The calculation of a congestion hour between Finland and Sweden refers to an
hour during which Finland’s day-ahead area price differs from both Sweden’s SE1
and its SE3 area prices.
Financing
The company’s credit rating remained high, reflecting the company’s strong
overall financial situation and debt service capacity. The company’s net
financial costs during the period under review were EUR 18.7 (33.7) million,
including the change in the fair value of derivatives of EUR -0.3 million (EUR
-13.3 million).
Interest-bearing borrowings totalled EUR 1,107.7 (1,143.4) million, of which
non-current borrowings accounted for EUR 842.9 (907.2) million and current
borrowings for EUR 264.9 (236.2) million. In 2016, the company issued bonds
totalling EUR 80 million (EUR 50 million with a four-year maturity and EUR 30
million with a six-year maturity) to refinance current borrowings.
The company’s liquidity remained good. Cash and financial assets recognised at
fair value through profit or loss on 31 December 2016 totalled EUR 79.7 (116.6)
million. The company additionally has an undrawn revolving credit facility of
EUR 300 million to secure liquidity and EUR 50 million in uncommitted overdraft
facilities. Fingrid used the first extension option of the revolving credit
facility during the period under review. This extended the maturity of the
revolving credit facility until 11 December 2021.
The counterparty risk arising from derivative contracts relating to financing
was EUR 16 (11) million. Fingrid’s foreign exchange and commodity price risks
were generally fully hedged.
The international credit rating agencies S&P Global (S&P) and Fitch Ratings
(Fitch) upgraded Fingrid’s ratings as follows:
-- On 28 October 2016, S&P raised the rating for Fingrid Oyj’s unsecured
senior debt and long-term company rating to ‘AA-’ and the short-term
company rating to ‘A-1+’, with a stable outlook.
-- On 21 November 2016, Fitch raised the rating for Fingrid Oyj’s unsecured
senior debt to ‘AA-’, the long-term company rating to ‘A+’, and affirmed
‘F1’ for the short-term company rating, with a stable outlook. The rating
received by Fingrid was, at the time of issuing, the highest valid rating
given by Fitch to any European regulated TSO.
Share capital
The company’s share capital is EUR 55,922,485.55. Fingrid shares 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
company’s website.
Personnel and remuneration systems
Fingrid Oyj employed 334 (315) persons, including temporary employees, at the
end of the year. The number of permanent personnel was 291 (280).
Of the personnel employed by the company, 25.0 (24.4) per cent were women and
75.0 (75.6) per cent were men. The average age of the personnel was 44 (44).
During 2016, personnel received a total of 11,647 (11,794) hours of training,
with an average of 35.7 (37.4) hours per person. Employee absences due to
illness accounted for 1 (2) per cent of the total working hours. In addition to
a compensation system that 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 was held in Helsinki on the 6th of April
2016. Juhani Järvi was elected Chairman of Fingrid’s Board of Directors and
Juha Majanen was elected Vice Chairman. Other members elected to the Board were
Esko Torsti, Sanna Syri and Anu Hämäläinen.
The Board members until 6th April 2016 were Helena Walldén, Juha Majanen,
Juhani Järvi, Sanna Syri and Esko Torsti.
PricewaterhouseCoopers Oy was elected as the auditor of the company, with Jouko
Malinen, APA serving as the responsible auditor.
The Board of Directors has two committees: the Audit Committee and the
Remuneration Committee. As of 6th April 2016, the Audit Committee consists of
Esko Torsti (Chairman), Juhani Järvi and Juha Majanen. The members of the Audit
Committee until 6th April 2016 were Juha Majanen (Chairman), Juhani Järvi and
Helena Walldén.
As of 6th April 2016, the Remuneration Committee consists of Juhani Järvi
(Chairman), Sanna Syri and Anu Hämäläinen. The members of the Remuneration
Committee until 6th April 2016 were Helena Walldén (Chairman), Sanna Syri and
Esko Torsti.
Jukka Ruusunen serves as President & CEO of the company. Fingrid has an
executive management group which supports the CEO in the company’s management
and decision-making.
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 and risk management
Fingrid’s internal control is a permanent component of the company’s operations
and deals with all those operating methods and procedures whose objective it is
to ensure
-- effective and profitable operations that are in line with the company’s
strategy,
-- the reliability and integrity of the company’s financial and management
information,
-- that the company’s assets are protected,
-- that applicable legislation, guidelines, regulations, agreements and the
company’s own governance and operating guidelines are complied with, and
-- that the company’s risk management meets a high standard.
Risk management is planned as a whole with the objective of comprehensively
identifying, assessing, monitoring and safeguarding the company’s operations,
the environment, personnel and assets from various threats and risks. Due to
the nature of the company’s basic mission, risks are also assessed from the
perspective of society in general.
Continuity management is a part of risk management. Its objective is to improve
the organisation’s capacity to prepare and to react in the best possible way
should risks occur, and to ensure the continuity of operations in such
situations.
Further information on internal control, risk management and the foremost risks
and factors of uncertainty is available on the company's website at
www.fingrid.fi and in the Board of Directors' annual review.
Board of Directors
The company’s Board is responsible for organising internal control and risk
management, and it approves the principles of internal control and risk
management on an annual basis. The Board specifies the company’s strategic
risks and related management procedures as part of the company’s strategy and
action plan, and monitors their implementation. The Board decides on the
operating model for the company’s internal audit. The Board regularly receives
internal audit and financial audit reports as well as a status update at least
once a year on the strategic risks and continuity threats relating to the
company’s operations and their management and occurrence.
Line management and other organisation
Assisted by the executive management group, the CEO is responsible for
executing and steering the company’s governance, decision-making procedures,
control and risk management, and for the assessment of strategic risks and
continuity threats at the company level, and their related risk management.
The heads of functions are responsible for the practical implementation of the
governance, decision-making procedures, controls and risk management for their
areas of responsibility, as well as for the reporting of deviations and the
sufficiency of more detailed guidelines. Directors appointed in charge of the
threats to continuity management are responsible for drawing up and maintaining
continuity management plans and guidelines, and for arranging sufficient
training and practice.
The CFO is responsible for arranging procedures, controls and monitoring at the
company level as required by the harmonised operating methods of internal
control and risk management. The company’s general counsel is responsible at
the company level for assuring the legality and regulation compliance of
essential contracts and internal guidelines, taking into account the company’s
interests, as well as for the procedures these require. Each Fingrid employee
is obligated to identify and report any risks or control deficiencies she or he
observes and to carry out the agreed risk management procedures.
Internal auditor and auditor
The Board decides on the operating model for the company’s internal audit. The
internal audit acts on the basis of plans processed by the Audit Committee and
approved by the Board. Audit results are reported to the object of inspection,
the CEO, the Audit Committee and the Board. Upon decision of the Board, an
internal audit outsourced to an authorised public accounting company acts
within the company. From an administrative perspective, the internal audit is
subordinate to the company’s CEO. The internal audit provides a systematic
approach to the assessment and development of the efficacy of the company’s
risk management, monitoring, management and administrative processes and
ensures their sufficiency and functionality as an independent party. The
internal audit has the authority to carry out reviews and to access all
information that is essential to the audit. The company’s internal audit
carries out risk-based auditing on the company’s various processes.
An authorised public accounting company selected by the general meeting acts as
auditor for the company. The company’s financial auditor inspects the
accounting, financial statements and financial administration for each
financial period and provides the general meeting with reports required by
accounting legislation or otherwise stipulated in legislation. The financial
auditor reports on his or her work, observations and recommendations for the
Board and may also carry out other authorisation-related tasks commissioned by
the Board or management.
Foremost risks and uncertainty factors for society and Fingrid
One of the company’s biggest business risks and the biggest risk where society
is concerned is a major disturbance related to the functioning of the power
system. A major disturbance or other electrical system disruption can cause
significant financial and physical damage to Fingrid and society in general.
Other major risks for Fingrid and society are a loss of confidence in the
electricity market, environmental risks and electricity and occupational health
and safety risks.
The risks to Fingrid’s operations are risks related to the unfavourable trend
in official regulation, capital investments which have become unnecessary,
financing risks, personnel risks, risks related to ICT and data transfer, asset
risks and reputation risks.
Risks to society arising from Fingrid’s operations are unsuccessful timing of
capital investments and long-term restrictions in transmission capacity.
The most significant of the above-mentioned risks to Fingrid are explored in
greater detail in the company’s annual report. Fingrid’s financing risks are
described in more detail in sections 5.2 and 5.3 of the consolidated financial
statements (IFRS). No substantial risks were realised in 2016.
Corporate responsibility
Fingrid’s compliance with corporate responsibility is steered by the set
strategy targets. Corporate responsibility is a key element in the
implementation of Fingrid’s strategy and in its business expertise. The key
targets have been set by identifying matters that are of material importance to
Fingrid. The need for updates to the materiality analysis is assessed annually
as part of the strategy process, based on an operating environment and
stakeholder analysis and on the strategy update. Fulfilment of the targets
serves as the basis for executive management’s and personnel’s remuneration.
Corporate responsibility is managed as an integrated part of Fingrid’s
management system. Fingrid’s Board of Directors approves the company’s Code of
Conduct and monitors the company’s compliance in operating responsibly. The
Board is responsible for the CSR management systems and their integration into
business operations. The CEO and the heads of functions are each responsible
for corporate responsibility issues within their area of responsibility. Social
issues and environmental impacts are taken into account in all decision-making
and when assessing operations alongside profitability issues.
Managers and the entire work community ensure that behaviour is in line with
the Code of Conduct. A whistleblower system managed by an independent third
party for reporting cases of misconduct etc. is available to the personnel.
Fingrid Oyj committed in 2016 to the United Nations Global Compact initiative.
Fingrid’s Code of Conduct complies with the Global Compact initiative’s
principles on human rights, labour, environment and anti-corruption. Fingrid
also requires all contractors to comply with the Code of Conduct and monitors
their compliance based on risk assessments.
Fingrid’s work sites are regularly audited to verify compliance with contractor
obligations, occupational safety and environmental management. The audits
carried out during 2016 proved that the work site operations are generally at a
high level and that use of the electronic reporting system is extensive.
A human rights impact assessment was carried out in compliance with the due
diligence process recommended in the UN’s Guiding Principles on Business and
Human Rights. As regards tax footprint reporting, Fingrid only operates in
Finland and has not resorted to any special arrangements to minimise taxes. The
company’s tax footprint is presented in the annual report’s ‘Corporate
finances, financing and risk management’ section. Dividends are mainly paid to
the State of Finland and to Finnish pension insurance and insurance companies.
To ensure transparency and comparability, Fingrid reports on its corporate
responsibility in accordance with the international Global Reporting Initiative
(GRI) framework. The GRI G4 reporting framework is applied using the Core ‘in
accordance’ option.
Environmental matters
Fingrid has a long-term approach to its environmental impacts and land use
issues, and the principles for minimising environmental impacts are accounted
for in our land use and environmental policy. The key aspects include an
environmental impact assessment (EIA) and preparedness for environmental risks.
During 2016, Fingrid signed the energy efficiency agreement of Finnish
industries 2017–2025 and committed to the target of cutting energy use by six
per cent by 2025.
Environmental management was developed during the year by establishing a
management system in compliance with the ISO 14 001 standard for the reserve
power plants and by introducing an online training course on environmental
issues for all personnel working at Fingrid sites. Environmental training was
provided during the kick-off meetings for investment projects, and training was
also provided on the use of chemicals, the management of safety data sheets and
oil spill response for the providers of maintenance services at substations and
reserve power plants. Environmental aspects were monitored as part of work site
monitoring. Compliance with environmental requirements, occupational safety and
contractor obligations was verified in 15 audits.
Several development projects were carried out to improve fire safety at
substations and reserve power plants. Oil spill response plans were created and
emergency response plans were updated at all reserve power plants. One
significant environmental deviation occurred during the year, as around 180
litres of oil was leaked from a worksite at the Isokangas substation.
In 2016, Fingrid issued around 260 statements on land-use plans and EIAs. In
addition, the company directed the construction taking place near grid
installations by issuing statements containing safety guidelines and land use
restrictions. Some 420 such statements were issued.
EIAs were carried out for six transmission line projects in 2016. Two events
were arranged to inform the public about the environmental impacts of the power
lines required to connect the Hanhikivi 1 nuclear power plant to the grid; the
EIA process for the project was completed in October 2016. A Natura assessment
update was carried out for this project in compliance with the Nature
Conservation Act. An EIA was completed for five transmission line projects
(Hämeenlahti–Hännilä, Kontiolahti–Pamilo, Kontiolahti–Uimaharju,
Siikajoki–Raahe and the line rearrangements for the Olkiluoto substation).
Three projects involved archaeological inventories.
In order to be able to build, operate and maintain a transmission line, Fingrid
redeems a right of use to the transmission line area. Redemption permits were
obtained for the re-routing of transmission lines from Multisilta and Kangasala
to Lavianvuori and for the transmission lines Vanaja–Tikinmaa,
Vihtavuori–Koivisto and Koria–Yllikkälä. A redemption permit application was
filed for the transmission line project Hikiä–Orimattila. The redemption
compensation procedure was completed in seven transmission line projects. Eight
hearings in accordance with the Finnish Act on the Redemption of Immoveable
Property and Special Rights were held with landowners.
Fingrid’s reserve power plants are subject to an environmental permit and
covered by the EU’s emissions trading scheme. The accuracy of the measuring and
reporting systems for fuel consumption is verified by an accredited emissions
trading verifier. A total of 10,326 (6,697) units (tCO2) of emission allowances
were returned, all of which consisted of acquired emission rights units.
Fingrid has not been granted free-of-charge emission rights for the emissions
trade period 2013–2020. No emissions rights were purchased in 2016. Emissions
trading had minor financial significance for Fingrid.
Legal proceedings and proceedings by authorities
A lawsuit was initiated against Fingrid in December 2016, demanding
non-specified damages due to an alleged breach of contract. The alleged injury
is continuous and the claim amounted to EUR 135,000 by the time the lawsuit was
initiated. Fingrid has contested the claims presented in the lawsuit. The case
is currently before the court. In Fingrid’s view, the legal proceedings are not
likely to have a substantial impact on the company’s financial result or
financial position. Thus no provisions were recognised in the financial
statements in relation to these proceedings.
Events after the review period and estimate of future outlook
Fingrid Group’s profit for the 2017 financial period, excluding changes in the
fair value of derivatives and before taxes, is expected to improve somewhat.
Grid service pricing for 2017 is set in such a way as to achieve a
regulatory-allowed financial result.
Results forecasts for 2017 are complicated especially by the uncertainty
related to grid income, ITC income and cross-border transmission income, and to
reserve and loss power costs. These are particularly dependent on temperature
variations and precipitation and changes in the hydrological situation in the
Nordic countries, 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.
Board of Directors’ proposal for the distribution of profit
The guiding principle for Fingrid’s dividend policy is to distribute
substantially all of the parent company profit as dividend. When making the
decision, however, the economic conditions, the company’s near term investment
and development needs as well as any prevailing financial targets of the
company are always taken into account.
Fingrid Oyj's parent company's profit for the financial year was EUR
103,866,300.72 and distributable funds in the financial statements total EUR
175 954 253,06. Since the close of the financial year, there have been no
material changes in the company’s financial position and, in the Board of
Directors’ view, the proposed dividend distribution does not threaten the
company’s solvency.
The company’s Board of Directors will propose to the Annual General Meeting of
Shareholders that
- a dividend of EUR 37 536,09 per share be paid for Series A shares and EUR 16
038,49 per share be paid for Series B shares, for a total of EUR 97 999 992,05.
- EUR 77,954,261.01 be retained in unrestricted equity.
Annual General Meeting 2017
Fingrid Oyj’s Annual General Meeting is preliminarily scheduled for 24 May 2017
in Helsinki.
Helsinki, 17 February, 2017
Fingrid Oyj
Board of Directors
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 1 Jan - 31 1 Jan - 31
Dec, 2016 Dec, 2015
--------------------------------------------------------------------------------
Notes € 1,000 € 1,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TURNOVER 1 586,120 600,224
Other operating income 2 12,689 5,199
Materials and services 5 -248,359 -240,643
Employee benefits expenses 9 -28,598 -25,804
Depreciation 11,12 -99,222 -94,119
Other operating expenses 6,13 -30,586 -82,288
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
OPERATING PROFIT 192,045 162,570
Finance income 17 694 706
Finance costs 17 -19,385 -34,401
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Finance income and costs -18,691 -33,695
Share of profit of associated companies 511 447
PROFIT BEFORE TAXES 173,865 129,321
Income taxes -35,192 -25,745
--------------------------------------------------------------------------------
PROFIT FOR THE FINANCIAL YEAR 138,673 103,576
================================================================================
OTHER COMPREHENSIVE INCOME
Items that may subsequently be transferred to
profit or loss
Cash flow hedges 7,232 7,232
Translation reserve 318 -309
Available-for-sale investments 17 22
Taxes related to other items in total -1,450 -1,451
comprehensive income
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD 144,790 109,070
================================================================================
Profit attributable to:
Equity holders of parent company 138,673 103,576
Total comprehensive income attributable to:
Equity holders of parent company 144,790 109,070
Earnings per share for profit attributable to
the equity holders of the parent company:
Undiluted and diluted earnings per share, € 41,706 31,151
Weighted average number of shares, quantity 3,325 3,325
Notes are an integral part of the financial statements.
Consolidated balance sheet
--------------------------------------------------------------------------------
ASSETS 31 Dec 31 Dec
2016 2015
Notes € 1,000 € 1,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NON-CURRENT ASSETS
Intangible assets: 12
Goodwill 87,920 87,920
Other intangible assets 96,580 95,428
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
184,500 183,348
Property, plant and equipment: 11
Land and water areas 15,701 15,349
Buildings and structures 193,716 167,280
Machinery and equipment 578,281 567,627
Transmission lines 825,038 789,614
Other property, plant and equipment 7,602 7,548
Prepayments and purchases in progress 69,825 129,566
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1,690,162 1,676,984
Investments in associated companies 24 14,158 12,388
Available-for-sale investments and receivables 101 284
Derivative instruments 23 29,657 32,148
Deferred tax assets 10 6,155 16,479
TOTAL NON-CURRENT ASSETS 1,924,733 1,921,632
CURRENT ASSETS
Inventories 8 12,269 12,665
Derivative instruments 23 2,861 3,353
Trade receivables and other receivables 3 82,191 70,213
Financial assets recognised in the income statement 20 57,790 93,451
at fair value
Cash in hand and cash equivalents 19 21,939 23,099
TOTAL CURRENT ASSETS 177,050 202,782
--------------------------------------------------------------------------------
TOTAL ASSETS 2,101,782 2,124,414
================================================================================
Notes are an integral part of the financial statements.
EQUITY AND LIABILITIES 31 Dec 31 Dec
2016 2015
Notes € 1,000 € 1,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE
PARENT COMPANY
Share capital 21 55,922 55,922
Share premium account 21 55,922 55,922
Revaluation reserve 21 59 -5,740
Translation reserve 21 -413 -731
Retained earnings 21 654,258 605,585
--------------------------------------------------------------------------------
TOTAL EQUITY 765,749 710,960
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NON-CURRENT LIABILITIES
Deferred tax liabilities 10 125,778 125,240
Borrowings 14 842,866 907,232
Provisions 25 1,481 1,668
Derivative instruments 23 18,567 46,952
--------------------------------------------------------------------------------
988,692 1,081,092
--------------------------------------------------------------------------------
CURRENT LIABILITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Borrowings 14 264,865 236,217
Derivative instruments 23 7,859 30,331
Trade payables and other liabilities 7 74,617 65,815
--------------------------------------------------------------------------------
347,341 332,363
--------------------------------------------------------------------------------
TOTAL LIABILITIES 1,336,033 1,413,455
--------------------------------------------------------------------------------
TOTAL EQUITY AND LIABILITIES 2,101,782 2,124,414
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Notes are an integral part of the financial
statements.
Consolidated statement of changes in equity
--------------------------------------------------------------------------------
-
Attributable to equity holders of the parent company, € 1,000
--------------------------------------------------------------------------------
-
Share Share Revalua Transl Retaine Total
tion ation d
capita premiu reserve reserv earning equity
l m s e s
accoun
t
--------------------------------------------------------------------------------
Balance on 1 Jan 2015 55,922 55,922 -11,543 -422 567,009 666,889
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Comprehensive income
Profit or loss 103,576 103,576
Other comprehensive income
Cash flow hedges 5,785 5,785
Translation reserve -309 -309
Available-for-sale 18 18
investments
--------------------------------------------------------------------------------
Total other comprehensive 5,803 -309 5,494
income adjusted by tax
effects
--------------------------------------------------------------------------------
Total comprehensive income 5,803 -309 103,576 109,070
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Transactions with owners
Dividend relating to 2014 -65,000 -65,000
--------------------------------------------------------------------------------
Balance on 31 December 2015 55,922 55,922 -5,740 -731 605,585 710,960
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Balance on 1 Jan 2016 55,922 55,922 -5,740 -731 605,585 710,960
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Comprehensive income
Profit or loss 138,673 138,673
Other comprehensive income
Cash flow hedges 5,785 5,785
Translation reserve 318 318
Available-for-sale 13 13
investments
--------------------------------------------------------------------------------
Total other comprehensive 5,799 318 6,117
income adjusted by tax
effects
--------------------------------------------------------------------------------
Total comprehensive income 5,799 318 138,673 144,790
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Transactions with owners
Dividend relating to 2015 -90,000 -90,000
--------------------------------------------------------------------------------
Balance on 31 Dec 2016 55,922 55,922 59 -413 654,258 765,749
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-
Notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT 1 Jan - 31 1 Jan - 31
Dec, 2016 Dec, 2015
Notes € 1,000 € 1,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cash flow from operating activities:
Profit for the financial year 21 138,673 103,576
Adjustments:
Business transactions not involving a payment
transaction:
Depreciation 99,222 94,119
Capital gains/losses (-/+) on tangible and -3,792 -1,970
intangible assets
Share of profit of associated companies -511 -447
Gains/losses from the assets and liabilities -35,378 24,276
recognised in the income statement at fair
value
Interest and other finance costs 19,385 34,401
Interest income -689 -701
Dividend income -5 -5
Taxes 35,192 25,745
Impact from changes in the fair value of the 203 -233
investment
Changes in working capital:
Change in trade receivables and other -13,121 -11,532
receivables
Change in inventories 396 178
Change in trade payables and other liabilities 7,371 -8,332
Congestion income 39,863
Change in provisions 25 -187 -18
Interests paid -20,496 -23,734
Interests received 440 821
Taxes paid -33,887 -20,470
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net cash flow from operating activities 232,679 215,674
Cash flow from investing activities:
Purchase of property, plant and equipment 11 -138,084 -150,449
Purchase of intangible assets 12 -4,108 -3,421
Proceeds from sale of other assets 152 500
Proceeds from sale of property, plant and 5,885 5,066
equipment
Loans granted -1,500 -900
Dividends received 565 556
Contributions received 15,000
Capitalised interest paid 17 -2,016 -1,690
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net cash flow from investing activities -139,106 -135,339
Cash flow from financing activities:
Proceeds from non-current financing 80,000 107,424
(liabilities)
Payments of non-current financing (liabilities) -164,824 -104,220
Change in current financing (liabilities) 44,430 -80,961
Dividends paid 21 -90,000 -65,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net cash flow from financing activities -130,394 -142,757
Change in cash as per the cash flow statement -36,822 -62,421
Opening cash as per the cash flow statement 116,550 178,972
Closing cash as per the cash flow statement 19,20 79,729 116,550
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Notes are an integral part of the financial
statements.
CONSOLIDATED 2016 2015 2014 2013 2012
KEY FIGURES
--------------------------------------------------------------------------------
IFRS IFRS IFRS IFRS IFRS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Extent of
operations
Turnover MEUR 586.1 600.2 567.2 543.1 522.1
Capital MEUR 146.7 147.5 129.5 225.3 139.0
expenditure, gross
- % of turnover % 25.0 24.6 22.8 41.5 26.6
Research and MEUR 2.4 1.8 1.7 1.8 1.5
development
expenses
- % of turnover % 0.4 0.3 0.3 0.3 0.3
Personnel, average 336 319 305 277 269
Personnel at the 334 315 313 287 275
end of period
Salaries and MEUR 22.7 21.3 20.5 19.0 18.2
remunerations
total
Profitability
Operating profit MEUR 192.0 162.6 142.8 115.3 94.6
- % of turnover % 32.8 27.1 25.2 21.2 18.1
Profit before taxes MEUR 173.9 129.3 132.9 87.3 88.3
- % of turnover % 29.7 21.5 23.4 16.1 16.9
Return on % 10.4 8.7 7.6 6.3 5.6
investments (ROI)
Return on equity % 18.8 15.0 16.3 15.0 12.4
(ROE)
Financing and
financial position
Equity ratio % 36.4 33.5 31.0 29.5 27.3
Interest-bearing MEUR 1,028.0 1,026.9 1,046.1 1,076.7 1,030.3
net borrowings
Net gearing 1.3 1.4 1.6 1.7 1.8
Share-specific key
figures
Profit/share € 41,706.1 31,150.8 32,027.9 27,277.9 20,159.2
Dividend/A shares € 37536.09 33,686.24 21,655.44 29,788.26 5,115.89
*
Dividend/B shares € 16038.49 16,038.49 16,038.49 16,038.50 2,018.26
*
Dividend payout % 90.0 108.1 67.6 109.2 25.4
ratio A shares
Dividend payout % 38.5 51.5 50.1 58.8 10.0
ratio series B
shares
Equity/share € 230,301 213,822 200,568 193,293 171,365
Number of shares at
31 Dec
– Series A shares shares 2,078 2,078 2,078 2,078 2,078
– Series B shares shares 1,247 1,247 1,247 1,247 1,247
Total shares 3,325 3,325 3,325 3,325 3,325
* The Board of
Directors proposal
to the Annual
General 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 = (interest-bearing borrowings - cash and cash equivalents and
financial assets) /
Equity
Number of Of all shares % Of votes %
shares
--------------------------------------------------------------------------------
SHAREHOLDERS BY CATEGORY 31 DEC
-----------------------------------
Public organisations 1,768 53.17 70.87
--------------------------------------------------------------------------------
Financial and insurance 1,557 46.83 29.12
institutions
--------------------------------------------------------------------------------
Total 3,325 100.00 100.00
================================================================================
Number of Of all Of votes
shares shares % %
--------------------------------------------------------------------------------
Shareholders, 31 Dec 2016
--------------------------------------------------------------------------------
Republic of Finland, represented by the 939 28.24 37.66
Ministry of Finance
Aino Holding Ky 878 26.41 11.74
National Emergency Supply Agency 828 24.90 33.20
Mutual Pension Insurance Company Ilmarinen 661 19.88 17.15
Imatran Seudun Sähkö Oy 10 0.30 0.13
Fennia Life 6 0.18 0.08
Elo Mutual Pension Insurance 1 0.03 0.01
OP Insurance Ltd 1 0.03 0.01
The State Pension Fund 1 0.03 0.01
--------------------------------------------------------------------------------
Total 3,325 100.00 100.00
================================================================================
DERIVATIVE INSTRUMENTS. 1 000 €
--------------------------------------------------------------------------------
-------------------
2016 2015
Hierar
chy
level
--------------------------------------------------------------------------------
------------------
Interest Fair Fair Net fair Nominal Fair Fair Net fair
Nominal
rate value value value value value value value
value
and pos. neg. pos. neg.
currenc
y
derivat
ives
--------------------------------------------------------------------------------
------------------
31.12.16 31.12.16 31.12.16 31.12.16 31.12.15 31.12.15 31.12.15
31.12.15
--------------------------------------------------------------------------------
------------------
Cross-cu 6,930 -12,487 -5,558 196,396 15,286 -20,297 -5,011
341,205 Level
rrency
2
swaps
--------------------------------------------------------------------------------
------------------
Forward 46 46 2,271 -88 -88
4,505 Level
contrac
2
ts
--------------------------------------------------------------------------------
------------------
Interest 26,667 -6,725 19,943 360,000 24,348 -9,442 14,905
430,000 Level
rate
2
swaps
--------------------------------------------------------------------------------
------------------
Bought 1,350 1,350 518,820 862 862
358,820 Level
interes
2
t rate
options
--------------------------------------------------------------------------------
------------------
Total 34,993 -19,212 15,781 1,077,487 40,496 -29,827 10,668
1,134,531
================================================================================
==================
Electric Fair Fair Net fair Volume Fair Fair Net fair
Volume
ity value value value TWh value value value
TWh
derivat pos. neg. pos. neg.
ives
--------------------------------------------------------------------------------
------------------
31.12.16 31.12.16 31.12.16 31.12.16 31.12.15 31.12.15 31.12.15 31.12.15
--------------------------------------------------------------------------------
-----------
Electric 1,640 -8,157 -6,518 4.07 -49,060 -49,060
4.22 Level
ity
1
forward
contrac
ts.
NASDAQ
OMX
Commodi
ties,
not
designa
ted as
hedge
account
ing
--------------------------------------------------------------------------------
------------------
Total 1,640 -8,157 -6,518 4.07 -49,060 -49,060
4.22
================================================================================
==================
The net fair value of derivatives indicates the realised profit/loss if they
had been closed on the last trading day of 2016. The net fair value cannot be
used for deriving the net derivative liabilities or receivables in the balance
sheet, as accrued interest is taken into account here.
COMMITMENTS AND CONTINGENT LIABILITIES, €1,000
--------------------------------------------------------------------------------
2016 2015
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Pledges
Pledge covering property lease agreements 9 9
Pledge covering customs credit account 280 280
Pledge covering electricity exchange purchases 863
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
289 1,151
Other financial commitments
Counterguarantee in favour of an associated company
Rent security deposit, guarantee 38 38
Credit facility commitment fee and commitment fee:
Commitment fee for the next year 395 326
Commitment fee for subsequent years 1,154 1,154
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1,587 1,518
Unrecognised investment commitments 84,572 124,314
The investment commitments consist of agreements signed by the company to carry
out grid construction projects.
Notes:
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