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Fingrid Oyj (BR96)

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Friday 24 October, 2008

Fingrid Oyj

3rd Quarter Results

RNS Number : 6052G
Fingrid Oyj
24 October 2008
 



Fingrid Oyj

Stock exchange release

24 October 2008



FINGRID GROUP'S INTERIM REPORT 1 JANUARY - 30 SEPTEMBER 2008



Review of operations

Power system operation

From July to September 2008, electricity consumption in Finland totalled 19.4 terawatt hours (19.9 TWh during the corresponding period in 2007). A total of 15.5 TWh of electricity was transmitted in Fingrid's grid during the same period, representing 80 per cent of the electricity consumption in Finland. Electricity consumption in Finland from January to September was 64.6 TWh (66.3 TWh), which was 2.5 per cent less than in 2007.

Electricity transmissions between Finland and Sweden mainly consisted of exports from Finland into Sweden between July and September. Service and construction work on the grid did not really reduce the transmission capacity made available to the market.


From July to September, 0.5 TWh of electricity was imported from Sweden into Finland (1.6 TWh in 2007), and 1.3 TWh (0.4 TWh) was exported from Finland into Sweden. From January to September, 3.5 TWh (3.8 TWh) of electricity was imported from Sweden into Finland, and 2.2 TWh (3.8 TWh) was exported from Finland into Sweden (3.8 TWh). 

Electricity imports from Russia into Finland between July and September were 2.8 TWh (2.2 TWh) and from Estonia 0.6 TWh (0.3 TWh). Electricity imports from Russia from January to September were 7.8 TWh (7.5 TWh) and from Estonia 1.6 TWh (1.2 TWh).

During the review period, there were no significant extensive faults in the grid. There were some short-term disturbances on the Russian cross-border connection due to the grid in Russia. At worst, these decreased the import capacity by 900 MW.

Promotion of electricity market

Nord Pool's system price during the third quarter in 2008 was on average 55.51 €/MWh (19.80 €/MWh during the corresponding period in 2007) and the area price for Finland was 65.90 €/MWh (27.16 €/MWh). 

Finland and Sweden constituted a uniform wholesale price area of electricity during the review period, since congestions in cross-border transmissions limited trade for only 1 per cent of the hours during the first half of 2008. The bottleneck revenues caused by transmission congestions on the border between Finland and Sweden totalled 0.1 million euros (0.01 million euros) from July to September. 

From January to September, Nord Pool's system price averaged 42.74 €/MWh (23.00 €/MWh) and the area price for Finland 50.56 €/MWh (25.98 €/MWh). The bottleneck revenues on the border between Finland and Sweden totalled 0.2 million euros (0.2 million euros) between January and September.

At the end of September, the Nordic energy ministers decided on measures towards a border-free Nordic electricity market. The ministers requested the Nordic transmission system operators to take action for dividing the inter-Nordic electricity exchange area into more numerous price and/or bidding areas than at present. Based on this, Fingrid has launched an analysis into dividing Finland into two bidding areas.

The operations of European Market Coupling Company (EMCC), which integrates the Nordic and German wholesale exchange areas for electricity, commenced at the end of September. EMCC integrates the bidding books of the Nordic and German exchange areas and specifies the electricity transmissions between the exchange areas so that the transactions always take place from an area of a more inexpensive market price to an area of a more expensive market price.

Capital expenditure and grid maintenance

The Group's gross capital expenditure from July to September was 20 million euros (20 million euros during the corresponding period in 2007). Gross capital expenditure between January and September totalled 55 million euros (56 million euros).

Fingrid is making capital investments totalling 1,600 million euros in the transmission grid and reserve power in the next 10 years. This will enable the connection of one large nuclear power unit and 2,000 MW of wind power capacity to the Finnish grid by 2020.


Financial result

The Group's revenue was 87 million euros (73 million euros) from July to September. The sales volume of balance power was 27 million euros (14 million euros) and purchases of balance power 19 million euros (12 million euros). The IFRS profit before taxes was 9 million euros (7 million euros).

The Group's revenue from January to September was 280 million euros (234 million euros). Transmission revenues grew slightly to 136 million euros (135 million euros). The sales volume of balance power was 76 million euros (41 million euros) and purchases of balance power 68 million euros (37 million euros). Fingrid's share of the inter-Nordic bottleneck revenues grew because of capacity restrictions between Norway, Sweden and Denmark to 21 million euros (19 million euros). The cross-border transmission revenues on the Russian and Estonian connections totalled 16 million euros (14 million euros). 

Operating profit between January and September without the change in the fair value of derivatives was 63 million euros (56 million euros). The compensations for the European market place had a positive impact of 7 million euros on the operating profit. Operating profit was decreased by items such as higher depreciations.

Between January and September, the operating profit in accordance with IFRS was 61 million euros (68 million euros), which contains 2 million euros (+13 million euros) of negative change in the fair value of electricity derivatives. The IFRS profit before taxes was 28 million euros (30 million euros). The equity ratio was 29 (27) per cent at the end of the review period.

The Group's income flow is characterised by seasonal fluctuations, which is why the financial result for the entire year cannot be directly estimated on the basis of the nine-month result.

Financing

The financial position of the Group continued to be reasonably good considering the difficult situation in the money and capital markets. The net finance costs of the Group from July to September were 7 million euros (8 million euros). The net finance costs between January and September decreased to 25 million euros (28 million euros). Financial assets recognised at fair value in the income statement, and cash and cash equivalents amounted to 213 million euros (221 million euros) at 30 September 2008. The interest-bearing liabilities, including derivative liabilities, totalled 939 million euros (986 million euros), of which 686 million euros (768 million euros) were long-term and 254 million euros (217 million euros) were short-term.

The counterparty risk involved in the derivative contracts relating to financing was 9 million euros (7 million euros). The company has an undrawn revolving credit facility of 250 million euros.

International rating agency Standard & Poor's Rating Services (S&P) updated Fingrid Oyj's credit opinion on 11 July 2008. There were no changes from the previous rating. The long-term credit rating is A+ and the short-term rating is A-1. The outlook is stable. Fingrid's rating from Moody's Investors Service is Aa3/P-1, and from Fitch Ratings AA-/F-1+. Both Moody's and Fitch Ratings consider Fingrid's outlook to be stable.

Personnel

The total personnel of the Fingrid Group averaged 240 (240) during the review period.

Auditing

The consolidated figures in this Interim Report are unaudited.

Outlook for the remaining part of the year

The profit of the Fingrid Group for the entire year without the change in the fair value of derivatives is expected to decrease somewhat on the previous year. Profit predictability is complicated by the difficulty to anticipate the accumulated inter-Nordic bottleneck revenues during the remaining part of the year.


Board of Directors

Appendices: Tables for the interim report

Further information:

Jukka Ruusunen, President & CEO, +358 (0)30 395 5140 or +358 (0)40 593 8428
Tom Pippingsköld, CFO, +358 (0)30 395 5157 or +358 (0)40 519 5041

  Appendices: Tables for the Interim Report 1 January - 30 September 2008

 Condensed consolidated income statement, million euros

2008
Jan-Sep

2007
Jan-Se
p

Change

2008
Jul-Sep

2007
Jul-Sep

Change

2007
Jan-Dec

 Revenue

280.3

234.3

46.0

87.1

73.3

13.8

334.6

 Other operating income

1.6

1.5

0.1

0.6

0.5

0.0

1.9

 Depreciation and amortisation expense

-44.5

-38.3

-6.2

-14.9

-12.8

-2.1

-55.5

 Operating expenses

-176.0

-129.0

-47.0

-57.3

-45.5

-11.8

-190.3

 Operating profit

61.4

68.5

-7.0

15.5

15.5

0.0

90.7

 Finance income and costs

-24.7

-28.0

3.3

-6.9

-8.3

1.5

-34.9

 Portion of profit of associated companies

0.6

0.5

0.1

0.8

0.2

0.6

0.7

 Profit before taxes

37.3

40.9

-3.6

9.4

7.3

2.1

56.5

 Income taxes

-9.6

-10.5

1.0

-2.3

-1.9

-0.4

-14.5

 Profit for the period

27.7

30.3

-2.7

7.2

5.5

1.7

41.9

 Earnings per share (euros) * belonging to the owners of the parent company, calculated from profit 




8 330




9 128




-798




2 156




1 645




512




12 616

*no dilution effect









 Condensed consolidated balance sheet, million euros

2008 

30 Sep

2007

 30 Sep

Change

2007 

31 Dec

 ASSETS




 

 Non-current assets





  Goodwill

87.9

87.9

0.0

87.9

  Intangible assets

84.6

80.7

3.9

84.4

  Property, plant and equipment

1 096.2

1 082.9

13.3

1 085.6

  Investments

7.2

7.9

-0.7

7.4

  Receivables

43.5

23.9

19.6

33.9

 Current assets

 

 

 


  Inventories

4.7

4.7

0.0

4.8

  Receivables

35.1

30.3

4.8

48.8

  Financial assets recognised in income statement

 

 

 


  at fair value

212.3

206.9

5.4

209.0

  Cash and cash equivalents

0.8

14.6

-13.7

3.0

 Total assets

1 572.2

1 539.7

32.5

1 564.8

 SHAREHOLDERS' EQUITY AND LIABILITIES





 Shareholders' equity belonging to the owners of the parent company





 Shareholders' equity

461.2

410.2

51.0

430.0

 Non-current liabilities

 

 

 

 

  Non-current interest-bearing liabilities

685.9

768.3

-82.4

766.5

  Other non-current liabilities

122.3

103.8

18.5

110.5

 Current liabilities

 

 

 

 

  Current interest-bearing liabilities

253.6

217.2

36.4

200.1

  Trade and other payables

49.3

40.2

9.1

57.7

 Total sharehoulders' equity and liabilities

1 572.2

1 539.7

32.5

1 564.8



 Key indicators, million euros

2008 Jan-Sep

2007 Jan-Sep

2007 Jan-Dec

Revenue

280.3

234.3

334.6

 Capital expenditure, gross

55.1

55.7

79.2

  - % of revenue

19.7

23.8

23.7

 Research and development expenses

0.6

0.7

1.2

  - % of revenue

0.2

0.3

0.4

 Personnel, average

240

240

241

 Operating profit

61.4

68.5

90.7

  - % of revenue

21.9

29.2

27.1

 Profit before taxes

37.3

40.9

56.5

  - % of revenue

13.3

17.4

16.9

 Interest bearing liabilities, net*

726.4

764.0

754.6

 Equity ratio, %*

29.3

26.6

27.5

 Shareholders' equity*

461.2

410.2

430.0

 Equity per share, euros*

138 697

123 366

129 338

 Earnings per share, euros*

8 330

9 128

12 616

* end of period









 Consolidated statement of changes in total equity, million euros

Share capital

Share premium account

Reval-uation reserve

Trans-lation reserve

Retained earnings

Total

 Capital and reserves 1 Jan 2007

55.9

55.9

0.0

0.1

273.6

385.5

 Cash flow hedges



1.0



1.0

 Change in translation

 

 

 

0.3

 

0.3

 Dividend distribution

 

 

 

 

-6.9

-6.9

 Profit for period

 

 

 

 

30.3

30.3

 Capital and reserves 30 Sep 2007

55.9

55.9

1.0

0.3

297.0

410.2

 Cash flow hedges



8.3



8.3

 Change in translation

 

 

 

-0.1

 

-0.1

 Other changes



0.0



0.0

 Profit for period

 

 

 

 

11.6

11.6

 Capital and reserves 31 Dec 2007

55.9

55.9

9.4

0.2

308.6

430.0

 Cash flow hedges



10.7



10.7

 Change in translation

 

 

 

-0.1

 

-0.1

 Dividend distribution

 

 

 

 

-7.2

-7.2

 Profit for period

 

 

 

 

27.7

27.7

 Capital and reserves 30 Sep 2008

55.9

55.9

20.1

0.1

329.1

461.2



 Condensed consolidated cash flow statement, million euros

2008

 Jan - Sep

2007 

Jan - Sep

2007 

Jan - Dec

 Cash flow from operating activities

 

 


  Profit for the financial year

27.7

30.3

41.9

  Adjustments

80.2

63.9

92.0

  Changes in working capital

8.3

14.0

7.2

  Interests paid

-29.6

-35.1

-45.2

  Interests received

6.5

5.7

8.5

  Taxes paid

-1.8

-1.2

-0.8

  Net cash flow from operating activities

91.3

77.7

103.6





 Cash flow from investing activities




  Purchase of property, plant and equipment

-54.7

-63.7

-78.1

  Purchase of intangible assets

-1.7

-1.9

-6.2

  Purchase of other assets

0.0

0.0

0.0

  Proceeds from other investments

0.0

0.0

0.0

  Proceeds from sale of property, plant and equipment

0.0

0.0

0.0

  Repayment of loans receivable

0.1

0.1

0.1

  Dividends received

0.6

0.0

0.7

 Net cash flow from investing activities

-55.7

-65.5

-83.6





 Cash flow from financing activities




  Withdrawal of loans

193.6

319.8

402.7

  Repayment of loans

-221.6

-308.7

-408.7

  Dividends paid

-7.2

-6.9

-6.9

  Net cash flow from financing activities

-35.1

4.2

-13.0





 Net change in cash and cash equivalents

0.5

16.4

7.1

  Cash and cash equivalents 1 Jan 

212.0

204.1

204.1

  Impact of changes in fair value of investments

0.6

1.0

0.8

 Cash and cash equivalents 30 Sep

213.1

221.5

212.0










30 Sep 2008

30 Sep 2007

31 Dec 2007

 Derivative agreements, million euros

Net fair value

Notional value

Net fair value

Notional value

Net fair value

Notional value

 Interest and currency derivatives

 




 


 Cross-currency swaps

-31

365

-45

382

-47

376

 Forward contracts

1

17

-6

138

-4

72

 Interest rate swaps

0

144

1

181

-1

181

 Call options, bought

9

330

11

440

11

370

 Total

-21

857

-39

1 141

-40

1 000


30 Sep 2008

30 Sep 2007

31 Dec 2007


Net fair value

Volume TWh

Net fair value

Volume TWh

Net fair value

Volume TWh

 Electricity derivatives







 Electricity forward contracts, Nord Pool Clearing designated as hedge accounting

34

3.56

11

3.17

19

3.03

 Electricity forward contracts, Nord Pool Clearing

0

0.00

-1

0.06

1

0.28

 Forward contracts of electricity, others

1

0.07

2

0.11

2

0.14

 Total

35

3.52

12

3.34

23

3.46



 Commitments and contingensies, million euros

30 Sep 2008

30 Sep 2007

31 Dec 2007

 Pledges / bank balances

0

4

0

 Rental liabilities

8

9

9

 Commitment fee of revolving credit facility

0

1

0

 Total

9

14

10

 Capital commitments

234

74

71

 Other financial liabilities

2

1

2


 Changes in property, plant and equipment,million euros

30 Sep 2008

30 Sep 2007

31 Dec 2007

 Carrying amount at beginning of period

1 086

1 066

1 066

 Increases

54

54

74

 Decreases


0

0

 Depreciation and amortisation expense

-43

-37

-54

 Carrying amount at end of period

1 096

1 083

1 086


 Related party transactions and balances,milllion euros

30 Sep

30 Sep 2007

31 Dec 2007

 Sales

71

64

90

 Purchases

75

54

78

 Receivables

7

3

8

 Liabilities

2

3

5


Accounting principles. This interim report has been drawn up in accordance with standard IAS 34, Interim Financial Reporting.     
In this interim report, Fingrid has followed the same principles as in the annual financial statements for 2007.
                                    

Segment reporting. The entire business of the Fingrid Group is deemed to comprise transmission system operation in Finland  
with system responsibility, only constituting a single segment. There are no essential differences in the risks and profitability

 of individual products and services. This is why segment reporting in accordance with the IAS 14 standard is not presented.


Corporate rearrangements. There have been no changes in the Group structure during the period reviewed.
        


Seasonal fluctuation The Group's operations are characterised by extensive seasonal fluctuations.
                    

General clause Certain statements in this release concern the future and are based on the present views of management. Due to their nature, they contain some risk and uncertainty and are subject to changes in economy and the relevant business.                                


This information is provided by RNS
The company news service from the London Stock Exchange
 
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