FINGRID GROUP'S INTERIM REPORT 1 JANUARY - 31 MARCH 2007
A total of 26 terawatt hours of electricity was consumed in Finland during the
first three months of 2007. This was 1.9 per cent less than during the
corresponding period in 2006.
In the winter period, electricity transmissions between Finland and Sweden
mainly consisted of imports into Finland.
The replacement of aluminium towers between Huutokoski and Vuolijoki together
with the line outages required by the grid reinforcements for the connection of
the new nuclear power unit at Olkiluoto to the grid caused restrictions in the
transmission capacity made available to the market. The Fenno-Skan cable was
damaged at the end of 2006, restricting the transmission capacity until
February. The cable was brought back to commercial operation on 13 February
2007. Despite the limitations in transmission capacity, Finland was separated
into a price area of its own for less than 2 per cent of the time during the
period examined.
The Estlink connection between Finland and Estonia was commissioned for
commercial operation in early January. This cable connection has been used for
importing electricity into Finland. Almost a full volume of electricity was
imported from Russia during the review period.
An all-time record was reached in electricity consumption in Finland during the
period of cold weather in week 6, when the peak consumption was more than 14,800
MW. Almost all electricity production capacity in Finland was in use then, and
no significant problems were encountered in electricity production. Fingrid used
for the first time the production capacity based on the Power Reserve Act to
secure the power balance. Fingrid's systems worked as planned throughout the
cold period.
With the exception of the failure of the Fenno-Skan submarine cable, the
transmission grid did not experience any significant faults affecting the
transmission capacity. In the Satakunta and Pirkanmaa regions, there were more
disturbances than average in the 110 kV network, caused in conjunction with
operating, maintenance and construction work.
The environmental impact assessment for the 220 kV transmission line
Petäjäskoski - Kaukonen - Vajukoski was completed. Fingrid launched preliminary
planning which supports the regional land use planning of grid reinforcements
required by the potential sixth nuclear power plant unit in Finland.
As of the beginning of 2007, Fingrid has been publishing the consumption
forecast for the next day on its website, which in part enhances the
transparency and improves the functioning of the electricity market.
The results of a customer survey carried out in January among all grid customers
indicated that Fingrid's customer service has continued to stay at an excellent
level.
Capital expenditure
Construction of the grid continued actively throughout the early part of 2007,
and at best more than 300 people were working at Fingrid's sites. The mild
winter complicated work progress on several sites. A contract for the
procurement of five power transformers was signed, with the first transformer to
be delivered to Fingrid in November 2008. The total value of the contract is
almost 20 million euros.
Gross capital expenditure during the period examined totalled 12 million euros
(10 million euros during the corresponding period in 2006).
Financial result
The Group's revenue during the review period was 101 million euros (114 million
euros). Revenue declined due to lower sales of balance power and decrease in
electricity consumption. The tariff reductions carried out at the beginning of
the year also decreased the revenue.
Operating profit without the change in the fair value of derivatives was 35
million euros (47 million euros). The operating profit in accordance with IFRS
was 33 million euros (61 million euros), which contains 2 million euros (14
million euros of positive) of negative change in the fair value of electricity
derivatives. The IFRS profit before taxes was 25 million euros (54 million
euros). The equity ratio was 26.2 per cent (25.7 per cent) 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 throughout the review
period. The net finance costs of the Group were 8 million euros (8 million
euros). Financial assets recognised at fair value in the income statement, and
cash and cash equivalents amounted to 211 million euros (201 million euros) at
31 March 2007. The interest-bearing liabilities, including derivative
liabilities, totalled 965 million euros (965 million euros), of which 750
million euros (775 million euros) were long-term and 214 million euros (191
million euros) were short-term.
The counterparty risk involved in the derivative contracts relating to financing
was 6 million euros (6 million euros). The company has an undrawn revolving
credit facility of 250 million euros.
Personnel
The total personnel of the Fingrid Group averaged 230 (234) during the review
period.
Annual General Meeting
Fingrid Oyj's Annual General Meeting was held in Helsinki on 22 March 2007. The
Annual General Meeting accepted the financial statements for 2006, adopted the
income statement and balance sheet, and granted discharge from liability to the
members of the Board of Directors and to the President.
Tapio Kuula, President, Fortum Power and Heat Oy, was elected as the Chairman of
the Board, Arto Lepistö, Deputy Director General, Ministry of Trade and
Industry, as the First Deputy Chairman of the Board, and Timo Rajala, President
and CEO, Pohjolan Voima Oy, as the Second Deputy Chairman of the Board. The
other Board members elected were Timo Karttinen, Senior Vice President, Fortum
Oyj, Ritva Nirkkonen, Managing Director, Jyväskylä Regional Development Company
Jykes Oy, Anja Silvennoinen, Vice President, Energy, UPM-Kymmene Oyj, and Jorma
Tammenaho, Portfolio Manager, Ilmarinen Mutual Pension Insurance Company.
Auditing
The consolidated figures in this Interim Report are unaudited.
Outlook for the remaining part of the year
Fingrid Oyj's Board of Directors decided on 26 April 2007 that Fingrid Oyj will
pay back the 1997 debenture of capital loan nature on the first possible call
date, 15 May 2007.
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
due to the tariff reductions.
Board of Directors
Appendices: Tables for the interim report 1 January - 31 March 2007
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
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| Condensed consolidated income | 2007 | 2006 | Change | 2006 |
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| statement, million euros | Jan - | Jan - Mar | | Jan - Dec |
| | Mar | | | |
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| Revenue | 101.1 | 113.5 | -12.4 | 351.3 |
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| Other operating income | 0.4 | 0.4 | 0.0 | 2.2 |
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| Depreciation and amortisation | -12.8 | -12.5 | -0.2 | -52.3 |
| expense | | | | |
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| Operating expenses | -55.6 | -40.0 | -15.5 | -221.7 |
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| Operating profit | 33.2 | 61.3 | -28.1 | 79.5 |
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| Finance income and costs | -8.0 | -7.8 | -0.2 | -29.3 |
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| Portion of profit of | 0.2 | 0.2 | -0.1 | 1.2 |
| associated companies | | | | |
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| Profit before taxes | 25.4 | 53.8 | -28.4 | 51.5 |
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| Income taxes | -6.6 | -13.9 | 7.3 | -13.1 |
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| Profit for the period | 18.8 | 39.9 | -21.0 | 38.3 |
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| Earnings per share (euros)* | | | | |
| belonging to the owners | | | | |
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| of the parent company, | 5,666 | 11,986 | -6,320 | 11,531 |
| calculated from profit | | | | |
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| *no dilution effect | | | | |
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| Condensed consolidated | 2007 | 2006 | Change | 2006 |
| balance | | | | |
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| sheet, million euros | 31 Mar | 31 Mar | | 31 Dec |
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| ASSETS | | | | |
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| Non-current assets | | | | |
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| Goodwill | 87.9 | 87.9 | 0.0 | 87.9 |
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| Intangible assets | 80.4 | 80.8 | -0.4 | 80.4 |
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| Property, plant and equipment | 1,065.4 | 1,045.7 | 19.7 | 1,065.8 |
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| Investments | 7.4 | 6.9 | 0.5 | 7.2 |
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| Receivables | 13.9 | 38.5 | -24.5 | 13.4 |
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| Current assets | | | | |
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| Inventories | 3.8 | 2.8 | 0.9 | 3.8 |
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| Receivables | 50.1 | 43.0 | 7.1 | 51.2 |
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| Financial assets recognised | | | | |
| in income statement | | | | |
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| at fair value | 182.7 | 198.4 | -15.7 | 186.7 |
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| Cash and cash equivalents | 28.4 | 2.8 | 25.6 | 17.4 |
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| Total assets | 1,520.0 | 1,506.7 | 13.2 | 1,513.8 |
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| | | | | |
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| SHAREHOLDERS' EQUITY AND | | | | |
| LIABILITIES | | | | |
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| Shareholders' equity | | | | |
| belonging to the owners of | | | | |
| the | | | | |
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| parent company | | | | |
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| Shareholders' equity | 397.5 | 387.1 | 10.4 | 385.5 |
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| Non-current liabilities | | | | |
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| Interest-bearing liabilities | 750.6 | 774.6 | -24.0 | 757.5 |
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| Other liabilities | 105.0 | 96.5 | 8.4 | 97.0 |
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| Current liabilities | | | | |
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| Interest-bearing liabilities | 214.2 | 190.8 | 23.5 | 212.8 |
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| Trade and other liabilities | 52.7 | 57.7 | -5.0 | 60.9 |
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| Total shareholders' equity | 1,520.0 | 1,506.7 | 13.2 | 1,513.8 |
| and liabilities | | | | |
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| | | | | |
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| Key indicators, million euros | | 2007 | 2006 | 2006 |
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| (* end of period) | | Jan - Mar | Jan - Mar | Jan - Dec |
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| Revenue | | 101.1 | 113.5 | 351.3 |
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| Capital expenditure, gross | | 12.2 | 10.5 | 69.6 |
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| - % of revenue | | 12.1 | 9.2 | 19.8 |
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| Research and development | | 0.2 | 0.2 | 1.2 |
| expenses | | | | |
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| - % of revenue | | 0.2 | 0.2 | 0.4 |
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| Personnel. average | | 230 | 234 | 238 |
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| Operating profit | | 33.2 | 61.3 | 79.5 |
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| - % of revenue | | 32.8 | 54.0 | 22.6 |
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| Profit before taxes | | 25.4 | 53.8 | 51.5 |
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| - % of revenue | | 25.1 | 47.4 | 14.7 |
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| Equity ratio, %* | | 26.2 | 25.7 | 25.5 |
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| Shareholders' equity* | | 397.5 | 387.1 | 385.5 |
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| Equity per share, euros* | | 119,553 | 116,433 | 115,952 |
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| Earnings per share, euros* | | 5,666 | 11,986 | 11,531 |
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| * end of period | | | | |
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| Consolidated statement of | | Share | Reva | Trans- | | |
| changes in | | | l- | | | |
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| total equity, million | Shar | premi | uati | lation | Retain | |
| euros | e | um | on | | ed | |
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| | capi | accou | rese | reserve | earnin | Total |
| | tal | nt | rve | | gs | |
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| Capital and reserves 1 Jan | 55.9 | 55.9 | 0.0 | 0.2 | 241.9 | 353.9 |
| 2006 | | | | | | |
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| Change in translation | | | | 0.0 | | 0.0 |
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| Dividend distribution | | | | | -6.6 | -6.6 |
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| Profit for period | | | | | 39.9 | 39.9 |
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| Capital and reserves 31 | 55.9 | 55.9 | 0.0 | 0.2 | 275.1 | 387.1 |
| Mar 2006 | | | | | | |
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| Change in translation | | | | -0.1 | | -0.1 |
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| Profit for period | | | | | -1.5 | -1.5 |
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| Other changes | | | 0.0 | | | 0.0 |
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| Capital and reserves 31 | 55.9 | 55.9 | 0.0 | 0.1 | 273.6 | 385.5 |
| Dec 2006 | | | | | | |
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| Change in translation | | | | 0.1 | | 0.1 |
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| Dividend distribution | | | | | -6.9 | -6.9 |
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| Profit for period | | | | | 18.8 | 18.8 |
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| Capital and reserves 31 | 55.9 | 55.9 | 0.0 | 0.1 | 285.5 | 397.5 |
| Mar 2007 | | | | | | |
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| | | | | | | |
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| Condensed consolidated | | | | 2007 | 2006 | 2006 |
| cash flow | | | | | | |
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| statement, million euros | | | | Jan - | Jan - | Jan - |
| | | | | Mar | Mar | Dec |
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| Cash flow from operating | | | | | | |
| activities | | | | | | |
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| Profit for the financial | | | | 18.8 | 39.9 | 38.3 |
| year | | | | | | |
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| Adjustments | | | | 28.8 | 19.8 | 111.6 |
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| Changes in working capital | | | | -2.0 | 2.9 | -6.8 |
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| Interests paid | | | | -7.0 | -6.5 | -41.6 |
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| Interests received | | | | 1.3 | 0.7 | 5.4 |
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| Taxes paid | | | | -0.6 | -0.6 | -2.3 |
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| Net cash flow from | | | | 39.3 | 56.1 | 104.7 |
| operating activities | | | | | | |
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| | | | | | | |
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| Cash flow from investing | | | | | | |
| activities | | | | | | |
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| Purchase of property, | | | | -19.8 | -15.2 | -65.5 |
| plant and equipment | | | | | | |
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| Purchase of intangible | | | | -0.5 | -1.0 | -2.4 |
| assets | | | | | | |
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| Purchase of other assets | | | | 0.0 | 0.0 | 0.0 |
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| Proceeds from other | | | | 0.0 | 0.0 | 0.0 |
| investments | | | | | | |
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| Proceeds from sale of | | | | 0.0 | 0.0 | 0.0 |
| property, plant and | | | | | | |
| equipment | | | | | | |
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| Repayment of loans | | | | 0.0 | 0.0 | 0.1 |
| receivable | | | | | | |
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| Dividends received | | | | 0.0 | 0.0 | 0.6 |
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| Net cash flow from | | | | -20.2 | -16.2 | -67.3 |
| investing activities | | | | | | |
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| | | | | | | |
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| Cash flow from financing | | | | | | |
| activities | | | | | | |
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| Withdrawal of loans | | | | 20.6 | 115.3 | 228.4 |
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| Repayment of loans | | | | -26.5 | -135.7 | -243.3 |
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| Dividends paid | | | | -6.9 | -6.6 | -6.6 |
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| Net cash flow from | | | | -12.7 | -27.0 | -21.5 |
| financing activities | | | | | | |
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| | | | | | | |
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| Net change in cash and | | | | 6.4 | 12.9 | 15.9 |
| cash equivalents | | | | | | |
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| Cash and cash equivalents | | | | 204.1 | 187.9 | 187.9 |
| 1 Jan | | | | | | |
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| Impact of changes in | | | | 0.0 | 0.0 | 0.0 |
| foreign exchange rates | | | | | | |
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| Impact of changes in fair | | | | 0.7 | 0.4 | 0.3 |
| value of investments | | | | | | |
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| Cash and cash equivalents | | | | 211.1 | 201.2 | 204.1 |
| 31 Mar | | | | | | |
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| Derivative agreements, | 31 Mar 2007 | 31 Mar 2006 | 31 Dec 2006 |
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| million euros | Net | Notio | Net | Notio | Net | Notion |
| | fair | nal | fair | nal | fair | al |
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| | value | value | value | value | value | value |
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| Interest and currency | | | | | | |
| derivatives | | | | | | |
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| Cross-currency swaps | -47 | 320 | -29 | 314 | -44 | 322 |
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| Forward contracts | -2 | 97 | 0 | 73 | -3 | 94 |
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| Interest rate swaps | -1 | 213 | -2 | 228 | -1 | 213 |
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| Call options, bought | 11 | 490 | 7 | 470 | 11 | 530 |
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| Total | -39 | 1,120 | -24 | 1,085 | -37 | 1,159 |
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| | | | | | | |
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| | Net | Volum | Net | Volum | Net | Volume |
| | fair | e | fair | e | fair | |
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| | value | TWh | value | TWh | value | TWh |
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| Electricity derivatives | | | | | | |
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| Futures contracts, Nord | | | | | | |
| Pool ASA | | | | | | |
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| Forward contracts of | -5 | 2.85 | 28 | 1.63 | -3 | 2.81 |
| electricity, Nord Pool | | | | | | |
| Clearing | | | | | | |
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| Forward contracts of | 1 | 0.14 | 2 | 0.15 | 1 | 0.14 |
| electricity, others | | | | | | |
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| Call options, bought | | | | | | |
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| Total | -4 | 3.00 | 31 | 1.78 | -2 | 2.96 |
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| | | | | | | |
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| Commitments and | | | | | | |
| contingensies, | | | | | | |
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| million euros | 31 Mar 2007 | 31 Mar 2006 | 31 Dec 2006 |
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| Pledges / bank balances | | 24 | | 0 | | 14 |
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| Rental liabilities | | 10 | | 8 | | 10 |
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| Commitment fee of | | 1 | | 1 | | 1 |
| revolving credit facility | | | | | | |
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| Total | | 35 | | 9 | | 25 |
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| Capital commitments | | 73 | | 80 | | 64 |
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| Other financial | | 1 | | 1 | | 1 |
| liabilities | | | | | | |
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| | | | | | | |
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| Changes in property, plant | | | | | | |
| and equipment, | | | | | | |
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| million euros | 31 Mar 2007 | 31 Mar 2006 | 31 Dec 2006 |
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| Carrying amount at | | 1,066 | | 1,048 | | 1,048 |
| beginning of period | | | | | | |
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| Increases | | 12 | | 9 | | 68 |
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| Decreases | | 0 | | | | 0 |
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| Depreciation and | | -12 | | -12 | | -51 |
| amortisation expense | | | | | | |
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| Carrying amount at end of | | 1,065 | | 1,046 | | 1,066 |
| period | | | | | | |
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| Related party transactions | | | | | | |
| and balances, | | | | | | |
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| milllion euros | 31 Mar 2007 | 31 Mar 2006 | 31 Dec 2006 |
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| Sales | | 31 | | 21 | | 73 |
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| Purchases | | 21 | | 27 | | 73 |
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| Receivables | | 1 | | 1 | | 1 |
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| Liabilities | | 3 | | 0 | | 5 |
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Accounting principles
This interim report has been drawn up in accordance with standard IAS 34,
Interim Financial Reporting.
In this interim report, Fingrid has followed the same principles as in the
annual financial statements for 2006. IFRS 7 (Financial Instruments:
Disclosures) will be adopted in the annual financial statements for 2007. The
Group has analysed the potential impacts of these revised standards and
interpretations, and they are not expected to be significant.
Segment reporting
The entire business of the Fingrid Group is deemed to comprise transmission
system operation in Finland with system responsibility, only constituting a
single segment. There are no essential differences in the risks and
profitability of individual products and services. This is why segment reporting
in accordance with the IAS 14 standard is not presented.
Corporate
rearrangements
There have been no changes in the Group structure during the period reviewed.
Seasonal fluctuation
The Group's operations are characterised by extensive seasonal fluctuations.
General clause
Certain statements in this release concern the future and are based on the
present views of management. Due to their nature, they contain some risk and
uncertainty and are subject to changes in economy and the relevant business.