Futher to our announcement dated 15 February 2008, we make following amendment
in the annual review, key indicators table CONSOLIDATED KEY INDICATORS column
2004 FAS is amended to 2004 IFRS.
Stock exchange release
February 15, 2008
Fingrid Group's annual review and financial statements 2007
Total electricity consumption in Finland in 2007 amounted to 90.3 terawatt hours
(90 TWh in 2006), of which Fingrid transmitted 68.4 terawatt hours in its grid.
Electricity consumption increased by 0.3 per cent on the previous year.
Revenue
of the Fingrid Group in 2007 was 335 million euros (351 million euros in 2006).
The operating profit of the group was 91 (80) million euros, which contains 12
(-18) million euros of positive change in the fair value of electricity
derivatives. Operating profit excluding the change in the fair value of
electricity derivates was 79 (98) million euros.The Group's profit for the year
was 42 (38) million euros.
The return on investment was 7.3 (6.4) per cent and
the return on equity 10.3 (10.4) per cent. The equity ratio was 27.5 (25.5) per
cent at the end of the review period.
The Group's gross capital expenditure in
2007 was 79 million euros (70 million euros).
There has been no material events
or changes in Fingrid´s business or financial situation after the closing of the
final year. The financial result for the current year is expected to decrease
somewhat on the previous year as a result of increased expenses. The grid tariff
was raised by 4.5 per cent at the beginning of 2008.
These financial statements have been audited. Annual review and financial
statements are attached.
Additional information:
Jukka Ruusunen, President and Chief Executive Officer,
tel. +358 30 395 5140 or +358 40 593 8428
Tom Pippingsköld, Chief Financial
Officer, tel. + 358 30 395 5157 or +358 40 519 5041
FINGRID OYJ English translation
FINGRID OYJ
ANNUAL REVIEW AND FINANCIAL STATEMENTS
1 January 2007 - 31 December 2007
CONTENTS Page
1. Annual review
Report of the Board of Directors
Key indicators
The Board of Directors' proposal for the distribution of profit
2. Financial statements
Consolidated financial statements (IFRS)
Income statement
Balance sheet
Statement of changes in equity
Cash flow statement
Notes to the financial statements
Parent company financial statements (FAS)
Income statement
Balance sheet
Cash flow statement
Notes to the financial statements
3. Signatures for the annual review and for the financial statements
REPORT OF THE BOARD OF DIRECTORS
Operating environment
Total electricity consumption in Finland in 2007 was 90.3 terawatt hours (90
terawatt hours in 2006), which was 0.3 per cent more than in the previous year.
With temperature and calendar adjustment, electricity consumption rose by 1 per
cent. A total of 68.4 terawatt hours (67.3 terawatt hours) of electricity was
transmitted in Fingrid's grid.
An all-time record was reached in electricity consumption in Finland in
February, with the peak consumption reaching 14,914 megawatts. In accordance
with the Finnish act on the security of supply of electricity, Fingrid signed
agreements on a power reserve of a total of 600 megawatts. During peak
consumption, power reserves were started once to secure continued power balance.
As of the beginning of 2007, Fingrid has been publishing the consumption
forecast for the next day on its website.
During the early part of the year, electricity transmissions between Finland and
Sweden mainly consisted of imports into Finland. Exports from Finland became
dominant in the autumn. A good water reservoir situation in Southern Norway but
insufficient transmission capacity from Norway to the other Nordic countries led
to the continuous separation of system price and area prices in the Nordic
countries from the late summer onwards. However, there has been a price area
difference between Finland and Sweden for only about 5 per cent of the time.
The Estlink connection between Finland and Estonia was commissioned for
commercial operation in early January. Transmissions on this link have mainly
comprised imports into Finland.
Transmission capacity between Finland and Russia was reserved in full.
Transmission capacity was limited by annual maintenance at the Vyborg DC
substation, and by maintenance work at the North West Power Plant near St
Petersburg, which continued throughout the latter part of the year. The capacity
utilisation rate was 82 per cent. Revised agreements between Fingrid and the
Russian transmission and system operator concerning the use of cross-border
connections from Russia came into effect at the beginning of 2008.
In September 2007, the European Commission submitted a proposal concerning
changes to the shared rules for the electricity market in Europe. For
transmission system operators (TSOs), the foremost changes concern ownership of
companies, strengthened status of the regulatory authority, and promotion of TSO
co-operation. The proposal aims to promote electricity market integration in
Europe.
According to the view of the Commission, the market players should have no
influence on the TSOs for example in the form of ownership or Board membership.
If the Commission proposal concerning regulations for TSO ownership became
reality, it would also have an impact on the ownership structure of Fingrid.
Capital expenditure and grid maintenance
Fingrid's gross capital expenditure in 2007 was 79 million euros (70 million
euros in 2006). Of this amount, a total of 67 million euros were used for the
transmission grid and 7 million euros for reserve power. IT-related capital
expenditure was approximately 5 million euros.
Fingrid's capital expenditure projects progressed as planned in 2007, and
several projects were brought to conclusion. A 400 kilovolt transmission
connection from Olkiluoto to Huittinen was introduced in Western Finland at the
end of October. The new line will reinforce the transmission grid and enables
the connection of the upcoming Olkiluoto nuclear power unit to the grid and the
transmission of electricity from the power plant to consumption. The project
with a total value of approx. 36 million euros included almost 100 kilometres of
new transmission line with various line arrangements. In the same conjunction,
two landscape towers were erected on the line in Eurajoki.
In the late autumn, the Ministry of Trade and Industry granted a cross-border
line permit to Fenno-Skan 2, which is the second subsea cable between Finland
and Sweden. The connection will be brought to commercial operation at the end of
November 2011, one year behind the original plan. The delay is caused by the
extended time of delivery of the subsea cable. Once completed, Fenno-Skan 2 will
bring 800 megawatts of additional transmission capacity on the DC link between
Finland and Sweden, thus improving the functioning of the Nordic electricity
market.
The Olkiluoto gas turbine power plant was commissioned in 2007. The plant,
constructed jointly by Fingrid and Teollisuuden Voima, serves as a fast reserve
for the grid. The project elevated the total capacity of Fingrid's own reserve
power plants by 100 megawatts to 615 megawatts. Fingrid also projects to
construct another 200 megawatts of new reserve power capacity.
In addition several separate substation and transmission line projects were
finalised in 2007, and series compensation in the transmission grid was
enhanced. These projects improve the transmission capacity and supply security
of the grid.
Approximately 16 million euros were used for the maintenance and local operation
of the Finnish grid in 2007. The repair of the Fenno-Skan 1 subsea cable link
between Finland and Sweden accounted for a considerable portion of this, 3.2
million euros. Approx. 6 million euros were used for the renovations and
maintenance of Fingrid's gas turbine plants.
Research and development were allocated 1 million euros. The foremost R&D
projects were related to the real-time monitoring and analysis of low-frequency
power oscillations in the grid, development of an electricity market model,
analysing corrosion damage in guy rods of transmission line towers, studying the
condition of transmission line joints, and measuring and limiting electric and
magnetic fields.
Financial result
Revenue of the Fingrid Group in 2007 was 335 million euros (351 million euros in
2006). Grid revenue decreased as a result of the 5 per cent tariff reduction
carried out at the beginning of the financial year. Electricity transmissions in
Fingrid's grid increased slightly. Revenue from the sales of balance power
decreased on the previous year to 64 (95) million euros. Depreciation costs,
reserve power costs and costs of loss energy purchases increased. Moreover, the
repair of the subsea cable between Finland and Sweden added to the costs.
The operating profit of the group was 91 (80) million euros, which contains 12
(-18) million euros of positive change in the fair value of electricity
derivatives. Fingrid introduced hedge accounting in Group reporting for
electricity derivatives as of 1 July 2007. The Group's positive change in the
fair value of electricity derivatives totalled 25 million euros, of which 11.7
million euros materialised during the first six months of the year, when the
change in the fair value was recorded completely in the income statement. The
change in the fair value recognised in the income statement for the third and
fourth quarters was 0.4 million euros, and the portion recorded in equity and
deferred tax liabilities was 12.6 million euros. Operating profit excluding the
change in the fair value of electricity derivatives was 79 (98) million euros.
The Group's profit for the year was 42 (38) million euros.
The return on investment was 7.3 (6.4) per cent and the return on equity 10.3
(10.4) per cent. The equity ratio was 27.5 (25.5) per cent at the end of the
review period. Revenue of the parent company was 333 (351) million euros and
profit for the financial year 4 (7) million euros.
Financing
The financial position of the Group continued to be good throughout the review
period. The net financial costs excluding the change in the fair value of
derivatives decreased slightly to 31 (32) million euros. The average interest
rate of interest-bearing liabilities, including capital loans, hedging items and
changes in fair value, was 4.5 (3.9) per cent. The change in fair value included
in the gross financial costs was 3.7 (+3) million euros negative, which raised
the average interest rate percentage.
The cash flow from the operations of the Group deducted by capital expenditure
and dividends was 13 (31) million euros.
The financial assets at 31 December 2007 totalled 212 (204) million euros. The
interest-bearing liabilities, including derivative liabilities, totalled 967
(970) million euros, of which 766 (758) million euros were long-term and 200
(213) million euros were short-term. The counterparty risk involved in the
financial derivative contracts was 5 (8) million euros. Available committed
long-term loan facilities amounted to 250 (250) million euros.
The company acquired financing from the international and domestic money and
capital markets. The company covers the need for short-term funding with the
Euro Commercial Paper Programme, and long-term funding has been arranged through
the international Debt Issuance Programme. Fingrid Oyj used its early redemption
right on 15 May 2007 and redeemed the capital loan of 138 million euros in full.
The capital loan had been issued on 1 September 1997.
International rating agency Standard & Poor's Rating Services lowered Fingrid's
long-term and short-term credit ratings by one notch in October 2007. Standard &
Poor's new long-term rating on Fingrid is A+ and short-term rating is A-1. Fitch
Ratings assigned Fingrid Oyj a long-term issuer default rating (IDR) of AA-, a
short-term IDR of F1+ and a senior unsecured debt rating of AA. Moody's
Investors Service updated Fingrid's credit opinion on 29 January 2008, and kept
Fingrid's credit ratings unchanged. Moody's long-term rating on Fingrid is
Aa3 and the short-term rating is P-1. All three rating agencies assessed
Fingrid's outlook to be stable.
Personnel and rewarding systems
The Fingrid Group and Fingrid Oyj employed 248 persons, including temporary
employees, at the end of 2007. The corresponding figure a year before was 242.
Of the personnel employed by the company, 22 per cent (21 per cent in 2006) are
women and 78 (79) per cent are men. Among permanent personnel, those in age
group 24 - 29 years of age numbered 25 in 2007 (24 in 2006), 30 - 34 years 35
(32), 35 - 39 years 28 (30), 40 - 44 years 40 (32), 45 - 49 years 37 (38), 50 -
54 years 27 (20), 55 - 59 years 30 (39), and age group 60 - 65 years 16 (13).
During 2007, a total of 9,337 (10,449) hours were used for personnel training,
with an average of 38 (45) hours per person. Employee absences on account of
illness in 2007 accounted for 2 per cent of the total working hours, which was
at the same level as in 2006. In addition to a compensation system which is
based on the requirements of each position, Fingrid applies quality and
incentive bonus schemes.
Board of Directors and corporate management
Fingrid Oyj's Annual General Meeting was held in Helsinki on 22 March 2007.
Tapio Kuula, President, was elected as the Chairman of the Board, Arto Lepistö,
Industrial Counsellor, as the First Deputy Chairman of the Board, and Timo
Rajala, President and CEO, as the Second Deputy Chairman of the Board. The Board
members elected were Timo Karttinen, Senior Vice President, Ritva Nirkkonen,
Managing Director, Anja Silvennoinen, Vice President, Energy, and Jorma
Tammenaho, Portfolio Manager.
Jukka Ruusunen has served as the President & CEO of the company from 1 January
2007.
Risk management
The Board of Directors approves the main measures in risk management as part of
the corporate strategy, performance indicators, action plan and budget. The
control committee of the Board of Directors obtains an annual report of the
foremost risks pertaining to the company's operations and of their management.
Moreover, the internal auditor monitors issues such as the internal rules of the
company and reports his findings to the control committee.
The foremost business risks of the company are risks relating to the functioning
of the power system, risks relating to regulation, risks relating to electrical
safety and the environment, price risk of electricity, interest rate risk, and
counterparty risk. In its selected strategic focal areas, Fingrid has taken the
management of these risks into account.
Fingrid is prepared for a wide-spread disturbance concerning Finland or the
Nordic power system by means of various reserves, procedural guidelines,
contingency plans, and exercises. In its strategy, the company also focuses on
the versatile utilisation of the upgraded power control system, expedited
disturbance management, and management of power shortage situations. A
wide-spread disturbance in the power system may be caused by several
simultaneous faults in the grid, inoperability of Fingrid's power control
system, insufficiency of production capacity, or an external event which
prevents grid operation entirely or partially.
Fingrid's operations are subject to a licence and supervised by the Energy
Market Authority. Changes in Finnish or European regulation may cause negative
impacts on the company's financial position or its opportunities to carry out
the objectives relating to the development of the electricity market.
The company's strategic focal areas include consolidated Nordic co-operation and
its adaptation to the increasingly European electricity market, improved
financial control, and constant assessment of financial latitude.
In order to control damage and health risks relating to high-voltage
transmission lines and substations, Fingrid is drawing up a risk and
vulnerability analysis of the transmission grid and a management plan for the
ageing of the grid. There is also specific emphasis on the technical guidelines
being up-to-date, and on monitoring the performance of service suppliers.
The price of electricity, changes in the interest rate level, and obligations of
parties which have a contractual relationship with Fingrid involve financial
risks. The regular monitoring of these risks and hedging against them are
improved constantly.
In 2007, internal control audited Fingrid's procedures in risk management.
According to the related report, Fingrid has identified risks pertaining to the
corporate operations systematically and throughout the organisation, and no
significant risks have remained unidentified.
Share capital and capital loans
The minimum share capital of the company is 55,900,000 euros and the maximum
share capital is 223,600,000, within which limits the share capital may be
increased or lowered without amending the Articles of Association. At present,
the share capital is 55,900,000 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. Shares in the various series have different rights relating to their
votes and dividends; these 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.
The company has a capital loan of 30 million euros, which becomes due on 30
November 2029, but, if the company so decides, it can be paid back on 30
November 2009 or 30 November 2019.The capital loan is publicly quoted and
registered in the book-entry system of Finnish Central Securities Depository
Ltd. The portion of interest, which has not been recorded as an expense, was 0.8
million euros at the end of the financial year.
Environment and corporate social responsibility
Fingrid applies an internal environmental management system. The environmental
principles of the company have been described in Fingrid's corporate social
responsibility and principles of environmental management. The primary
environmental impacts of Fingrid's operations are caused by transmission lines
together with areas required by these plus substations serving as nodes in the
transmission grid.
Fingrid has approx. 30,300 tonnes of creosote-impregnated or CCA-impregnated
wooden towers and cable trench covers, categorised as hazardous waste. The
related disposal costs of approx. 2 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 approx. 22 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.
Fingrid serves as the issuing body for guarantees of origin of electricity in
Finland. The guarantee is included in the system required by the RES-E directive
of the European Union.
Events after the closing of the financial year and estimate of future outlook
There have been no material events or changes in Fingrid's business or financial
situation after the closing of the financial year. The financial result for the
current year is expected to decrease somewhat on the previous year as a result
of increased expenses. The grid tariff was raised by 4.5 per cent at the
beginning of 2008.
The company will continue the implementation of its extensive capital
expenditure programme. The capital expenditure will grow from an annual level of
approx. 40 million euros to more than 100 million euros per year in the coming
years. The capital expenditure will grow because electricity consumption is
increasing, the ageing transmission grid needs to be renewed, and cross-border
transmission capacity between countries needs to be further enhanced in order to
promote the market mechanisms. Moreover, Fingrid has to increase its own reserve
power capacity.
Fingrid Oyj has lodged an appeal with the Market Court against a decision issued
by the Energy Market Authority concerning the proceeds of grid operation and
fees levied on the transmission service. Fingrid argues that when assessing a
reasonable return, the supervision model applied by the Energy Market Authority
needs to take into account the special characteristics of Fingrid's operations,
the new obligations of domestic and EU-level regulation affecting its position,
and risks. These should be considered by applying a specific additional risk
premium. The other items in the appeal are related to the handling of financial
assets and receivables as well as specification of efficiency and cost
incentives.
--------------------------------------------------------------------------------
| CONSOLIDATED KEY | | 2003 | 2004 | 2005 | 2006 | 2007 |
| INDICATORS | | | | | | |
--------------------------------------------------------------------------------
| | | FAS | IFRS | IFRS | IFRS | IFRS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Extent of | | | | | | |
| operations | | | | | | |
--------------------------------------------------------------------------------
| Turnover | million € | 297.6 | 301.8 | 316.7 | 351.3 | 334.6 |
--------------------------------------------------------------------------------
| | | | | | | |
--------------------------------------------------------------------------------
| Capital | million € | 43.7 | 42.9 | 63.3 | 69.6 | 79.2 |
| expenditure, | | | | | | |
| gross | | | | | | |
--------------------------------------------------------------------------------
| - of turnover | % | 14.7 | 14.2 | 20.0 | 19.8 | 23.7 |
--------------------------------------------------------------------------------
| | | | | | | |
--------------------------------------------------------------------------------
| Research and | million € | 1.3 | 1.1 | 1.6 | 1.2 | 1.2 |
| development | | | | | | |
| expenses | | | | | | |
--------------------------------------------------------------------------------
| - of turnover | % | 0.4 | 0.4 | 0.5 | 0.4 | 0.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Personnel, | | 227 | 233 | 228 | 238 | 241 |
| average | | | | | | |
--------------------------------------------------------------------------------
| Personnel, end | | 220 | 220 | 231 | 233 | 244 |
| of year | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Salaries and | million € | 14.7 | 12.0 | 12.7 | 13.8 | 14.6 |
| bonuses, total | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profitability | | | | | | |
--------------------------------------------------------------------------------
| Operating profit | million € | 90.5 | 101.5 | 110.0 | 79.5 | 90.7 |
--------------------------------------------------------------------------------
| - of revenue | % | 30.4 | 33.6 | 34.7 | 22.6 | 27.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit before | million € | 37.5 | 59.1 | 75.1 | 51.5 | 56.5 |
| taxes | | | | | | |
--------------------------------------------------------------------------------
| - of revenue | % | 12.6 | 19.6 | 23.7 | 14.7 | 16.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on | % | 7.3 | 8.2 | 8.7 | 6.4 | 7.3 |
| investment (ROI) | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on equity | % | 10.8 | 17.5 | 16.9 | 10.4 | 10.3 |
| (ROE) | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Financing and | | | | | | |
| financial | | | | | | |
| position | | | | | | |
--------------------------------------------------------------------------------
| Equity ratio | % | 18.7 | 21.6 | 23.9 | 25.5 | 27.5 |
--------------------------------------------------------------------------------
| Interest-bearing | million € | 903.0 | 847.6 | 797.9 | 766.3 | 754.6 |
| net liabilities | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share-specific | | | | | | |
| indicators | | | | | | |
--------------------------------------------------------------------------------
| Earnings per | € | 7,972 | 14,884 | 16,761 | 11,531 | 12,616 |
| share | | | | | | |
--------------------------------------------------------------------------------
| Dividends per | € | 1,995 | 1,995 | 1,995 | 2,082 | 2,156* |
| share | | | | | | |
--------------------------------------------------------------------------------
| Equity per share | € | 76,88 | 91,640 | 106,439 | 115,952 | 129,338 |
| | | 6 | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Number of shares | | | | | | |
| at 31 Dec | | | | | | |
--------------------------------------------------------------------------------
| - Series A | qty | 2,078 | 2,078 | 2,078 | 2,078 | 2,078 |
| shares | | | | | | |
--------------------------------------------------------------------------------
| - Series B | qty | 1,247 | 1,247 | 1,247 | 1,247 | 1,247 |
| shares | | | | | | |
--------------------------------------------------------------------------------
| 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 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Profit before taxes + interest and other finance | | |
| | | costs | | |
--------------------------------------------------------------------------------
| Return on | = | -------------------------------------- x 100 |
| investmen | | |
| t, % | | |
--------------------------------------------------------------------------------
| | | Balance sheet total - non-interest-bearing liabilities | |
| | | (average for the year) | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Profit for the financial year | | | | |
--------------------------------------------------------------------------------
| Return on | = | -------------------------------------- x 100 |
| equity, % | | |
--------------------------------------------------------------------------------
| | | Shareholders' equity (average for the | | | |
| | | year) | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Shareholders' equity | | | | | |
--------------------------------------------------------------------------------
| Equity | = | -------------------------------------- x 100 |
| ratio, % | | |
--------------------------------------------------------------------------------
| | | Balance sheet total - advances received | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Profit for the financial year | | | | |
--------------------------------------------------------------------------------
| Earnings | = | -------------------------------------- |
| per | | |
| share, € | | |
--------------------------------------------------------------------------------
| | | Average number of shares | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Dividends for the financial year | | | | |
--------------------------------------------------------------------------------
| Dividends | = | -------------------------------------- |
| per | | |
| share, € | | |
| | | |
--------------------------------------------------------------------------------
| | | Average number of | | | | |
| | | shares | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Shareholders' | | | | | |
| | | equity | | | | | |
--------------------------------------------------------------------------------
| Equity | = | -------------------------------------- |
| per | | |
| share, € | | |
--------------------------------------------------------------------------------
| | | Number of shares at closing date | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest- | = | Interest-bearing liabilities - cash and cash | | |
| bearing | | equivalents | | |
| net | | | | |
| liabiliti | | | | |
| es, € | | | | |
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS' PROPOSAL FOR THE DISTRIBUTION OF PROFIT
Fingrid Oyj's distributable funds in the financial statements are 10,166,264.95
euros. After 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
- 2,156.17 euros of dividend per share be paid in accordance with article 5 of
the Articles of Association, totalling 7,169,262.65 euros
- 2,997,002.30 euros be carried over as unrestricted equity.
--------------------------------------------------------------------------------
| 2. Financial statements | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONSOLIDATED FINANCIAL STATEMENTS (IFRS) | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONSOLIDATED | | 1 Jan - 31 Dec | 1 Jan - 31 Dec |
| INCOME STATEMENT | | 2007 | 2006 |
--------------------------------------------------------------------------------
| | Notes | 1,000 € | 1,000 € |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| REVENUE | 2 | 334,578 | 351,326 |
--------------------------------------------------------------------------------
| Other operating income | 3 | 1,878 | 2,210 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Raw materials and consumables | 4 | -148,650 | -154,950 |
| used | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Employee benefits expense | 5 | -18,537 | -17,917 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Depreciation | 6 | -55,533 | -52,254 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other operating expenses | 7 | -23,078 | -48,867 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OPERATING PROFIT | | 90,658 | 79,548 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Portion of profit of | 8 | 725 | 1,190 |
| associated companies | | | |
--------------------------------------------------------------------------------
| Finance income | 8 | 9,294 | 5,885 |
--------------------------------------------------------------------------------
| Finance costs | 8 | -44,194 | -35,139 |
--------------------------------------------------------------------------------
| Finance income and costs | | -34,175 | -28,064 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PROFIT BEFORE TAXES | | 56,483 | 51,485 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income taxes | 9 | -14,535 | -13,143 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PROFIT FOR THE FINANCIAL YEAR | | 41,948 | 38,342 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to | | | |
--------------------------------------------------------------------------------
| Equity holders of parent | | 41,948 | 38,342 |
| company | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share, € | 10 | 12,616 | 11,531 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share for profit attributable |
| to the equity holders of the parent company |
--------------------------------------------------------------------------------
| Undiluted earnings per share, | 10 | 12,616 | 11,531 |
| € | | | |
--------------------------------------------------------------------------------
| Diluted earnings per share, € | 10 | 12,616 | 11,531 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONSOLIDATED BALANCE SHEET | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSETS | | 31 Dec 2007 | 31 Dec 2006 |
--------------------------------------------------------------------------------
| | Notes | 1,000 € | 1,000 € |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NON-CURRENT ASSETS | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Intangible assets: | | | |
--------------------------------------------------------------------------------
| Goodwill | 12 | 87,920 | 87,920 |
--------------------------------------------------------------------------------
| Other intangible assets | 13 | 84,396 | 80,450 |
--------------------------------------------------------------------------------
| | | 172,316 | 168,370 |
--------------------------------------------------------------------------------
| Property, plant and | 14 | | |
| equipment: | | | |
--------------------------------------------------------------------------------
| Land and water areas | | 10,758 | 10,496 |
--------------------------------------------------------------------------------
| Buildings and structures | | 52,304 | 45,970 |
--------------------------------------------------------------------------------
| Machinery and equipment | | 411,295 | 402,144 |
--------------------------------------------------------------------------------
| Transmission lines | | 550,188 | 543,135 |
--------------------------------------------------------------------------------
| Other property, plant and | | 2,757 | 2,694 |
| equipment | | | |
--------------------------------------------------------------------------------
| Advance payments and | | 58,289 | 61,343 |
| purchases in progress | | | |
--------------------------------------------------------------------------------
| | | 1,085,591 | 1,065,782 |
--------------------------------------------------------------------------------
| Investments: | 15 | | |
--------------------------------------------------------------------------------
| Equity investments in | | 7,074 | 6,856 |
| associated companies | | | |
--------------------------------------------------------------------------------
| Available-for-sale | | 350 | 315 |
| investments | | | |
--------------------------------------------------------------------------------
| | | 7,424 | 7,171 |
--------------------------------------------------------------------------------
| Receivables: | | | |
--------------------------------------------------------------------------------
| Finance receivables | 16 | 10,478 | 11,738 |
--------------------------------------------------------------------------------
| Deferred tax assets | 22 | 522 | 538 |
--------------------------------------------------------------------------------
| Other receivables | 26 | 22,792 | 1,131 |
--------------------------------------------------------------------------------
| | | 33,792 | 13,407 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL NON-CURRENT ASSETS | | 1,299,123 | 1,254,730 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CURRENT ASSETS | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Inventories | 17 | 4,801 | 3,819 |
--------------------------------------------------------------------------------
| Finance receivables | 16 | 1,480 | 369 |
--------------------------------------------------------------------------------
| Trade receivables and | 18 | 47,461 | 50,480 |
| other receivables | | | |
--------------------------------------------------------------------------------
| Tax assets | | | 320 |
--------------------------------------------------------------------------------
| Financial assets | 19 | 208,961 | 186,728 |
| recognised in | | | |
| income statement at fair | | | |
| value | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 19 | 3,023 | 17,358 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL CURRENT ASSETS | | 265,725 | 259,075 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL ASSETS | | 1,564,848 | 1,513,805 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONSOLIDATED BALANCE SHEET | | | |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES | | 31 Dec 2007 | 31 Dec 2006 |
--------------------------------------------------------------------------------
| | Notes | 1,000 € | 1,000 € |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share capital | 21 | 55,922 | 55,922 |
--------------------------------------------------------------------------------
| Share premium account | 21 | 55,922 | 55,922 |
--------------------------------------------------------------------------------
| Revaluation reserve | 21 | 9,375 | 45 |
--------------------------------------------------------------------------------
| Translation reserve | 15 | 213 | 63 |
--------------------------------------------------------------------------------
| Retained earnings | | 308,614 | 273,589 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| TOTAL EQUITY | | 430,048 | 385,542 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NON-CURRENT LIABILITIES | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Deferred tax liabilities | 22 | 108,497 | 91,964 |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 24 | 766,468 | 757,547 |
--------------------------------------------------------------------------------
| Provisions | 25 | 2,007 | 2,067 |
--------------------------------------------------------------------------------
| Other liabilities | 27 | | 3,009 |
--------------------------------------------------------------------------------
| | | 876,972 | 854,586 |
--------------------------------------------------------------------------------
| CURRENT LIABILITIES | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 24 | 200,149 | 212,813 |
--------------------------------------------------------------------------------
| Trade payables and other | 28 | 57,680 | 60,864 |
| liabilities | | | |
--------------------------------------------------------------------------------
| | | 257,828 | 273,676 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL LIABILITIES | | 1,134,800 | 1,128,263 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL EQUITY AND LIABILITIES | | 1,564,848 | 1,513,805 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY, 1,000 € | | |
--------------------------------------------------------------------------------
| | Notes | Share | Share | Revalu | Transla | Retained | Total |
| | | capita | premiu | ation | tion | earnings | |
| | | l | m | reserv | reserve | | |
| | | | accoun | e | | | |
| | | | t | | | | |
--------------------------------------------------------------------------------
| Atrributab | | | | | | | |
| le to | | | | | | | |
| equity | | | | | | | |
| holders of | | | | | | | |
| the parent | | | | | | | |
| company | | | | | | | |
--------------------------------------------------------------------------------
| Equity | | 55,922 | 55,922 | 33 | 152 | 241,879 | 353,910 |
| 1 Jan 2006 | | | | | | | |
--------------------------------------------------------------------------------
| Translatio | 15 | | | | -88 | | -88 |
| n reserve | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | 11 | | | | | -6,632 | -6,632 |
| distributi | | | | | | | |
| on | | | | | | | |
--------------------------------------------------------------------------------
| Other | 21 | | | 11 | | | 11 |
| changes | | | | | | | |
--------------------------------------------------------------------------------
| Profit for the | | | | | 38,342 | 38,342 |
| financial year | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity | | 55,922 | 55,922 | 45 | 63 | 273,589 | 385,542 |
| 31 Dec | | | | | | | |
| 2006 | | | | | | | |
--------------------------------------------------------------------------------
| Cashflow | 21, | | | 9,304 | | | 9,304 |
| hedges | 26 | | | | | | |
--------------------------------------------------------------------------------
| Translatio | 15 | | | | 150 | | 150 |
| n reserve | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | 11 | | | | | -6,923 | -6,923 |
| distributi | | | | | | | |
| on | | | | | | | |
--------------------------------------------------------------------------------
| Other | 21 | | | 26 | | | 26 |
| changes | | | | | | | |
--------------------------------------------------------------------------------
| Profit for the | | | | | 41,948 | 41,948 |
| financial year | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity | | 55,922 | 55,922 | 9,375 | 213 | 308,614 | 430,048 |
| 31 Dec | | | | | | | |
| 2007 | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONSOLIDATED CASH FLOW STATEMENT | 1 Jan - 31 Dec | 1 Jan - 31 Dec |
| | 2007 | 2006 |
--------------------------------------------------------------------------------
| | 1,000 € | 1,000 € |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from operating activities: | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit for the financial year | 41,948 | 38,342 |
--------------------------------------------------------------------------------
| Adjustments: | | |
--------------------------------------------------------------------------------
| Business transactions not involving a | 42,590 | 69,186 |
| payment transaction* | | |
--------------------------------------------------------------------------------
| Interest and other finance costs | 44,194 | 35,139 |
--------------------------------------------------------------------------------
| Interest income | -9,280 | -5,881 |
--------------------------------------------------------------------------------
| Dividend income | -14 | -5 |
--------------------------------------------------------------------------------
| Taxes | 14,535 | 13,143 |
--------------------------------------------------------------------------------
| Changes in working capital: | | |
--------------------------------------------------------------------------------
| Change in trade receivables and other | 3,287 | -6,344 |
| receivables | | |
--------------------------------------------------------------------------------
| Change in inventories | -981 | -955 |
--------------------------------------------------------------------------------
| Change in trade payables and other | 4,950 | 523 |
| liabilities | | |
--------------------------------------------------------------------------------
| Change in provisions | -60 | |
--------------------------------------------------------------------------------
| Interests paid | -45,190 | -41,555 |
--------------------------------------------------------------------------------
| Interests received | 8,506 | 5,381 |
--------------------------------------------------------------------------------
| Taxes paid | -836 | -2,299 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net cash flow from operating | 103,650 | 104,675 |
| activities | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investing activities: | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Purchase of property, plant and | -78,103 | -65,548 |
| equipment | | |
--------------------------------------------------------------------------------
| Purchase of intangible assets | -6,226 | -2,438 |
--------------------------------------------------------------------------------
| Purchase of other assets | | |
--------------------------------------------------------------------------------
| Proceeds from other investments | | 3 |
--------------------------------------------------------------------------------
| Proceeds from sale of property, plant | 8 | |
| and equipment | | |
--------------------------------------------------------------------------------
| Repayment of loans receivable | 85 | 85 |
--------------------------------------------------------------------------------
| Dividends received | 671 | 634 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net cash flow from investing | -83,565 | -67,265 |
| activities | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing activities: | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Withdrawal of short-term loans | 206,155 | 76,788 |
--------------------------------------------------------------------------------
| Repayment of short-term loans | -180,256 | -82,837 |
--------------------------------------------------------------------------------
| Withdrawal of long-term loans | 196,550 | 151,601 |
--------------------------------------------------------------------------------
| Repayment of long-term loans | -228,488 | -160,434 |
--------------------------------------------------------------------------------
| Dividends paid | -6,923 | -6,632 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net cash flow from financing | -12,961 | -21,515 |
| activities | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net change in cash and cash | 7,124 | 15,896 |
| equivalents | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents 1 Jan | 204,087 | 187,922 |
--------------------------------------------------------------------------------
| Impact of changes in fair value of | 774 | 268 |
| investments | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents 31 Dec | 211,984 | 204,087 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Notes to consolidated cash flow | | |
| statement | | |
--------------------------------------------------------------------------------
| Adjustments: | | |
--------------------------------------------------------------------------------
| *Business transactions not involving | 42,590 | 69,186 |
| a payment transaction | | |
--------------------------------------------------------------------------------
| - Depreciation | 55,533 | 52,254 |
--------------------------------------------------------------------------------
| - Capital gains/losses (-/+) on | 78 | -2 |
| property, plant and equipment and | | |
| intangible assets | | |
--------------------------------------------------------------------------------
| - Portion of profit of associated | -725 | -1,190 |
| companies | | |
--------------------------------------------------------------------------------
| - Gains/losses from the valuation of | -12,295 | 18,124 |
| assets and liabilities recognised in | | |
| income statement at fair value | | |
--------------------------------------------------------------------------------
| - Others | | |
--------------------------------------------------------------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING PRINCIPLES OF CONSOLIDATED FINANCIAL STATEMENTS
Fingrid Oyj is a Finnish public limited company established in accordance with
Finnish law. Fingrid's consolidated financial statements have been drawn up in
accordance with the International Financial Reporting Standards (IFRS) as
adopted by the EU. Fingrid's registered office is in Helsinki at address P.O.
Box 530 (Arkadiankatu 23 B), 00101 Helsinki.
A copy of the consolidated financial statements is available on the internet at
www.fingrid.fi or at Fingrid Oyj's head office.
The amounts in the financial statements are in thousands of euros and based on
the original acquisition costs unless otherwise stated in the accounting
principles or notes.
Fingrid Oyj's Board of Directors has accepted the publication of these financial
statements in its meeting of 13 February 2008. In accordance with the Finnish
Companies Act, the shareholders have an opportunity to adopt or reject the
financial statements in the shareholders' meeting held after their publication.
The shareholders' meeting can also amend the financial statements.
Primary business areas
Fingrid Oyj is the national transmission system operator responsible for the
main electricity transmission grid in Finland. The companies responsibilities
are develop the main grid, maintain a continuous balance between electricity
consumption and generation, settle the electricity deliveries between the
parties on a nation-wide level, and promote the electricity market. The company
is also in charge of the cross-border transmission connections to the other
Nordic countries and Russia.
The consolidated financial statements contain the parent company Fingrid Oyj and
its fully-owned subsidiary Fingrid Verkko Oy. The consolidated associated
companies were Porvoon Alueverkko Oy (ownership 33.3%) and Nord Pool Spot AS
(ownership 20%). The Group has no joint ventures.
All intercompany transactions, internal margins on inventories and property,
plant and equipment, internal receivables and liabilities as well as internal
profit distribution are eliminated in consolidation. Ownership of shares between
the Group companies is accounted for under the purchase method of accounting.
The associated companies are consolidated using the equity method of accounting.
The portion of the results of associated companies for the financial year, based
on the Group's ownership in them, is included in the income statement in finance
income and costs.
Use of estimates
When the consolidated financial statements are drawn up in accordance with IFRS,
the company management need to make estimates and assumptions which have an
impact on the amounts of assets, liabilities, income and expenses recorded and
conditional items presented. These estimates and assumptions are based on
historical experience and other justified assumptions which are believed to be
reasonable in the conditions which constitute the foundation for the estimates
of the items recorded in the financial statements. The actual amounts may differ
fom these estimates but the estimates do not involve significant risks.
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.
Revenue and sales recognition
Sales recognition takes place on the basis of the supply of the service.
Electricity transmission is recognised once the transmission has taken place.
Balance power services are recognised on the basis of the supply of the service.
Connection fees are recognised on the basis of the relevant time. Indirect taxes
and discounts, among others, are deducted from the sales income when calculating
revenue.
Contributions
Contributions received from the EU or other parties are recognised in the income
statement at the same time as the related expenses. Contributions received are
presented in other operating income.
Pension schemes
The pension security of the Group's personnel is arranged by outside pension
insurance companies. The Group has both contribution-based pension schemes in
accordance with IAS 19 and benefit-based schemes. Pension premiums paid for
contribution-based schemes are charged to the income statement in the year to
which they relate. Costs resulting from benefit-based schemes are recorded in
the income statement on the basis of annual actuarial calculations.
Research and development
Research and development by the Group aim to intensify intra-company operations.
No new services or products sold separately are created as a result of R&D. This
is why R&D costs are recorded in the income statement as expenses in the
accounting year in which they are created.
Leases
In accordance with the principles of standard IAS 17 Leases, those leases where
the company is transferred substantially all the risks and rewards incident to
ownership are categorised as finance leases. Assets leased through finance
leases reduced by accumulated depreciation are recorded in property, plant and
equipment, and the resulting liabilities are recorded in interest-bearing
liabilities. When a Group company is the lessor, the present value of future
lease payments are recorded in interest-bearing receivables, and the assets
leased out are depreciated in the property, plant and equipment of the lessor.
Lease payments resulting from finance leases are broken down into a finance cost
or income and into a reduction in liability or receivable.
Finance leases in accordance with standard IAS 17 are recognised in the balance
sheet and valued at the lower of an amount equal to the fair value of the assets
when the lease begins or the present value of minimum lease rents. Assets
acquired through finance leases are depreciated according to plan, and potential
impairment losses are recognised. Depreciation is calculated in accordance with
the lower of the Group's depreciation periods for property, plant and equipment
or the lease period.
Lease obligations where the risks and rewards incident to ownership remain with
the lessor are recorded as other leases. Lease obligations paid on the basis of
other leases are recorded in other operating expenses, and they are recognised
in the income statement as equally large items during the lease period.
Foreign currency transactions
The consolidated financial statements are presented in euros, which is the
currency used by the parent company. Commercial flows and financial items
denominated in foreign currencies are booked at the foreign exchange mid-rate
quoted by the European Central Bank (ECB) at the transaction value date.
Receivables and liabilities denominated in foreign currencies are translated at
the mid-rate quoted by ECB at the closing day and recognised in the financial
statements. Foreign exchange gains and losses from business are included in
corresponding items above operating profit. Foreign exchange gains and losses
from financial instruments are recorded at net amounts in finance income and
costs.
Foreign exchange gains and losses from translating the income statement items of
the foreign associated company to the mid-rate and from translating its balance
sheet items to the rate at the closing date are presented as a separate item in
shareholders' equity. Translation differences created before 1 January 2004 are
recorded in retained earnings in accordance with the exception allowed by the
IFRS 1 standard.
Income taxes
Taxes presented in the consolidated income statement include the Group
companies' accrual taxes for the profit of the financial year, tax adjustments
from previous financial years and changes in deferred taxes. In accordance with
IAS 12, the Group records deferred tax assets as non-current receivables and
deferred tax liabilities as non-current liabilities.
Deferred tax assets and liabilities are recorded of all temporary differences
between the tax values of asset and liability items and their carrying amounts
using the liability method. Deferred tax is recorded using tax rates valid at
the closing date.
The largest temporary differences result from the depreciation of property,
plant and equipment and from financial instruments. No deferred tax is recorded
of the undistributed profits of the foreign associated company, because
receiving the dividend does not cause a tax impact by virtue of a Nordic tax
agreement (and the difference will not likely be realised in the foreseeable
future). The deferred tax asset from temporary differences is recorded up to an
amount which can likely be utilised against taxable income created in the
future.
Earnings per share
The Group has calculated the undiluted earnings per share in accordance with
standard IAS 33. The undiluted earnings per share are calculated using the
weighted average number of shares outstanding during the financial year.
Since Fingrid has no option systems or benefits bound to the shareholders'
equity nor other equity financial instruments, there is no dilution effect.
Goodwill and other intangible assets
Goodwill created as a result of the acquisition of enterprises and businesses is
composed of the excess of the acquisition cost over the identifiable net assets
of the acquired business valued at fair value. Goodwill is allocated to
cash-generating units and it is tested annually for impairment. With associated
companies, goodwill is included in the value of the investment in the associated
company.
The Group has applied the exception allowed by the IFRS 1 transition standard to
business combinations which took place before 1 January 2004, which is why the
goodwill resulting from the acquisition of associated companies and businesses
was transferred at values in accordance with FAS. Goodwill has not been
depreciated after 1 January 2004.
Other intangible assets comprise computer systems and land use rights. Computer
systems are valued at the original acquisition cost and depreciated on a
straight line basis during their estimated economic lives. Land use rights with
unlimited economic lives are not depreciated but tested annually for impairment.
The depreciation periods of intangible assets are as follows:
Computer systems, operation control 7-15 years
Computer systems, others 3 years
Subsequent expenses relating to intangible assets are only capitalised if their
financial benefit for the company increases above the former performance level.
In other cases, the expenses are recorded in the income statement when they
materialise.
Emission rights
Emission rights acquired free of charge are valued in intangible assets at their
market price at the time of acquisition, and purchased emission rights are
recorded at the acquisition cost. If it is estimated that the acquired emission
rights do not suffice during the first emission rights period, the company must
purchase the excess portion from the emission rights market. No depreciation is
recorded of emission rights. They are derecognised in the balance sheet at the
time of transfer when the actual emissions have been ascertained.
A provision is recorded of emission rights to be returned. If the Group has a
sufficient volume of emission rights to cover the return obligations, the
provision is recognised at the carrying amount corresponding to the emission
rights in question. If there are not sufficient emission rights to cover the
return obligations, the provision is recognised at the market price of the
emission rights in question.
Property, plant and equipment
Land areas, buildings, transmission lines, machinery and equipment constitute
most of the property, plant and equipment. These are recognised in the balance
sheet at the original acquisition cost less accumulated depreciation and
potential impairment. Interest expenses during the construction period are not
capitalised. If an asset is made up of several parts with economic lives of
different lengths, the parts are recorded as separate items.
When a separately recorded part of property, plant and equipment is renewed, the
costs relating to the new part are capitalised. Other subsequent costs are
capitalised only if it is likely that the future financial benefit relating to
the asset benefits the Group and the acquisition cost of the asset can be
determined reliably. Repair and maintenance costs are recognised in the income
statement once they have materialised.
Straight-line depreciation is recorded of property, plant and equipment on the
basis of their economic lives. Depreciation on property, plant and equipment
taken into use during the financial year is calculated asset-specifically from
the month of introduction. Land and water areas are not depreciated. The
expected economic lives are verified at each closing date, and if they differ
significantly from the earlier estimates, the depreciation periods are amended
accordingly.
The depreciation periods of property, plant and equipment are as follows:
Buildings and structures
Substation buildings and separate buildings 40 years
Substation structures 30 years
Buildings and structures at gas turbine power plants 20 years
Separate structures 15 years
Transmission lines
Transmission lines 400 kV 40 years
Direct current lines 40 years
Transmission lines 110-220 kV 30 years
Creosote-impregnated towers and related disposal expenses 30 years
Aluminium towers of transmission lines (400 kV) 10 years
Optical ground wires 10-20 years
Machinery and equipment
Substation machinery 10-30 years
Gas turbine power plants 20 years
Other machinery and equipment 3-5 years
Gains or losses from the sale or disposition of property, plant and equipment
are recorded in the income statement under either other operating income or
expenses. Property, plant and equipment are derecognised in the balance sheet
when the planned depreciation period has expired, the asset has been sold,
scrapped or otherwise disposed of to an outsider.
Impairment
The carrying amounts of asset items are assessed at the closing date to detect
potential impairment. If impairment is detected, the recoverable amount of the
asset is estimated. An asset is impaired if the balance sheet value of the asset
or of a cash-generating unit exceeds the recoverable amount. Impairment losses
are recorded in the income statement.
The impairment loss of a cash-generating unit is first allocated to reduce the
goodwill of the cash-generating unit and thereafter to reduce in proportion the
other asset items of the unit.
The recoverable amount of intangible assets and property, plant and equipment is
defined so that it is the higher of the fair value reduced by the costs
resulting from sale or the value in use. When defining the value in use, the
estimated future cash flows are discounted at their present value based on
discount rates which reflect the average capital cost of the said
cash-generating unit before taxes. The specific risk of the assets in question
is also considered in the discount rates. An impairment loss relating to
property, plant and equipment and intangible assets other than goodwill is
reversed if a change has taken place in the estimates used for defining the
recoverable amount of the asset. An impairment loss is reversed at the most up
to an amount which would have been defined as the carrying amount of the asset
(reduced by depreciation) if no impairment loss had been recorded of it in the
previous years. An impairment loss recorded of goodwill is not reversed.
Available-for-sale investments
Publicly quoted securities are classified as available-for-sale investments and
recorded at fair value, which is the market value at the closing date. Changes
in fair value are recorded in the shareholders' equity until the investment is
sold or otherwise disposed of, in which case the changes in fair value are
recorded in the income statement. Permanent impairment of assets is recorded in
the income statement. Unlisted securities are recorded at the acquisition cost
as their fair values are not reliably available.
Inventories
Inventories are entered at the lower of the acquisition cost or net realisable
value. The acquisition cost is determined using the FIFO principle. The net
realisable value is the estimated market price in normal business reduced by the
estimated future costs of completing and estimated costs required by sale.
Trade receivables and other receivables
Trade receivables and other receivables are recorded at the original value. The
amount of bad receivables is estimated based on the risks of individual items.
An impairment loss of receivables is recorded when there is valid evidence that
the Group will not receive all of its receivables at the original terms (e.g.
due to the debtor's serious financial problems, likelihood that the debtor will
go bankrupt or subject to other financial rearrangements, and negligence of due
dates of payments by more than 30 days). Impairment losses are recorded directly
to reduce the carrying amount of receivables.
Electricity derivatives
The company enters into electricity derivative contracts in order to hedge its
electricity purchases in accordance with the loss energy forecast. Electricity
derivatives are classified as held-for-trading derivative assets and
liabilities. On 1 July 2007, the company adopted hedge accounting for
electricity derivatives in accordance with the IAS 39 standard, based on cash
flow hedging of loss energy purchases. The company documents at the inception of
the contract the relationship between the hedged item and the hedging
instrument, in accordance with the loss energy purchasing principles approved by
the Board of Directors. The effectiveness calculation of hedging is documented
both at the hedge inception and on an ongoing basis. Hedge accounting is applied
to publicly quoted annual and quarterly instruments bought by the company.
Changes in the fair values of instruments which are designated and qualify for
hedge accounting are recorded in equity, in the hedge reserve. Changes in the
fair values of other electricity derivatives continue to be recorded in the
income statement. Instruments quoted at Nord Pool ASA are valued at the market
prices at the closing date. Bilateral price hedging contracts are valued using
the price of a comparable instrument at Nord Pool ASA.
Interest rate and foreign exchange derivatives
The company enters into derivative contracts in order to hedge the financial
risks (interest rate and foreign exchange exposures) in accordance with the
primary principles for financing approved by the Board of Directors. Fingrid
does not apply hedge accounting to the derivatives. Financial derivatives are
classified as held-for-trading derivative assets and liabilities. Derivative
assets and liabilities are recognised at the original acquisition cost.
Derivatives are measured at fair value at the closing date, and their change in
fair value is recorded in the income statement in finance income and costs. The
fair values of derivatives at the closing date are based on different
calculation methods. Foreign exchange forwards have been measured at the forward
prices. Interest rate and cross-currency swaps have been measured at the present
value on the basis of the yield curve of each currency. Interest rate options
have been valued by using generally accepted option pricing models in the
market.
Financial securities and cash and cash equivalents
Financial securities are classified as held-for-trading assets. This group
includes money market securities and investments in short-term money market
funds. Financial securities are recorded in the balance sheet at fair value at
the settlement day. Financial securities are measured in the financial
statements at fair value, and their change in fair value is recognised in the
income statement in finance income and costs.
Financial assets recognised in the income statement at fair value primarily
comprise certificates of deposit, commercial papers and municipality bills with
maturities of 3 - 6 months, and investments in short-term money market funds.
Cash and cash equivalents comprise bank balances and bank deposits. Bank
deposits are classified as held-to-maturity assets and they are recognised at
the original acquisition cost. In the financial statements, bank deposits are
measured at the amortised acquisition cost.
Financial securities and other cash equivalents are derecognised when they
mature, are sold or otherwise disposed of.
Interest-bearing liabilities
Interest-bearing liabilities include bond and commercial paper issuance and
loans raised by the company, recorded at the acquisition cost less transaction
costs. Transaction costs consist of bond prices above or below par value, credit
fees, commissions and administrative fees. In the financial statements,
interest-bearing liabilities are measured at the amortised cost using the
effective interest rate method. Interest-bearing liabilities are derecognised
when they mature and are repaid.
Provisions
A provision is recorded when the Group has a legal or factual obligation based
on an earlier event and it is likely that fulfilling the obligation will require
a payment, and the amount of the obligation can be estimated reliably.
The provisions can relate to the rearrangement of operations, unprofitable
contracts, environmental obligations, litigation, and tax risks. The provisions
are valued at the present value of costs required to cover the obligation. The
discounting factor used in calculating the present value is chosen so that it
reflects the market view of the time value of money at the assessment date and
of the risks pertaining to the obligation.
Dividend distribution
The Board of Directors' proposal concerning dividend distribution is not
recorded in the financial statements. This is only recorded after a decision
made by an Annual General Meeting of Shareholders.
New IFRS standards and interpretations
The Group has not adopted the following published IFRS/IAS standards and
interpretations, compliance to which is not yet mandatory: IAS 1 Presentation of
Financial Statements: A Revised Presentation, IFRS 8 Operating Segments, IFRIC 8
Scope of IFRS 2, IFRIC 11-IFRS 2 Group and Treasury Share Transactions, IFRIC 12
Service Concession Arrangements, IFRIC 13 Customer Loyalty Programmes, IFRIC 14
IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and
their Interaction. The assessment is that these changes will not have any
material impact on the Group's profit or balance sheet position.
2. INFORMATION ON REVENUE AND SEGMENTS
Through the grid services, a customer obtains the right to transmit electricity
to and from the main grid through its connection point. Grid service is agreed
by means of a grid service contract signed between a customer connected to the
main grid and Fingrid. Fingrid charges a consumption fee, use of grid fee,
connection point fee and market border fee for the grid service. The contract
terms are equal and public.
Transmission services on the cross-border connections to the other Nordic
countries enable participation in the Nordic Elspot and Elbas exchange trade.
Fingrid makes transmission services on the cross-border connections from Russia
available to all electricity market parties. The transmission service is
intended for fixed electricity imports. When making an agreement on transmission
services from Russia, the customer reserves a transmission right (in MW) for a
period of time to be agreed upon separately. The smallest unit that can be
reserved is 50 MW. The contract terms are equal and public.
Information on segments is not presented, because 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.
--------------------------------------------------------------------------------
| 3. OTHER OPERATING INCOME, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Rental income | 1,558 | 1,592 |
--------------------------------------------------------------------------------
| Contributions received | 134 | 136 |
--------------------------------------------------------------------------------
| Other income | 186 | 483 |
--------------------------------------------------------------------------------
| Total | 1,878 | 2,210 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 4. RAW MATERIALS AND CONSUMABLES USED, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Purchases during financial year | 131,547 | 141,152 |
--------------------------------------------------------------------------------
| Foreign exchange gains and losses | | |
--------------------------------------------------------------------------------
| Change in inventories, increase (-) or decrease (+) | -981 | -955 |
--------------------------------------------------------------------------------
| Materials and consumables | 130,566 | 140,197 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| External services | 18,084 | 14,753 |
--------------------------------------------------------------------------------
| Total | 148,650 | 154,950 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | |
--------------------------------------------------------------------------------
| 5. EMPLOYEE BENEFITS EXPENSE, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Salaries and bonuses | 14,592 | 13,808 |
--------------------------------------------------------------------------------
| Pension expenses - contribution-based schemes | 2,293 | 2,218 |
--------------------------------------------------------------------------------
| Pension expenses - benefit-based schemes (note 23) | 335 | 552 |
--------------------------------------------------------------------------------
| Other additional personnel expenses | 1,316 | 1,339 |
--------------------------------------------------------------------------------
| Total | 18,537 | 17,917 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Salaries and bonuses of top management (note 33) | 1,111 | 1,178 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Number of salaried employees in the company during the | |
| financial year: | |
--------------------------------------------------------------------------------
| Personnel, average | 241 | 238 |
--------------------------------------------------------------------------------
| Personnel, 31 Dec | 244 | 233 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 6. DEPRECIATION, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Intangible assets | 1,489 | 1,467 |
--------------------------------------------------------------------------------
| Buildings and structures | 2,016 | 1,817 |
--------------------------------------------------------------------------------
| Machinery and equipment | 26,605 | 22,214 |
--------------------------------------------------------------------------------
| Transmission lines | 24,633 | 25,902 |
--------------------------------------------------------------------------------
| Other property, plant and equipment | 790 | 856 |
--------------------------------------------------------------------------------
| Total | 55,533 | 52,254 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 7. OTHER OPERATING EXPENSES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Contracts, assignments etc. undertaken | 27,204 | 21,879 |
| externally | | |
--------------------------------------------------------------------------------
| Gains from measuring electricity derivatives | -12,096 | 18,117 |
| at fair value | | |
--------------------------------------------------------------------------------
| Rental expenses | 2,043 | 2,207 |
--------------------------------------------------------------------------------
| Foreign exchange gains and losses | 188 | 298 |
--------------------------------------------------------------------------------
| Other expenses | 5,739 | 6,366 |
--------------------------------------------------------------------------------
| Total | 23,078 | 48,867 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 8. FINANCE INCOME AND COSTS, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Portion of profit of associated companies | -725 | -1,190 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest income | -9,280 | -5,881 |
--------------------------------------------------------------------------------
| Dividend income | -14 | -5 |
--------------------------------------------------------------------------------
| | -9,294 | -5,885 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest expenses | 40,128 | 37,663 |
--------------------------------------------------------------------------------
| Gains from measuring derivative contracts at fair | | -8,924 |
| value | | |
--------------------------------------------------------------------------------
| Losses from measuring derivative contracts at | 3,651 | 5,943 |
| fair value | | |
--------------------------------------------------------------------------------
| Foreign exchange gains | -27,903 | -33,720 |
--------------------------------------------------------------------------------
| Foreign exchange losses | 27,936 | 33,846 |
--------------------------------------------------------------------------------
| Other finance costs | 381 | 331 |
--------------------------------------------------------------------------------
| | 44,194 | 35,139 |
--------------------------------------------------------------------------------
| Total | 34,175 | 28,064 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 9. INCOME TAXES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Direct taxes | 1,264 | 2,221 |
--------------------------------------------------------------------------------
| Deferred taxes (note 22) | 13,270 | 10,922 |
--------------------------------------------------------------------------------
| Total | 14,535 | 13,143 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Reconciliation of income tax | | |
--------------------------------------------------------------------------------
| Profit before taxes | 56,483 | 51,485 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Tax calculated in accordance with statutory tax | 14,686 | 13,386 |
| rate in Finland 26 % | | |
--------------------------------------------------------------------------------
| Non-deductible expenses and tax-free income | -151 | -243 |
--------------------------------------------------------------------------------
| Tax expense in income statement | 14,535 | 13,143 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 10. EARNINGS PER SHARE | 2007 | 2006 |
--------------------------------------------------------------------------------
| Profit for the financial year, 1,000 € | 41,948 | 38,342 |
--------------------------------------------------------------------------------
| Weighted average number of shares, qty | 3,325 | 3,325 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Undiluted earnings per share, € | 12,616 | 11,531 |
--------------------------------------------------------------------------------
| Diluted earnings per share, € | 12,616 | 11,531 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 11. DIVIDEND PER SHARE | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| After the closing date, the Board of Directors have proposed that a dividend |
| of 2,156.17 (2006: 2,082.71) euros per share be distributed, totalling 7.2 |
| (2006: 6.9) million euros. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 12. GOODWILL, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 87,920 | 87,920 |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 87,920 | 87,920 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 87,920 | 87,920 |
--------------------------------------------------------------------------------
The entire business of the Fingrid Group comprises transmission system operation
in Finland with system responsibility, which the full goodwill of the Group
concerns.
In impairment testing, the recoverable amount from business is defined by means
of value in use. The cash flow forecasts used in impairment calculations are
based on financial plans approved by executive management, covering a period of
6 years. The expected cash flows during the subsequent years are estimated by
extrapolating the expected cash flows using a growth estimate of zero per cent.
The discount rate before taxes used in the calculations is 6.9%.
According to the view of the management, reasonable changes in the primary
assumptions used in the calculations will not lead to a need for recording
impairment losses.
--------------------------------------------------------------------------------
| 13. INTANGIBLE ASSETS, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Land use rights | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 76,562 | 76,078 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 1,164 | 484 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 77,726 | 76,562 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 77,726 | 76,562 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other intangible assets | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 12,598 | 11,525 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 4,271 | 1,073 |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 16,869 | 12,598 |
--------------------------------------------------------------------------------
| Accumulated depreciation according to plan 1 | -8,710 | -7,244 |
| Jan | | |
--------------------------------------------------------------------------------
| Depreciation according to plan 1 Jan - 31 Dec | -1,489 | -1,467 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 6,670 | 3,888 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 84,396 | 80,450 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 14. PROPERTY, PLANT AND EQUIPMENT, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Land and water areas | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 10,496 | 10,334 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 262 | 162 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 10,758 | 10,496 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 10,758 | 10,496 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Buildings and structures | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 59,317 | 56,179 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 8,430 | 3,139 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | -105 | |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 67,642 | 59,317 |
--------------------------------------------------------------------------------
| Accumulated depreciation according to plan 1 | -13,347 | -11,530 |
| Jan | | |
--------------------------------------------------------------------------------
| Decreases, depreciation according to plan 1 | 25 | |
| Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Depreciation according to plan 1 Jan - 31 Dec | -2,016 | -1,817 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 52,304 | 45,970 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Machinery and equipment | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 565,131 | 543,989 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 35,760 | 21,142 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | -6 | |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 600,885 | 565,131 |
--------------------------------------------------------------------------------
| Accumulated depreciation according to plan 1 | -162,987 | -140,773 |
| Jan | | |
--------------------------------------------------------------------------------
| Decreases, depreciation according to plan 1 | 2 | |
| Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Depreciation according to plan 1 Jan - 31 Dec | -26,605 | -22,214 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 411,295 | 402,144 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Transmission lines | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 730,959 | 714,428 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 31,686 | 16,531 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 762,644 | 730,959 |
--------------------------------------------------------------------------------
| Accumulated depreciation according to plan 1 | -187,824 | -161,922 |
| Jan | | |
--------------------------------------------------------------------------------
| Decreases, depreciation according to plan 1 | | |
| Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Depreciation according to plan 1 Jan - 31 Dec | -24,633 | -25,902 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 550,188 | 543,135 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other property, plant and equipment | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 11,715 | 11,631 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 853 | 84 |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 12,569 | 11,715 |
--------------------------------------------------------------------------------
| Accumulated depreciation according to plan 1 | -9,022 | -8,166 |
| Jan | | |
--------------------------------------------------------------------------------
| Depreciation according to plan 1 Jan - 31 Dec | -790 | -856 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 2,757 | 2,694 |
--------------------------------------------------------------------------------
| Advance payments and purchases in progress | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 61,343 | 34,271 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 69,650 | 61,233 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | -72,704 | -34,160 |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 58,289 | 61,343 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 58,289 | 61,343 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 1,085,591 | 1,065,782 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 15. INVESTMENTS, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Available-for-sale investments | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 315 | 300 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | | -1 |
--------------------------------------------------------------------------------
| Changes in fair value 1 Jan - 31 Dec | 36 | 15 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 350 | 315 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The changes in fair value are recorded in | | |
| equity (note 21). | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity investments in associated companies | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 6,856 | 6,384 |
--------------------------------------------------------------------------------
| Portion of profit 1 Jan - 31 Dec | 725 | 1,190 |
--------------------------------------------------------------------------------
| Translation differences 1 Jan - 31 Dec | 150 | -88 |
--------------------------------------------------------------------------------
| Dividends 1 Jan - 31 Dec | -657 | -629 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 7,074 | 6,856 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 7,424 | 7,171 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Goodwill contained in the carrying amount of | 3,245 | 3,245 |
| associated companies at 31 Dec | | |
--------------------------------------------------------------------------------
There are no such essential temporary differences with associated companies of
which deferred tax assets or liabilities would have been recorded.
Financial summary of associated companies, 1,000 €
--------------------------------------------------------------------------------
| 2006 | Assets | Liabiliti | Revenue | Profit/los | Ownership |
| | | es | | s | (%) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Nord Pool Spot AS, | 333,78 | 316,668 | 11,219 | 5,714 | 20.0 |
| Lysaker, Norway | 4 | | | | |
--------------------------------------------------------------------------------
| Porvoon Alueverkko | 2,215 | 2,158 | 3,427 | 9 | 33.3 |
| Oy, Porvoo, Finland | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 2007 | Assets | Liabiliti | Revenue | Profit/los | Ownership |
| | | es | | s | (%) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Nord Pool Spot AS, | 440,22 | 421,754 | 11,409 | 3,928 | 20.0 |
| Lysaker, Norway | 6 | | | | |
--------------------------------------------------------------------------------
| Porvoon Alueverkko | 2,629 | 2,573 | 3,784 | 2 | 33.3 |
| Oy, Porvoo, Finland | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Subsidiary shares 31 | | | | Ownership | Ownership |
| Dec 2007 | | | | (%) | (%) |
--------------------------------------------------------------------------------
| Fingrid Verkko Oy, | | | | 100 | 100 |
| Helsinki, Finland | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 16. FINANCE RECEIVABLES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Non-current: | | |
--------------------------------------------------------------------------------
| Loans receivable from associated companies | | 194 |
--------------------------------------------------------------------------------
| Receivables based on derivative contracts | 10,478 | 11,544 |
--------------------------------------------------------------------------------
| | 10,478 | 11,738 |
--------------------------------------------------------------------------------
| Current: | | |
--------------------------------------------------------------------------------
| Receivables based on derivative contracts | 1,363 | 329 |
--------------------------------------------------------------------------------
| Loans receivable from associated companies (note | 110 | |
| 33) | | |
--------------------------------------------------------------------------------
| Other receivables | 7 | 40 |
--------------------------------------------------------------------------------
| | 1,480 | 369 |
--------------------------------------------------------------------------------
| Total | 11,958 | 12,107 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 17. INVENTORIES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Materials and consumables | 4,801 | 3,793 |
--------------------------------------------------------------------------------
| Work in progress | | 27 |
--------------------------------------------------------------------------------
| Total | 4,801 | 3,819 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 18. TRADE RECEIVABLES AND OTHER RECEIVABLES, 1,000 | 2007 | 2006 |
| € | | |
--------------------------------------------------------------------------------
| Trade receivables | 36,798 | 43,008 |
--------------------------------------------------------------------------------
| Trade receivables and other receivables from | 1,463 | 419 |
| associated companies (note 33) | | |
--------------------------------------------------------------------------------
| Prepayments and accrued income | 9,163 | 7,016 |
--------------------------------------------------------------------------------
| Other receivables | 36 | 37 |
--------------------------------------------------------------------------------
| Total | 47,461 | 50,480 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Essential items included in prepayments and accrued | | |
| income | | |
--------------------------------------------------------------------------------
| Accruals of sales | 7,853 | 6,197 |
--------------------------------------------------------------------------------
| Accruals of purchases/prepayments | 958 | 569 |
--------------------------------------------------------------------------------
| Rents/prepayments | 244 | 249 |
--------------------------------------------------------------------------------
| Total | 9,055 | 7,016 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Age distribution of trade receivables | 2007 | 2006 |
--------------------------------------------------------------------------------
| Unmatured trade receivables | 38,046 | 42,859 |
--------------------------------------------------------------------------------
| Trade receivables matured by 1-30 days | 208 | 566 |
--------------------------------------------------------------------------------
| Trade receivables matured by 31-60 days | | 1 |
--------------------------------------------------------------------------------
| Trade receivables matured by more than 60 days | 7 | |
--------------------------------------------------------------------------------
| Total | 38,260 | 43,426 |
--------------------------------------------------------------------------------
On 31 December 2007 or on 31 December 2006, the company did not have matured
trade receivables of which impairment losses would have been recorded. Based on
earlier payments, the company expects to receive the matured receivables in less
than 3 months.
Receivables where the due dates have been renegotiated are not included in
matured trade receivables.
--------------------------------------------------------------------------------
| Trade receivables and other receivables broken down by | |
| currencies | |
--------------------------------------------------------------------------------
| EUR | 47,442 | 48,701 |
--------------------------------------------------------------------------------
| USD | | 25 |
--------------------------------------------------------------------------------
| NOK | | 151 |
--------------------------------------------------------------------------------
| SEK | 18 | 1,603 |
--------------------------------------------------------------------------------
| Total | 47,461 | 50,480 |
--------------------------------------------------------------------------------
The fair value of trade receivables and other receivables does not differ
essentially from the balance sheet value.
--------------------------------------------------------------------------------
| 19. CASH AND CASH EQUIVALENTS, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Certificates of deposit | 79,287 | 49,400 |
--------------------------------------------------------------------------------
| Commercial papers | 84,555 | 77,156 |
--------------------------------------------------------------------------------
| Investments in money market funds | 45,119 | 60,172 |
--------------------------------------------------------------------------------
| | 208,961 | 186,728 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash in hand and bank receivables* | 2,863 | 17,218 |
--------------------------------------------------------------------------------
| Money market deposits | 160 | 140 |
--------------------------------------------------------------------------------
| | 3,023 | 17,358 |
--------------------------------------------------------------------------------
| Total | 211,984 | 204,087 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| *includes pledged bank accounts (note 29) | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 20. CARRYING AMOUNTS OF FINANCIAL ASSETS AND LIABILITIES BY MEASUREMENT |
| CATEGORIES, 1,000 € |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Balance | Loans | Assets/ | Availabl | Financia | Total | Note |
| sheet item | and | liabiliti | e-for-sa | l | | |
| 31 Dec | other | es | le | assets/ | | |
| 2007 | receiv | recognise | financia | liabilit | | |
| | ables | d in | l assets | ies | | |
| | | income | | measured | | |
| | | statement | | at | | |
| | | at fair | | amortise | | |
| | | value | | d cost | | |
--------------------------------------------------------------------------------
| Non-curren | | | | | | |
| t | | | | | | |
| financial | | | | | | |
| assets | | | | | | |
--------------------------------------------------------------------------------
| Available- | | | 350 | | 350 | 15 |
| for-sale | | | | | | |
| investment | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Derivative | | 10,478 | | | 10,478 | 16, 26 |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Current | | | | | | |
| financial | | | | | | |
| assets | | | | | | |
--------------------------------------------------------------------------------
| Derivative | 1,363 | | | | 1,363 | 16 |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Other | 7 | | | 110 | 117 | 16 |
| financial | | | | | | |
| receivable | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Trade | 47,461 | | | | 47,461 | 18 |
| receivable | | | | | | |
| s and | | | | | | |
| other | | | | | | |
| receivable | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Cash and | | 208,961 | | | 208,961 | 19 |
| cash | | | | | | |
| equivalent | | | | | | |
| s | | | | | | |
| recognised | | | | | | |
| in income | | | | | | |
| statement | | | | | | |
| at fair | | | | | | |
| value | | | | | | |
--------------------------------------------------------------------------------
| Cash in | 3,023 | | | | 3,023 | 19 |
| hand and | | | | | | |
| bank | | | | | | |
| receivable | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Financial | 51,854 | 219,439 | 350 | 110 | 271,753 | |
| assets | | | | | | |
| total | | | | | | |
--------------------------------------------------------------------------------
| Non-curren | | | | | | |
| t | | | | | | |
| financial | | | | | | |
| liabilitie | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Interest-b | | | | 729,009 | 729,009 | 24 |
| earing | | | | | | |
| liabilitie | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Derivative | | 37,459 | | | 37,459 | 24, 26 |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Current | | | | | | |
| financial | | | | | | |
| liabilitie | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Interest-b | | | | 187,100 | 187,100 | 24 |
| earing | | | | | | |
| liabilitie | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Derivative | | 13,049 | | | 13,049 | 24, 26 |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Trade | 37,047 | | | 13,618 | 50,665 | 28 |
| payables | | | | | | |
| and other | | | | | | |
| liabilitie | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Financial | 37,047 | 50,508 | | 929,726 | 1,017,281 | |
| liabilitie | | | | | | |
| s total | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Balance | Loans | Assets/ | Availabl | Financia | Total | Note |
| sheet item | and | liabiliti | e- | l | | |
| 31 Dec | other | es | for-sale | assets/ | | |
| 2006 | receiv | recognise | financia | liabilit | | |
| | ables | d in | l | ies | | |
| | | income | assets | measured | | |
| | | statement | | at | | |
| | | at fair | | amortise | | |
| | | value | | d | | |
| | | | | cost | | |
--------------------------------------------------------------------------------
| Non-curren | | | | | | |
| t | | | | | | |
| financial | | | | | | |
| assets | | | | | | |
--------------------------------------------------------------------------------
| Available- | | | 315 | | 315 | 15 |
| for-sale | | | | | | |
| investment | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Derivative | | 11 544 | | | 11 544 | 16, 26 |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Other | | | | 194 | 194 | 16 |
| financial | | | | | | |
| receivable | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Current | | | | | | |
| financial | | | | | | |
| assets | | | | | | |
--------------------------------------------------------------------------------
| Derivative | 329 | | | | 329 | 16 |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Other | 40 | | | | 40 | 16 |
| financial | | | | | | |
| receivable | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Trade | 50 840 | | | | 50 840 | 18 |
| receivable | | | | | | |
| s and | | | | | | |
| other | | | | | | |
| receivable | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Cash and | | 186 728 | | | 186 728 | 19 |
| cash | | | | | | |
| equivalent | | | | | | |
| s | | | | | | |
| recognised | | | | | | |
| in income | | | | | | |
| statement | | | | | | |
| at fair | | | | | | |
| value | | | | | | |
--------------------------------------------------------------------------------
| Cash in | 17 358 | | | | 17 358 | 19 |
| hand and | | | | | | |
| bank | | | | | | |
| receivable | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Financial | 68 567 | 198 272 | 315 | 194 | 267 348 | |
| assets | | | | | | |
| total | | | | | | |
--------------------------------------------------------------------------------
| Non-curren | | | | | | |
| t | | | | | | |
| financial | | | | | | |
| liabilitie | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Interest-b | | | | 724 022 | 724 022 | 24 |
| earing | | | | | | |
| liabilitie | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Derivative | | 33 525 | | | 33 525 | 24, 26 |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Current | | | | | | |
| financial | | | | | | |
| liabilitie | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Interest-b | | | | 200 021 | 200 021 | 24 |
| earing | | | | | | |
| liabilitie | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Derivative | | 12 792 | | | 12 792 | 24, 26 |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Trade | 31 767 | | | 16 904 | 48 671 | 28 |
| payables | | | | | | |
| and other | | | | | | |
| liabilitie | | | | | | |
| s | | | | | | |
--------------------------------------------------------------------------------
| Financial | 31 767 | 46 317 | | 940 947 | 1 019 031 | |
| liabilitie | | | | | | |
| s total | | | | | | |
--------------------------------------------------------------------------------
21. EQUITY
Equity is composed of the share capital, share premium account, fair value
reserve (incl. hedge and revaluation reserves), translation reserve, and
retained earnings. The hedge reserve includes the changes in the fair value of
hedging instruments for loss energy. The fair value reserve includes the changes
in the fair value of available-for-sale investments. The translation reserve
includes translation differences in the net capital investments of associated
companies in accordance with the purchase method of accounting. The profit for
the financial year is recorded in retained earnings.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share capital and share premium | Share | Share | Total |
| account, 1,000 € | capital | premium | |
| | | account | |
--------------------------------------------------------------------------------
| 1 Jan 2006 | 55,922 | 55,922 | 111,845 |
--------------------------------------------------------------------------------
| Change | | | |
--------------------------------------------------------------------------------
| 31 Dec 2006 | 55,922 | 55,922 | 111,845 |
--------------------------------------------------------------------------------
| Change | | | |
--------------------------------------------------------------------------------
| 31 Dec 2007 | 55,922 | 55,922 | 111,845 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The share capital is broken down as | Number of | Of all | Of votes |
| follows: | shares | shares | % |
| | qty | % | |
--------------------------------------------------------------------------------
| Series A shares | 2,078 | 62.49 | 83.32 |
--------------------------------------------------------------------------------
| Series B shares | 1,247 | 37.51 | 16.68 |
--------------------------------------------------------------------------------
| Total | 3,325 | 100.00 | 100.00 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Number of shares, qty | Series | Series | Total |
| | A shares | B shares | |
--------------------------------------------------------------------------------
| 1 Jan 2007 | 2,078 | 1,247 | 3,325 |
--------------------------------------------------------------------------------
| Change | | | |
--------------------------------------------------------------------------------
| 31 Dec 2007 | 2,078 | 1,247 | 3,325 |
--------------------------------------------------------------------------------
The maximum number of shares is 13,000 as in 2006. The shares have no par value.
Series A shares confer three votes each at a shareholders' meeting and series B
shares one vote each. When electing members of the Board of Directors, series A
share confers 10 votes each at a shareholders' meeting and each series B share
one vote each.
Series B shares have preferential right over series A shares to obtain the
annual dividends specified below from the funds available for profit
distribution. After this, a corresponding dividend is distributed to series A
shares. If the annual dividend cannot be distributed in some year, the shares
confer a right to receive the undistributed amount from the funds available for
profit distribution in the subsequent years; however so that series B shares
have preferential right over series A shares to receive the annual dividend and
the undistributed amount.
A shareholders' meeting decides on the annual dividend for series B shares on
the following grounds:
The amount of the annual dividend is calculated on the basis of calendar years
so that the subscription price of a share, added by amounts paid in conjunction
with potential increases of share capital and reduced by potential amounts paid
in refunds of equity, is multiplied by the dividend percentage; however so that
the minimum dividend is 6%. The dividend percentage is defined on the basis of
the yield of the 30-year German Government Bond.
Series B shares have preference with respect to dividends as stipulated in the
Articles of Association. The dividend for 2007 is 6.41 % p.a. of the
subscription price of the share.
There are no minority interests.
--------------------------------------------------------------------------------
| Shareholders by different categories | Number | Of all | Of votes |
| | of | shares | % |
| | shares | % | |
| | qty | | |
--------------------------------------------------------------------------------
| Public enterprises | 834 | 25.08 | 33.44 |
--------------------------------------------------------------------------------
| Private enterprises | 844 | 25.38 | 33.57 |
--------------------------------------------------------------------------------
| Public organisations | 410 | 12.33 | 16.44 |
--------------------------------------------------------------------------------
| Financial and insurance institutions | 1,237 | 37.20 | 16.55 |
--------------------------------------------------------------------------------
| Total | 3,325 | 100.00 | 100.00 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders | Number | Of all | Of votes |
| | of | shares | |
| | shares | % | % |
| | qty | | |
--------------------------------------------------------------------------------
| Fortum Power and Heat Oy | 834 | 25.08 | 33.44 |
--------------------------------------------------------------------------------
| Pohjolan Voima Oy | 834 | 25.08 | 33.44 |
--------------------------------------------------------------------------------
| Republic of Finland | 410 | 12.33 | 16.44 |
--------------------------------------------------------------------------------
| Varma Mutual Pension Insurance Company | 405 | 12.18 | 5.41 |
--------------------------------------------------------------------------------
| Mutual Pension Insurance Company | 350 | 10.53 | 4.68 |
| Ilmarinen | | | |
--------------------------------------------------------------------------------
| Tapiola Mutual Pension Insurance | 150 | 4.51 | 2.01 |
| Company | | | |
--------------------------------------------------------------------------------
| Suomi Mutual Life Assurance Company | 75 | 2.26 | 1.00 |
--------------------------------------------------------------------------------
| Pohjola Non-Life Insurance Company Ltd | 75 | 2.26 | 1.00 |
--------------------------------------------------------------------------------
| Sampo Life Insurance Company Limited | 54 | 1.62 | 0.72 |
--------------------------------------------------------------------------------
| Tapiola General Mutual Insurance | 50 | 1.50 | 0.67 |
| Company | | | |
--------------------------------------------------------------------------------
| Tapiola Mutual Life Assurance Company | 35 | 1.05 | 0.47 |
--------------------------------------------------------------------------------
| If P&C Insurance Company Ltd | 25 | 0.75 | 0.33 |
--------------------------------------------------------------------------------
| Tapiola Corporate Life Insurance | 12 | 0.36 | 0.16 |
| Company Ltd | | | |
--------------------------------------------------------------------------------
| Imatran Seudun Sähkö Oy | 10 | 0.30 | 0.13 |
--------------------------------------------------------------------------------
| Fennia Life Insurance Company | 6 | 0.18 | 0.08 |
--------------------------------------------------------------------------------
| Total | 3,325 | 100.00 | 100.00 |
--------------------------------------------------------------------------------
Share premium account
The share premium account includes the difference between the counter value of
the shares and the value obtained. According to the Finnish Companies Act the
premium fund means tied equity. The share capital can be increased by
transferring funds from the premium fund account. The premium fund account can
be decreased in order to cover losses or it can under certain conditions be
returned to the owners.
Fair value reserve
The fair value reserves include the changes in the fair value of derivative
instruments used for hedging cash flow (hedge reserve) and the changes in the
fair value of available-for-sale investments (publicly quoted and unquoted
securities) (revaluation reserve).
--------------------------------------------------------------------------------
| Hedge reserve, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| 1 Jan | | |
--------------------------------------------------------------------------------
| Hedge reserve | 12,573 | |
--------------------------------------------------------------------------------
| Taxes | -3,269 | |
--------------------------------------------------------------------------------
| Hedge reserve 31 Dec | 9,304 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Revaluation reserve, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| 1 Jan | 45 | 33 |
--------------------------------------------------------------------------------
| Changes in fair value during financial year | 36 | 15 |
--------------------------------------------------------------------------------
| Taxes on changes in fair value during financial year | -9 | -4 |
--------------------------------------------------------------------------------
| Revaluation reserve 31 Dec | 71 | 45 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Translation reserve, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Translation reserve 31 Dec | 213 | 63 |
--------------------------------------------------------------------------------
| The translation reserve includes the translation differences resulting from |
| converting the financial statements of the foreign associated company. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Dividends, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Dividends paid | 6,923 | 6,632 |
--------------------------------------------------------------------------------
| The proposal for dividend distribution is presented | | |
| in note 11. | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Retained earnings , 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Profit from previous financial years | 266,666 | 235,247 |
--------------------------------------------------------------------------------
| Profit for the financial year | 41,948 | 38,342 |
--------------------------------------------------------------------------------
| Retained earnings 31 Dec | 308,614 | 273,589 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 22. DEFERRED TAXES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Deferred tax assets | | |
--------------------------------------------------------------------------------
| Valuation of derivative contracts and other financial | | |
--------------------------------------------------------------------------------
| assets and liabilities at fair value | 2,099 | 2,278 |
--------------------------------------------------------------------------------
| Other temporary differences | 522 | 538 |
--------------------------------------------------------------------------------
| | 2,621 | 2,816 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | | |
--------------------------------------------------------------------------------
| Accumulated depreciation difference | 91,846 | 83,864 |
--------------------------------------------------------------------------------
| Intangible assets | 9,657 | 7,226 |
--------------------------------------------------------------------------------
| Valuation of derivative contracts and other financial | | |
--------------------------------------------------------------------------------
| assets and liabilities at fair value | 8,617 | 2,623 |
--------------------------------------------------------------------------------
| Other temporary differences | 476 | 528 |
--------------------------------------------------------------------------------
| | 110,596 | 94,242 |
--------------------------------------------------------------------------------
| Total* | 107,975 | 91,426 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| *Deferred net tax liability is broken down in the | | |
| balance sheet as follows: | | |
--------------------------------------------------------------------------------
| Deferred tax assets | 522 | 538 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 108,497 | 91,964 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Deferred tax assets | | |
--------------------------------------------------------------------------------
| Non-current | 782 | 927 |
--------------------------------------------------------------------------------
| Current | 1,840 | 1,889 |
--------------------------------------------------------------------------------
| | 2,621 | 2,816 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Deferred tax liabilities | | |
--------------------------------------------------------------------------------
| Non-current | 109,236 | 92,968 |
--------------------------------------------------------------------------------
| Current | 1,360 | 1,273 |
--------------------------------------------------------------------------------
| | 110,596 | 94,242 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 107,975 | 91,426 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in deferred taxes recorded in balance sheet | | |
--------------------------------------------------------------------------------
| Deferred taxes (net) 1 Jan | 91,426 | 80,500 |
--------------------------------------------------------------------------------
| Items recorded in income statement | 13,270 | 10,922 |
--------------------------------------------------------------------------------
| Items recorded in shareholders' equity (note 21) | 3,278 | 4 |
--------------------------------------------------------------------------------
| Deferred taxes 31 Dec | 107,975 | 91,426 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 23. PENSION COMMITMENTS | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The most important pension scheme of the Group is a contribution-based scheme in
accordance with TyEL (Finnish Employee Pensions Act), where the benefits are
determined directly on the basis of the beneficiary's earnings.
The Group has a benefit-based supplementary pension scheme covering those born
between 1945 and 1949 who have worked at Fingrid at least as of 1 September
1997. These persons can retire at certain discretionary conditions at the
earliest at an age of 60 and at the earliest in 2006. The payment of the
supplementary pension will finish when the person reaches old age pension and at
the latest at the age of 63, after which the person's pension will be composed
of the statutory pensions incurred by that time.
--------------------------------------------------------------------------------
| Benefit-based pension expense in income statement, | 2007 | 2006 |
| 1,000 € | | |
--------------------------------------------------------------------------------
| Expenses based on service during financial year | 323 | 533 |
--------------------------------------------------------------------------------
| Expected return on scheme assets | -105 | -99 |
--------------------------------------------------------------------------------
| Interest expenses | 117 | 118 |
--------------------------------------------------------------------------------
| Total | 335 | 552 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Benefit-based pension liability in balance sheet, | 2007 | 2006 |
| 1,000 € | | |
--------------------------------------------------------------------------------
| Present value of funded obligations | 1,543 | 2,144 |
--------------------------------------------------------------------------------
| Fair value of scheme assets | -1,507 | -2,028 |
--------------------------------------------------------------------------------
| Deficit/surplus | 36 | 117 |
--------------------------------------------------------------------------------
| Unrecognised net actuarial gains (+) and losses (-) | -36 | -117 |
--------------------------------------------------------------------------------
| Net liability | 0 | 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Changes in present value of benefit obligations, | 2007 | 2006 |
| 1,000 € | | |
--------------------------------------------------------------------------------
| Present value of benefit obligations 1 Jan | 2,144 | 2,081 |
--------------------------------------------------------------------------------
| Service cost | 323 | 533 |
--------------------------------------------------------------------------------
| Interest cost on benefit obligations | 117 | 118 |
--------------------------------------------------------------------------------
| Actuarial gains (+) and losses (-) | -1,042 | -587 |
--------------------------------------------------------------------------------
| Present value of benefit obligations 31 Dec | 1,543 | 2,144 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Fair value of plan assets, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Fair value of plan assets 1 Jan | 2,028 | 1,923 |
--------------------------------------------------------------------------------
| Expected return on plan assets | 105 | 99 |
--------------------------------------------------------------------------------
| Contributions by employer | 316 | 457 |
--------------------------------------------------------------------------------
| Actuarial gains (+) and losses (-) | -941 | -451 |
--------------------------------------------------------------------------------
| Fair value of plan assets 31 Dec | 1,507 | 2,028 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Principal actuarial assumptions used | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Discount rate (%) | 5.25 | 4.75 |
--------------------------------------------------------------------------------
| Expected return on scheme assets (%) | 5.25 | 4.75 |
--------------------------------------------------------------------------------
| Rate of increase in future compensation levels (%) | 3.30 | 3.30 |
--------------------------------------------------------------------------------
| Future pension increases (%) | 0.00 | 0.00 |
--------------------------------------------------------------------------------
| Inflation (%) | 2.00 | 2.00 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The Group anticipates that it will pay 0.173 million | | |
| euros in benefit-based pension schemes in 2008. | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 24. INTEREST-BEARING | 2007 | 2006 |
| LIABILITIES, 1,000 € | | |
--------------------------------------------------------------------------------
| Non-current | Fair | Balance | Fair | Balance |
| | value | sheet | value | sheet |
| | | value | | value |
--------------------------------------------------------------------------------
| Capital loan* | 31,962 | 30,000 | 177,893 | 167,914 |
--------------------------------------------------------------------------------
| Bonds | 663,228 | 663,227 | 514,321 | 513,170 |
--------------------------------------------------------------------------------
| Loans from financial | 36,221 | 35,782 | 43,317 | 42,938 |
| institutions | | | | |
--------------------------------------------------------------------------------
| Derivative liabilities | 39,046 | 37,459 | 35,608 | 33,525 |
--------------------------------------------------------------------------------
| | 770,456 | 766,468 | 771,139 | 757,547 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Current | Fair | Balance | Fair | Balance |
| | value | sheet | value | sheet |
| | | value | | value |
--------------------------------------------------------------------------------
| Current portion of long-term | 42,616 | 42,158 | 81,582 | 80,581 |
| liabilities maturing within a | | | | |
| year | | | | |
--------------------------------------------------------------------------------
| Derivative liabilities | 13,091 | 13,049 | 12,792 | 12,792 |
--------------------------------------------------------------------------------
| Other loans / Commercial | 146,698 | 144,941 | 120,539 | 119,440 |
| papers (international and | | | | |
| domestic) | | | | |
--------------------------------------------------------------------------------
| | 202,405 | 200,149 | 214,913 | 212,813 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Total | 972,862 | 966,616 | 986,052 | 970,359 |
--------------------------------------------------------------------------------
*The fair value of capital loan has been presented assuming that they are
redeemed on the first possible repurchase date.
The fair values of interest-bearing liabilities are based on the present values
of cash flows. Loans raised in various currencies are measured at the present
value on the basis of the yield curve of each currency. The discount rate
includes the company-specific and loan-specific risk premium. Liabilities
denominated in foreign currencies are translated into euros at the mid-rate
quoted by ECB at the closing day.
--------------------------------------------------------------------------------
| Capital loan included in interest-bearing | 2007 | 2006 |
| liabilities, 1,000 € | | |
--------------------------------------------------------------------------------
| | | Maturity date | Interest | | |
--------------------------------------------------------------------------------
| EUR | 137,914 | 15.05.2027 | 6.80%* | | 137,914 |
--------------------------------------------------------------------------------
| EUR | 30,000 | 30.11.2029 | 6.388%** | 30,000 | 30,000 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | | | | 30,000 | 167,914 |
--------------------------------------------------------------------------------
* According to the loan agreement, the company decided to redeem early on 15 May
2007 the principal and accrued interest at par.
**The loan becomes due on 30 November 2029, but, if the company so decides, it
can be paid back on 30 November 2009 or 30 November 2019 at 100% rate. The
coupon rate is 6.388% p.a. until 30 November 2009, after which the interest rate
is the 6 month Euribor + 2.28% p.a. until 30 November 2019. After this, the
coupon rate is the 6 month Euribor + 3.28% p.a.
--------------------------------------------------------------------------------
| Bonds included in interest-bearing liabilities, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| International: | Maturity | Interest | | |
| | date | | | |
--------------------------------------------------------------------------------
| EUR | 22,000 | 14.06.2007 | variable | | 22,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 25,000 | 06.04.2009 | variable | 25,000 | 25,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 10,000 | 31.03.2010 | interest rate | 10,000 | 10,000 |
| | | | structure | | |
--------------------------------------------------------------------------------
| EUR | 10,000 | 16.03.2011 | 3.625 % | 10,000 | 10,000 |
--------------------------------------------------------------------------------
| EUR | 25,000 | 23.03.2011 | variable | 25,000 | 25,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 15,000 | 24.03.2011 | variable | 15,000 | 15,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 20,000 | 07.04.2011 | variable | 20,000 | 20,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 25,000 | 16.03.2012 | variable | 25,000 | 25,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 25,000 | 12.04.2012 | variable | 25,000 | |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 10,000 | 16.04.2012 | variable | 10,000 | |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 20,000 | 28.04.2013 | variable | 20,000 | 20,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 20,000 | 15.10.2013 | 4.30 % | 20,000 | 20,000 |
--------------------------------------------------------------------------------
| EUR | 24,000 | 02.07.2014 | variable | 24,000 | 24,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 20,000 | 11.04.2017 | variable | 20,000 | |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 25,000 | 11.04.2017 | variable | 25,000 | |
| | | | interest | | |
--------------------------------------------------------------------------------
| | | | | 274,000 | 216,000 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| FIM | 100,000 | 04.09.2008 | 4.75 % | 16,812 | 16,803 |
--------------------------------------------------------------------------------
| FIM | 210,000 | 19.08.2013 | 5.20 % | 26,905 | 26,904 |
--------------------------------------------------------------------------------
| | | | | 43,717 | 43,707 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| USD | 35,000 | 09.07.2007 | variable | | 26,576 |
| | | | interest | | |
--------------------------------------------------------------------------------
| USD | 30,000 | 23.03.2009 | variable | 20,379 | 22,779 |
| | | | interest | | |
--------------------------------------------------------------------------------
| | | | | 20,379 | 49,355 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| JPY | 3,000,000 | 23.05.2008 | 0.925 % | 18,190 | 19,117 |
--------------------------------------------------------------------------------
| JPY | 3,000,000 | 15.07.2009 | 1.84 % | 18,190 | 19,117 |
--------------------------------------------------------------------------------
| JPY | 1,000,000 | 12.07.2010 | 2.00 % | 6,063 | 6,372 |
--------------------------------------------------------------------------------
| JPY | 2,000,000 | 16.10.2010 | 1.022 % | 12,126 | 12,745 |
--------------------------------------------------------------------------------
| JPY | 3,000,000 | 05.07.2011 | 1.31 % * | 18,190 | 19,117 |
--------------------------------------------------------------------------------
| JPY | 3,000,000 | 25.07.2012 | 1.3575 % ** | 18,190 | 19,117 |
--------------------------------------------------------------------------------
| JPY | 3,000,000 | 20.04.2015 | 1.45 % | 18,190 | 19,117 |
--------------------------------------------------------------------------------
| | | | | 109,137 | 114,701 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CHF | 16,000 | 06.06.2007 | 2.00 % | | 9,957 |
--------------------------------------------------------------------------------
| CHF | 39,000 | 15.03.2010 | 2.24 % | 23,569 | 24,270 |
--------------------------------------------------------------------------------
| CHF | 39,000 | 22.05.2012 | 2.475 % | 23,569 | 24,270 |
--------------------------------------------------------------------------------
| | | | | 47,138 | 58,498 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| GBP | 10,000 | 07.08.2007 | 5.5225 % | | 14,892 |
--------------------------------------------------------------------------------
| | | | | | 14,892 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CZK | 750,000 | 05.05.2010 | variable | 28,166 | 27,288 |
| | | | interest | | |
--------------------------------------------------------------------------------
| | | | | 28,166 | 27,288 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NOK | 200,000 | 17.10.2016 | 5.15 % | 25,132 | |
--------------------------------------------------------------------------------
| NOK | 200,000 | 11.04.2017 | 5.16 % | 25,132 | |
--------------------------------------------------------------------------------
| | | | | 50,264 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SEK | 225,000 | 03.04.2012 | variable | 23,831 | |
| | | | interest | | |
--------------------------------------------------------------------------------
| SEK | 225,000 | 11.04.2012 | variable | 23,831 | |
| | | | interest | | |
--------------------------------------------------------------------------------
| SEK | 100,000 | 21.03.2013 | variable | 10,592 | 11,061 |
| | | | interest | | |
--------------------------------------------------------------------------------
| SEK | 200,000 | 03.04.2013 | variable | 21,183 | 22,123 |
| | | | interest | | |
--------------------------------------------------------------------------------
| SEK | 175,000 | 04.04.2014 | variable | 18,535 | |
| | | | interest | | |
--------------------------------------------------------------------------------
| SEK | 220,000 | 01.12.2015 | interest rate | 27,455 | 28,970 |
| | | | structure | | |
--------------------------------------------------------------------------------
| | | | | 125,427 | 62,154 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Bonds, long-term | | | 663,227 | 513,170 |
| total | | | | |
--------------------------------------------------------------------------------
| Bonds, short-term | | | 35,002 | 73,425 |
| total | | | | |
--------------------------------------------------------------------------------
| Total | | | | 698,229 | 586,594 |
--------------------------------------------------------------------------------
*call option not exercised 5 July 2004
**call option not exercised 25 July 2006
--------------------------------------------------------------------------------
| Maturity of non-current | | | | |
| interest-bearing liabilities, | | | | |
| 1,000 € | | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| | 2008 | 2009 | 2010 | 2011 | 2012 | 2012+ | Total |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Bonds | 35,00 | 63,56 | 79,92 | 88,190 | 139,421 | 292,122 | 698,229 |
| | 2 | 9 | 5 | | | | |
--------------------------------------------------------------------------------
| Loans from | 7,156 | 7,156 | 7,156 | 7,156 | 7,156 | 7,156 | 42,939 |
| financial | | | | | | | |
| institutio | | | | | | | |
| ns | | | | | | | |
--------------------------------------------------------------------------------
| Total | 42,15 | 70,72 | 87,08 | 95,346 | 146,577 | 299,279 | 741,167 |
| | 8 | 5 | 1 | | | | |
--------------------------------------------------------------------------------
Capital loan (30 million euros) is excluded from the table above, because the
repayment schedule is conditional.
Capital structure
The corporate finances are planned over a long time span, and the company is
ensured sufficient latitude and independent power of decision in the management
of finances. The company aims to secure sufficient cash flow for the long-term
development of transmission capacity, secured operational reliability and
development of the electricity market so that the tariff level remains moderate.
The company pursues as low average capital costs as possible by utilising a
lower cost through debt financing as compared to equity cost. However, the goal
is to keep the cash flow and debt service ratios of the company at such a level
that the company retains its high credit rating. The high credit rating enables
the company to tap the international and domestic money and capital markets.
--------------------------------------------------------------------------------
| 25. PROVISIONS FOR LIABILITIES AND CHARGES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Provisions 1 Jan | 2,067 | 2,067 |
--------------------------------------------------------------------------------
| Provisions used | -60 | |
--------------------------------------------------------------------------------
| Provisions 31 Dec | 2,007 | 2,067 |
--------------------------------------------------------------------------------
Fingrid uses creosote-impregnated or CCA-impregnated wooden towers and cable
trench covers. Decree YMA 711/2001 by the Finnish Ministry of the Environment
categorises decommissioned impregnated wood as hazardous waste. A provision was
recorded in 2004 of the related disposal costs materialising in the future
decades.
--------------------------------------------------------------------------------
| 26. DERIVATIVE | 2007 | 2006 |
| CONTRACTS, 1,000 € | | |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Interest rate and | Net fair | Nominal | Net fair | Nominal |
| currency | value | value | value | value |
| derivatives | 31 Dec 2007 | 31 Dec 2007 | 31 Dec 2006 | 31 Dec 2006 |
--------------------------------------------------------------------------------
| Cross-currency | -47,497 | 376,358 | -43,608 | 322,252 |
| swaps | | | | |
--------------------------------------------------------------------------------
| Forward contracts | -3,517 | 72,401 | -2,929 | 94,036 |
--------------------------------------------------------------------------------
| Interest rate | -572 | 181,000 | -670 | 213,000 |
| swaps | | | | |
--------------------------------------------------------------------------------
| Interest rate | 11,289 | 370,000 | 10,599 | 530,000 |
| options, bought | | | | |
--------------------------------------------------------------------------------
| Total | -40,297 | 999,759 | -36,609 | 1,159,288 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Electricity | Net fair | Volume | Net fair | Volume |
| derivatives | value | TWh | value | TWh |
| | 31 Dec 2007 | 31 Dec 2007 | 31 Dec 2006 | 31 Dec 2006 |
--------------------------------------------------------------------------------
| Electricity | 19,496 | 3.03 | | |
| forward contracts, | | | | |
| designated as | | | | |
| hedge accounting, | | | | |
| Nord Pool Clearing | | | | |
--------------------------------------------------------------------------------
| Electricity | 1,303 | 0.28 | -3,009 | 2.81 |
| forward contracts, | | | | |
| Nord Pool Clearing | | | | |
--------------------------------------------------------------------------------
| Electricity | 1,993 | 0.14 | 1,131 | 0.14 |
| forward contracts, | | | | |
| others | | | | |
--------------------------------------------------------------------------------
| Total | 22,792 | 3.46 | -1,878 | 2.96 |
--------------------------------------------------------------------------------
The fair values of financial derivatives are included in the balance sheet in
non-current and current interest-bearing liabilities, interest and other
financial liabilities, and noncurrent and current financial and other
receivables.
Interest rate options included in financial 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.
Electricity forward contracts, others, includes bilateral financial and physical
purchase commitments concerning electricity purchases, not cleared separately by
a clearing organisation. The derivatives hedge future electricity losses.
The net fair value of derivatives indicates the realised profit/loss if they had
been reversed on the last business day of 2007.
Maturity of derivative contracts:
--------------------------------------------------------------------------------
| Nominal | 2008 | 2009 | 2010 | 2011 | 2012 | 2012+ | Total |
| value, | | | | | | | |
| 1,000 € | | | | | | | |
--------------------------------------------------------------------------------
| Interest | 47,000 | 69,000 | 10,000 | 10,00 | 25,000 | 20,000 | 181,000 |
| rate swaps | | | | 0 | | | |
--------------------------------------------------------------------------------
| Interest | 40,000 | 20,000 | 290,00 | 20,00 | | | 370,000 |
| rate | | | 0 | 0 | | | |
| options | | | | | | | |
--------------------------------------------------------------------------------
| Cross-curre | 18,190 | 38,569 | 69,925 | 18,19 | 89,421 | 142,065 | 376,358 |
| ncy swaps | | | | 0 | | | |
--------------------------------------------------------------------------------
| Forward | 72,401 | | | | | | 72,401 |
| contracts | | | | | | | |
--------------------------------------------------------------------------------
| Total | 177,59 | 127,56 | 369,92 | 48,19 | 114,421 | 162,065 | 999,759 |
| | 1 | 9 | 5 | 0 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TWh | 2008 | 2009 | 2010 | 2011 | 2012 | 2012+ | Total |
--------------------------------------------------------------------------------
| Electricity | 1.21 | 0.99 | 0.72 | 0.32 | 0.21 | | 3.46 |
| derivatives | | | | | | | |
--------------------------------------------------------------------------------
| Total | 1.21 | 0.99 | 0.72 | 0.32 | 0.21 | | 3.46 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 27. OTHER LIABILITIES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Electricity derivatives | | 3,009 |
--------------------------------------------------------------------------------
| Total | | 3,009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 28. TRADE PAYABLES AND OTHER DEBT, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Trade payables | 26,423 | 24,835 |
--------------------------------------------------------------------------------
| Trade payables to associated companies | 145 | 173 |
--------------------------------------------------------------------------------
| Interest liabilities | 13,618 | 16,904 |
--------------------------------------------------------------------------------
| Value added tax | 6,599 | 10,153 |
--------------------------------------------------------------------------------
| Electricity tax | 416 | 2,081 |
--------------------------------------------------------------------------------
| Accruals | 9,826 | 6,125 |
--------------------------------------------------------------------------------
| Other debt | 653 | 594 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 57,680 | 60,864 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Essential items included in accruals | | |
--------------------------------------------------------------------------------
| Personnel expenses | 3,697 | 3,199 |
--------------------------------------------------------------------------------
| Accruals of sales and purchases | 6,036 | 2,913 |
--------------------------------------------------------------------------------
| Other | 92 | 13 |
--------------------------------------------------------------------------------
| Total | 9,826 | 6,125 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 29. COMMITMENTS AND CONTINGENT LIABILITIES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Pledges | | |
--------------------------------------------------------------------------------
| Pledge covering property lease agreement | 38 | 38 |
--------------------------------------------------------------------------------
| Pledged account in favour of the Customs Office | 27 | 27 |
--------------------------------------------------------------------------------
| Pledged account covering electricity exchange | 45 | 13,942 |
| purchases | | |
--------------------------------------------------------------------------------
| | 110 | 14,007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Unrecorded investment commitments | 70,586 | 63,519 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other financial commitments | | |
--------------------------------------------------------------------------------
| Counterguarantee in favour of an associated company | 1,700 | |
--------------------------------------------------------------------------------
| Commitment fee of revolving credit facility: | | |
--------------------------------------------------------------------------------
| Commitment fee for the next year | 102 | 101 |
--------------------------------------------------------------------------------
| Commitment fee for subsequent years | 393 | 496 |
--------------------------------------------------------------------------------
| | 2,194 | 598 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Supplementary pension scheme for 2008 - 2009 (note | 248 | 610 |
| 23) | | |
--------------------------------------------------------------------------------
| Donation of five-year professorship to Helsinki | 360 | 480 |
| University of Technology | | |
| for 2006 - 2010 | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 30. OTHER LEASE AGREEMENTS, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Minimum rental obligations of other irrevocable | | |
| lease agreements: | | |
--------------------------------------------------------------------------------
| In one year | 1,761 | 1,767 |
--------------------------------------------------------------------------------
| In more than one year and less than five years | 5,557 | 6,922 |
--------------------------------------------------------------------------------
| In more than five years | 1,530 | 1,557 |
--------------------------------------------------------------------------------
| Total | 8,847 | 10,247 |
--------------------------------------------------------------------------------
The foremost lease agreements of the Group relate to office premises. The
durations of lease agreements range from less than one year to ten years, and
the contracts can usually be extended after the original date of expiration. The
index, renewal and other terms of the different agreements vary.
The Group has rented for instance several land areas and some 110 kilovolt
transmission lines and circuit breaker bays.
--------------------------------------------------------------------------------
| 31. LEGAL PROCEEDINGS AND PROCEEDINGS BY AUTHORITIES | | |
--------------------------------------------------------------------------------
There are no ongoing legal proceedings or proceedings by authorities that would
have a material impact on the business of the company. In relation to
transmission line projects there are several complaints made to different
instances of justice. According to the management of the company there are no on
going legal proceedings or other such legal proceedings relating to other areas,
which final outcome would have a material impact on the financial position of
the Group. In January 2008 Fingrid Oyj appealed to the market court relating to
the decision 13 December 2007 by the Energy Market Authority "Determination of
the methodology for the assessment of the return of the grid owners grid
operations transmission services pricing for the review period starting 1
January 2008 ending 31 December 2011".
--------------------------------------------------------------------------------
| 32. RISK MANAGEMENT | | | | | |
--------------------------------------------------------------------------------
The objective of Fingrid's risk management is to make preparations for
cost-effective measures providing protection against damage and loss relating to
risks and to make the entire personnel committed to considering the risks
pertaining to the company, its various organisational units and each employee.
In order to fulfil these objectives, risk management must be continuous and
systematic. The significance of individual risks or risk entities is assessed
against the present level of protection, taking into account the probability of
a disadvantageous event, its financial impact and impact on corporate image or
on the attainment of the business goals. The Board of Directors approves the
primary principles for risk management and any amendments to them. The Board of
Directors approves the primary action for risk management as part of the
corporate strategy, indicators, operating plan, and budget. The control
committee of the Board of Directors receives an situation report of the major
risks relating to the operations of the company and of the management of such
risks.
FINANCIAL RISK MANAGEMENT
Fingrid Oyj is exposed to market, liquidity and credit risks when managing the
financial position of the company. The company's objective is to reduce risks
such that the fluctuations of Fingrid's cash flow remains low.
Primary principles for financing
The Board of Directors of Fingrid Oyj approves the primary principles for
financing, stating the guidelines for external funding, financial asset
management, market, liquidity, refinancing and credit risks.
Risk management execution and reporting
The treasury is responsible for executing the external funding, the financial
asset management and manages the market risks which the company is exposed to.
The financial activities of the company are reported four times a year to the
Board of Directors. The treasury is responsible for identifying, measuring and
reporting the financial risks, which the company may be exposed to.
Risk management processes
The treasury is in charge of risk management monitoring, systems and models as
well as methods, for risk calculation and assessment.
Market risks
Fingrid Oyj uses derivative agreements in order to hedge market risks such as
foreign exchange, interest rate risk and commodity risks. Derivatives are only
used for hedging purposes, and therefore the company does not enter into any
deals for market speculation. The hedging instruments are defined in the primary
principles for financing or in the loss power procurement policy, and chosen in
order to achieve efficient hedging of a risk exposure.
Foreign exchange risk
The functional currency of the company is the euro. The basic rule of the
company is to protect foreign exchange risks, but can according to the primary
principals for financing, leave an exposure unhedged, which may not exceed 10%
of the financial assets.
Transaction exposure
The company issues securities in the domestic and international money and
capital markets. The interest bearing debt portfolio of the company is
distributed between different convertible currencies and the total debt
portfolio and the related interest rate flows are hedged against currency risk.
The foreign exchange risk of each bond is done in conjunction with the
underlying debt issuance. Business related currency risks are small, and they
are hedged. Therefore is there no sensitivity analysis presentation. During the
financial year the company used foreign exchange forwards and cross currency
swaps for hedging the transaction exposure.
The tables below first illustrate currency distribution and the hedging rate of
the interest bearing debt of the company and then the sensitivity analysis of
the euro against the foreign currencies, which also proves that the company does
not have any open foreign exchange risk.
--------------------------------------------------------------------------------
| Currency distribution and hedging degree of interest-bearing | |
| liabilities, 1,000 € | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Currency | Carryi | Port | Hedging | Currency | Carrying | Port | Hedging |
| distribut | ng | ion | degree | distributi | amount | ion | degree |
| ion 31 | amount | % | | on 31 Dec | | % | |
| Dec 2007 | | | | 2006 | | | |
--------------------------------------------------------------------------------
| | | | | | | | |
--------------------------------------------------------------------------------
| EUR | 465,35 | 51 | | EUR | 507,579 | 55 | |
| | 8 | | | | | | |
--------------------------------------------------------------------------------
| CHF | 47,138 | 5 | 100 | CHF | 58,498 | 6 | 100 |
--------------------------------------------------------------------------------
| CZK | 28,166 | 3 | 100 | CZK | 27,288 | 3 | 100 |
--------------------------------------------------------------------------------
| GBP | | | | GBP | 14,892 | 2 | 100 |
--------------------------------------------------------------------------------
| JPY | 109,13 | 12 | 100 | JPY | 114,701 | 12 | 100 |
| | 7 | | | | | | |
--------------------------------------------------------------------------------
| NOK | 50,264 | 5 | 100 | NOK | | | |
--------------------------------------------------------------------------------
| SEK | 125,42 | 14 | 100 | SEK | 62,154 | 7 | 100 |
| | 7 | | | | | | |
--------------------------------------------------------------------------------
| USD | 90,618 | 10 | 100 | USD | 138,932 | 15 | 100 |
--------------------------------------------------------------------------------
| Total | 916,10 | 100 | 100 | Total | 924,043 | 100 | 100 |
| | 8 | | | | | | |
--------------------------------------------------------------------------------
The sensitivity analysis of foreign exchange rate is measured as a 10% between
the euro and the one currency in question. The company's result will not be
subject to exchange rate differentials, since the debt denominated in foreign
currencies are hedged against foreign exchange changes.
--------------------------------------------------------------------------------
| Exchange rate changes, | | | | | |
| 1,000 € | | | | | |
--------------------------------------------------------------------------------
| 31 Dec | Bond | Comme | Tota | Cross- | Forwar | Total | Net | |
| 2007 | s | rcial | l | curren | d | | exposure | |
| | | paper | | cy | contra | | Total | |
| | | s | | swaps | cts | | | |
--------------------------------------------------------------------------------
| CH | +10 | -5,2 | | -5,2 | 5,202 | | 5,202 | 0 | |
| F | % | 02 | | 02 | | | | | |
--------------------------------------------------------------------------------
| | -10 | 4,27 | | 4,27 | -4,275 | | -4,275 | 0 | |
| | % | 5 | | 5 | | | | | |
--------------------------------------------------------------------------------
| CZ | +10 | -3,1 | | -3,1 | 3,142 | | 3,142 | 0 | |
| K | % | 42 | | 42 | | | | | |
--------------------------------------------------------------------------------
| | -10 | 2,57 | | 2,57 | -2,571 | | -2,571 | 0 | |
| | % | 1 | | 1 | | | | | |
--------------------------------------------------------------------------------
| JP | +10 | -12, | | -12, | 12,231 | | 12,231 | 0 | |
| Y | % | 231 | | 231 | | | | | |
--------------------------------------------------------------------------------
| | -10 | 10,0 | | 10,0 | -10,00 | | -10,007 | 0 | |
| | % | 07 | | 07 | 7 | | | | |
--------------------------------------------------------------------------------
| NO | +10 | -5,4 | | -5,4 | 5,485 | | 5,485 | 0 | |
| K | % | 85 | | 85 | | | | | |
--------------------------------------------------------------------------------
| | -10 | 4,48 | | 4,48 | -4,487 | | -4,487 | 0 | |
| | % | 7 | | 7 | | | | | |
--------------------------------------------------------------------------------
| SE | +10 | -13, | | -13, | 13,451 | | 13,451 | 0 | |
| K | % | 451 | | 451 | | | | | |
--------------------------------------------------------------------------------
| | -10 | 11,0 | | 11,0 | -11,00 | | -11,005 | 0 | |
| | % | 05 | | 05 | 5 | | | | |
--------------------------------------------------------------------------------
| US | +10 | -2,2 | -7,91 | -10, | 2,268 | 7,915 | 10,183 | 0 | |
| D | % | 68 | 5 | 183 | | | | | |
--------------------------------------------------------------------------------
| | -10 | 1,85 | 6,476 | 8,33 | -1,856 | -6,476 | -8,332 | 0 | |
| | % | 6 | | 2 | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Exchange rate changes, 1,000 | | | | | |
| € | | | | | |
--------------------------------------------------------------------------------
| 31 Dec | Bonds | Commerci | Total | Cross-cu | Forward | Total | Net |
| 2006 | | al | | rrency | contrac | | expos |
| | | papers | | swaps | ts | | ure |
| | | | | | | | |
| | | | | | | | Total |
--------------------------------------------------------------------------------
| CHF | +10 | -6,51 | | -6,517 | 6,517 | | 6,517 | 0 |
| | % | 7 | | | | | | |
--------------------------------------------------------------------------------
| | -10 | 5,332 | | 5,332 | -5,332 | | -5,332 | 0 |
| | % | | | | | | | |
--------------------------------------------------------------------------------
| CZK | +10 | -3,04 | | -3,047 | 3,047 | | 3,047 | 0 |
| | % | 7 | | | | | | |
--------------------------------------------------------------------------------
| | -10 | 2,493 | | 2,493 | -2,493 | | -2,493 | 0 |
| | % | | | | | | | |
--------------------------------------------------------------------------------
| GBP | +10 | -1,70 | | -1,702 | 1,702 | | 1,702 | 0 |
| | % | 2 | | | | | | |
--------------------------------------------------------------------------------
| | -10 | 1,393 | | 1,393 | -1,393 | | -1,393 | 0 |
| | % | | | | | | | |
--------------------------------------------------------------------------------
| JPY | +10 | -12,7 | | -12,76 | 12,761 | | 12,761 | 0 |
| | % | 61 | | 1 | | | | |
--------------------------------------------------------------------------------
| | -10 | 10,44 | | 10,441 | -10,441 | | -10,44 | 0 |
| | % | 1 | | | | | 1 | |
--------------------------------------------------------------------------------
| SEK | +10 | -6,39 | | -6,390 | 6,390 | | 6,390 | 0 |
| | % | 0 | | | | | | |
--------------------------------------------------------------------------------
| | -10 | 5,228 | | 5,228 | -5,228 | | -5,228 | 0 |
| | % | | | | | | | |
--------------------------------------------------------------------------------
| USD | +10 | -5,52 | -10,074 | -15,59 | 5,523 | 10,074 | 15,597 | 0 |
| | % | 3 | | 7 | | | | |
--------------------------------------------------------------------------------
| | -10 | 4,519 | 8,242 | 12,761 | -4,519 | -8,242 | -12,76 | 0 |
| | % | | | | | | 1 | |
--------------------------------------------------------------------------------
Translation exposure
The company holds an equity investment in an associated company denominated in a
foreign currency. This translation risk is unhedged. The sensitivity analysis is
(10% changes) is presented in the following table. The table shows a 10% change
of the Norwegian krone and the impact of the change on the company's equity.
--------------------------------------------------------------------------------
| Translation exposure, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| | | Equity | Equity |
| | | 31 Dec 2007 | 31 Dec 2006 |
--------------------------------------------------------------------------------
| NOK | +10 % | 410 | 313 |
--------------------------------------------------------------------------------
| | -10 % | -336 | -256 |
--------------------------------------------------------------------------------
Interest rate risk
The company is only exposed to interest rate risk in euros, because the interest
bearing debt are both in terms of principal and interest payments hedged against
exchange rate risk, and the financial assets are denominated in euros. The
interest-bearing liabilities are mainly linked to floating rates.
Interest rate risk is managed in accordance with the main principles of
financing so that 30 - 70 % of the interest costs are hedged over the next five
years. When the interest rates are high, the hedging level is kept close to the
lower limit of the range, and when the interest rates are low, the hedging level
is kept close to the upper limit of the range. The specified low level of
interest rates is 3 % or less, and high level of interest rates is 5 % or more.
At the end of 2007, 42 % of the interest costs for the next five years were
hedged, and correspondingly 57 % were hedged at the end of 2006.
The sensitivity of the interest rate risk is measured as a 1 percentage unit
interest rate fluctuation and by using the CfaR method (Cashflow at Risk). The
assumed fluctuation in interest rates is the effect of a 1 percentage unit
fluctuation during the next 12 months from the closing date. The analysis of
interest rate sensitivity is carried out on interest-bearing liabilities
including exchange rate hedging, the derivatives portfolio hedging the interest
rate exposure, and on cash and cash equivalents, which result in a net liability
position exposed to interest rate fluctuations.
--------------------------------------------------------------------------------
| Interest rate sensitivity, | 2007 | | 2006 | |
| 1,000 € | | | | |
--------------------------------------------------------------------------------
| | -1%-unit | +1%-unit | -1%-unit | +1%-unit |
--------------------------------------------------------------------------------
| Interest-bearing | 7,027 | -7,027 | 6,638 | -6,638 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Interest rate derivatives | 1,123 | 2,098 | 400 | 2,554 |
--------------------------------------------------------------------------------
| Interest-bearing | 8,150 | -4,929 | 7,038 | -4,084 |
| liabilities total | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents | -1,763 | 1,763 | -1,519 | 1,519 |
--------------------------------------------------------------------------------
| Interest-bearing net | 6,387 | -3,166 | 5,519 | -2,565 |
| liabilities total | | | | |
--------------------------------------------------------------------------------
The following table presents how the CfaR method is used for measuring the
impact of the interest-bearing liabilities, derivatives, and cash and cash
equivalents have, with a given confidence level and over time horizon of 12
months, on the cash flow of the company. The other finance costs of the company
are not included in the calculation.
--------------------------------------------------------------------------------
| Cashflow at | 2007 | | | | 2006 | |
| Risk, 1,000 € | | | | | | |
--------------------------------------------------------------------------------
| | | 31 Dec 2007 | | | 31 Dec 2006 |
--------------------------------------------------------------------------------
| Confidence level | Net finance | Confidence level | Net finance costs |
| | costs | | |
--------------------------------------------------------------------------------
| 96 % | | min. | 31,463 | 96 % | | min. | 32,432 |
--------------------------------------------------------------------------------
| | | max. | 33,590 | | | max. | 34,095 |
--------------------------------------------------------------------------------
| 98 % | | min. | 31,282 | 98 % | | min. | 32,177 |
--------------------------------------------------------------------------------
| | | max. | 33,718 | | | max. | 34,190 |
--------------------------------------------------------------------------------
Commodity risk
The company is exposed to price and volume risk through transmission losses.
Loss energy purchases are hedged in accordance with the loss energy purchasing
principles accepted by the Board of Directors. The time span of price hedging is
five years, divided into three parts: basic, budgetary and operative hedging.
Moreover, the company has operative instructions for physical electricity
purchases, instructions for price hedging and control room instructions. For
hedging of loss energy purchases, the company uses Nord Pool ASA's electricity
derivative contracts and bilateral contracts.
If the market prices of electricity derivatives had been 20 % higher or lower on
the closing date, the change in the fair value of electricity derivatives would
have been 34.7 million euros higher or lower (24.1 million euros in 2006). The
impact on the company's equity would have been 25.7 (17.8) million euros. The
impact on the equity is presented as the total impact on equity, without
separating the impact of hedge accounting, which was implemented during the
financial year.
Liquidity risk and refinancing risk
Fingrid is exposed to liquidity and refinancing risk deriving from redemption of
loans, payments and fluctuations in cash flow from operating activities.
The liquidity of the company must be arranged so that 100% of the refinancing
need for the next 12 months is covered by means of liquid assets and available
long-term committed credit lines; however, so that the refinancing need may not
account for more than 45 % of the total amount of the company's debt financing.
As back-up for the liquidity the company has a revolving credit facility of 250
million euros. The revolving credit facility will mature on 16 November 2012.
The revolving credit facility has not been drawn.
The company's funding is carried out through debt issuance programmes. The
company operates in the international capital market by issuing bonds under the
Medium Term Note Programme: The Programme size is one billion euros. Short-term
funding is arranged through commercial paper programmes; a Euro Commercial Paper
Programme of 600 million euros and a domestic commercial paper programme of 150
million euros. The refinancing risk reduced by an even maturity profile so that
the refinancing need over periods of 12 months in excess of one year must not
exceed 30 % of the company's amount of debt financing.
Contactual repayments and interest costs of interest-bearing financial
liabilities are presented in the next table. The interest rate percentages of
variable-interest loans are defined using the zero coupon curve. The repayments
and interest amounts are un-discounted values. Finance costs relating to
cross-currency swaps, interest rate swaps and forward contracts are often paid
in net amounts depending on their nature. In the following table, they are
presented in gross amounts.
Contractual repayments and interest costs of interest-bearing financial
liabilities and payments and receivables of financial derivatives, 1,000 €
--------------------------------------------------------------------------------
| 31 | | 2008 | 2009 | 2010 | 2011 | 2012 | 2012+ | Total |
| Dec | | | | | | | | |
| 2007 | | | | | | | | |
| | | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | | |
--------------------------------------------------------------------------------
| Capit | - | | 30,000 | | | | | 30,000 |
| al | rep | | | | | | | |
| loan | aym | | | | | | | |
| | ent | | | | | | | |
| | s | | | | | | | |
--------------------------------------------------------------------------------
| | - | 1,916 | 2,882 | | | | | 4,798 |
| | int | | | | | | | |
| | ere | | | | | | | |
| | st | | | | | | | |
| | cos | | | | | | | |
| | ts | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | | |
--------------------------------------------------------------------------------
| Bonds | - | 35,002 | 63,569 | 79,925 | 88,190 | 139,42 | 292,12 | 698,229 |
| | rep | | | | | 1 | 2 | |
| | aym | | | | | | | |
| | ent | | | | | | | |
| | s | | | | | | | |
--------------------------------------------------------------------------------
| | - | 27,586 | 24,985 | 22,845 | 20,444 | 15,896 | 33,828 | 145,584 |
| | int | | | | | | | |
| | ere | | | | | | | |
| | st | | | | | | | |
| | cos | | | | | | | |
| | ts | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | | |
--------------------------------------------------------------------------------
| Loans | - | 7,156 | 7,156 | 7,156 | 7,156 | 7,156 | 7,157 | 42,939 |
| from | rep | | | | | | | |
| finan | aym | | | | | | | |
| cial | ent | | | | | | | |
| | s | | | | | | | |
--------------------------------------------------------------------------------
| insti | - | 1,589 | 1,350 | 1,049 | 748 | 389 | 74 | 5,199 |
| tutio | int | | | | | | | |
| ns | ere | | | | | | | |
| | st | | | | | | | |
| | cos | | | | | | | |
| | ts | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | | |
--------------------------------------------------------------------------------
| Comme | - | 144,94 | | | | | | 144,941 |
| rcial | rep | 1 | | | | | | |
| paper | aym | | | | | | | |
| s | ent | | | | | | | |
| | s | | | | | | | |
--------------------------------------------------------------------------------
| | - | 2,384 | | | | | | 2,384 |
| | int | | | | | | | |
| | ere | | | | | | | |
| | st | | | | | | | |
| | cos | | | | | | | |
| | ts | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cross | - | 47,256 | 66,124 | 90,149 | 41,103 | 108,57 | 164,52 | 517,738 |
| -curr | pay | | | | | 9 | 7 | |
| ency | men | | | | | | | |
| swaps | ts | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Inter | - | 7,248 | 5,479 | 2,692 | 2,372 | 1,544 | 975 | 20,310 |
| est | pay | | | | | | | |
| rate | men | | | | | | | |
| swaps | ts | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Forwa | - | 75,952 | | | | | | 75,952 |
| rd | pay | | | | | | | |
| contr | men | | | | | | | |
| acts | ts | | | | | | | |
--------------------------------------------------------------------------------
| Total | | 351,03 | 201,54 | 203,816 | 160,01 | 272,98 | 498,68 | 1,688,0 |
| | | 1 | 5 | | 3 | 5 | 3 | 74 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cross | - | 30,780 | 50,429 | 80,651 | 27,580 | 97,494 | 160,51 | 447,444 |
| -curr | rec | | | | | | 3 | |
| ency | eiv | | | | | | | |
| swaps | abl | | | | | | | |
| | es | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Inter | - | 7,398 | 5,314 | 2,464 | 2,409 | 1,150 | 860 | 19,595 |
| est | rec | | | | | | | |
| rate | eiv | | | | | | | |
| swaps | abl | | | | | | | |
| | es | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Forwa | - | 72,383 | | | | | | 72,383 |
| rd | rec | | | | | | | |
| contr | eiv | | | | | | | |
| acts | abl | | | | | | | |
| | es | | | | | | | |
--------------------------------------------------------------------------------
| Total | | 110,56 | 55,743 | 83,115 | 29,989 | 98,644 | 161,37 | 539,422 |
| | | 0 | | | | | 3 | |
--------------------------------------------------------------------------------
| Grand | | 240,47 | 145,80 | 120,702 | 130,02 | 174,34 | 337,31 | 1,148,6 |
| total | | 1 | 2 | | 4 | 2 | 1 | 51 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 31 | | 2007 | 2008 | 2009 | 2010 | 2011 | 2011+ | Total |
| Dec | | | | | | | | |
| 2006 | | | | | | | | |
| | | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | | |
--------------------------------------------------------------------------------
| Capit | - | 137,91 | | 30,000 | | | | 167,914 |
| al | rep | 4 | | | | | | |
| loans | aym | | | | | | | |
| | ent | | | | | | | |
| | s | | | | | | | |
--------------------------------------------------------------------------------
| | - | 11,294 | 1,916 | 2,882 | | | | 16,092 |
| | int | | | | | | | |
| | ere | | | | | | | |
| | st | | | | | | | |
| | cos | | | | | | | |
| | ts | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | | |
--------------------------------------------------------------------------------
| Bonds | - | 73,425 | 35,920 | 66,896 | 80,675 | 89,117 | 240,56 | 586,595 |
| | rep | | | | | | 2 | |
| | aym | | | | | | | |
| | ent | | | | | | | |
| | s | | | | | | | |
--------------------------------------------------------------------------------
| | - | 3,647 | 17,559 | 15,173 | 13,214 | 10,513 | 17,579 | 77,685 |
| | int | | | | | | | |
| | ere | | | | | | | |
| | st | | | | | | | |
| | cos | | | | | | | |
| | ts | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | | |
--------------------------------------------------------------------------------
| Loans | - | 7,156 | 7,156 | 7,156 | 7,156 | 7,156 | 14,313 | 50,095 |
| from | rep | | | | | | | |
| finan | aym | | | | | | | |
| cial | ent | | | | | | | |
| insti | s | | | | | | | |
| tutio | | | | | | | | |
| ns | | | | | | | | |
--------------------------------------------------------------------------------
| | - | 1,706 | 1,321 | 1,052 | 1,016 | 692 | 474 | 6,261 |
| | int | | | | | | | |
| | ere | | | | | | | |
| | st | | | | | | | |
| | cos | | | | | | | |
| | ts | | | | | | | |
--------------------------------------------------------------------------------
| | | | | | | | | |
--------------------------------------------------------------------------------
| Comme | - | 119,44 | | | | | | 119,440 |
| rcial | rep | 0 | | | | | | |
| paper | aym | | | | | | | |
| s | ent | | | | | | | |
| | s | | | | | | | |
--------------------------------------------------------------------------------
| | - | 1,677 | | | | | | 1,677 |
| | int | | | | | | | |
| | ere | | | | | | | |
| | st | | | | | | | |
| | cos | | | | | | | |
| | ts | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cross | - | 75,409 | 40,515 | 60,006 | 84,427 | 34,812 | 139,37 | 434,540 |
| -curr | pay | | | | | | 1 | |
| ency | men | | | | | | | |
| swaps | ts | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Inter | - | 7,823 | 6,988 | 5,299 | 2,547 | 2,110 | 2,261 | 27,028 |
| est | pay | | | | | | | |
| rate | men | | | | | | | |
| swaps | ts | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Forwa | - | 96,965 | | | | | | 96,965 |
| rd | pay | | | | | | | |
| contr | men | | | | | | | |
| acts | ts | | | | | | | |
--------------------------------------------------------------------------------
| Total | | 536,45 | 111,37 | 188,464 | 189,03 | 144,40 | 414,56 | 1,584,2 |
| | | 5 | 5 | | 5 | 0 | 0 | 91 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cross | - | 60,575 | 26,211 | 48,009 | 75,710 | 22,852 | 128,41 | 361,775 |
| -curr | rec | | | | | | 9 | |
| ency | eiv | | | | | | | |
| swaps | abl | | | | | | | |
| | es | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Inter | - | 7,915 | 6,808 | 5,036 | 2,375 | 2,263 | 1,983 | 26,380 |
| est | rec | | | | | | | |
| rate | eiv | | | | | | | |
| swaps | abl | | | | | | | |
| | es | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Forwa | - | 94,191 | | | | | | 94,191 |
| rd | rec | | | | | | | |
| contr | eiv | | | | | | | |
| acts | abl | | | | | | | |
| | es | | | | | | | |
--------------------------------------------------------------------------------
| Total | | 162,68 | 33,019 | 53,045 | 78,085 | 25,115 | 130,40 | 482,346 |
| | | 1 | | | | | 2 | |
--------------------------------------------------------------------------------
| Grand | | 373,77 | 78,357 | 135,420 | 110,95 | 119,28 | 284,15 | 1,101,9 |
| total | | 4 | | | 1 | 6 | 9 | 45 |
--------------------------------------------------------------------------------
Credit risk
Credit risk arises from a counterparty not fulfilling its contractual
commitments towards Fingrid. Such risks arise in the company's operations and
financial activities.
Credit risk in operations
The company measures and monitors its counterparty risks as part of business
monitoring and reporting. The credit rating and payment behaviour of all
counterparties and suppliers are regularly monitored. The company has no
significant credit risk concentrations. The company did not incur credit losses
or rearrange the terms of trade receivables during the financial year.
Credit risk in financing
The company is exposed to credit risk through derivative agreements and
financial investments. The company only has derivaives outstanding and invests
its funds within the permitted risk limits. There is an upper limit in euros
for each counterparty. The company signs the International Swap Dealers
Association's (ISDA) Master Agreement with each counterparty before entering
into a derivative transaction. The counterparty risks of financial instruments
did not incur any losses during the financial year.
33. RELATED PARTY TRANSACTIONS
Fingrid Group's related parties comprise associated companies Porvoon Alueverkko
Oy and Nord Pool Spot AS, the biggest owners Fortum Power and Heat Oy and
Pohjolan Voima Oy with their group companies, and top management with its
related parties. Top management is composed of the Board of Directors,
President, and management team.
The company has not lent money to the top management, and the company has no
transactions with the top management. The company has granted Porvoon Alueverkko
Oy two separate loans. One is a floating rate loan linked to the six months
euribor. The loan is redeemed annually and matures 28 May 2008. The borrower has
the right to early redemption at each interest payment date. The other loan is
linked to the five-year TyEL (Finnish Employee Pensions Act) reference rate and
the loan finally matures 28 May 2008. Fingrid Oyj has granted Porvoon Alueverkko
Oy a counter guarantee of 1.7 million euros. Business with related parties are
conducted at market prices.
--------------------------------------------------------------------------------
| Employee benefits of top management, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Salaries and other short-term employee benefits | 1,111 | 1,178 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Transactions with associated companies, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Sales | 3,453 | 2,984 |
--------------------------------------------------------------------------------
| Purchases | 33,755 | 51,062 |
--------------------------------------------------------------------------------
| Receivables | 1,573 | 613 |
--------------------------------------------------------------------------------
| Liabilities | 145 | 255 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Loans receivable from associated companies, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| 1 Jan | 194 | 279 |
--------------------------------------------------------------------------------
| Repayment of loans | -85 | -85 |
--------------------------------------------------------------------------------
| 31 Dec | 110 | 194 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Transactions with related parties, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Sales | 86,256 | 84,277 |
--------------------------------------------------------------------------------
| Purchases | 43,828 | 56,880 |
--------------------------------------------------------------------------------
| Receivables | 6,186 | 2,111 |
--------------------------------------------------------------------------------
| Liabilities | 4,639 | 5,329 |
--------------------------------------------------------------------------------
General procurement principles
The group follows three alternative procurement methods when purchasing goods or
services. When the costs and value of the purchase are less than 5,000 euros, an
oral call for bid is made and written order or purchasing contract. When the
procurement exceeds 5,000 euros but is below the values applied to public
procurements, bids are requested and competitive bidding is arranged. When the
limits for public procurements concerning Fingrid (0.4 million euros for goods
and services and 5.3 million euros for construction projects in 2007) are
exceeded, the company applies the public procurement procedure.
34. EMISSION RIGHTS
In the initial allocation of emission rights, Fingrid was granted a total of
13.4 thousand tonnes of emission rights for 2005 - 2007 (Olkiluoto power station
was granted 4.2 thousand tonnes in 2007). Of this volume, 6.6 thousand tonnes
were used in 2007 (2006: 2.4 thousand tonnes). The use of emission rights did
not impact the profit in 2005 and 2006, because the company only used emission
rights obtained free of charge. In 2007 the company bought 2.0 thousand tonnes,
which had minor impact on costs.
35. EVENTS AFTER CLOSING DATE
The Group management is not aware of such essential events after the closing
date that would affect the financial statements.
PARENT COMPANY FINANCIAL STATEMENTS (FAS)
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PARENT COMPANY PROFIT | Notes | 1 Jan - 31 Dec 2007 | 1 Jan - 31 Dec 2006 |
| AND LOSS ACCOUNT | | € | € |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TURNOVER | 2 | 332,937,877.30 | 351,325,775.22 |
--------------------------------------------------------------------------------
| Other operating | 3 | 1,878,021.54 | 2,210,380.24 |
| income | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Materials and | 4 | -147,150,488.67 | -154,949,736.68 |
| services | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Staff expenditure | 5 | -18,718,550.62 | -18,012,441.95 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Depreciation and | 6 | -64,789,636.48 | -61,495,880.44 |
| amortisation expense | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other operating | 7 | -35,184,959.82 | -30,647,411.30 |
| expenses | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OPERATING PROFIT | | 68,972,263.25 | 88,430,685.09 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finance income and | 8 | -33,050,563.75 | -33,132,513.48 |
| costs | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PROFIT BEFORE | | 35,921,699.50 | 55,298,171.61 |
| EXTRAORDINARY ITEMS | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PROFIT BEFORE | | 35,921,699.50 | 55,298,171.61 |
| PROVISIONS AND TAXES | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Provisions | 9 | -30,698,892.27 | -46,456,162.53 |
--------------------------------------------------------------------------------
| Income taxes | 10 | -1,224,275.08 | -2,217,263.42 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PROFIT FOR THE | | 3,998,532.15 | 6,624,745.66 |
| FINANCIAL YEAR | | | |
--------------------------------------------------------------------------------
PARENT COMPANY BALANCE SHEET
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSETS | Notes | 31 Dec 2007 | 31 Dec 2006 |
| | | € | € |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NON-CURRENT ASSETS | | | |
--------------------------------------------------------------------------------
| Intangible assets | | | |
--------------------------------------------------------------------------------
| Goodwill | 11 | 62,187,485.62 | 68,620,673.79 |
--------------------------------------------------------------------------------
| Other non-current | 12 | 77,575,997.77 | 76,558,588.95 |
| expenses | | | |
--------------------------------------------------------------------------------
| | | 139,763,483.39 | 145,179,262.74 |
--------------------------------------------------------------------------------
| Tangible assets | 13 | | |
--------------------------------------------------------------------------------
| Land and water areas | | 10,757,893.91 | 10,496,381.99 |
--------------------------------------------------------------------------------
| Buildings and | | 52,248,703.73 | 45,950,017.40 |
| structures | | | |
--------------------------------------------------------------------------------
| Machinery and | | 409,005,786.93 | 399,761,307.50 |
| equipment | | | |
--------------------------------------------------------------------------------
| Transmission lines | | 550,175,093.16 | 543,121,562.97 |
--------------------------------------------------------------------------------
| Other tangible assets | | 100,102.76 | 87,602.76 |
--------------------------------------------------------------------------------
| Advance payments and | | 58,289,459.02 | 61,343,483.61 |
| purchases in progress | | | |
--------------------------------------------------------------------------------
| | | 1,080,577,039.51 | 1,060,760,356.23 |
--------------------------------------------------------------------------------
| Investments | 14 | | |
--------------------------------------------------------------------------------
| Equity investments in | | 504,563.77 | 504,563.77 |
| Group companies | | | |
--------------------------------------------------------------------------------
| Equity investments in | | 6,641,360.21 | 6,641,360.21 |
| associated companies | | | |
--------------------------------------------------------------------------------
| Other shares and | | 607,090.83 | 604,193.49 |
| equity investments | | | |
--------------------------------------------------------------------------------
| | | 7,753,014.81 | 7,750,117.47 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL NON-CURRENT | | 1,228,093,537.71 | 1,213,689,736.44 |
| ASSETS | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CURRENT ASSETS | | | |
--------------------------------------------------------------------------------
| Inventories | 15 | 4,800,526.18 | 3,819,252.71 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Receivables | | | |
--------------------------------------------------------------------------------
| Non-current | | | |
| receivables | | | |
--------------------------------------------------------------------------------
| Receivables from | | | 194,467.71 |
| associated companies | | | |
--------------------------------------------------------------------------------
| | | | 194,467.71 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current receivables | | | |
--------------------------------------------------------------------------------
| Trade receivables | | 36,798,351.88 | 43,008,351.12 |
--------------------------------------------------------------------------------
| Receivables from | | 150,000.00 | |
| Group companies | | | |
--------------------------------------------------------------------------------
| Receivables from | 16 | 1,572,840.32 | 418,894.43 |
| associated companies | | | |
--------------------------------------------------------------------------------
| Other receivables | | 35,824.43 | 36,642.74 |
--------------------------------------------------------------------------------
| Prepayments and | 17, 18 | 18,927,295.78 | 20,242,762.09 |
| accrued income | | | |
--------------------------------------------------------------------------------
| | | 57,484,312.41 | 63,706,650.38 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Financial assets | 19 | 207,388,114.38 | 185,929,380.94 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash in hand and bank | 19 | 3,023,236.09 | 17,358,280.04 |
| receivables | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL CURRENT ASSETS | | 272,696,189.06 | 271,008,031.78 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL ASSETS | | 1,500,789,726.77 | 1,484,697,768.22 |
--------------------------------------------------------------------------------
PARENT COMPANY BALANCE SHEET
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| SHAREHOLDERS' EQUITY | Notes | 31 Dec 2007 | 31 Dec 2006 |
| AND LIABILITIES | | € | € |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SHAREHOLDERS' EQUITY | 20 | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share capital | | 55,922,485.55 | 55,922,485.55 |
--------------------------------------------------------------------------------
| Share premium account | | 55,922,485.55 | 55,922,485.55 |
--------------------------------------------------------------------------------
| Profit from previous | | 6,167,732.80 | 6,466,190.85 |
| financial years | | | |
--------------------------------------------------------------------------------
| Profit for the | | 3,998,532.15 | 6,624,745.66 |
| financial year | | | |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| TOTAL SHAREHOLDERS' | | 122,011,236.05 | 124,935,907.61 |
| EQUITY | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ACCUMULATED PROVISIONS | 21 | 353,253,491.35 | 322,554,599.08 |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PROVISIONS FOR | 29 | 2,007,346.78 | 2,067,387.00 |
| LIABILITIES AND | | | |
| CHARGES | | | |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| LIABILITIES | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current | | | |
| liabilities | | | |
--------------------------------------------------------------------------------
| Capital loan | 22 | 30,000,000.00 | 167,914,099.68 |
--------------------------------------------------------------------------------
| Bonds | 23, 24 | 697,756,228.75 | 545,888,705.69 |
--------------------------------------------------------------------------------
| Loans from financial | | 35,781,786.06 | 42,938,216.54 |
| institutions | | | |
--------------------------------------------------------------------------------
| | | 763,538,014.81 | 756,741,021.91 |
--------------------------------------------------------------------------------
| Current liabilities | | | |
--------------------------------------------------------------------------------
| Bonds | 23 | 44,518,792.68 | 83,252,957.51 |
--------------------------------------------------------------------------------
| Loans from financial | | 7,156,430.35 | 7,156,430.34 |
| institutions | | | |
--------------------------------------------------------------------------------
| Trade payables | | 26,423,031.88 | 24,834,597.65 |
--------------------------------------------------------------------------------
| Liabilities to Group | 25 | 525,972.96 | 515,708.60 |
| companies | | | |
--------------------------------------------------------------------------------
| Liabilities to | 26 | 145,182.43 | 173,435.24 |
| associated companies | | | |
--------------------------------------------------------------------------------
| Other liabilities | 27 | 156,064,727.51 | 135,427,939.66 |
--------------------------------------------------------------------------------
| Accruals | 28 | 25,145,499.97 | 27,037,783.62 |
--------------------------------------------------------------------------------
| | | 259,979,637.78 | 278,398,852.62 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL LIABILITIES | | 1,023,517,652.59 | 1,035,139,874.53 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL SHAREHOLDERS' EQUITY AND | 1,500,789,726.77 | 1,484,697,768.22 |
| LIABILITIES | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PARENT COMPANY CASH FLOW | 1 Jan - 31 Dec 2007 | 1 Jan - 31 Dec 2006 |
| STATEMENT | € | € |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from operating | | |
| activities: | | |
--------------------------------------------------------------------------------
| Profit for the financial year | 3,998,532.15 | 6,624,745.66 |
--------------------------------------------------------------------------------
| Adjustments: | | |
--------------------------------------------------------------------------------
| Business transactions not | 95,566,125.50 | 107,950,106.49 |
| involving a payment | | |
| transaction* | | |
--------------------------------------------------------------------------------
| Interest and other finance | 42,965,510.87 | 39,660,381.92 |
| costs | | |
--------------------------------------------------------------------------------
| Interest income | -9,233,315.02 | -5,884,964.85 |
--------------------------------------------------------------------------------
| Dividend income | -681,632.10 | -642,903.59 |
--------------------------------------------------------------------------------
| Taxes | 1,224,275.08 | 2,217,263.42 |
--------------------------------------------------------------------------------
| Changes in working capital: | | |
--------------------------------------------------------------------------------
| Change in trade receivables and | 4,928,833.19 | -6,343,516.83 |
| other receivables | | |
--------------------------------------------------------------------------------
| Change in inventories | -981,273.47 | -955,268.76 |
--------------------------------------------------------------------------------
| Change in trade payables and | 3,430,297.27 | 523,254.94 |
| other liabilities | | |
--------------------------------------------------------------------------------
| Change in provisions | -60,040.22 | |
--------------------------------------------------------------------------------
| Interests paid | -45,209,306.93 | -41,569,190.44 |
--------------------------------------------------------------------------------
| Interests received | 8,506,084.55 | 5,381,002.58 |
--------------------------------------------------------------------------------
| Taxes paid | -824,609.96 | -2,296,103.44 |
--------------------------------------------------------------------------------
| Net cash flow from operating | 103,629,480.91 | 104,664,807.10 |
| activities | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from investing | | |
| activities: | | |
--------------------------------------------------------------------------------
| Purchase of tangible assets | -78,110,954.38 | -65,958,687.33 |
--------------------------------------------------------------------------------
| Purchase of intangible assets | -6,215,226.40 | -2,012,750.66 |
--------------------------------------------------------------------------------
| Investments in other assets | -2,897.34 | -14,693.00 |
--------------------------------------------------------------------------------
| Proceeds from other investments | | 2,620.00 |
--------------------------------------------------------------------------------
| Proceeds from sale of tangible | 7,921.64 | |
| assets | | |
--------------------------------------------------------------------------------
| Repayment of loans receivable | 84,848.28 | 84,724.26 |
--------------------------------------------------------------------------------
| Dividends received | 681,632.10 | 642,903.59 |
--------------------------------------------------------------------------------
| Net cash flow from investing | -83,554,676.10 | -67,255,883.14 |
| activities | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing | | |
| activities: | | |
--------------------------------------------------------------------------------
| Withdrawal of short-term loans | 206,155,015.45 | 76,788,181.36 |
--------------------------------------------------------------------------------
| Repayment of short-term loans | -180,245,755.14 | -82,835,709.95 |
--------------------------------------------------------------------------------
| Withdrawal of long-term loans | 196,550,335.67 | 151,600,778.83 |
--------------------------------------------------------------------------------
| Repayment of long-term loans | -228,487,507.59 | -160,433,807.41 |
--------------------------------------------------------------------------------
| Dividends paid | -6,923,203.71 | -6,632,410.75 |
--------------------------------------------------------------------------------
| Net cash flow from financing | -12,951,115.32 | -21,512,967.92 |
| activities | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net change in cash and cash | 7,123,689.49 | 15,895,956.04 |
| equivalents | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents 1 Jan | 203,287,660.98 | 187,391,704.94 |
--------------------------------------------------------------------------------
| Cash and cash equivalents 31 | 210,411,350.47 | 203,287,660.98 |
| Dec | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Notes to parent company cash | | |
| flow statement | | |
--------------------------------------------------------------------------------
| Adjustments: | | |
--------------------------------------------------------------------------------
| *Business transactions not | 95,566,125.50 | 107,950,106.49 |
| involving a payment transaction | | |
--------------------------------------------------------------------------------
| - Depreciation | 64,789,636.48 | 61,495,880.44 |
--------------------------------------------------------------------------------
| - Increase or decrease In | 30,698,892.27 | 46,456,162.53 |
| accumulated depreciation | | |
| difference | | |
--------------------------------------------------------------------------------
| - Capital gains/losses (-/+) on | 77,596.75 | -1,936.48 |
| tangible and intangible assets | | |
--------------------------------------------------------------------------------
| - Others | | |
--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS OF PARENT COMPANY
1. ACCOUNTING PRINCIPLES
Fingrid Oyj's financial statements have been drawn up in accordance with Finnish
Accounting Standards (FAS). The items in the financial statements are valued at
original acquisition cost.
Foreign currency transactions
Commercial flows and financial items denominated in foreign currencies are
booked at the foreign exchange mid-rate quoted by the European Central Bank
(ECB) at the transaction value date. Interest-bearing liabilities and assets and
the derivatives hedging these items are valued at the mid-rate quoted by ECB at
the closing day. Realised foreign exchange gains and losses of interest-bearing
liabilities and assets and of the related derivatives are booked under finance
income and costs at maturity. The realised foreign exchange rate differences of
derivatives hedging commercial flows adjust the corresponding item in the income
statement.
Interest rate and foreign exchange derivatives
In accordance with the financial policy, interest rate and cross-currency swaps,
foreign exchange forwards and interest rate options are used for hedging
Fingrid's interest and foreign exchange exposure of balance sheet items,
interest flows and commercial flows. The accounting principles for derivatives
are the same as for the underlying items. The interest flow of interest rate and
cross-currency swaps and interest rate options is accrued and booked under
interest income and expenses. The interest portion of forward foreign exchange
contracts hedging the interest-bearing liabilities and assets is accrued over
their maturity and booked under finance income and costs. Up-front paid or
received premiums for interest rate options are accrued over the hedging period.
Electricity derivatives
Fingrid Oyj hedges the loss energy purchases by using bilateral contracts and
electricity exchange products, such as forwards, futures and options. The price
differentials arising from these contracts are booked at maturity adjusting the
loss energy purchases in the income statement. Up-front paid or received
premiums for options are accrued over the hedging period.
Research and development expenses
Research and development expenses are entered as annual expenses.
Valuation of fixed assets
Fixed assets are capitalised under immediate acquisition cost. Planned
straight-line depreciation on the acquisition price is calculated on the basis
of the economic lives of fixed assets. Depreciation on fixed assets taken into
use during the financial year is calculated asset-specifically from the month of
introduction.
The depreciation periods are as follows:
Goodwill 20 years
Other non-current expenses
Rights of use to line areas 30-40 years
Other rights of use according to economic lives, maximum 10 years
Computer systems, operation control 7-15 years
Computer systems, others 3 years
Buildings and structures
Substation buildings and separate buildings 40 years
Substation structures 30 years
Buildings and structures at gas turbine power plants 20 years
Separate structures 15 years
Transmission lines
Transmission lines 400 kV 40 years
Direct current lines 40 years
Transmission lines 110-220 kV 30 years
Creosote-impregnated towers and related disposal expenses* 30 years
Aluminium towers of transmission lines (400 kV) 10 years
Optical ground wires 10-20 years
Machinery and equipment
Substation machinery 10-30 years
Gas turbine power plants 20 years
Other machinery and equipment 3-5 years
*The disposal expenses are discounted at present value and added to the value of
fixed assets and booked under provisions for liabilities and charges.
Goodwill is depreciated over a 20-year period, since power transmission
operation is a long-term business in which income is accrued over several
decades.
Emission rights
Emission rights are treated in accordance with the net procedure in conformance
with statement 1767/2005 of the Finnish Accounting Board.
Valuation of inventories
Inventories are entered according to the FIFO principle at the acquisition cost,
or at the lower of replacement cost or probable market price.
Cash in hand, bank receivables and financial securities
Cash in hand and bank receivables include cash assets and bank balances.
Financial securities include certificates of deposit, commercial papers,
treasury bills and investments in short-term money-market funds. Quoted
securities and comparable assets are valued at the lower of original acquisition
cost or probable market price.
Interest-bearing liabilities
Fingrid's non-current interest-bearing liabilities consist of loans from
financial institutions and bonds issued under the international and domestic
Debt Issuance Programmes. The current interest-bearing liabilities consist of
commercial papers issued under the domestic and international programmes and of
the current portion of noncurrent debt and bonds maturing within a year. The
outstanding notes under the programmes are denominated in euros and foreign
currencies. Fingrid has both fixed and floating rate debt and debt with interest
rate structures. The interest is accrued over the maturity of the debt. The
differential of a bond issued over or under par value is accrued over the life
of the bond. The arrangement fees of the revolving credit facilities are as a
rule immediately entered as expenses and the commitment fees are accrued over
the maturity of the facility.
Financial risk management
The principles applied to the management of financial risks are presented in the
notes of the Group under item 32.
Income taxes
The taxes include the accrued tax corresponding to the profit of the financial
year as well as adjustments of taxes for previous financial years.
Deferred taxes
Deferred tax assets and liabilities are not recorded in the profit and loss
statement or balance sheet. Information concerning these is presented in the
notes.
--------------------------------------------------------------------------------
| 2. REVENUE BY BUSINESS AREAS | | |
--------------------------------------------------------------------------------
The business of Fingrid Oyj comprises entirely transmission grid business with
system responsibility. Because of this there is no division of revenue into
separate business areas.
--------------------------------------------------------------------------------
| 3. OTHER OPERATING INCOME, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Rental income | 1,558 | 1,592 |
--------------------------------------------------------------------------------
| Contributions received | 134 | 136 |
--------------------------------------------------------------------------------
| Other income | 186 | 483 |
--------------------------------------------------------------------------------
| Total | 1,878 | 2,210 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 4. MATERIALS AND SERVICES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Purchases during the financial year | 85,268 | 104,326 |
--------------------------------------------------------------------------------
| Loss energy purchases | 46,280 | 36,826 |
--------------------------------------------------------------------------------
| Change in inventories, increase (-) or | -981 | -955 |
| decrease (+) | | |
--------------------------------------------------------------------------------
| Materials and supplies | 130,566 | 140,197 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Grid service charges | 53 | 46 |
--------------------------------------------------------------------------------
| Other external services | 16,532 | 14,707 |
--------------------------------------------------------------------------------
| Services | 16,584 | 14,753 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 147,150 | 154,950 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 5. STAFF EXPENDITURE, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Salaries and bonuses | 14,592 | 13,808 |
--------------------------------------------------------------------------------
| Pension expenses | 2,810 | 2,865 |
--------------------------------------------------------------------------------
| Other additional personnel expenses | 1,316 | 1,339 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 18,719 | 18,012 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Salaries and bonuses of the members of the Board of | 267 | 325 |
| Directors and President | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Tapio Kuula, Chairman of the Board | 17 | 14 |
--------------------------------------------------------------------------------
| Arto Lepistö, 1st Deputy Chairman of the Board | 15 | 9 |
--------------------------------------------------------------------------------
| Timo Rajala, 2nd Deputy Chairman of the Board | 14 | 13 |
--------------------------------------------------------------------------------
| Timo Karttinen, Member of the Board | 8 | 9 |
--------------------------------------------------------------------------------
| Ritva Nirkkonen, Member of the Board | 7 | |
--------------------------------------------------------------------------------
| Anja Silvennoinen, Member of the Board | 11 | 7 |
--------------------------------------------------------------------------------
| Jorma Tammenaho, Member of the Board | 9 | 5 |
--------------------------------------------------------------------------------
| Risto Autio, debuty Member of the Board | 6 | 9 |
--------------------------------------------------------------------------------
| Jussi Hintikka, deputy Member of the Board | 3 | |
--------------------------------------------------------------------------------
| Pekka Kettunen, deputy Member of the Board | 5 | 4 |
--------------------------------------------------------------------------------
| Timo Koivuniemi, deputy Member of the Board | 4 | 5 |
--------------------------------------------------------------------------------
| Ari Koponen, deputy Member of the Board | 5 | 3 |
--------------------------------------------------------------------------------
| Juha Laaksonen, deputy Member of the Board | 4 | 3 |
--------------------------------------------------------------------------------
| Timo Ritonummi, deputy Member of the Board | 4 | 4 |
--------------------------------------------------------------------------------
| Taisto Turunen, former 2nd Deputy Chairman of the | 0 | 3 |
| Board | | |
--------------------------------------------------------------------------------
| Marjukka Aarnio, former Member of the Board | 3 | 9 |
--------------------------------------------------------------------------------
| Timo Väisänen, former deputy Member of the Board | | 3 |
--------------------------------------------------------------------------------
| Matti Kaisjoki, former deputy Member of the Board | | 1 |
--------------------------------------------------------------------------------
| Tapio Lehtisalo, former deputy Member of the Board | | 1 |
--------------------------------------------------------------------------------
| Markku Tynkkynen, former deputy Member of the Board | | 1 |
--------------------------------------------------------------------------------
| Jukka Ruusunen, President & CEO | 153 | |
--------------------------------------------------------------------------------
| Timo Toivonen, President & CEO until 31 December 2006 | | 222 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Pension commitments: | | |
--------------------------------------------------------------------------------
| Pension commitments are described in the notes of the Group under item 23. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Number of salaried employees in the company during the | | |
| financial year: | | |
--------------------------------------------------------------------------------
| Personnel, average | 241 | 238 |
--------------------------------------------------------------------------------
| Personnel, 31 Dec | 244 | 233 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 6. DEPRECIATION ACCORDING TO PLAN, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Goodwill | 6,433 | 6,433 |
--------------------------------------------------------------------------------
| Other noncurrent expenses | 5,198 | 5,216 |
--------------------------------------------------------------------------------
| Buildings and structures | 2,015 | 1,816 |
--------------------------------------------------------------------------------
| Machinery and equipment | 26,512 | 22,129 |
--------------------------------------------------------------------------------
| Transmission lines | 24,632 | 25,901 |
--------------------------------------------------------------------------------
| Total* | 64,790 | 61,496 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| *Depreciation on the electricity grid (notes 12 and | 50,796 | 48,088 |
| 13) | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 7. OTHER OPERATING EXPENSES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Contracts, assignments etc. undertaken | 27,186 | 21,879 |
| externally | | |
--------------------------------------------------------------------------------
| Grid rents | 420 | 617 |
--------------------------------------------------------------------------------
| Other rental expenses | 1,623 | 1,590 |
--------------------------------------------------------------------------------
| Other expenses | 5,956 | 6,562 |
--------------------------------------------------------------------------------
| Total | 35,185 | 30,647 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 8. FINANCE INCOME AND COSTS, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Dividend income from Group companies | -11 | -9 |
--------------------------------------------------------------------------------
| Dividend income from others | -671 | -634 |
--------------------------------------------------------------------------------
| Interest and other finance income from Group | -6 | -8 |
| companies | | |
--------------------------------------------------------------------------------
| Interest and other finance income from others | -9,227 | -5,877 |
--------------------------------------------------------------------------------
| | -9,915 | -6,528 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest and other finance costs to Group | 21 | 15 |
| companies | | |
--------------------------------------------------------------------------------
| Interest and other finance costs to others | 42,945 | 39,646 |
--------------------------------------------------------------------------------
| | 42,966 | 39,660 |
--------------------------------------------------------------------------------
| Total | 33,051 | 33,133 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 9. PROVISIONS, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Difference between depreciation according to | 30,699 | 46,456 |
| plan | | |
| and depreciation carried out in taxation | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 10. INCOME TAXES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Income taxes for the financial year | 1,224 | 2,217 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 1,224 | 2,217 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Deferred tax assets and liabilities, 1,000 € | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Deferred tax assets | | |
--------------------------------------------------------------------------------
| On temporary differences | 522 | 538 |
--------------------------------------------------------------------------------
| | 522 | 538 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | | |
--------------------------------------------------------------------------------
| On temporary differences | 476 | 494 |
--------------------------------------------------------------------------------
| On provisions | 91,846 | 83,864 |
--------------------------------------------------------------------------------
| | 92,322 | 84,358 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 91,800 | 83,820 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 11. GOODWILL, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cost at 1 Jan | 128,664 | 128,664 |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 128,664 | 128,664 |
--------------------------------------------------------------------------------
| Accumulated depreciation according to plan 1 | -60,043 | -53,610 |
| Jan | | |
--------------------------------------------------------------------------------
| Depreciation according to plan 1 Jan - 31 Dec | -6,433 | -6,433 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 62,187 | 68,621 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Accumulated depreciation difference 1 Jan | -68,621 | -62,187 |
--------------------------------------------------------------------------------
| Increase in depreciation difference reserve 1 | | -6,433 |
| Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Decrease in depreciation difference reserve 1 | 6,433 | |
| Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Accumulated depreciation in excess of plan 31 | -62,187 | -68,621 |
| Dec | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 12. OTHER NON-CURRENT EXPENSES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 119,870 | 117,857 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 6,215 | 2,013 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 126,085 | 119,870 |
--------------------------------------------------------------------------------
| Accumulated depreciation according to plan 1 | -43,311 | -38,095 |
| Jan | | |
--------------------------------------------------------------------------------
| Decreases, depreciation according to plan 1 Jan | | |
| - 31 Dec | | |
--------------------------------------------------------------------------------
| Depreciation according to plan 1 Jan - 31 Dec | -5,198 | -5,216 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec* | 77,576 | 76,559 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Accumulated depreciation difference 1 Jan | -68,705 | -62,475 |
--------------------------------------------------------------------------------
| Increase in depreciation difference reserve 1 | -3,722 | -6,230 |
| Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Decrease in depreciation difference reserve 1 | 5,198 | |
| Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Accumulated depreciation in excess of plan 31 | -67,230 | -68,705 |
| Dec | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| *Net capital expenditure in electricity grid, | 2007 | 2006 |
| 1,000 € | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 69,525 | 71,417 |
--------------------------------------------------------------------------------
| Carrying amount 1 Jan | -71,417 | -73,497 |
--------------------------------------------------------------------------------
| Depreciation according to plan 1 Jan - 31 Dec | 3,095 | 3,079 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 1,203 | 999 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 13. TANGIBLE ASSETS, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Land and water areas | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 10,496 | 10,334 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 262 | 162 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 10,758 | 10,496 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Buildings and structures | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 57,676 | 54,532 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 8,394 | 3,144 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | -105 | |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 65,965 | 57,676 |
--------------------------------------------------------------------------------
| Accumulated depreciation according to plan 1 | -11,726 | -9,910 |
| Jan | | |
--------------------------------------------------------------------------------
| Decreases, depreciation according to plan 1 Jan | 25 | |
| - 31 Dec | | |
--------------------------------------------------------------------------------
| Depreciation according to plan 1 Jan - 31 Dec | -2,015 | -1,816 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 52,249 | 45,950 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Accumulated depreciation difference 1 Jan | -7,618 | -7,337 |
--------------------------------------------------------------------------------
| Increase in depreciation difference reserve 1 | -3,576 | -281 |
| Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Decrease in depreciation difference reserve 1 | 2,093 | |
| Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Accumulated depreciation in excess of plan 31 | -9,101 | -7,618 |
| Dec | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Machinery and equipment | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 541,679 | 520,992 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 35,760 | 20,687 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | -6 | |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 577,433 | 541,679 |
--------------------------------------------------------------------------------
| Accumulated depreciation according to plan 1 | -141,918 | -119,789 |
| Jan | | |
--------------------------------------------------------------------------------
| Decreases, depreciation according to plan 1 Jan | 2 | |
| - 31 Dec | | |
--------------------------------------------------------------------------------
| Depreciation according to plan 1 Jan - 31 Dec | -26,512 | -22,129 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 409,006 | 399,761 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Accumulated depreciation difference 1 Jan | -68,807 | -52,835 |
--------------------------------------------------------------------------------
| Increase in depreciation difference reserve 1 | -34,751 | -15,971 |
| Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Decrease in depreciation difference reserve 1 | 26,512 | |
| Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Accumulated depreciation in excess of plan 31 | -77,046 | -68,807 |
| Dec | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Transmission lines | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 730,943 | 714,412 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 31,686 | 16,531 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 762,628 | 730,943 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Accumulated depreciation according to plan 1 | -187,821 | -161,920 |
| Jan | | |
--------------------------------------------------------------------------------
| Decreases, depreciation according to plan 1 Jan | | |
| - 31 Dec | | |
--------------------------------------------------------------------------------
| Depreciation according to plan 1 Jan - 31 Dec | -24,632 | -25,901 |
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 550,175 | 543,122 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Accumulated depreciation difference 1 Jan | -108,804 | -91,264 |
--------------------------------------------------------------------------------
| Increase in depreciation difference reserve 1 | -53,518 | -17,540 |
| Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Decrease in depreciation difference reserve 1 | 24,632 | |
| Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Accumulated depreciation in excess of plan 31 | -137,690 | -108,804 |
| Dec | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other tangible assets | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 88 | 84 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 13 | 3 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | | |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 100 | 88 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Advance payments and purchases in progress | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 61,343 | 34,271 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 69,650 | 61,233 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | -72,704 | -34,160 |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 58,289 | 61,343 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total* | 1,080,577 | 1,060,760 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| *Net capital expenditure in electricity grid, | 2007 | 2006 |
| 1,000 € | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Carrying amount 31 Dec | 1,000,588 | 982,512 |
--------------------------------------------------------------------------------
| Carrying amount 1 Jan | -982,512 | -975,512 |
--------------------------------------------------------------------------------
| Depreciation according to plan 1 Jan - 31 Dec | 47,701 | 45,009 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | 84 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 65,862 | 52,009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 14. INVESTMENTS, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity investments in Group companies | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 505 | 505 |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 505 | 505 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity investments in associated companies | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 6,641 | 6,641 |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 6,641 | 6,641 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other shares and equity investments | | |
--------------------------------------------------------------------------------
| Cost at 1 Jan | 604 | 590 |
--------------------------------------------------------------------------------
| Increases 1 Jan - 31 Dec | 3 | 15 |
--------------------------------------------------------------------------------
| Decreases 1 Jan - 31 Dec | | -1 |
--------------------------------------------------------------------------------
| Cost at 31 Dec | 607 | 604 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 7,753 | 7,750 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 15. INVENTORIES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Materials and supplies | 4,801 | 3,793 |
--------------------------------------------------------------------------------
| Work in progress | | 27 |
--------------------------------------------------------------------------------
| | | |
--------------------------------------------------------------------------------
| Total | 4,801 | 3,819 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 16. RECEIVABLES FROM ASSOCIATED COMPANIES, | 2007 | 2006 |
| 1,000 € | | |
--------------------------------------------------------------------------------
| Non-current: | | |
--------------------------------------------------------------------------------
| Loans receivable | | 194 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current: | | |
--------------------------------------------------------------------------------
| Loans receivable | 110 | |
--------------------------------------------------------------------------------
| Trade receivables | 1,462 | 417 |
--------------------------------------------------------------------------------
| Prepayments and accrued income | 1 | 2 |
--------------------------------------------------------------------------------
| | 1,573 | 419 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 1,573 | 613 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 17. PREPAYMENTS AND ACCRUED INCOME, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Interests and other financial items | 11,962 | 13,045 |
--------------------------------------------------------------------------------
| Accruals of sales and purchases | 6,720 | 6,628 |
--------------------------------------------------------------------------------
| Taxes | | 320 |
--------------------------------------------------------------------------------
| Other | 244 | 249 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 18,927 | 20,243 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 18. UNRECORDED EXPENSES AND PAR VALUE | 2007 | 2006 |
| DIFFERENTIALS ON THE ISSUE OF LOANS INCLUDED IN | | |
| PREPAYMENTS AND ACCRUED INCOME, 1,000 € | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Par value differentials | 4,277 | 4,754 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 19. CASH AND CASH EQUIVALENTS, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Certificates of deposit | 78,486 | 49,140 |
--------------------------------------------------------------------------------
| Commercial papers | 83,900 | 76,788 |
--------------------------------------------------------------------------------
| Investments in money market funds | 45,002 | 60,001 |
--------------------------------------------------------------------------------
| | 207,388 | 185,929 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Bank Deposits | 160 | 140 |
--------------------------------------------------------------------------------
| Cash in hand and bank receivables* | 2,863 | 17,218 |
--------------------------------------------------------------------------------
| | 3,023 | 17,358 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 210,411 | 203,288 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| *includes pledged bank accounts (note 30) | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 20. SHAREHOLDERS' EQUITY, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Share capital 1 Jan | 55,922 | 55,922 |
--------------------------------------------------------------------------------
| Share capital 31 Dec | 55,922 | 55,922 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share premium account 1 Jan | 55,922 | 55,922 |
--------------------------------------------------------------------------------
| Share premium account 31 Dec | 55,922 | 55,922 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit from previous financial years 1 Jan | 13,091 | 13,099 |
--------------------------------------------------------------------------------
| Dividend distribution | -6,923 | -6,632 |
--------------------------------------------------------------------------------
| Profit from previous financial years 31 Dec | 6,168 | 6,466 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit for the financial year | 3,999 | 6,625 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shareholders' equity 31 Dec | 122,011 | 124,936 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Distributable shareholders' equity | 10,166 | 13,091 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Number of shares, qty | Series | Series | Total |
| | A shares | B shares | |
--------------------------------------------------------------------------------
| 1 Jan 2007 | 2,078 | 1,247 | 3,325 |
--------------------------------------------------------------------------------
| 31 Dec 2007 | 2,078 | 1,247 | 3,325 |
--------------------------------------------------------------------------------
Series A shares confer three votes each at a shareholders' meeting and series B
shares one vote each. When electing members of the Board of Directors, series A
share confers 10 votes each at a shareholders' meeting and each series B share
one vote each.
Series B shares have preferential right over series A shares to obtain the
annual dividends specified below from the funds available for profit
distribution. After this, a corresponding dividend is distributed to series A
shares. If the annual dividend cannot be distributed in some year, the shares
confer a right to receive the undistributed amount from the funds available for
profit distribution in the subsequent years; however so that series B shares
have preferential right over series A shares to receive the annual dividend and
the undistributed amount.
A shareholders' meeting decides on the annual dividend for series B shares on
the following grounds: The amount of the annual dividend is calculated on the
basis of calendar years so that the subscription price of a share, added by
amounts paid in conjunction with potential increases of share capital and
reduced by potential amounts paid in refunds of equity, is multiplied by the
dividend percentage; however so that the minimum dividend is 6%. The dividend
percentage is defined on the basis of the yield of the 30-year German Government
Bond.
Series B shares have preference with respect to dividends as stipulated in the
Articles of Association. The dividend for 2007 is 6.41% p.a. of the subscription
price of the share.
There are no minority interests.
--------------------------------------------------------------------------------
| 21. ACCUMULATED PROVISIONS, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Accumulated depreciation in excess of plan, the | 353,253 | 322,555 |
| difference between depreciation according to plan | | |
| and depreciation carried out in taxation | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 22. CAPITAL LOAN, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Debenture of capital loan nature 1997 | | 137,914 |
--------------------------------------------------------------------------------
| Debenture of capital loan nature 1999 | 30,000 | 30,000 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 30,000 | 167,914 |
--------------------------------------------------------------------------------
The terms of the capital loan fulfil the requirements of Chapter 5, Section 1 of
the Companies Act (29.9.1978). The principal and interest for capital loans can
be repaid only after debts with higher claim in the event of the liquidation or
bankruptcy of the company.
The capital loan is publicly quoted and registered in the book-entry system of
Finnish Central Securities Depository Ltd.
Debenture of capital loan nature 1997
According to the loan agreement, the company decided to redeem early on 15 May
2007 the principal and accrued interest at par.
Debenture of capital loan nature 1999
The loan becomes due on 30 November 2029, but, if the company so decides, it can
be paid back on 30 November 2009 or 30 November 2019 at 100% rate. The coupon
rate is 6.388% p.a. until 30 November 2009, after which the interest rate is the
6 month Euribor + 2.28% p.a. until 30 November 2019. After this, the coupon rate
is the 6 month Euribor + 3.28% p.a.
--------------------------------------------------------------------------------
| 23. BONDS, 1,000 € | | | 2007 | 2006 |
--------------------------------------------------------------------------------
| Internationa | | Maturity | Interest | | |
| l: | | date | | | |
--------------------------------------------------------------------------------
| EUR | 22,000 | 14.06.2007 | variable | | 22,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 25,000 | 06.04.2009 | variable | 25,000 | 25,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 10,000 | 31.03.2010 | interest rate | 10,000 | 10,000 |
| | | | structure | | |
--------------------------------------------------------------------------------
| EUR | 10,000 | 16.03.2011 | 3.625 % | 10,000 | 10,000 |
--------------------------------------------------------------------------------
| EUR | 25,000 | 23.03.2011 | variable | 25,000 | 25,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 15,000 | 24.03.2011 | variable | 15,000 | 15,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 20,000 | 07.04.2011 | variable | 20,000 | 20,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 25,000 | 16.03.2012 | variable | 25,000 | 25,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 25,000 | 12.04.2012 | variable | 25,000 | |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 10,000 | 16.04.2013 | variable | 10,000 | |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 20,000 | 28.04.2013 | variable | 20,000 | 20,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 20,000 | 15.10.2013 | 4.30 % | 20,000 | 20,000 |
--------------------------------------------------------------------------------
| EUR | 24,000 | 02.07.2014 | variable | 24,000 | 24,000 |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 20,000 | 11.04.2017 | variable | 20,000 | |
| | | | interest | | |
--------------------------------------------------------------------------------
| EUR | 25,000 | 11.04.2017 | variable | 25,000 | |
| | | | interest | | |
--------------------------------------------------------------------------------
| | | | | 274,000 | 216,000 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| FIM | 100,000 | 04.09.2008 | 4.75 % | 16,819 | 16,819 |
--------------------------------------------------------------------------------
| FIM | 210,000 | 19.08.2013 | 5.20 % | 26,910 | 26,910 |
--------------------------------------------------------------------------------
| | | | | 43,729 | 43,729 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| USD | 35,000 | 09.07.2007 | variable | | 35,497 |
| | | | interest | | |
--------------------------------------------------------------------------------
| USD | 30,000 | 23.03.2009 | variable | 24,476 | 24,476 |
| | | | interest | | |
--------------------------------------------------------------------------------
| | | | | 24,476 | 59,973 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| JPY | 3,000,00 | 23.05.2008 | 0.925 % | 27,700 | 27,700 |
| | 0 | | | | |
--------------------------------------------------------------------------------
| JPY | 3,000,00 | 15.07.2009 | 1.84 % | 24,000 | 24,000 |
| | 0 | | | | |
--------------------------------------------------------------------------------
| JPY | 1,000,00 | 12.07.2010 | 2.00 % | 10,215 | 10,215 |
| | 0 | | | | |
--------------------------------------------------------------------------------
| JPY | 2,000,00 | 16.10.2010 | 1.022 % | 15,504 | 15,504 |
| | 0 | | | | |
--------------------------------------------------------------------------------
| JPY | 3,000,00 | 05.07.2011 | 1.31 % * | 28,200 | 28,200 |
| | 0 | | | | |
--------------------------------------------------------------------------------
| JPY | 3,000,00 | 25.07.2012 | 1.3575 % ** | 25,400 | 25,400 |
| | 0 | | | | |
--------------------------------------------------------------------------------
| JPY | 3,000,00 | 20.04.2015 | 1.45 % | 21,563 | 21,563 |
| | 0 | | | | |
--------------------------------------------------------------------------------
| | | | | 152,581 | 152,581 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CHF | 16,000 | 06.06.2007 | 2.00 % | | 10,180 |
--------------------------------------------------------------------------------
| CHF | 39,000 | 15.03.2010 | 2.24 % | 25,000 | 25,000 |
--------------------------------------------------------------------------------
| CHF | 39,000 | 22.05.2012 | 2.475 % | 25,000 | 25,000 |
--------------------------------------------------------------------------------
| | | | | 50,000 | 60,180 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| GBP | 10,000 | 07.08.2007 | 5.5225 % | | 15,576 |
--------------------------------------------------------------------------------
| | | | | | 15,576 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CZK | 750,000 | 05.05.2010 | variable | 24,902 | 24,902 |
| | | | interest | | |
--------------------------------------------------------------------------------
| | | | | 24,902 | 24,902 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NOK | 200,000 | 17.10.2016 | 5.15 % | 24,620 | |
--------------------------------------------------------------------------------
| NOK | 200,000 | 11.04.2017 | 5.16 % | 24,620 | |
--------------------------------------------------------------------------------
| | | | | 49,240 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SEK | 225,000 | 03.04.2012 | variable | 24,194 | |
| | | | interest | | |
--------------------------------------------------------------------------------
| SEK | 225,000 | 11.04.2012 | variable | 24,142 | |
| | | | interest | | |
--------------------------------------------------------------------------------
| SEK | 100,000 | 21.03.2013 | variable | 10,560 | 10,560 |
| | | | interest | | |
--------------------------------------------------------------------------------
| SEK | 200,000 | 03.04.2013 | variable | 21,305 | 21,305 |
| | | | interest | | |
--------------------------------------------------------------------------------
| SEK | 175,000 | 04.04.2014 | variable | 18,811 | |
| | | | interest | | |
--------------------------------------------------------------------------------
| SEK | 220,000 | 01.12.2015 | interest rate | 24,336 | 24,336 |
| | | | structure | | |
--------------------------------------------------------------------------------
| | | | | 123,347 | 56,201 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Bonds, | | | | 697,756 | 545,889 |
| long-term | | | | | |
| total | | | | | |
--------------------------------------------------------------------------------
| Bonds, | | | | 44,519 | 83,253 |
| short-term | | | | | |
| total | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | | | | 742,275 | 629,142 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| *call option not | | | | |
| exercised 5 July 2004 | | | | |
--------------------------------------------------------------------------------
| **call option not exercised 25 July | | | |
| 2006 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 24. LOANS FALLING DUE FOR PAYMENT IN FIVE YEARS OR | 2007 | 2006 |
| MORE, 1,000 € | | |
--------------------------------------------------------------------------------
| Capital loan | 30,000 | 167,914 |
--------------------------------------------------------------------------------
| Bonds | 291,725 | 244,074 |
--------------------------------------------------------------------------------
| Loans from financial institutions | 7,156 | 14,312 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 328,881 | 258,386 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 25. LIABILITIES TO GROUP COMPANIES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Current: | | |
--------------------------------------------------------------------------------
| Other debts | 524 | 514 |
--------------------------------------------------------------------------------
| Accruals | 2 | 2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 526 | 516 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 26. LIABILITIES TO ASSOCIATED COMPANIES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Current: | | |
--------------------------------------------------------------------------------
| Trade payables | 145 | 173 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 145 | 173 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 27. OTHER DEBTS, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Current: | | |
--------------------------------------------------------------------------------
| Other loans / Commercial papers (international and | 148,552 | 122,652 |
| domestic) | | |
--------------------------------------------------------------------------------
| Value added tax | 6,599 | 10,153 |
--------------------------------------------------------------------------------
| Electricity tax | 416 | 2,081 |
--------------------------------------------------------------------------------
| Other debts | 499 | 542 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 156,065 | 135,428 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 28. ACCRUALS, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Current: | | |
--------------------------------------------------------------------------------
| Interests and other financial items | 16,882 | 20,936 |
--------------------------------------------------------------------------------
| Salaries and additional personnel expenses | 3,697 | 3,199 |
--------------------------------------------------------------------------------
| Accruals of sales and purchases | 4,487 | 2,902 |
--------------------------------------------------------------------------------
| Other | 79 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 25,146 | 27,038 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 29. PROVISIONS FOR LIABILITIES AND CHARGES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Creosote-impregnated or CCA-impregnated wooden towers, | 2,007 | 2,067 |
| disposal expenses | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total | 2,007 | 2,067 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 30. COMMITMENTS AND CONTINGENT LIABILITIES, 1,000 € | 2007 | 2006 |
--------------------------------------------------------------------------------
| Rental liabilities | | |
--------------------------------------------------------------------------------
| Liabilities for the next year | 1,761 | 1,767 |
--------------------------------------------------------------------------------
| Liabilities for subsequent years | 7,086 | 8,479 |
--------------------------------------------------------------------------------
| | 8,847 | 10,247 |
--------------------------------------------------------------------------------
| Pledges | | |
--------------------------------------------------------------------------------
| Pledge covering property lease agreement | 38 | 38 |
--------------------------------------------------------------------------------
| Pledged account in favour of the Customs Office | 27 | 27 |
--------------------------------------------------------------------------------
| Pledged account covering electricity exchange | 45 | 13,942 |
| purchases | | |
--------------------------------------------------------------------------------
| | 110 | 14,007 |
--------------------------------------------------------------------------------
| Other financial commitments | | |
--------------------------------------------------------------------------------
| Counterguarantee in favour of an associated company | 1,700 | |
--------------------------------------------------------------------------------
| Commitment fee of revolving credit facility: | | |
--------------------------------------------------------------------------------
| Commitment fee for the next year | 102 | 101 |
--------------------------------------------------------------------------------
| Commitment fee for subsequent years | 393 | 496 |
--------------------------------------------------------------------------------
| | 2,194 | 597 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Supplementary pension scheme for 2008 - 2009 (see | 248 | 610 |
| Group note 23) | | |
--------------------------------------------------------------------------------
| Donation of five-year professorship to Helsinki | 360 | 480 |
| University of Technology for 2006 - 2010 | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 31. DERIVATIVE | 2007 | 2006 |
| AGREEMENTS, 1,000 | | |
| € | | |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Interest and | Net fair | Nominal | Net fair | Nominal |
| currency | value | value | value | value |
| derivatives | 31 Dec 2007 | 31 Dec 2007 | 31 Dec 2006 | 31 Dec 2006 |
--------------------------------------------------------------------------------
| Cross-currency | -47,497 | 376,358 | -43,608 | 322,252 |
| swaps | | | | |
--------------------------------------------------------------------------------
| Forward contracts | -3,517 | 72,401 | -2,929 | 94,036 |
--------------------------------------------------------------------------------
| Interest rate | -572 | 181,000 | -670 | 213,000 |
| swaps | | | | |
--------------------------------------------------------------------------------
| Interest rate | 11,289 | 370,000 | 10,599 | 530,000 |
| options, bought | | | | |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Total | -40,297 | 999,759 | -36,609 | 1,159,288 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Electricity | Net fair | Volume | Net fair | Volume |
| derivatives | value | TWh | value | TWh |
| | 31 Dec 2007 | 31 Dec 2007 | 31 Dec 2006 | 31 Dec 2006 |
--------------------------------------------------------------------------------
| Electricity | 20,798 | 3.31 | -3,009 | 2.81 |
| forward | | | | |
| contracts, Nord | | | | |
| Pool Clearing | | | | |
--------------------------------------------------------------------------------
| Electricity | 1,993 | 0.14 | 1,131 | 0.14 |
| forward | | | | |
| contracts, others | | | | |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Total | 22,792 | 3.46 | -1,878 | 2.96 |
--------------------------------------------------------------------------------
Interest rate and cross-currency swaps and interest rate options are
mark-to-market at the closing date so that the derived net cash flow is
calculated on a net present value basis. Currency forwards are mark-to-market by
using prevailing forward rates at the closing date.
Electricity forward contracts, others, includes bilateral financial and physical
purchase commitments concerning electricity purchases, not cleared separately by
a clearing organisation. The derivatives hedge future electricity losses.
The net fair value of derivatives indicates the realised profit/loss if they had
been reversed on the last business day of 2007.
32. LEGAL PROCEEDINGS AND PROCEEDINGS BY AUTHORITIES
There are no ongoing legal proceedings or proceedings by authorities that would
have a material impact on the business of the company. In relation to
transmission line projects there are several complaints made to different
instances of justice. According to the management of the company there are no on
going legal proceedings or other such legal proceedings relating to other areas,
which final outcome would have a material impact on the financial position of
the Group. in January 2008 Fingrid Oyj appealed to the market court relating to
the decision 13 December 2007 by the Energy Market Authority "Determination of
the methodology for the assessment of the return of the grid owners grid
operations and for transmission services pricing for the review period starting
1 January 2008 ending 31 December 2011".
33. SEPARATION OF BUSINESSES IN ACCORDANCE WITH THE ELECTRICITY MARKET ACT
Balance power and regulating power
Each electricity market party must ensure that its electricity balance is in
balance by making an agreement on this with either Fingrid or some other party.
Fingrid buys and sells balance power so as to balance the hourly power balance
of an electricity market party (balance provider). Balance power trade and
pricing of balance power are based on a balance service contract with equal and
public terms and conditions.
Fingrid takes care of the continuous power balance in Finland by buying and
selling regulating power in Finland. The balance providers can participate in
the Nordic regulating power market by submitting bids of their available
capacity. The terms and conditions of participation in the regulating power
market and the pricing of regulating power are based on the balance service
contract.
Management of balance operation
In accordance with a decision by the Energy Market Authority, Fingrid Oyj shall
separate the duties pertaining to national power balance operation from the
other businesses by virtue of Chapter 7 of the Electricity Market Act.
The profit and loss account of the balance operation unit is separated by means
of cost accounting as follows:
Income direct
Separate costs direct
Production costs matching principle
Administrative costs matching principle
Depreciation matching principle in accordance with Fingrid Oyj's
depreciation principles
Finance income and costs on the basis of imputed debt
Income taxes based on result
The average number of personnel during 2007 was 12 (12). The operating profit
was 4.0 (4.1) per cent of turnover. The return on investment was 27.4 (55.1) per
cent.
--------------------------------------------------------------------------------
| MANAGEMENT OF BALANCE | 1 Jan - 31 Dec 2007 | 1 Jan - 31 Dec 2006 |
| OPERATION, SEPARATED PROFIT | 1,000 € | 1,000 € |
| AND LOSS ACCOUNT | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TURNOVER* | 68,547 | 101,235 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Materials and services* | -63,801 | -95,074 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Staff expenditure | -1,058 | -1,127 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Depreciation and amortisation | -240 | -131 |
| expense | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other operating expenses | -714 | -801 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OPERATING PROFIT | 2,733 | 4,102 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finance income and costs | 0 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PROFIT BEFORE PROVISIONS AND | 2,733 | 4,102 |
| TAXES | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Provisions | -315 | -45 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Income taxes | -629 | -1,055 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PROFIT FOR THE FINANCIAL YEAR | 1,789 | 3,002 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| *Turnover includes 4.9 (5.8) million euros of sales of balance power to |
| balance provider Fingrid Oyj, and Materials and services includes 4.8 (6.9) |
| million euros of its purchases. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MANAGEMENT OF BALANCE OPERATION, SEPARATED BALANCE SHEET | |
--------------------------------------------------------------------------------
| ASSETS | 31 Dec 2007 | 31 Dec 2006 |
| | 1,000 € | 1,000 € |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NON-CURRENT ASSETS | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Intangible assets | | |
--------------------------------------------------------------------------------
| Other non-current expenses | 590 | 305 |
--------------------------------------------------------------------------------
| | 590 | 305 |
--------------------------------------------------------------------------------
| Tangible assets | | |
--------------------------------------------------------------------------------
| Machinery and equipment | 1,232 | 25 |
--------------------------------------------------------------------------------
| Advance payments and purchases in | 129 | 325 |
| progress | | |
--------------------------------------------------------------------------------
| | 1,361 | 350 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL NON-CURRENT ASSETS | 1,951 | 655 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CURRENT ASSETS | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current receivables | | |
--------------------------------------------------------------------------------
| Trade receivables | 3,680 | 5,851 |
--------------------------------------------------------------------------------
| Receivables from Group companies | 6,484 | 3,244 |
--------------------------------------------------------------------------------
| | 10,164 | 9,126 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash in hand and bank receivables | 1 | 1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL CURRENT ASSETS | 10,165 | 9,096 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL ASSETS | 12,116 | 9,751 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SHAREHOLDERS' EQUITY AND LIABILITIES | 31 Dec 2007 | 31 Dec 2006 |
| | 1,000 € | 1,000 € |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SHAREHOLDERS' EQUITY | | |
--------------------------------------------------------------------------------
| Share capital | 32 | 32 |
--------------------------------------------------------------------------------
| Share premium account | 286 | 286 |
--------------------------------------------------------------------------------
| Profit from previous financial years | 8,845 | 5,843 |
--------------------------------------------------------------------------------
| Profit for the financial year | 1,789 | 3,002 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL SHAREHOLDERS' EQUITY | 10,952 | 9,162 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ACCUMULATED PROVISIONS | 42 | -273 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| LIABILITIES | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities | | |
--------------------------------------------------------------------------------
| Trade payables | 718 | 820 |
--------------------------------------------------------------------------------
| Other liabilities | 405 | 42 |
--------------------------------------------------------------------------------
| | 1,122 | 862 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL LIABILITIES | 1,122 | 862 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TOTAL SHAREHOLDERS' EQUITY AND | 12,116 | 9,751 |
| LIABILITIES | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Transmission system operation
Transmission system operation is deemed to cover the entire business of Fingrid
Oyj, including system responsibility, which in turn includes balance operation.
Therefore, Fingrid Oyj's financial statements represent the financial statements
of transmission system operation.
--------------------------------------------------------------------------------
| 34. KEY INDICATORS OF TRANSMISSION SYSTEM OPERATION | 2007 | 2006 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on investment (ROI) in transmission system | 5.9 | 7.2 |
| operation, % | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Profit before extraordinary items + interest and |
| | other finance costs + interest portions of leasing |
| | fees and rents of electricity grid |
--------------------------------------------------------------------------------
| Return on investment, % | = ---------------------------------------- x 100 |
--------------------------------------------------------------------------------
| | Balance sheet total - non-interest-bearing |
| | liabilities + leasing and rent liabilities related |
| | to electricity grid (average for the year) |
--------------------------------------------------------------------------------
35. EMISSION RIGHTS
In the initial allocation of emission rights, Fingrid was granted a total of
13.4 thousand tonnes of emission rights for 2005 - 2007 (Olkiluoto power station
was granted 4.2 thousand tonnes in 2007). Of this volume, 6,6 thousand tonnes
were used in 2007 (2006: 2.4 thousand tonnes). The use of emission rights did
not impact the profit in 2005 and 2006, because the company only used emission
rights obtained free of charge. In 2007 the company bought 2.0 thousand tonnes,
which had minor impact on expenses.
3. Signatures for the annual review and for the financial statements
Helsinki, 13 February 2008
Tapio Kuula
Chairman
Arto Lepistö
1st Deputy Chairman
Timo Rajala
2nd Deputy Chairman
Timo Karttinen
Ritva Nirkkonen
Anja Silvennoinen
Jorma Tammenaho
Jukka Ruusunen
President & CEO
Auditor's notation
The financial statements for the financial year 2007 have been prepared in
accordance with Generally Accepted Accounting Principles. A report on the audit
carried out has been submitted today.
Helsinki, 14 February 2008
PricewaterhouseCoopers Oy
Authorised Public Accountants
Juha Tuomala, Authorised Public Accountant
