30.4.2008 11:00
Stock Exchange releases

Fingrid Group's Interim Report 1 January - 31 March 2008

Review of operations
 
Power system operation
 
From the beginning of 2008 to the end of March, 25 terawatt hours of electricity was consumed in Finland. This was 2.6 per cent less than during the corresponding period in 2007. The winter with exceptionally mild weather decreased electricity consumption.
 
Electricity transmissions between Finland and Sweden consisted of imports from Sweden into Finland during the early part of the year. The replacement of aluminium transmission line towers between Huutokoski and Vuolijoki caused a restriction in the transmission capacity to Sweden, but this had no impact on the functioning of the market. Soft ground complicated the replacement of the towers, and the work needs to be continued next winter.
 
Transmissions between Estonia and Finland comprised imports into Finland. The import capacity on the Russian transmission connection was restricted by maintenance work in Russia throughout the period under review. Fingrid gave permission to North West Power Plant 2 in St Petersburg to connect to the Finnish grid during the faults and service of North West Power Plant 1.
 
Because of the mild weather, the electricity consumption peak in Finland (13,763 megawatts according to Finnish Energy Industries) was 10 % below the consumption peak in the previous years (14 914 MW in 2007). Peak power subject to the Power Reserve Act was not started on a single occasion.
 
The second nuclear power unit at Olkiluoto tripped from the grid on 5 January 2008, as a result of which imports from Sweden rose up to the full transmission capacity. Electricity consumption on that day was not significantly high (peaking at approx. 13,000 megawatts). Despite this, Fingrid issued a notice of a strained power situation in the evening, because the restarting of the Olkiluoto unit was delayed and because there were no domestic regulation bids available to cover the increase in consumption resulting from night-rate electricity loads. More production capacity became available after the notice, and the situation did not escalate into a power shortage.
 
Falling of a transmission line tower in Paimio as a result of guy corrosion caused a transmission interruption of a couple of weeks on the Lieto-Salo 400 kV transmission line. The event did not cause damage to the environment or interruptions in electricity supply.
 
Promotion of electricity market
 
Finland and Sweden constituted an uniform wholesale market area of electricity during the review period, since congestions limited trade for only one per cent of the hours during the early part of 2008.
 
Nordel, the organisation of the Nordic transmissions system operators, published its new Grid Master Plan in March, extending to the period after 2015. The new grid programme together with national capital investment projects will double the Nordic capital investments in the transmission grid to an annual level of 600 -800 million euros. In addition to enhancing the efficiency of the electricity market, the Grid Master Plan will also facilitate the achievement of environmental goals, because the grid reinforcements will contribute to the wide-spread use of renewable forms of energy.
 
In February, Fingrid increased the amount of electricity market information published on its website. The new items include an hourly consumption forecast, and volumes and prices of balance and regulation power.
 
Capital expenditure and grid maintenance
 
Active grid construction continued during the period examined. Gross capital expenditure totalled 14 million euros (12 million euros during the corresponding period in 2007).
 
Fingrid and Svenska Kraftnät are jointly constructing a second HVDC connection between Finland and Sweden (Fenno-Skan 2). The new connection will improve the electricity transmission capacity between Finland and Sweden, integrating the electricity market in the two countries even more closely together. The submarine cable will be supplied by Nexans Norway AS through a contract worth approx. 150 million euros. Fenno-Skan 2 will be commissioned at the end of 2011.
 
Fingrid has decided to renew four 110 kilovolt transmission lines because of the ageing of conductors and increased transmission needs. These projects will be completed during 2009 -2010.
 
Environmental impact assessment processes concerning 400 kilovolt transmission line routes between Hyvinkää and Hikiä as well as between Länsisalmi and Vuosaari have been completed.
 
In the coming years, transmission capacity will be elevated by 220 kilovolt lines in Lapland because of increasing electricity consumption in that region. The construction of the Petäjäskoski-Valajaskoski-Isoniemi line in Lapland has been launched.
 
Financial result
 
The Group's revenue was 115 million euros (101 million euros). Revenue rose due to increased sales of balance power.
 
Operating profit without the change in the fair value of derivatives was 40 million euros (35 million euros). The operating profit grew mainly because of reduced maintenance management costs and purchasing costs of loss energy. The operating profit in accordance with IFRS was 38 million euros (33 million euros), which contains 2 million euros (- 2 million euros) of negative change in the fair value of electricity derivatives. The IFRS profit before taxes was 29 million euros (25 million euros). The equity ratio was 27.9 % (26.2 %) at the end of the review period.
 
The Group's income flow is characterised by seasonal fluctuations, which is why the financial result for the entire year cannot be directly estimated on the basis of the three-month result.
 
Financing
 
The financial position of the Group continued to be good. The net finance costs of the Group were 8 million euros (8 million euros). Financial assets recognised at the fair value in the income statement, and cash and cash equivalents amounted to 223 million euros (211 million euros) at 31 March 2008. The interest-bearing liabilities, including derivative liabilities, totalled 952 million euros (965 million euros), of which 732 million euros (750 million euros) were long term and 220 million euros (214 million euros) were short-term.
 
The counterparty risk involved in the derivative contracts relating to financing was 9 million euros (6 million euros). The company has an undrawn revolving credit facility of 250 million euros.
 
Moody's Investors Service updated Fingrid's credit opinion on 29 January 2008. The rating stayed the same. The long-term rating is Aa3 and the short-term rating is P-1. The future outlook is stable (Stable Outlook).
 
Personnel
 
The total personnel of the Fingrid Group averaged 243 (230) during the review period.
 
Annual General Meeting
 
Fingrid Oyj's Annual General Meeting was held in Helsinki on 18 March 2008. The Annual General Meeting accepted the financial statements for 2007, adopted the income statement and balance sheet, and granted discharge from liability to the members of the Board of Directors and to the President.
 
Arto Lepistö, Industrial Counsellor, Ministry of Employment and the Economy, was elected as the Chairman of the Board, Timo Rajala, President and CEO, Pohjolan Voima Oy, as the First Deputy Chairman of the Board, and Timo Karttinen, Senior Vice President, Fortum Oyj, as the Second Deputy Chairman of the Board. The other Board members elected were Ari Koponen, Managing Director, Fortum Sähkönsiirto Oy, Ritva Nirkkonen, Managing Director, Jyväskylä Regional Development Company Jykes Ltd, Anja Silvennoinen, Vice President, Energy, UPM-Kymmene Oyj, and Jorma Tammenaho, Portfolio Manager, Mutual Pension Insurance Company Ilmarinen.
 
Auditing
 
The consolidated figures in this Interim Report are unaudited.
 
Outlook for the remaining part of the year
 
The profit of the Fingrid Group for the entire year without the change in the fair value of derivatives is expected to decrease somewhat on the previous year.
 
Board of Directors
Appendices: Tables for the interim report 1 January - 31 March 2008
 
Further information:
Jukka Ruusunen, President & CEO, +358 (0)30 395 5140 or +358(0)40 593 8428
Tom Pippingsköld, CFO, +358 (0)30 395 5157 or +358 (0)40 519 5041