14.2.2014 13:00
Stock Exchange releases, Current News

Fingrid Oyj's review of January – December 2013: profit improved, investments still at a high level

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 %
10–12/13
10–12/12
change %
Turnover
M€
543.1
522.1
4.0
155.1
153.7
0.9
Capital expenditure, gross
M€
225.3
139.0
62.2
94.8
56.4
68.2
- % of turnover
%
41.5
26.6
 
61.1
36.7
 
Research and development expenses
M€
1.8
1.5
15.9
0.6
0.6
8.8
- % of turnover
%
0.3
0.3
 
0.4
0.4
 
Personnel, average
 
277
269
3.0
 
 
 
Personnel at the end of period
 
287
275
4.4
 
 
 
Salaries and remunerations total
M€
19.0
18.2
4.3
5.5
5.3
3.8
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 financial period
M€
90.7
67.0
35.3
47.5
26.7
77.9
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 liabilities
M€
1,076.7
1,030.3
4.5
 
 
 
Gearing
 
1.68
1.81
 
 
 
 
Profit/share
27,278
20,159
35.3
14,286
8,032
77.9
Dividend/A shares
2,018.26*
5,115.89
 
 
 
 
Dividend/B shares
2,018.26*
2,018.26
 
 
 
 
Equity/share
193,293
171,365
12.8
 
 
 
Dividend payout ratio A shares
%
7.4*
25.4
 
 
 
 
Dividend payout ratio series B shares
%
7.4*
10.0
 
 
 
 
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€
 
1-12/13
1-12/12
change %
10-12/13
10-12/12
change %
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 income
13
11
24.6
4
3
5.2
Finland-Estonia congestion income*
4
6
-42.8
1
1
30.3
Finland-Sweden congestion income
19
44
-58.0
6
8
-22.4
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 total
547
526
4.0
156
156
0.2
 
 
 
 
 
 
 

 

Costs, M€
 
1-12/13
1-12/12
change %
10-12/13
10-12/12
change %
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 change in the fair value of commodity derivatives
122
107
13.6
48
39
21.9
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
 
 
 
 
 
1-12/13
1-12/12
10-12/13
10-12/12
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, million €*
37.2
88.5
12.4
16.0
Congestion hours between Finland and Sweden %*
19.4
35.1
27.9
32.0
Congestion income between Finland and Estonia, million €*
7.4
12.9
1.9
1.5
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 Dec 2013
1 Jan - 31 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, 9
-57,802
-66,376
 
 
 
 
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
income statement at fair value
22
194,973
207,426
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
 
 
 
 
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 capital
Share premium account
Revaluation reserve
Translation reserve
Retained earnings
Total equity
Balance at 1 Jan 2012
 
55,922
55,922
-13,679
551
408,586
507,304
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 long-term asset items available-for-sale
12
 
 
1
 
 
1
Total other comprehensive income adjusted by tax effects
 
 
 
6,113
92
 
6,205
Total comprehensive income
 
 
6,113
92
67,029
73,235
Transactions with owners
 
 
 
 
 
 
 
Dividends relating to 2011
26
 
 
 
 
-10,751
-10,751
Balance at 31 Dec 2012
 
55,922
55,922
-7,565
643
464,865
569,788
 
 
 
 
 
 
 
 
Balance at 1 Jan 2013
 
55,922
55,922
-7 565
643
464,865
569,788
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 long-term asset items available-for-sale
12
 
 
-2
 
 
-2
Total other comprehensive income adjusted by tax effects
 
 
 
-3,994
-646
 
- 4,640
Total comprehensive income
 
 
 
-3,994
-646
90,699
86,059
Transactions with owners
 
 
 
 
 
 
 
Dividends relating to 2012
26
 
 
 
 
-13,148
-13,148
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 2013
1 Jan - 31 Dec 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 payment transaction
36
85,818
86,206
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 value
 
25
-488
Changes in working capital:
 
 
 
Change in trade receivables and other receivables
 
10,597
-22,712
Change in inventories
 
-954
-3,736
Change in trade payables and other liabilities
 
-6,572
22,742
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 equipment
17
-222,272
-139,611
Purchase of intangible assets
16
-4,699
-5,106
Purchase of other assets
18
-2,001
0
Proceeds from sale of property, plant and equipment
17
3,980
612
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 INDICATORS
 
 
2013
2012
2011
2010
2009
 
 
IFRS
IFRS
IFRS
IFRS
IFRS
 
 
 
 
 
 
 
Extent of operations
 
 
 
 
 
 
Turnover
million €
543,1
522.1
438.5
456.3
358.9
 
 
 
 
 
 
 
Capital expenditure, gross
million €
225,3
139.0
244.4
144.1
135.6
- of turnover
%
41,5
26.6
55.7
31.6
37.8
 
 
 
 
 
 
 
Research and development expense
million €
 
1,8
1.5
1.8
1.6
1.3
- of turnover
%
0,3
0.3
0.4
0.3
0.4
 
 
 
 
 
 
 
Personnel, average
 
277
269
263
260
251
Personnel, end of year
 
287
275
266
263
260
 
 
 
 
 
 
 
Salaries and bonuses, total
million €
19,0
18.2
17.2
17.2
16.0
 
 
 
 
 
 
 
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 (ROI)
%
6,3
5.6
3.6
5.1
3.9
Return on equity (ROE)
%
15,0
12.4
6.5
8.7
5.7
 
 
 
 
 
 
 
Financing and financial position
 
 
 
 
 
 
Equity ratio
%
29,5
27.3
25.7
28.6
27.2
Interest-bearing net borrowings
million €
1076,7
1,030.3
1,020.2
855.2
797.5
 
 
 
 
 
 
 
Share-specific indicators
 
 
 
 
 
 
Earnings per share
27,277.9
20,159.2
9,924.1
12,561.9
7,417.4
Dividend, series A shares
2,018.26*
5,115.89
3,962.52
2,018.26
2,022.29
Dividend, series B shares
2,018.26*
2,018.26
2,018.26
2,018.26
2,022.29
 
 
 
 
 
 
 
Dividend payout ratio, A-shares
%
7,4
25.4
39.9
16.1
27.3
Dividend payout ratio, B-shares
%
7,4
10.0
20.3
16.1
27.3
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
x 100
Balance sheet total - non-interest-bearing liabilities (average for the year)
 
 
Return on equity, %
=
Profit for the financial year
x 100
Shareholders’ equity (average for the year)
 
 
Equity ratio, %
=
Shareholders’ equity
x 100
Balance sheet total - advances received
 
 
Earnings per share, €
=
Profit for the financial year
 
Average number of shares
 
 
Dividends per share, €  
=
Dividends for the financial year
 
Average number of shares
 
 
Dividendpayoutratio, %
=
Dividend per share
x 100
Earnings per share
 
 
Equity per share, €
=
Shareholders’ equity
 
Number of shares at closing date
 
 
Interest-bearing net borrowings, €
=
Interest-bearing borrowings - cash and cash equivalents
 
 

 

Notes are an integral part of the financial statements.

 

 

KEY INDICATORS PER QUARTER
 
 
 
 
 
 
 
 
 
 
 
Q4/
2013
Q3/
2013
Q2
/2013
Q1/
2013
Q4/
2012
Q3/
2012
Q2/
2012
Q1/
2012
Turnover
M€
155.1
107.8
109.5
170.6
153.7
106.0
92.7
169.6
Operating profit
M€
36.5
9.9
-10.2
79.1
38.5
7.1
-5.1
54.2
Operating profit
%
23.5
9.2
-9.3
46.4
25.0
6.7
-5.5
32.0
 
 
Q4/
2011
Q3/
2011
Q2/
2011
Q1/
2011
Q4/
2010
Q3/
2010
Q2/
2010
Q1/
2010
Turnover
M€
107.9
88.0
91.0
151.6
138.0
85.6
87.5
145.2
Operating profit
M€
17.1
-4.3
2.0
41.7
23.1
4.5
5.9
40.9
Operating profit
%
15.8
-4.8
2.2
27.5
16.7
5.3
6.8
28.1

 

 

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
2012
Interest rate and currency derivatives
Fair value
Pos.

31.12.
13
Fair value
Neg.
31.12.
13
Fair net value
31.12.
13
Nominal value
31.12.
13
Fair value
Pos.
31.12.
12
Fair value
Neg.
31.12.
12
Fair net value
31.12.
12
Nominal value
31.12.
12
 
39,830
-9,225
30,605
366,033
78,713
-6,621
72,092
418,578
Cross-currency swaps
 
-872
-872
135,347
 
-90
-90
2,837
Forward contracts                            
11,939
-8,036
3,904
471,000
15,032
-9,733
5,299
406,000
Interest rate swaps
 
 
 
350,000
2
 
2
810,000
Interest rate options, bought
51,770
-18,133
33,637
1,322,381
93,747
-16,444
77,303
1,637,415
 
 
 
 
 
 
 
 
 
Electricity derivatives
Fair value
Pos.

31.12.13
Fair value
Neg.
31.12.13
Fair net value
31.12.13
Nominal value
31.12.13
Fair value
Pos.
31.12.12
Fair value
Neg.
31.12.12
Fair net value
31.12.12
Nominal value
31.12.12
Electricity forward contracts, designated as hedge accounting NASDAQ OMX Commodities
 
-18,091
-18,091
1.76
 
-16,844
-16,844
2.68
Electricity forward contracts, not designated as hedge accounting NASDAQ OMX Commodities
 
-20,117
-20,117
2.21
 
-10,450
-10,450
1.20
Total
 
-38,208
-38,208
3.97
 
-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, 1,000 €
2014
2015
2016
2017
2018
2018+
Total
Interest rate swaps
36,000
30,000
70,000
30,000
105,000
200,000
471,000
Interest rate options
130,000
220,000
 
 
 
 
350,000
Cross-currency swaps
40,081
90,714
148,081
51,285
 
35,872
366,033
Forward contracts
134,702
645
 
 
 
 
135,347
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 derivatives
1.25
1.14
0.79
0.53
0.26
 
3.97
Total
1.25
1.14
0.79
0.53
0.26
 
3.97

 

 

 

Shareholders by different categories
Number of shares
qty
Of all
shares
%
Of votes
 
             %
 
 
 
 
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
qty
Of all
shares
%
Of votes            
 
%
 
 
 
 
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 Company
150
4.51
2.01
Suomi Mutual Life Assurance Company
75
2.26
1.00
Pohjola Insurance Ltd
75
2.26
1.00
Mandatum Life Insurance Company Limited
54
1.62
0.72
LocalTapiola General Mutual Insurance Company
50
1.50
0.67
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

 

 

Attachments:

Financial Statement Release

Corporate Governance Statement 2013

Annual Review and Financial Statements