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Fingrid Oyj (BR96)

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Tuesday 17 February, 2009

Fingrid Oyj

Final Results

RNS Number : 4256N
Fingrid Oyj
17 February 2009
 



Fingrid Group's annual review and financial statements 2008

Operating environment


Power system operation


In 2008, electricity consumption in Finland decreased by 3.8 per cent on the previous year, to 86.9 terawatt hours (90.3 terawatt hours in 2007). The winter with exceptionally mild weather decreased electricity consumption. The economic recession in the autumn also decreased the need for electricity by industries. A total of 65.4 terawatt hours (68.2) of electricity was transmitted in Fingrid's grid, representing 75 per cent of the electricity consumption in Finland.


A total of 3.7 terawatt hours of electricity was imported from Sweden into Finland (4 terawatt hours in 2007), and 4.2 terawatt hours (3.7) was exported from Finland into Sweden in 2008.


Electricity transmissions from the Baltic countries on the Estlink connection from Estonia mainly consisted of imports into Finland. The import volume on this connection was 2.3 terawatt hours (1.9).


Electricity imports from Russia into Finland totalled 10.9 terawatt hours (10.2) in 2008. 


Power system operation

2008

2007

Electricity consumption in Finland TWh

86.9

90.3

Fingrid's transmission volume TWh

65.4

68.2

Electricity transmissions Finland-Sweden



exports to Sweden TWh

4.2

3.7

imports from Sweden TWh

3.7

4.0

Electricity transmissions Finland-Estonia



imports from Estonia TWh

2.3

1.9

Electricity transmissions Finland-Russia



imports from Russia TWh

10.9

10.2


Promotion of electricity market


There were no problems in the transmission connections between Finland and Sweden. In practice, the two countries constituted a uniform wholesale market area of electricity, with the same spot price for 98 per cent of the time. Only 0.5 per cent of all congestion income accumulated on the border between Finland and Sweden. This income totalled more than 240 million euros in the Nordic countries. The most significant restrictions in the available electricity transmission capacity existed in the cables running at the bottom of the Oslo Fjord and on the Skagerrak connection between Southern Norway and Jutland in Denmark

The average price of electricity on the spot market in 2008 was 45 €/MWh (28 €/MWh in 2007), while transmission congestions raised the area price in Finland to a level of 51 €/MWh (30 €/MWh). 

The integration of the European electricity market is progressing swiftly in line with the establishment of the new European organisation ENTSO-E. From the transmission system operators (TSOs), the new organisation calls for greater input in the development of the market and market rules in Europe.

An agreement on the harmonisation of balance service was reached between the Nordic countries, and the new procedure was introduced at the beginning of 2009. The main changes include the handling of electricity balances in two different balances - production and consumption balance - and the harmonisation of costs included in balance service. A so-called two-price model is applied to the balance deviation in the production balance, and a single-price model is applied to the balance deviation in the consumption balance. 

Electricity market

2008

2007

Nord Pool system price, average €/MWh

44.74

27.93

Area price Finland, average €/MWh

51.02

30.01

Congestion income in the Nordic countries million €

244.1

173.6

Congestion income between Finland and Sweden million €

1.3

2.7

Congestion income between Finland and Sweden %

1.6

0.5

 



Fingrid's share of the congestion income in the Nordic countries million €

23.2

22.6


Capital expenditure and grid maintenance


Construction of the Finnish grid continued actively throughout the year. There will also be significant construction projects in the coming years, because Fingrid is making capital investments totalling 1,600 million euros in the transmission grid and reserve power over the next 10 years. This will enable the connection of one large nuclear power unit and 2,000 megawatts of geographically decentralised wind power capacity to the Finnish grid by 2020 as well as the renewal of ageing parts of the grid.

One of the most important projects completed in 2008 was the Ulvila-Kangasala 400 kilovolt (kV) transmission connection, which reinforces electricity transmission from the west coast to Pirkanmaa. Moreover, the 110 kV line between Kankaanpää and Lålby in Western Finland was renewed. In all, some 40 construction projects on the main grid were in progress.

Alongside the Nordic analysis, the viability of three transmission connections between the Baltic countries and Poland as well as between the Baltic countries and the Nordic countries was studied. The first stage of the study was completed at the turn of 2008 and 2009. The study concerned a new transmission connection Estlink 2 between Finland and Estonia, a link between Sweden and the Baltic countries, and a connection between Lithuania and Poland. In order to maintain the security of electricity supply in the Baltic area, the EU established a group consisting of the EU member states in the area of the Baltic Sea to think of ways in which to develop the electricity market and transmission connections in the area over a long time span (Baltic Interconnection Plan). Fingrid contributes actively to the work of this group.

Fingrid's gross capital expenditure in 2008 was 88 (79) million euros.

 

Financial result


Revenue of the Fingrid Group in 2008 was 382 million euros (335 million euros in 2007). Other operating income was 3 million euros (2 million euros). Grid service revenue decreased slightly despite the 4.5 per cent tariff increase carried out at the beginning of the financial year. This was mainly due to the rapid decline in global economy, which is why electricity consumption by Finnish industries went down quickly towards the end of the year.

 

Revenue from the sales of balance power grew from the previous year to 105 (64) million euros. Correspondingly, the purchases of balance power also grew to 95 (59) million euros. This was mainly due to the elevated sales prices and purchase prices of balance power. Cross-border transmission income and peak load power income remained almost at the same level as in 2007. ITC or inter-TSO compensations between the European TSOs grew by 4 million euros. Depreciation, loss energy, reserve power and personnel costs rose slightly. Income and costs related to the feed-in tariff for peat decreased. The corresponding changes during the last quarter of the financial year are shown in the table below (in million euros).


Revenue

1-12/08

1-12/07

9-12/08

9-12/07






Grid service revenue

189

190

53

55

Sales of balance power

105

64

28

23

Cross-border transmission

22

23

6

6

ITC income

23

19

7

8

Peak load power

11

10

3

3

Feed-in tariff for peat

0.4

2

0.1

1

Congestion income

23

23

2

4

Other operational revenue and other income

11

6

3

1






Revenue and other income total

385

336

103

101


Costs

1-12/08

1-12/07

9-12/08

9-12/07






Depreciation

59

56

15

17

Purchase of balance power

95

59

27

22

ITC charges

16

16

4

3

Peak load power

10

10

3

3

Feed-in tariff for peat

0.1

1.5

0.0

1.5

Purchase of loss energy

50

47

13

12

Reserves

20

18

5

5

Maintenance management

16

16

6

5

Personnel

20

19

6

6

Other costs

17

16

5

5






Costs total

302

258

84

78


Operating profit excluding the change in the fair value of electricity derivatives was 83 (79) million euros during the financial year. In the last quarter, operating profit excluding the change in the fair value of electricity derivatives was 19 (23) million euros.

     

The IFRS operating profit of the Group was 68 (91) million euros. Fingrid introduced hedge accounting in Group reporting for electricity derivatives as of 1 July 2007.The prices of electricity derivatives decreased significantly during the last quarter of the financial year, and of the negative change in the fair value of electricity derivatives, 58 million euros, 14 million euros (12) were recognised in the income statement and a total of 44 million euros in equity and deferred tax receivables.


The Group's profit for the year was 28 (42) million euros.


The return on investment was 5.8 (7.3) per cent and the return on equity 6.6 (10.3) per cent. The equity ratio was 26.7 (27.5) per cent at the end of the review period.

 

The cash flow from the operations of the Group deducted by capital expenditure and dividends was 20 (13) million euros.


The Fingrid Group and Fingrid Oyj employed 249 persons, including temporary employees, at the end of 2008. The corresponding figure a year before was 244 persons.


As a result of the recession in economy, electricity consumption in Finland in 2009 is expected to decrease further.


Fingrid will continue the implementation of its extensive capital expenditure programme. Fingrid is making capital investments totalling 1,600 million euros in the transmission grid and reserve power in the next 10 years. The investments on an annual level are about 100 - 200 million euros. The extensive capital investments have a negative impact on cash flow and will require additional borrowing.


These financial statements have been audited.


Appendix:
Fingrid Oyj, Annual review and financial statements 2008

Additional information:
CEO Jukka Ruusunen, +358 30 395 5140 or +358 40 593 8428

CFO Tom Pippingsköld, +358 30 395 5157 or +358 40 519 5041


English translation








FINGRID OYJ

ANNUAL REVIEW AND FINANCIAL STATEMENTS

1 January 2008 - 31 December 2008


  

CONTENTS                                                                                   PAGE



1. Annual review                                                                                     2


    Report of the Board of Directors                                                        3


    Key indicators                                                                                   13


    The Board of Directors' proposal for the distribution of profit           15


2. Financial statements                                                                         16


    Consolidated financial statements (IFRS)                                        16


    Income statement                                                                             16


    Balance sheet                                                                                   17


    Statement of changes in equity                                                        19


    Cash flow statement                                                                         20


    Notes to the financial statements                                                      21


    Parent company financial statements (FAS)                                    46    


    Income statement                                                                             46


    Balance sheet                                                                                   47


    Cash flow statement                                                                         49


    Notes to the financial statements                                                      50


3. Signatures for the annual review and for the financial statements   64


  REPORT OF THE BOARD OF DIRECTORS


Operating environment


Power system operation


In 2008, electricity consumption in Finland decreased by 3.8 per cent on the previous year, to 86.9 terawatt hours (90.3 terawatt hours in 2007). The winter with exceptionally mild weather decreased electricity consumption. The economic recession in the autumn also decreased the need for electricity by industries. A total of 65.4 terawatt hours (68.2) of electricity was transmitted in Fingrid's grid, representing 75 per cent of the electricity consumption in Finland.


A total of 3.7 terawatt hours of electricity was imported from Sweden into Finland (4 terawatt hours in 2007), and 4.2 terawatt hours (3.7) was exported from Finland into Sweden in 2008.


Electricity transmissions from the Baltic countries on the Estlink connection from Estonia mainly consisted of imports into Finland. The import volume on this connection was 2.3 terawatt hours (1.9).


Electricity imports from Russia into Finland totalled 10.9 terawatt hours (10.2) in 2008. 


Power system operation

2008

2007

Electricity consumption in Finland TWh

86.9

90.3

Fingrid's transmission volume TWh

65.4

68.2

Electricity transmissions Finland-Sweden



exports to Sweden TWh

4.2

3.7

imports from Sweden TWh

3.7

4.0

Electricity transmissions Finland-Estonia



imports from Estonia TWh

2.3

1.9

Electricity transmissions Finland-Russia



imports from Russia TWh

10.9

10.2


Promotion of electricity market


There were no problems in the transmission connections between Finland and Sweden. In practice, the two countries constituted a uniform wholesale market area of electricity, with the same spot price for 98 per cent of the time. Only 0.5 per cent of all congestion income accumulated on the border between Finland and Sweden. This income totalled more than 240 million euros in the Nordic countries. The most significant restrictions in the available electricity transmission capacity existed in the cables running at the bottom of the Oslo Fjord and on the Skagerrak connection between Southern Norway and Jutland in Denmark.

The average price of electricity on the spot market in 2008 was 45 €/MWh (28 €/MWh in 2007), while transmission congestions raised the area price in Finland to a level of 51 €/MWh (30 €/MWh). 

The integration of the European electricity market is progressing swiftly in line with the establishment of the new European organisation ENTSO-E. From the transmission system operators (TSOs), the new organisation calls for greater input in the development of the market and market rules in Europe.

An agreement on the harmonisation of balance service was reached between the Nordic countries, and the new procedure was introduced at the beginning of 2009. The main changes include the handling of electricity balances in two different balances - production and consumption balance - and the harmonisation of costs included in balance service. A so-called two-price model is applied to the balance deviation in the production balance, and a single-price model is applied to the balance deviation in the consumption balance. 

Electricity market

2008

2007

Nord Pool system price, average €/MWh

44.74

27.93

Area price Finland, average €/MWh

51.02

30.01

Congestion income in the Nordic countries million €

244.1

173.6

Congestion income between Finland and Sweden million €

1.3

2.7

Congestion income between Finland and Sweden %

1.6

0.5




Fingrid's share of the congestion income in the Nordic countries million €

23.2

22.6





















Capital expenditure and grid maintenance


Construction of the Finnish grid continued actively throughout the year. There will also be significant construction projects in the coming years, because Fingrid is making capital investments totalling 1,600 million euros in the transmission grid and reserve power over the next 10 years. This will enable the connection of one large nuclear power unit and 2,000 megawatts of geographically decentralised wind power capacity to the Finnish grid by 2020 as well as the renewal of ageing parts of the grid.

One of the most important projects completed in 2008 was the Ulvila-Kangasala 400 kilovolt (kV) transmission connection, which reinforces electricity transmission from the west coast to Pirkanmaa. Moreover, the 110 kV line between Kankaanpää and Lålby in Western Finland was renewed. In all, some 40 construction projects on the main grid were in progress.

Alongside the Nordic analysis, the viability of three transmission connections between the Baltic countries and Poland as well as between the Baltic countries and the Nordic countries was studied. The first stage of the study was completed at the turn of 2008 and 2009. The study concerned a new transmission connection Estlink 2 between Finland and Estonia, a link between Sweden and the Baltic countries, and a connection between Lithuania and Poland. In order to maintain the security of electricity supply in the Baltic area, the EU established a group consisting of the EU member states in the area of the Baltic Sea to think of ways in which to develop the electricity market and transmission connections in the area over a long time span (Baltic Interconnection Plan). Fingrid contributes actively to the work of this group.

Fingrid's gross capital expenditure in 2008 was 88 (79) million euros. Of this amount, a total of 81 million euros were used for the transmission grid and 5 million euros for reserve power. IT-related capital expenditure was approximately 2 million euros.

 

Research and development were allocated a total of 0.9 million euros. A significant portion of this was used for projects related to the monitoring and damping of low-frequency power oscillations; these projects have continued for several years. Projects aiming at a more detailed specification of system security, improved system security and establishing the impacts of wind power on the power system progressed through post-graduate studies. Research pertaining to electromagnetic fields continued within several different projects. 



Financial result


Revenue of the Fingrid Group in 2008 was 382 million euros (335 million euros in 2007). Other operating income was 3 million euros (2 million euros). Grid revenue decreased slightly despite the 4.5 per cent tariff increase carried out at the beginning of the financial year. This was mainly due to the rapid decline in global economy, which is why electricity consumption by Finnish industries went down quickly towards the end of the year.


Revenue from the sales of balance power grew from the previous year to 105 (64) million euros. Correspondingly, the purchases of balance power also grew to 95 (59) million euros. This was mainly due to the elevated sales prices and purchase prices of balance power. Cross-border transmission income and peak load power income remained almost at the same level as in 2007. ITC or inter-TSO compensations between the European TSOs grew by 4 million euros. Depreciation, loss energy, reserve power and personnel costs rose slightly. Income and costs related to the feed-in tariff for peat decreased. The corresponding changes during the last quarter of the financial year are shown in the table below (in million euros).


Revenue

1-12/08

1-12/07

9-12/08

9-12/07






Grid service revenue

189

190

53

55

Sales of balance power

105

64

28

23

Cross-border transmission


22


23


6


6

ITC income

23

19

7

8

Peak load power

11

10

3

3

Feed-in tariff for peat

0.4

2

0.1

1

Congestion income

23

23

2

4

Other operational revenue and other income


11


6


3


1






Revenue and other income total


385


336


103


101



Costs

1-12/08

1-12/07

9-12/08

9-12/07






Depreciation

59

56

15

17

Purchase of balance power

95

59

27

22

ITC charges

16

16

4

3

Peak load power

10

10

3

3

Feed-in tariff for peat

0.1

1.5

0.0

1.5

Purchase of loss energy

50

47

13

12

Reserves

20

18

5

5

Maintenance management

16

16

6

5

Personnel

20

19

6

6

Other costs

17

16

5

5






Costs total

302

258

84

78


Operating profit excluding the change in the fair value of electricity derivatives was 83 (79) million euros during the financial year. In the last quarter, operating profit excluding the change in the fair value of electricity derivatives was 19 (23) million euros.


The IFRS operating profit of the Group was 68 (91) million euros. Fingrid introduced hedge accounting in Group reporting for electricity derivatives as of 1 July 2007.The prices of electricity derivatives decreased significantly during the last quarter of the financial year, and of the negative change in the fair value of electricity derivatives, 58 million euros, 14 million euros (+12) were recognised in the income statement and a total of 44 million euros in equity and deferred tax receivables. 


The Group's profit for the year was 28 (42) million euros.


The return on investment was 5.8 (7.3) per cent and the return on equity 6.6 (10.3) per cent. The equity ratio was 26.7 (27.5) per cent at the end of the review period. Revenue of the parent company was 382 (333) million euros and profit for the financial year 6 (4) million euros.



Financing


The financial position of the Group continued to be satisfactory. The international crisis in the financial market has increased the margins of corporate funding considerably. Fingrid did not issue new bonds or withdraw long-term loans in 2008. As a result of the global recession, both short-term and long-term interest rates decreased during the last quarter of the financial year. The uncertain situation in the money and capital markets continues, and it is difficult to anticipate its time frame.


The net financial costs excluding the change in the fair value of derivatives decreased to 29 million euros (31 million euros in 2007) during the review period. Interest income was 11 (9) million euros. The net financial costs in accordance with IFRS were 31 (35) million euros, including the negative change in the fair value 2 (-4) million euros.


The cash flow from the operations of the Group deducted by capital expenditure and dividends was 20 (13) million euros.


The financial assets at 31 December 2008 totalled 206 (212) million euros. The interest-bearing liabilities, including derivative liabilities, totalled 933 (967) million euros, of which 678 (766) million euros were long-term and 255 (200) million euros were short-term. The counterparty risk arising from in the currency derivative contracts and interest rate derivative contracts was 10 (5) million euros. 


The company has a fully undrawn revolving credit facility of 250 million euros.


Moody's Investors Service updated Fingrid's credit opinion on 29 January 2008. The rating was unchanged. Moody's long-term rating is Aa3 and the short-term rating is P-1. Standard & Poor's Rating Services updated Fingrid's credit opinion on 11 July 2008. The long-term rating assigned by Standard & Poor's is A+ and the short-term rating is A-1. On 23 October 2007, Fitch Ratings assigned Fingrid Oyj a long-term issuer default rating (IDR) of AA- (AA minus), a short-term IDR of F-1+ and a senior unsecured debt rating of AA. All three rating agencies assess Fingrid's outlook to be stable.



Personnel and rewarding systems


The Fingrid Group and Fingrid Oyj employed 249 persons, including temporary employees, at the end of 2008. The corresponding figure a year before was 244 persons.


Of the personnel employed by the company, 21 per cent (22 per cent in 2007) were women and 79 (78) per cent were men at the end of the year. Among permanent personnel, those in age group 24 - 29 years of age numbered 30 (25) in 2008, 30 - 34 years 34 (35), 35 - 39 years 38 (28), 40 - 44 years 31 (40), 45 - 49 years 37 (37), 50 - 54 years 37 (27), 55 - 59 years 26 (30), and age group 60 - 65 years 16 (16).


During 2008, a total of 11,820 (9,337) hours were used for personnel training, with an average of 49 (38) hours per person. Employee absences on account of illness in 2008 accounted for 2 per cent of the total working hours, which was at the same level as in 2007. 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 18 March 2008. Arto Lepistö, Industrial Counsellor, was elected as the Chairman of the Board, Timo Rajala, President and CEO, as the First Deputy Chairman of the Board, and Timo Karttinen, Senior Vice President, as the Second Deputy Chairman of the Board. The other Board members elected were Ari Koponen, Managing Director, Ritva Nirkkonen, Managing Director, Anja Silvennoinen, Vice President, Energy, and Jorma Tammenaho, Portfolio Manager.


PricewaterhouseCoopers Oy was elected as the auditor of the company, with Authorised Public Accountant Juha Tuomala serving as the responsible auditor.


Jukka Ruusunen serves as the President & CEO of the company. 


Corporate governance


In its business, Fingrid Oyj adheres to the Corporate Governance Code 2008.


Fingrid's shareholders have the supreme power of decision in the general meeting which elects the Board of Directors annually. Fingrid's Board of Directors takes care of corporate administration. The Board of Directors decides on significant strategic policy decisions and approves the principles related to the management system of the company. The Board approves annually the action plan and budget and reviews the risks relating to the company's operations and the management of such risks. Moreover, the Board appoints the CEO of the company and approves its basic organisation and composition of the executive management group. The CEO is responsible for the operations of the company, assisted by the executive management group. The working order of the Board specifies the course of procedure of the above issues in more detail. The working order of the Board is available on the company's website.


Assisted by an outside consultant, the Board of Directors implemented a development process for the work of the Board in 2008. As part of this process, the operations were reviewed comprehensively, and a decision was made to rearrange the meetings of the Board.


The Board had eight meetings during the financial year, two of these being audio conferences. The attendance rate of the members was 93 per cent.


The Board of Directors has two committees: audit committee, and remuneration and nomination committee. The committees have rules of procedure confirmed by the Board of Directors. The rules of procedure are available on the company's website.


The members of the audit committee in 2008 were Ritva Nirkkonen (Chairperson), Arto Lepistö, Anja Silvennoinen and Jorma Tammenaho. The audit committee had three meetings during the year. The attendance rate of the members was 92 per cent. The committee is appointed by the Board of Directors and it assists the Board. The audit committee prepares, guides and assesses internal control, auditing, risk management, and financial reporting. 


The remuneration and nomination committee consists of Arto Lepistö (Chairman), Timo Rajala and Timo Karttinen. The remuneration and nomination committee is appointed by the Board of Directors and it assists the Board. This committee approves the remuneration to be paid to the CEO and other members of the executive management group on the basis of principles specified by the Board of Directors. The committee also prepares the appointments of the CEO, deputy CEO and persons belonging to the executive management group as well as surveys their successors. The committee had two meetings during the year. The attendance rate of the members was 100 per cent.


Deviation from Corporate Governance Code: the Corporate Governance Code requires that the majority of the Board members must be independent of the company, and at least two of the members representing this majority must be independent of significant shareholders of the company. Fingrid's Board of Directors has considered that of the seven Board members, Arto Lepistö, Ritva Nirkkonen and Jorma Tammenaho are independent of the company. Ritva Nirkkonen, Anja Silvennoinen and Jorma Tammenaho are independent of the significant shareholders. 


The Board of Directors considers that the objective and professional handling of matters by the Board has been ensured. In addition to the stipulations laid down in the Finnish Companies Act, Securities Markets Act and corresponding general regulations, Fingrid's decision making is especially subject to obligations prescribed by the Electricity Market Act concerning the unbiased treatment of customers and an obligation to develop the market with a view to the overall interests. Vital matters having bearing on Fingrid's customer interface are prepared by the company's Advisory Committee. Moreover, Fingrid's Articles of Association, ownership contracts and principles concerning the work of the Board of Directors ensure objective handling of matters. 


In accordance with the Corporate Governance Code, the members of the audit committee should be independent of the company. The Board of Directors considers it important that practical expertise in the energy industry is also represented in the audit committee, which is why it is deemed necessary that Anja Silvennoinen is a member of the audit committee. In accordance with the Corporate Governance Code, a majority of the members of the nomination committee should be independent of the company. Of the members of the remuneration and nomination committee, Arto Lepistö is independent of the company. The Board of Directors considers that the composition of the committee ensures such handling of the matters that leads to an optimum outcome in view of the shareholders and the company.


Unlike what has been stated in the Code, the remuneration and nomination committee does not prepare the appointments of Board members.


Risk management, internal supervision, internal auditing


The Board of Directors approves the main risk management principles and any changes in these. The Board approves the risk management measures as part of the corporate strategy, performance indicators, action plan and budget. The audit committee of the Board of Directors obtains an annual report of the foremost risks pertaining to the company's operations and of their management. The internal auditor monitors issues such as the internal rules of the company and reports his findings to the audit committee. Internal auditing is also responsible for internal supervision and for auditing business risk management, and it reports the results of this work to the audit committee. The audit committee reports to the Board of Directors.


With regard to the foremost risks, the main content of risk management is specified as part of the strategy work of the executive management group, in the operating principles, and in the procedural guidelines. These risks are monitored, co-ordinated and managed by the executive management group, but each function and/or business process is responsible for implementing its own risk management. The executive management group identifies and assesses regularly the strategic risks pertaining to personnel and expertise, corporate finances, customers and stakeholders, and business processes. The financial administration of the Group is responsible for the control structures relating to the financial reporting process.


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 operation 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 operation 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 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. 


    The audit committee of the Board of Directors examines the functioning of internal supervision. The company has internal auditing independent of the operative management. Internal auditing reports to the audit committee on its observations concerning the procedural guidelines, authorisations and rules of the company. As part of internal supervision, internal auditing audited the company's financial control system which produces the financial reports, and procurement of loss energy and balance service in 2008.



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 euros, 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 1.8 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. 27,077 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. 25 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. However, the international decline in economy together with the crisis in the financial market will be reflected in Fingrid's business and financial result in a negative way.


As a result of the recession in economy, electricity consumption in Finland in 2009 is expected to decrease further. The magnitude of the decrease will depend on the economic trends and on the temperatures this year. After the recession, consumption is expected to return to the 'basic track' where electricity consumption in Finland grows at an average rate of 0.7 per cent per year. Electricity consumption in Finland is reflected directly in the volume of electricity transmitted via Fingrid's grid and in Fingrid's grid revenue.


The Nordic congestion income is presumed to decrease in 2009 from the previous year once the transmission connections in the Oslo Fjord are restored and made available to the electricity market again.


Fingrid will continue the implementation of its extensive capital expenditure programme. Fingrid is making capital investments totalling 1,600 million euros in the transmission grid and reserve power in the next 10 years. The investments on an annual level are about 100 - 200 million euros. The extensive capital investments have a negative impact on cash flow and will require additional borrowing.

  


CONSOLIDATED KEY INDICATORS

 

2004

2005

2006

2007

2008

 

 

IFRS

IFRS

IFRS

IFRS

IFRS








Extent of operations







Turnover

million €

301.8

316.7

351.3

334.6

382.3








Capital expenditure, gross

million €

42.9

63.3

69.6

79.2

87.9

- of turnover

%

14.2

20.0

19.8

23.7

23.0








Research and development expenses

million €

1.1

1.6

1.2

1.2

0.9

- of turnover

%

0.4

0.5

0.4

0.4

0.2








Personnel, average


233

228

238

241

241

Personnel, end of year


220

231

233

244

249








Salaries and bonuses, total

million €

12.0

12.7

13.8

14.6

15.8








Profitability







Operating profit 

million €

101.5

110.0

79.5

90.7

68.4

- of revenue

%

33.6

34.7

22.6

27.1

17.9








Profit before taxes

million €

59.1

75.1

51.5

56.5

37.5

- of revenue

%

19.6

23.7

14.7

16.9

9.8








Return on investment (ROI)

%

8.2

8.7

6.4

7.3

5.8








Return on equity (ROE)

%

17.5

16.9

10.4

10.3

6.6








Financing and financial position







Equity ratio

%

21.6

23.9

25.5

27.5

26.7

Interest-bearing net liabilities

million €

847.6

797.9

766.3

754.6

726.7








Share-specific indicators







Earnings per share

14,884

16,761

11,531

12,616

8,379

Dividends per share

1,995

1,995

2,082

2,156

2,018*

Equity per share

91,640

106,439

115,952

129,338

125,600








Number of shares at 31 Dec







- Series A shares

qty

2,078

2,078

2,078

2,078

2,078

- Series B shares

qty

1,247

1,247

1,247

1,247

1,247

Total

qty

3,325

3,325

3,325

3,325

3,325








*The Board of Directors proposal to the General Annual Meeting 






  




 

 

 

 



CALCULATION OF KEY INDICATORS

 

 

 

 

 













Profit before taxes + interest and other finance costs



Return on investment, %

=

-------------------------------------------------------------------------------------- x 100



Balance sheet total - non-interest-bearing liabilities (average for the year)













Profit for the financial year





Return on equity, %

=

-------------------------------------------------------------------------------------- x 100



Shareholders' equity (average for the year)















Shareholders' equity






Equity ratio, %

=

-------------------------------------------------------------------------------------- x 100



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-bearing net liabilities, €

=

Interest-bearing liabilities - cash and cash equivalents




  

THE BOARD OF DIRECTORS' PROPOSAL FOR THE DISTRIBUTION OF PROFIT


Fingrid Oyj's distributable funds in the financial statements are 9,467,398.26 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


- 2,018.26 euros of dividend per share be paid in accordance with article 5 of the Articles of Association, totaling 6,710,698.27 euros


- 2,756,699.99 euros be carried over as unrestricted equity.  

2. Financial statements








CONSOLIDATED FINANCIAL STATEMENTS (IFRS)







CONSOLIDATED INCOME STATEMENT

 

1 Jan - 31 Dec 2008

1 Jan - 31 Dec 2007

 

Notes

1,000 €

1,000 €





REVENUE

2

382,309

334,578

Other operating income

3

2,508

1,878



 


Raw materials and consumables used

4

-188,634

-148,650



 


Employee benefits expense

5

-19,584

-18,537



 


Depreciation

6

-59,484

-55,533



 


Other operating expenses

7, 8

-48,751

-23,078



 


OPERATING PROFIT


68,365

90,658



 


Portion of profit of associated companies

9

514

725

Finance income

9

11,090

9,294

Finance costs

9

-42,453

-44,194

Finance income and costs


-30,849

-34,175



 


PROFIT BEFORE TAXES


37,516

56,483



 


Income taxes

10

-9,658

-14,535



 


PROFIT FOR THE FINANCIAL YEAR

 

27,859

41,948





Attributable to




Equity holders of parent company


27,859

41,948



 


Earnings per share, €

11

8,379

12,616





Earnings per share for profit attributable 

to the equity holders of the parent company

Undiluted earnings per share, €

11

8,379

12,616

Diluted earnings per share, €

11

8,379

12,616


  

CONSOLIDATED BALANCE SHEET








ASSETS

 

31 Dec 2008

31 Dec 2007

 

Notes

1,000 €

1,000 €





NON-CURRENT ASSETS








Intangible assets:




Goodwill

13

87,920

87,920

Other intangible assets

14

85,274

84,396



173,194

172,316

Property, plant and equipment:

15

 


Land and water areas


10,832

10,758

Buildings and structures


55,916

52,304

Machinery and equipment


392,202

411,295

Transmission lines


570,483

550,188

Other property, plant and equipment


2,628

2,757

Advance payments and purchases in progress

 

81,081

58,289



1,113,141

1,085,591

Investments:

16

 


Equity investments in associated companies


6,370

7,074

Available-for-sale investments

 

324

350



6,694

7,424

Receivables:


 


Finance receivables

17

1,205

10,478

Deferred tax assets

23

8,664

522

Other receivables

27

 

22,792



9,868

33,792



 


TOTAL NON-CURRENT ASSETS

 

1,302,897

1,299,123





CURRENT ASSETS








Inventories

18

4,628

4,801

Finance receivables

17

3,029

1,480

Trade receivables and other receivables

19

44,930

47,461

Tax assets


 


Financial assets recognised in 

income statement at fair value

20

200,040

208,961

Cash and cash equivalents

20

6,104

3,023



 


TOTAL CURRENT ASSETS

 

258,730

265,725



 


TOTAL ASSETS

 

1,561,628

1,564,848


  

CONSOLIDATED BALANCE SHEET




 

 

 

 

EQUITY AND LIABILITIES


31 Dec 2008

31 Dec 2007

 

Notes

1,000 €

1,000 €





EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY






Share capital

22

55,922

55,922

Share premium account

22

55,922

55,922

Revaluation reserve

22

-23,159

9,375

Translation reserve

16

-368

213

Retained earnings

 

329,303

308,614

 


 


TOTAL EQUITY

 

417,621

430,048



 


NON-CURRENT LIABILITIES

 

 




 


Deferred tax liabilities

23

112,796

108,497

Interest-bearing liabilities

25

678,336

766,468

Provisions

26

1,955

2,007

Other liabilities

28

35,361




828,448

876,972

CURRENT LIABILITIES


 




 


Interest-bearing liabilities

25

254,522

200,149

Trade payables and other liabilities

29

61,037

57,680



315,559

257,828



 


TOTAL LIABILITIES

 

1,144,007

1,134,800



 


TOTAL EQUITY AND LIABILITIES

 

1,561,628

1,564,848


  

 

 

 

 

 

 

 

 









CONSOLIDATED STATEMENT OF CHANGES IN EQUITY, 1,000 €



 

 

 

 

 

 

 

 

 








 








 

Notes

Share capital

Share premium account

Revaluation reserve

Translation reserve

Retained earnings

Total









Attributable to equity holders of the parent company












Equity 1 Jan 2007

 

55,922

55,922

45

63

273,589

385,542

Cashflow hedges

22, 27



9,304



9,304

Translation reserve

16




150


150

Dividend distribution

12





-6,923

-6,923

Other changes

22



26



26

Profit for the financial year






41,948

41,948









Equity 31 Dec 2007

 

55,922

55,922

9,375

213

308,614

430,048









Cashflow hedges

22, 27

 

 

-32,515

 

 

-32,515

Translation reserve

16




-581


-581

Dividend distribution

12





-7,169

-7,169

Other changes

22



-19



-19

Profit for the financial year






27,859

27,859









Equity 31 Dec 2008

 

55,922

55,922

-23,159

-368

329,303

417,621


  

 

 

 




CONSOLIDATED CASH FLOW STATEMENT

1 Jan - 31 Dec 2008

1 Jan - 31 Dec 2007

 

1,000 €

1,000 €




Cash flow from operating activities:






Profit for the financial year

32,981

41,948

Adjustments:



 Business transactions not involving a payment transaction*

66,239

42,590

 Interest and other finance costs

42,453

44,194

 Interest income

-11,079

-9,280

 Dividend income

-11

-14

 Taxes

11,458

14,535

Changes in working capital:



 Change in trade receivables and other receivables

2,489

3,287

 Change in inventories

173

-981

 Change in trade payables and other liabilities

2,144

4,950

 Change in provisions

-52

-60

Interests paid

-40,843

-45,190

Interests received

8,951

8,506

Taxes paid

-2,329

-836




Net cash flow from operating activities

112,574

103,650




Cash flow from investing activities:






Purchase of property, plant and equipment

-83,551

-78,103

Purchase of intangible assets

-3,106

-6,226

Purchase of other assets



Proceeds from other investments



Proceeds from sale of property, plant and equipment

158

8

Repayment of loans receivable

110

85

Dividends received

647

671




Net cash flow from investing activities

-85,742

-83,565




Cash flow from financing activities:






Withdrawal of short-term loans

354,438

206,155

Repayment of short-term loans

-330,341

-180,256

Withdrawal of long-term loans


196,550

Repayment of long-term loans

-51,675

-228,488

Dividends paid

-7,169

-6,923




Net cash flow from financing activities

-34,747

-12,961




Net change in cash and cash equivalents

-7,916

7,124




Cash and cash equivalents 1 Jan 

211,984

204,087

Impact of changes in fair value of investments

2,075

774

Cash and cash equivalents 31 Dec

206,144

211,984




Notes to consolidated cash flow statement



Adjustments:



*Business transactions not involving a payment transaction

66,239

42,590

- Depreciation

59,484

55,533

- Capital gains/losses (-/+) on property, plant and equipment 

  and intangible assets

-87

78

- Portion of profit of associated companies

-514

-725

- Gains/losses from the valuation of assets and liabilities

  recognised in income statement at fair value

7,357

-12,295

- 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 2009. 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 will be mandatory for accounting periods starting 1 January 2009 or later: IAS 1 Presentation of Financial Statements, amendment to IAS 23 Borrowing Costs, amendments to IAS 32 Financial Instruments, amendment to IFRS 2 Share-based payment, IFRS 8 Operating Segments, IFRIC 11-IFRS 2 Group and Teasury Share Transactions, IFRIC 13 Customer Loyalty Programmes, IFRIC 14- IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 16 Hedges of a Net Investment in a Foreign Operation. 


For the accounting period starting in 2009 the Group will adopt the following standards and interpretations: IAS 1 Presentation of Financial Statements and IFRS 8 Operating Segments


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 pub7lic.

Each electricity market party must ensure that its electricity balance is in balance by making an agreement with either Fingrid or some other party. Fingrid buys and sells balance power in order 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 agreement with equal and public terms and conditions.

Fingrid is responsible for the continuous power balance in Finland by buying and selling regulating power in Finland. The balance providers can participate in the Nordic balancing power market by submitting bids of their available capacity. The terms and conditions of participation in the regulating power market and the pricing of balancing power are based on the balance service agreement.

The congestion income are revenues that the transmission system operator receives from market actors for use of transmission capacity for those transmission links, on which the operational reliability of the power system restricts the power transmission. Fingrid receives a contractual portion of the Nordic congestion income.

ITC-compensation are income and/or costs for Fingrid, which the transmission system operator receives for the use of its grid by other European transmission operators and/ or pays to other transmission system operators when using their grid when servicing its own customers.

Peak load power includes condensing power capacity, when it is under threat of being closed down, to be kept in readiness for use (peak load power) and the feed-in tariff for peat includes compensation for peat condensing power.

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.

REVENUE, 1,000 €

2008

2007




Grid service revenue

189,120

189,868

Sales of balance power

104,790

63,663

Cross-border transmission

22,409

22,967

ITC income

22,767

19,286

Congestion income

23,173

22,591

Peak load power

10,887

10,110

Feed-in tariff for peat

358

1,790

Other operating revenue

8,805

4,302

Total

382,309

334,578


3. OTHER OPERATING INCOME, 1,000 €

2008

2007

Rental income

1,618

1,558

Contributions received

129

134

Other income

761

186

Total

2,508

1,878


4. RAW MATERIALS AND CONSUMABLES USED, 1,000 €

2008

2007

Purchases during financial year

171,534

131,547

Change in inventories, increase (-) or decrease (+)

173

-981

Materials and consumables

171,707

130,566




External services

16,927

18,084

Total

188,634

148,650


5. EMPLOYEE BENEFITS EXPENSE, 1,000 €

2008

2007

Salaries and bonuses

15,766

14,592

Pension expenses - contribution-based schemes

2,398

2,293

Pension expenses - benefit-based schemes (note 24)

83

335

Other additional personnel expenses

1,337

1,316

Total

19,584

18,537




Salaries and bonuses of top management (note 34)

1,126

1,111


The Group use a compensation system, which general principles has been approved by the Board of Directors on 23 October 2007. The principles for the bonus programme for the Executive Management Group has additionally been determined in a meeting held on 12 October 2007 by the Remuneration and Nomination Committee. The base salary and the profit-based compensation for the Executive Management Group, is based on the strategic indicators of the company. The members of the Executive Management Group are paid a bonus decided by the Remuneration and Nomination Committee of the Board of Directors, which maximum amount is 20 % for the President & CEO, 15 % for the Vice President and 10 % for other members of the Management Executive Group of the annual salary. The system changes from a one-year to a three-year review period as of 1 January 2010, when the compensation will be based on a three-year average of the strategic indicators from 2008 until 2010.


Number of salaried employees in the company during the financial year:


Personnel, average

241

241

Personnel, 31 Dec

249

244





  

6. DEPRECIATION, 1,000 €

2008

2007

Intangible assets

1,833

1,489

Buildings and structures

2,628

2,016

Machinery and equipment

30,477

26,605

Transmission lines

24,146

24,633

Other property, plant and equipment

399

790

Total

59,484

55,533





7. OTHER OPERATING EXPENSES, 1,000 €

2008

2007

Contracts, assignments etc. undertaken externally

26,327

27,204

Gains from measuring electricity derivatives at fair value

14,213

-12,096

Rental expenses

2,100

2,043

Foreign exchange gains and losses

-57

188

Other expenses

6,168

5,739

Total

48,751

23,078





8. AUDITORS FEES, 1,000 €

2008

2007




Auditing fee

57

38

Other fees

25

24




Total

82

63





9. FINANCE INCOME AND COSTS, 1,000 €

2008

2007

Portion of profit of associated companies

-514

-725




Interest income

-11,079

-9,280

Dividend income

-11

-14


-11,090

-9,294




Interest expenses

40,120

40,128

Gains from measuring derivative contracts at fair value

-7,346


Losses from measuring derivative contracts at fair value

9,349

3,651

Foreign exchange gains

-3,603

-27,903

Foreign exchange losses

3,549

27,936

Other finance costs

384

381


42,453

44,194

Total

30,849

34,175





10. INCOME TAXES, 1,000 €

2008

2007

Direct taxes

2,070

1,264

Deferred taxes (note 23)

7,588

13,270

Total

9,658

14,535




Reconciliation of income tax



Profit before taxes

37,516

56,483




Tax calculated in accordance with statutory tax rate in Finland 26 %

9,754

14,686

Non-deductible expenses and tax-free income

-96

-151

Tax expense in income statement

9,658

14,535





  

11. EARNINGS PER SHARE

2008

2007

Profit for the financial year, 1,000 €

27,859

41,948

Weighted average number of shares, qty

3,325

3,325




Undiluted earnings per share, €

8,379

12,616

Diluted earnings per share, €

8,379

12,616





12. DIVIDEND PER SHARE

 

 




After the closing date, the Board of Directors have proposed that a dividend of 2,018.26 (2006: 2,156.17) euros per share be distributed, totalling 6.7 (2006: 7.2) million euros.







13. GOODWILL, 1,000 €

2008

2007

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.


14. INTANGIBLE ASSETS, 1,000 €

2008

2007

Land use rights



Cost at 1 Jan

77,726

76,562

Increases 1 Jan - 31 Dec

1,253

1,164

Decreases 1 Jan - 31 Dec

-44


Cost at 31 Dec

78,935

77,726

Carrying amount 31 Dec

78,935

77,726




Other intangible assets



Cost at 1 Jan

16,869

12,598

Increases 1 Jan - 31 Dec

1,501

4,271

Cost at 31 Dec

18,370

16,869

Accumulated depreciation according to plan 1 Jan

-10,199

-8,710

Depreciation according to plan 1 Jan - 31 Dec

-1,833

-1,489

Carrying amount 31 Dec

6,338

6,670




Carrying amount 31 Dec

85,274

84,396


  

15. PROPERTY, PLANT AND EQUIPMENT, 1,000 €

2008

2007

Land and water areas



Cost at 1 Jan

10,758

10,496

Increases 1 Jan - 31 Dec

74

262

Decreases 1 Jan - 31 Dec

 


Cost at 31 Dec

10,832

10,758

Carrying amount 31 Dec

10,832

10,758




Buildings and structures



Cost at 1 Jan

67,642

59,317

Increases 1 Jan - 31 Dec

6,240

8,430

Decreases 1 Jan - 31 Dec

 

-105

Cost at 31 Dec

73,883

67,642

Accumulated depreciation according to plan 1 Jan

-15,339

-13,347

Decreases, depreciation according to plan 1 Jan - 31 Dec


25

Depreciation according to plan 1 Jan - 31 Dec

-2,628

-2,016

Carrying amount 31 Dec

55,916

52,304




Machinery and equipment



Cost at 1 Jan

600,885

565,131

Increases 1 Jan - 31 Dec

11,384

35,760

Decreases 1 Jan - 31 Dec

 

-6

Cost at 31 Dec

612,269

600,885

Accumulated depreciation according to plan 1 Jan

-189,590

-162,987

Decreases, depreciation according to plan 1 Jan - 31 Dec


2

Depreciation according to plan 1 Jan - 31 Dec

-30,477

-26,605

Carrying amount 31 Dec

392,202

411,295




Transmission lines



Cost at 1 Jan

762,644

730,959

Increases 1 Jan - 31 Dec

44,469

31,686

Decreases 1 Jan - 31 Dec

-411

 

Cost at 31 Dec

806,702

762,644

Accumulated depreciation according to plan 1 Jan

-212,457

-187,824

Decreases, depreciation according to plan 1 Jan - 31 Dec

384


Depreciation according to plan 1 Jan - 31 Dec

-24,146

-24,633

Carrying amount 31 Dec

570,483

550,188




Other property, plant and equipment



Cost at 1 Jan

12,569

11,715

Increases 1 Jan - 31 Dec

270

853

Cost at 31 Dec

12,838

12,569

Accumulated depreciation according to plan 1 Jan

-9,811

-9,022

Depreciation according to plan 1 Jan - 31 Dec

-399

-790

Carrying amount 31 Dec

2,628

2,757

Advance payments and purchases in progress



Cost at 1 Jan

58,289

61,343

Increases 1 Jan - 31 Dec

80,076

69,650

Decreases 1 Jan - 31 Dec

-57,285

-72,704

Cost at 31 Dec

81,081

58,289

Carrying amount 31 Dec

81,081

58,289




Carrying amount 31 Dec

1,113,141

1,085,591


16. INVESTMENTS, 1,000 €

2008

2007

Available-for-sale investments



Cost at 1 Jan

350

315

Decreases 1 Jan - 31 Dec



Changes in fair value 1 Jan - 31 Dec

-26

36

Carrying amount 31 Dec

324

350




The changes in fair value are recorded in equity (note 22).






Equity investments in associated companies



Cost at 1 Jan

7,074

6,856

Portion of profit 1 Jan - 31 Dec

514

725

Translation differences 1 Jan - 31 Dec

-581

150

Dividends 1 Jan - 31 Dec

-637

-657

Carrying amount 31 Dec

6,370

7,074




Carrying amount 31 Dec

6,694

7,424




Goodwill contained in the carrying amount of associated companies

 at 31 Dec

3,245

3,245


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 €

2007 

Assets

Liabilities

Revenue

Profit/loss

Ownership (%)







Nord Pool Spot AS, Lysaker, Norway

440,226

421,754

11,409

3,928

20.0

Porvoon Alueverkko Oy, Porvoo, Finland

2,629

2,573

3,784

2

33.3







2008 

Assets

Liabilities

Revenue

Profit/loss

Ownership (%)







Nord Pool Spot AS, Lysaker, Norway

319,037

304,048

11,878

2,550

20.0

Porvoon Alueverkko Oy, Porvoo, Finland

5,824

5,829

4,406

-60

33.3







Subsidiary shares 31 Dec 2008

 

 

 

 Ownership (%)

Ownership (%)

Fingrid Verkko Oy, Helsinki, Finland




100

100


17. FINANCE RECEIVABLES, 1,000 €

2008

2007

Non-current:



Receivables based on derivative contracts

1,205

10,478


1,205

10,478

Current:



Receivables based on derivative contracts

2,954

1,363

Loans receivable from associated companies (note 34)


110

Other receivables

74

7

 

3,029

1,480

Total

4,233

11,958


  

18. INVENTORIES, 1,000 €

2008

2007

Materials and consumables

4,626

4,801

Work in progress

2

 

Total

4,628

4,801








19. TRADE RECEIVABLES AND OTHER RECEIVABLES,

  1,000 €

2008

2007

Trade receivables

39,127

36,798

Trade receivables and other receivables from associated companies (note 34)

844

1,463

Prepayments and accrued income

4,923

9,163

Other receivables

37

36

Total

44,930

47,461




Essential items included in prepayments and accrued income


 

Accruals of sales

3,868

7,853

Accruals of purchases/prepayments

693

958

Rents/prepayments

226

244

Total

4,787

9,055




Age distribution of trade receivables

2008

2007

Unmatured trade receivables

38,086

38,046

Trade receivables matured by 1-30 days

986

208

Trade receivables matured by 31-60 days



Trade receivables matured by more than 60 days

899

7

Total

39,970

38,260


On 31 December 2008 or on 31 December 2007, 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

2008

2007

EUR

44,917

47,442

USD



NOK



SEK

13

18

Total

44,930

47,461


The fair value of trade receivables and other receivables does not differ essentially from the balance sheet value.



20. CASH AND CASH EQUIVALENTS, 1,000 €

2008

2007

Certificates of deposit

78,856

79,287

Commercial papers

121,184

84,555

Investments in money market funds

 

45,119

 

200,040

208,961




Cash in hand and bank receivables*

6,104

2,863

Money market deposits

 

160

 

6,104

3,023

Total

206,144

211,984




*includes pledged bank accounts (note 30)



  

21. CARRYING AMOUNTS OF FINANCIAL ASSETS AND LIABILITIES BY

  MEASUREMENT CATEGORIES, 1,000 €

Balance sheet item 

31 Dec 2008

Loans and other receivables





Assets/ liabilities recognised in income statement at fair value


Available-for-sale financial assets




Financial assets/ liabilities measured at amortised cost

Total







Note







Non-current financial assets

 




 

 

Available-for-sale investments

 


324


324

16

Derivative contracts

 

1,205



1,205

17, 27

Current financial assets

 




 

 

Derivative contracts

1,857

1,097



2,954

17

Other financial receivables

74




74

17

Trade receivables and other receivables

44,930




44,930

19

Cash and cash equivalents recognised in

 




 

 

income statement at fair value

 

200,040



200,040

20

Cash in hand and bank receivables

6,104

 

 

 

6,104

20

Financial Assets Total

52,965

202,342

324


255,632









Non-current financial liabilities

 




 

 

Interest-bearing liabilities

 



660,353

660,353

25

Derivative contracts

 

17,982


 

17,982

25, 27

Current financial liabilities

 




 

 

Interest-bearing liabilities

 



251,327

251,327

25

Derivative contracts

 

3,195


 

3,195

25, 27

Trade payables and other liabilities

42,713

 

 

13,610

56,323

29

Financial liabilities total

42,713

21,177

 

925,291

989,181

 


Balance sheet item 

31 Dec 2007

Loans and 

other 

receivables





Assets/ liabilities recognised in income statement at fair value


Available-

for-sale 

financial 

assets




Financial 

assets/ 

liabilities 

measured 

at 

amortised 

cost

Total







Note







Non-current financial assets

 




 

 

Available-for-sale investments

 


350


350

16

Derivative contracts

 

10,478



10,478

17, 27

Current financial assets







Derivative contracts

1,363




1,363

17

Other financial receivables

7



110

117

17

Trade receivables and other receivables

47,461




47,461

19

Cash and cash equivalents recognised in income statement at fair value

 

208,961



208,961

20

Cash in hand and bank receivables

3,023

 

 

 

3,023

20

Financial assets total

51,854

219,439

350

110

271,753

 

Non-current financial liabilities

 




 

 

Interest-bearing liabilities

 



729,009

729,009

25

Derivative contracts

 

37,459


 

37,459

25, 27

Current financial liabilities

 






Interest-bearing liabilities

 



187,100

187,100

25

Derivative contracts

 

13,049



13,049

25, 27

Trade payables and other liabilities

37,047

 

 

13,618

50,665

29

Financial liabilities total

37,047

 50,508

 

929,726

 1,017,281



22. 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 account, 1,000 €

Share capital

Share premium account

Total

1 Jan 2007

55,922

55,922

111,845

Change

 

 

 

31 Dec 2007

55,922

55,922

111,845

Change

 

 

 

31 Dec 2008

55,922

55,922

111,845





The share capital is broken down as follows:

Number of shares

 qty

Of all shares

 %

  Of votes 


%

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

 A shares

Series 

B shares

Total

1 Jan 2008

2,078

1,247

3,325

Change

 

 

 

31 Dec 2008

2,078

1,247

3,325



The maximum number of shares is 13,000 as in 2007. 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 2008 is 6 % p.a. of the subscription price of the share.


There are no minority interests.

  

Shareholders by different categories

Number of shares 

qty

Of all 

shares 

%

Of votes


  %

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 shares 

qty

Of all 

shares 

%

Of votes  


%

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 Ilmarinen

350

10.53

4.68

Tapiola Mutual Pension Insurance Company

150

4.51

2.01

Suomi Mutual Life Assurance Company

75

2.26

1.00

Pohjola Insurance Ltd

75

2.26

1.00

Sampo Life Insurance Company Limited

54

1.62

0.72

Tapiola General Mutual Insurance Company

50

1.50

0.67

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 Company Ltd

12

0.36

0.16

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 €

2008

2007

1 Jan

9,304


Hedge reserve

-40,671

12,573

Taxes

8,155

-3,269

Hedge reserve 31 Dec

-23,211

9,304




Revaluation reserve, 1,000 €

2008

2007

1 Jan

71

45

Changes in fair value during financial year

-26

36

Taxes on changes in fair value during financial year

7

-9

Revaluation reserve 31 Dec

52

71




Translation reserve, 1,000 €

2008

2007

Translation reserve 31 Dec

-368

213

The translation reserve includes the translation differences resulting from converting the financial statements of the foreign associated company.




Dividends, 1,000 €

2008

2007

Dividends paid

7,169

6,923

The proposal for dividend distribution is presented in note 12.






Retained earnings , 1,000 €

2008

2007

Profit from previous financial years

301,445

266,666

Profit for the financial year

27,859

41,948

Retained earnings 31 Dec

329,303

308,614


23. DEFERRED TAXES, 1,000 €

2008

2007




Deferred tax assets



Valuation of derivative contracts and other financial



assets and liabilities at fair value

8,138


Other temporary differences

526

522

 

8,664

522

Deferred tax liabilities



Accumulated depreciation difference

100,355

91,846

Intangible assets

12,099

9,657

Valuation of derivative contracts and other financial



assets and liabilities at fair value


6,518

Other temporary differences

341

476


112,796

108,497

Total*

104,132

107,975




*Deferred net tax liability is broken down in the balance sheet as follows:



Deferred tax assets

8,664

522

Deferred tax liabilities

112,796

108,497







Deferred tax assets


 

Non-current

8,346

522

Current

317

 


8,664

522




Deferred tax liabilities


 

Non-current

110,801

107,136

Current

1,995

1,360


112,796

108,497




Total

104,132

107,975




Change in deferred taxes recorded in balance sheet


 

Deferred taxes (net) 1 Jan

107,975

91,426

Items recorded in income statement

7,588

13,270

Items recorded in shareholders' equity (note 22)

-11,431

3,278

Deferred taxes 31 Dec

104,132

107,975


  




24. 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, 1,000 €

2008

2007

Expenses based on service during financial year

115

323

Expected return on scheme assets

-83

-105

Interest expenses

87


Actuarial gains (+) and losses (-)

-36

117

Total 

83

335




Benefit-based pension liability in balance sheet, 1,000 €

2008

2007

Present value of funded obligations

600

1,543

Fair value of scheme assets

-593

-1,507

Deficit/surplus

7

36

Unrecognised net actuarial gains (+) and losses (-)

-7

-36

Net liability

0

 0




Changes in present value of benefit obligations, 1,000 €

2008

2007

Present value of benefit obligations 1 Jan

1,543

2,144

Service cost

115

323

Interest cost on benefit obligations

87

117

Actuarial gains (+) and losses (-)

-1,144

-1,042

Present value of benefit obligations 31 Dec

600

1,543




Fair value of plan assets, 1,000 €

2008

2007

Fair value of plan assets 1 Jan

1,507

2,028

Expected return on plan assets

83

105

Contributions by employer

138

316

Actuarial gains (+) and losses (-)

-1,135

-941

Fair value of plan assets 31 Dec

593

1,507




Principal actuarial assumptions used






Discount rate (%)

5.50

5.25

Expected return on scheme assets (%)

5.50

5.25

Rate of increase in future compensation levels (%)

3.30

3.30

Future pension increases (%)

0.00

0.00

Inflation (%)

2.00

2.00





  

25. INTEREST-BEARING LIABILITIES,

  1,000 €

2008


2007

Non-current

Fair value

Balance sheet value

Fair value

Balance sheet value

Capital loan*

31,888

30,000

31,962

30,000

Bonds

601,175

601,728

663,228

663,227

Loans from financial institutions

29,277

28,625

36,221

35,782

Derivative liabilities

18,792

17,982

39,046

37,459


681,132

678,336

770,456

766,468




 


Current

Fair value

Balance sheet value

Fair value

Balance sheet value

Current portion of long-term liabilities maturing within

 a year

78,483

77,496

42,616

42,158

Derivative liabilities

4,015

3,195

13,091

13,049

Other loans / Commercial papers (international and domestic)

176,315

173,831

146,698

144,941


258,812

254,522

202,405

200,149


 

 

 


Total

939,945

932,858

972,862

966,616

*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 liabilities, 1,000 €

2008

2007



Maturity date

Interest



EUR

  30,000

30.11.2029

6.388%*

30,000

30,000





 


Total

 

 

 

30,000

30,000


*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 €

2008

2007







International:

Maturity date

Interest



EUR

25,000

06.04.2009

variable interest

25,000

25,000

EUR

10,000

31.03.2010

interest rate structure

10,000

10,000

EUR

10,000

16.03.2011

3.625 %

10,000

10,000

EUR

25,000

23.03.2011

variable interest

25,000

25,000

EUR

15,000

24.03.2011

variable interest

15,000

15,000

EUR

20,000

07.04.2011

variable interest

20,000

20,000

EUR

25,000

16.03.2012

variable interest

25,000

25,000

EUR

25,000

12.04.2012

variable interest

25,000

25,000

EUR

10,000

16.04.2013

variable interest

10,000

10,000

EUR

20,000

28.04.2013

variable interest

20,000

20,000

EUR

20,000

15.10.2013

4.30 %

20,000

20,000

EUR

24,000

02.07.2014

variable interest

24,000

24,000

EUR

20,000

11.04.2017

variable interest

20,000

20,000

EUR

25,000

11.04.2017

variable interest

25,000

25,000





274,000

274,000







FIM

100,000

04.09.2008

4.75 %


16,812

FIM

160,000

19.08.2013

5.20 %

26,906

26,905





26,906

43,717


USD

30,000

23.03.2009

variable interest

21,556

20,379





21,556

20,379







JPY

3,000,000

23.05.2008

0.925 %


18,190

JPY

3,000,000

15.07.2009

1.84 %

23,783

18,190

JPY

1,000,000

12.07.2010

2.00 %

7,928

6,063

JPY

2,000,000

16.10.2010

1.022 %

15,855

12,126

JPY

3,000,000

05.07.2011

1.31 % *

23,783

18,190

JPY

3,000,000

25.07.2012

1.3575 % **

23,783

18,190

JPY

3,000,000

20.04.2015

1.45 %

23,783

18,190





118,915

109,137







CHF

39,000

15.03.2010

2.24 %

26,263

23,569

CHF

39,000

22.05.2012

2.475 %

26,263

23,569





52,525

47,138







CZK

750,000

05.05.2010

variable interest

27,907

28,166





27,907

28,166







NOK

200,000

17.10.2016

5.15 %

20,513

25,132

NOK

200,000

11.04.2017

5.16 %

20,513

25,132





41,026

50,264







SEK

225,000

03.04.2012

variable interest

20,699

23,831

SEK

225,000

11.04.2012

variable interest

20,699

23,831

SEK

100,000

21.03.2013

variable interest

9,200

10,592

SEK

200,000

03.04.2013

3.70 %

18,399

21,183

SEK

175,000

04.04.2014

4.30 %

16,099

18,535

SEK

220,000

01.12.2015

interest rate structure

24,135

27,455





109,232

125,427







Bonds, long-term total



601,728

663,227

Bonds, short-term total

 

 

70,339

35,002

Total

 

 

 

672,067

698,229


*call option not exercised 5 July 2004

**call option not exercised 25 July 2006


Maturity of non-current interest-bearing liabilities, 1,000 €








 


 



 

2009

2010

2011

2012

2013

2013+

Total









Bonds

70,339

87,953

93,783

141,444

104,505

174,043

672,067

Loans from financial institutions

7,156

7,156

7,156

7,156

7156

 

35,782

Total

77,496

95,109

100,940

148,600

111,661

174,043

707,850


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.

  


26. PROVISIONS FOR LIABILITIES AND CHARGES, 1,000 €

2008

2007

Provisions 1 Jan

2,007

2,067

Provisions used

-52

-60 

Provisions 31 Dec

1,955

2,007


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.



27. DERIVATIVE CONTRACTS, 1,000 €

2008

2007


 


 

 

Interest rate and currency derivatives

Net fair value 

31 Dec 2008

Nominal value 

31 Dec 2008

Net fair value 

31 Dec 2007

Nominal value 

31 Dec 2007

Cross-currency swaps

-22,314

367,266

-47,497

376,358

Forward contracts

1,097

19,418

-3,517

72,401

Interest rate swaps

199

134,000

-572

181,000

Interest rate options, bought

2,371

330,000

11,289

370,000

Total

-18,648

850,684

-40,297

999,759




 


Electricity derivatives

Net fair value 

31 Dec 2008

Volume 

TWh 

31 Dec 2008

Net fair value 

31 Dec 2007

Volume 

TWh 

31 Dec 2007

Electricity forward contracts, designated as hedge accounting, Nord Pool Clearing

-35,232

3.52

19,496

3.03

Electricity forward contracts, Nord Pool Clearing

-4

0.00

1,303

0.28

Electricity forward contracts, others

-125

0.07

1,993

0.14

Total

-35,361

3.59

22,792

3.46


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 2008.


Maturity of derivative contracts:


Nominal value, 1,000 €

2009

2010

2011

2012

2013

2013+

Total

Interest rate swaps

69,000

10,000

10,000

45,000



134,000

Interest rate options

20,000

290,000

20,000

 



330,000

Cross-currency swaps

45,339

77,953

23,783

91,444

27,599

101,147

367,266

Forward contracts

19,418

 

 

 

 

 

19,418

Total

153,758

377,953

53,783

136,444

27,599

101,147

850,684



TWh

2009

2010

2011

2012

2013

2013+

Total

Electricity derivatives

1.17

1.01

0.70

0.47

0.24

 

3.59

Total

1.17

1.01

0.70

0.47

0.24

 

3.59



28. OTHER LIABILITIES, 1,000 €

2008

2007

Electricity derivatives

35,361


Total

35,361


  

29. TRADE PAYABLES AND OTHER DEBT, 1,000 €

2008

2007

Trade payables

24,693

26,423

Trade payables to associated companies

133

145

Interest liabilities

13,610

13,618

Value added tax

4,324

6,599

Electricity tax

389

416

Accruals

17,278

9,826

Other debt

610

653

Total

61,037

57,680




Essential items included in accruals


 

Personnel expenses

4,120

3,697

Accruals of sales and purchases

13,141

6,036

Other

17

92

Total

17,278

9,826



30. COMMITMENTS AND CONTINGENT LIABILITIES, 1,000 €

2008

2007

Pledges



Pledge covering property lease agreements

46

38

Pledged account in favour of the Customs Office

154

27

Pledged account covering electricity exchange purchases

5,664

45


5,865

110




Unrecorded investment commitments

219,213

70,586




Other financial commitments



Counterguarantee in favour of an associated company

1,700

1,700

Credit facility commitment fee and commitment fee:



Commitment fee for the next year

158

102

Commitment fee for subsequent years

409

393


2,268

2,194




Donation of five-year professorship to Helsinki University of Technology

for 2006 - 2010

240

360



31. OTHER LEASE AGREEMENTS, 1,000 €

2008

2007




Minimum rental obligations of other irrevocable lease agreements:



In one year

2,012

1,761

In more than one year and less than five years

5,083

5,557

In more than five years

2,333

1,530

Total

9,428

8,847


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.



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 December 2008 the Market Court reached a decision concerning Fingrid´s appeal to the Energy Market Authority´s decision 13 December 2007 'Determination of the methodology for the assessment of the return of the grid owners' grid operations transmission services pricing for the review period starting on 1 January 2008 and ending on 31 December 2011'. The Energy Market Authority has in turn appealed the decision to the Supreme Administrative Court. RAO Nordic Oy has made an application to take action to the Competition Authority, in order to clarify that Fingrid's cross-border transmission is accordance with the Act on competition restrictions.


33. 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 a 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 distribution 

31 Dec 2008

Carrying amount

Portion %

Hedging degree

Currency distribution

 31 Dec 2007

Carrying

 amount

Portion %

Hedging

 degree


 


 

 

 


 

EUR

522,829

57


EUR

465,358

51


CHF 

52,525

6

100

CHF 

47,138

5

100

CZK

27,907

3

100

CZK

28,166

3

100

JPY

118,915

13

100

JPY

109,137

12

100

NOK

41,026

5

100

NOK

50,264

5

 100

SEK

109,232

12

100

SEK

125,427

14

100

USD

39,246

4

100

USD

90,618

10

100

Total

911,681

100

100

Total

916,108

100

100


  

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. In the figures presented in the tables below, a negative number would increase foreign exchange loss and a positive number would correspondingly increase foreign exchange gain.


Exchange rate changes, 1,000 €

31 Dec 2008

Bonds



Commercial papers


Total



Cross-currency swaps

Forward contracts


Total



Net exposure 


 Total

CHF

+10 %

-5,896

 

-5,896

5,896

 

5,896

0

 

- 10 %

4,824

 

4,824

-4,824

 

-4,824

0

CZK

+10 %

-3,117

 

-3,117

3,117

 

3,117

0

 

- 10 %

2,550

 

2,550

-2,550

 

-2,550

0

JPY

+10 %

-12,947

 

-12,947

12,947

 

12,947

0

 

- 10 %

10,592

  

10,592

-10,592

 

-10,592

0

NOK

+10 %

-4,317

 

-4,317

4,317

 

4,317

0

 

- 10 %

3,532

 

3,532

-3,532

 

-3,532

0

SEK

+10 %

-11,701

 

-11,701

11,701

 

11,701

0

 

- 10 %

9,573

 

9,573

-9,573

 

-9,573

0

USD

+10 %

-2,393

-1,993

-4,386

2,393

1,993

4,386

0

 

- 10 %

2,154

1,794

3,948

-2,154

-1,794

-3,948

0



Exchange rate changes, 1,000 €






31 Dec 2007

Bonds



Commercial papers


Total



Cross-currency swaps

Forward contracts


Total



Net exposure

 

Total

CHF

+10 %

-5,202

 

-5,202

5,202

 

5,202

0

 

- 10 %

4,275

 

4,275

-4,275

 

-4,275

0

CZK

+10 %

-3,142

 

-3,142

3,142

 

3,142

0

 

- 10 %

2,571

 

2,571

-2,571

 

-2,571

0

JPY

+10 %

-12,231

 

-12,231

12,231

 

12,231

0

 

- 10 %

10,007

  

10,007

-10,007

 

-10,007

0

NOK

+10 %

-5,485

 

-5,485

5,485

 

5,485

0

 

- 10 %

4,487

 

4,487

-4,487

 

-4,487

0

SEK

+10 %

-13,451

 

-13,451

13,451

 

13,451

0

 

- 10 %

11,005

 

11,005

-11,005

 

-11,005

0

USD

+10 %

-2,268

-7,915

-10,183

2,268

7,915

10,183

0

 

- 10 %

1,856

6,476

8,332

-1,856

-6,476

-8,332

0


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 €

2008

2007



Equity 

31 Dec 2008

Equity 

31 Dec 2007

NOK

+10 %

340

410

 

- 10 %

-278

-336



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 2008, 35 % of the interest costs for the next five years were hedged, and correspondingly 42 % were hedged at the end of 2007.


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, 1,000 €

2008

 

2007

 


-1%-unit

+1%-unit

-1%-unit

+1%-unit

Interest-bearing liabilities

6,586

-6,586

7,027

-7,027

Interest rate derivatives

-235

2,772

1,123

2,098

Interest-bearing liabilities total

6,351

-3,814

8,150

-4,929

Cash and cash equivalents

-1,448

1,448

-1,763

1,763

Interest-bearing net liabilities total

4,903

-2,366

6,387

-3,166



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 Risk, 1,000 €

 

2008

 

2007

 

 



31 Dec 2008



31 Dec 2007

Confidence level

Net finance costs

Confidence level

Net finance costs

96 %


min.

25,121

96 %


min.

31,463

 

 

max.

30,971

 

 

max.

33,590

98 %


min.

24,766

98 %


min.

31,282

 

 

max.

31,277

 

 

max.

33,718



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 28.3 million euros higher or lower (34.7 million euros in 2007). The impact on the company's equity would have been 20.9 (25.7) 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 Dec 2008  

 

2009

2010

2011

2012

2013

2013+

Total



  

 

  

 

 

 

 

Capital loan

- repayments

30,000

 

 

 

 

 

30,000


- interest costs

2,882

 

 

 

  

 

2,882



 

 

 

 

 

 

 

Bonds

- repayments

70,339

87,953

93,783

141,444

104,505

170,151

668,175


- interest costs

19,465

15,869

15,321

13,081

10,025

17,909

91,670



 

 

 

 

 

 

 

Loans from financial 

- repayments

7,156

7,156

7,156

7,156

7,156

 

35,782

institutions

- interest costs

1,138

811

702

423

162

 

3,236



 

 

 

 

 

 

 

Commercial papers

- repayments

173,830

 

   

  

  

 

173,830

  

- interest costs

3,434

 

   

  

  

 

3,434










Cross-currency swaps

- payments

60,489

84,283

37,241

106,365

36,658

124,462

449,499










Interest rate swaps

- payments

1,987

1,636

1,632

1,215

751


7,221










Forward contracts

- payments

18,321

 

  

  

  

 

18,321

Total

 

389,041

197,708

155,835

269,685

159,257

312,523

1,484,049










Cross-currency swaps

- receivables

54,866

85,635

30,665

97,941

32,272

111,384

412,763










Interest rate swaps

- receivables

1,711

1,885

2,148

1,081

860


7,685










Forward contracts

- receivables

19,375

 

  

  

 

  

19,375

Total

 

75,952

87,520

32,813

99,022

33,132

111,384

439,823

Grand total

 

313,088

110,189

123,022

170,663

126,125

201,139

1,044,226



















31 Dec 2007  

 

2008

2009

2010

2011

2012

2012+

Total



  

 

  

 

 

 

 

Capital loans

- repayments


30,000

 

 

 

 

30,000


- interest costs

1,916

2,882

 

 

  

 

4,798



 

 

 

 

 

 

 

Bonds

- repayments

35,002

63,569

79,925

88,190

139,421

292,122

698,229


- interest costs

27,586

24,985

22,845

20,444

15,896

33,828

145,584



 

 

 

 

 

 

 

Loans from financial institutions

- repayments

7,156

7,156

7,156

7,156

7,156

7,157

42,939

 

- interest costs

1,589

1,350

1,049

748

389

74

5,199



 

 

 

 

 

 

 

Commercial papers

- repayments

144,941

 

   

  

  

 

144,941

  

- interest costs

2,384

 

   

  

  

 

2,384










Cross-currency swaps

- payments

47,256

66,124

90,149

41,103

108,579

164,527

517,738










Interest rate swaps

- payments

7,248

5,479

2,692

2,372

1,544

975

20,310










Forward contracts

- payments

75,952

 

  

  

  

 

75,952

Total

 

351,031

201,545

203,816

160,013

272,985

498,683

1,688,074










Cross-currency swaps

- receivables

30,780

50,429

80,651

27,580

97,494

160,513

447,444










Interest rate swaps

- receivables

7,398

5,314

2,464

2,409

1,150

860

19,595










Forward contracts

- receivables

72,383

 

  

  

 

  

72,383

Total

 

110,560

55,743

83,115

29,989

98,644

161,373

539,422

Grand total

 

240,471

145,802

120,702

130,024

174,342

337,311

1,148,651


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.


34. 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. 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 €

2008

2007

Salaries and other short-term employee benefits

1,126

1,111




Transactions with associated companies, 1,000 €

2008

2007

Sales

3,788

3,453

Purchases

52,083

33,755

Receivables

844

1,573

Liabilities

176

145




Loans receivable from associated companies, 1,000 €

2008

2007

1 Jan


194

Repayment of loans


-85

31 Dec


110







Transactions with related parties, 1,000 €

2008

2007

Sales

95,582

86,256

Purchases

57,153

43,828

Receivables

8,208

6,186

Liabilities

855

4,639


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 5.15 million euros for construction projects) are exceeded, the company applies the public procurement procedure.


35. EMISSION RIGHTS                


Fingrid was granted emission rights in total 126.3 thousand tonnes for the years 2008-2010, of which Olkiluoto power station was granted a share of 112.3 thousand tonnes (for 2005-2007: 13.4 thousand tonnes). Of this volume 3.0 thousand tonnes were used in 2008 (2007: 6.6 thousand tonnes), of which Olkiluodo power station share was 0.8 thousand tonnes. The use of emission rights did not impact the profit in 2005 to 2006, because the company only used emission rights obtained free of charge. In 2007 the company bought 2.0 emission rights, which had a minor impact on the profit. During the accounting period of 2008 the sale of emission rights amounted to 15 thousand tonnes.


36. 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 AND LOSS ACCOUNT

Notes

1 Jan - 31 Dec 2008

 €

1 Jan - 31 Dec 2007

 €





TURNOVER

2

382,229,533.99

332,937,877.30

Other operating income

3

2,508,339.28

1,878,021.54



 


Materials and services

4

-188,546,066.57

-147,150,488.67



 


Staff expenditure

5

-19,500,943.64

-18,718,550.62



 


Depreciation and amortisation expense

6

-68,775,922.62

-64,789,636.48



 


Other operating expenses

7, 8

-34,561,619.82

-35,184,959.82





OPERATING PROFIT


73,353,320.62

68,972,263.25



 


Finance income and costs

9

-32,089,027.56

-33,050,563.75





PROFIT BEFORE EXTRAORDINARY ITEMS


41,264,293.06

35,921,699.50





PROFIT BEFORE PROVISIONS AND TAXES


41,264,293.06

35,921,699.50





Provisions

10

-32,727,823.79

-30,698,892.27

Income taxes

11

-2,066,073.31

-1,224,275.08





PROFIT FOR THE FINANCIAL YEAR

 

6,470,395.96

3,998,532.15


  

PARENT COMPANY BALANCE SHEET


 

 

 

 





ASSETS


Notes

31 Dec 2008 

31 Dec 2007 





NON-CURRENT ASSETS




Intangible assets



 

Goodwill

12

55,754,297.46

62,187,485.62

Other non-current expenses

13

75,152,925.49

77,575,997.77



130,907,222.95

139,763,483.39

Tangible assets

14



Land and water areas


10,831,759.91

10,757,893.91

Buildings and structures


55,862,651.91

52,248,703.73

Machinery and equipment


390,000,149.49

409,005,786.93

Transmission lines


570,470,701.80

550,175,093.16

Other tangible assets


107,377.76

100,102.76

Advance payments and purchases in progress

 

81,081,134.39

58,289,459.02



1,108,353,775.26

1,080,577,039.51

Investments

15



Equity investments in Group companies


504,563.77

504,563.77

Equity investments in associated companies


6,641,360.21

6,641,360.21

Other shares and equity investments

 

721,405.83

607,090.83



7,867,329.81

7,753,014.81



 


TOTAL NON-CURRENT ASSETS

 

1,247,128,328.02

1,228,093,537.71





CURRENT ASSETS




Inventories

16

4,627,709.26

4,800,526.18





Receivables




Non-current receivables




Receivables from associated companies

 


 









Current receivables




Trade receivables


39,126,644.80

36,798,351.88

Receivables from Group companies


274,500.00

150,000.00

Receivables from associated companies

17

843,612.07

1,572,840.32

Other receivables


36,657.35

35,824.43

Prepayments and accrued income

18, 19

15,937,528.78

18,927,295.78



56,218,943.00

57,484,312.41





Financial assets

20

196,391,703.87

207,388,114.38



 


Cash in hand and bank receivables

20

6,103,687.98

3,023,236.09



 


TOTAL CURRENT ASSETS

 

263,342,044.11

272,696,189.06



 


TOTAL ASSETS

 

1,510,470,372.13

1,500,789,726.77


  

PARENT COMPANY BALANCE SHEET


 

 

 

 

 




SHAREHOLDERS' EQUITY AND LIABILITIES


Notes

31 Dec 2008 

31 Dec 2007 





SHAREHOLDERS' EQUITY

21







Share capital


55,922,485.55

55,922,485.55

Share premium account


55,922,485.55

55,922,485.55

Profit from previous financial years


2,997,002.30

6,167,732.80

Profit for the financial year

 

6,470,395.96

3,998,532.15

 


 


TOTAL SHAREHOLDERS' EQUITY

 

121,312,369.36

122,011,236.05





ACCUMULATED PROVISIONS

22

385,981,315.14

353,253,491.35

 

 

 

 



 


PROVISIONS FOR LIABILITIES AND CHARGES

30

1,955,246.78

2,007,346.78

 

 


 





LIABILITIES








Non-current liabilities




Capital loan

23

30,000,000.00

30,000,000.00

Bonds

24, 25

624,280,418.73

697,756,228.75

Loans from financial institutions

 

28,625,355.58

35,781,786.06



682,905,774.31

763,538,014.81

Current liabilities




Bonds

24

73,475,810.01

44,518,792.68

Loans from financial institutions


7,156,430.35

7,156,430.35

Trade payables


24,692,701.31

26,423,031.88

Liabilities to Group companies

26

259,243.05

525,972.96

Liabilities to associated companies 

27

132,554.00

145,182.43

Other liabilities

28

177,902,946.29

156,064,727.51

Accruals

29

34,695,981.53

25,145,499.97



318,315,666.54

259,979,637.78



 


TOTAL LIABILITIES

 

1,001,221,440.85

1,023,517,652.59





TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES

1,510,470,372.13

1,500,789,726.77


  

 

 

 




PARENT COMPANY CASH FLOW STATEMENT

1 Jan - 31 Dec 2008

 €

1 Jan - 31 Dec 2007

 €




Cash flow from operating activities:



Profit for the financial year

6,470,395.96

3,998,532.15

Adjustments:



 Business transactions not involving a payment transaction*

101,417,010.61

95,566,125.50

 Interest and other finance costs

42,952,140.99

42,965,510.87

 Interest income

-10,102,322.91

-9,233,315.02

 Dividend income

-760,790.52

-681,632.10

 Taxes

2,066,073.31

1,224,275.08

Changes in working capital:



 Change in trade receivables and other receivables

1,088,300.63

4,928,833.19

 Change in inventories

172,816.92

-981,273.47

 Change in trade payables and other liabilities

3,663,674.31

3,430,297.27

 Change in provisions

-52,100.00

-60,040.22

Interests paid

-40,859,549.96

-45,209,306.93

Interests received

8,950,797.92

8,506,084.55

Taxes paid

-2,281,871.58

-824,609.96

Net cash flow from operating activities

112,724,575.68

103,629,480.91




Cash flow from investing activities:



Purchase of tangible assets

-83,777,788.58

-78,110,954.38

Purchase of intangible assets

-2,764,660.75

-6,215,226.40

Investments in other assets

-114,315.00

-2,897.34

Proceeds from other investments



Proceeds from sale of tangible assets

157,800.00

7,921.64

Repayment of loans receivable

109,619.43

84,848.28

Dividends received

760,790.52

681,632.10

Net cash flow from investing activities

-85,628,554.38

-83,554,676.10




Cash flow from financing activities:



Withdrawal of short-term loans

354,438,029.45

206,155,015.45

Repayment of short-term loans

-330,605,523.55

-180,245,755.14

Withdrawal of long-term loans


196,550,335.67

Repayment of long-term loans

-51,675,223.17

-228,487,507.59

Dividends paid

-7,169,262.65

-6,923,203.71

Net cash flow from financing activities

-35,011,979.92

-12,951,115.32




Net change in cash and cash equivalents

-7,915,958.62

7,123,689.49




Cash and cash equivalents 1 Jan 

210,411,350.47

203,287,660.98

Cash and cash equivalents 31 Dec 

202,495,391.85

210,411,350.47




Notes to parent company cash flow statement



Adjustments:



*Business transactions not involving a payment transaction

101,417,010.61

95,566,125.50

- Depreciation

68,775,922.62

64,789,636.48

- Increase or decrease In accumulated depreciation difference

32,727,823.79

30,698,892.27

- Capital gains/losses (-/+) on tangible and intangible assets

-86,735.80

77,596.75

- 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 33.


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.


REVENUE, 1, 000 €

2008

2007

Grid service revenue

189,120

189,868

Sales of balance power

104,790

63,663

Cross-border transmission

22,409

22,967

ITC income

22,767

19,286

Congestion income

23,173

22,591

Peak load power

10,887

10,110

Service fee for feed-in tariff

278

150

Other operating revenue

8,805

4,302

Total

382,230

332,938


3. OTHER OPERATING INCOME, 1,000 €

2008

2007

Rental income

1,618

1,558

Contributions received

129

134

Other income

761

186

Total

2,508

1,878



4. MATERIALS AND SERVICES, 1,000 €

2008

2007

Purchases during the financial year

121,616

85,268

Loss energy purchases

49,918

46,280

Change in inventories, increase (-) or decrease (+)

173

-981

Materials and supplies

171,707

130,566

Grid service charges

46

53

Other external services

16,793

16,532

Services

16,839

16,584




Total

188,546

147,150


5. STAFF EXPENDITURE, 1,000 €

2008

2007

Salaries and bonuses

15,766

14,592

Pension expenses

2,398

2,810

Other additional personnel expenses

1,337

1,316




Total

19,501

18,719




Salaries and bonuses of the members of the Board of Directors and President

341

267




Arto Lepistö, Chairman of the Board

21

15

Timo Rajala, 1st Deputy Chairman of the Board

15

14

Timo Karttinen, 2nd Deputy Chairman of the Board

15

8

Ari Koponen, Member of the Board

11

5

Ritva Nirkkonen, Member of the Board

13

7

Anja Silvennoinen, Member of the Board

13

11

Jorma Tammenaho, Member of the Board

13

9

Risto Autio, deputy Member of the Board

5

6

Jussi Hintikka, deputy Member of the Board

6

3

Pekka Kettunen, deputy Member of the Board

6

5

Kari Koivuranta, deputy Member of the Board

4


Juha Mikkonen, deputy Member of the Board

4


Juha Laaksonen, deputy Member of the Board

5

4

Timo Ritonummi, deputy Member of the Board

5

4

Tapio Kuula, former Chairman of the Bord

4

17

Timo Koivuniemi, former deputy Member of the Board

1

4

Taisto Turunen, former 2nd Deputy Chairman of the Board


0

Marjukka Aarnio, former Member of the Board


3




Jukka Ruusunen, President & CEO

200

153







Pension commitments:



Pension commitments are described in the notes of the Group under item 24.




Number of salaried employees in the company during the financial year:



Personnel, average

241

241

Personnel, 31 Dec

249

244



6. DEPRECIATION ACCORDING TO PLAN, 1,000 €

2008

2007

Goodwill

6,433

6,433

Other noncurrent expenses

5,188

5,198

Buildings and structures

2,626

2,015

Machinery and equipment

30,383

26,512

Transmission lines

24,146

24,632

Total*

68,776

64,790




*Depreciation on the electricity grid (notes 13 and 14)

53,839

50,796


  

7. OTHER OPERATING EXPENSES, 1,000 €

2008

2007

Contracts, assignments etc. undertaken externally

26,324

27,186

Grid rents

449

420

Other rental expenses

1,652

1,623

Other expenses

6,137

5,956

Total

34,562

35,185


8. AUDITORS FEES, 1,000 €

2008

2007

Auditing fee

57

38

Other fees

25

24

Total

82

63


9. FINANCE INCOME AND COSTS, 1,000 €

2008

2007




Dividend income from Group companies

-114

-11

Dividend income from others

-647

-671

Interest and other finance income from Group companies

-4

-6

Interest and other finance income from others

-10,098

-9,227


-10,863

-9,915




Interest and other finance costs to Group companies

15

21

Interest and other finance costs to others

42,937

42,945


42,952

42,966

Total

32,089

33,051



10. PROVISIONS, 1,000 €

2008

2007




Difference between depreciation according to plan 

and depreciation carried out in taxation

32,728

30,699



11. INCOME TAXES, 1,000 €

2008

2007

Income taxes for the financial year

2,066

1,224




Total

2,066

1,224




Deferred tax assets and liabilities, 1,000 €


 




Deferred tax assets



On temporary differences

508

522


508

522

Deferred tax liabilities



On temporary differences

458

476

On provisions

100,355

91,846


100,813

92,322




Total

100,305

91,800



12. GOODWILL, 1,000 €

2008

2007




Cost at 1 Jan

128,664

128,664

Cost at 31 Dec

128,664

128,664

Accumulated depreciation according to plan 1 Jan

-66,476

-60,043

Depreciation according to plan 1 Jan - 31 Dec

-6,433

-6,433

Carrying amount 31 Dec

55,754

62,187




Accumulated depreciation difference 1 Jan

-62,187

-68,621

Increase in depreciation difference reserve 1 Jan - 31 Dec



Decrease in depreciation difference reserve 1 Jan - 31 Dec

6,433

6,433

Accumulated depreciation in excess of plan 31 Dec

-55,754

-62,187


13. OTHER NON-CURRENT EXPENSES, 1,000 €

2008

2007

Cost at 1 Jan

126,085

119,870

Increases 1 Jan - 31 Dec

2,808

6,215

Decreases 1 Jan - 31 Dec

-69

 

Cost at 31 Dec

128,824

126,085

Accumulated depreciation according to plan 1 Jan

-48,509

-43,311

Decreases, depreciation according to plan 1 Jan - 31 Dec

26


Depreciation according to plan 1 Jan - 31 Dec

-5,188

-5,198

Carrying amount 31 Dec*

75,153

77,576




Accumulated depreciation difference 1 Jan

-67,230

-68,705

Increase in depreciation difference reserve 1 Jan - 31 Dec

-3,059

-3,722

Decrease in depreciation difference reserve 1 Jan - 31 Dec

5,231

5,198

Accumulated depreciation in excess of plan 31 Dec

-65,057

-67,230




*Net capital expenditure in electricity grid, 1,000 €

2008

2007




Carrying amount 31 Dec

67,685

69,525

Carrying amount 1 Jan

-69,525

-71,417

Depreciation according to plan 1 Jan - 31 Dec

3,086

3,095

Decreases 1 Jan - 31 Dec

44

 




Total

1,290

1,203



14. TANGIBLE ASSETS, 1,000 €

2008

2007

Land and water areas



Cost at 1 Jan

10,758

10,496

Increases 1 Jan - 31 Dec

74

262

Decreases 1 Jan - 31 Dec

 

 

Cost at 31 Dec

10,832

10,758




Buildings and structures



Cost at 1 Jan

65,965

57,676

Increases 1 Jan - 31 Dec

6,240

8,394

Decreases 1 Jan - 31 Dec

 

-105

Cost at 31 Dec

72,205

65,965

Accumulated depreciation according to plan 1 Jan

-13,716

-11,726

Decreases, depreciation according to plan 1 Jan - 31 Dec


25

Depreciation according to plan 1 Jan - 31 Dec

-2,626

-2,015

Carrying amount 31 Dec

55,863

52,249




Accumulated depreciation difference 1 Jan

-9,101

-7,618

Increase in depreciation difference reserve 1 Jan - 31 Dec

-2,757

-3,576

Decrease in depreciation difference reserve 1 Jan - 31 Dec

2,626

2,093

Accumulated depreciation in excess of plan 31 Dec

-9,231

-9,101




Machinery and equipment



Cost at 1 Jan

577,433

541,679

Increases 1 Jan - 31 Dec

11,377

35,760

Decreases 1 Jan - 31 Dec

 

-6

Cost at 31 Dec

588,811

577,433

Accumulated depreciation according to plan 1 Jan

-168,427

-141,918

Decreases, depreciation according to plan 1 Jan - 31 Dec


2

Depreciation according to plan 1 Jan - 31 Dec

-30,383

-26,512

Carrying amount 31 Dec

390,000

409,006




Accumulated depreciation difference 1 Jan

-77,046

-68,807

Increase in depreciation difference reserve 1 Jan - 31 Dec

-41,004

-34,751

Decrease in depreciation difference reserve 1 Jan - 31 Dec

30,383

26,512

Accumulated depreciation in excess of plan 31 Dec

-87,667

-77,046


  

Transmission lines



Cost at 1 Jan

762,628

730,943

Increases 1 Jan - 31 Dec

44,469

31,686

Decreases 1 Jan - 31 Dec

-411

 

Cost at 31 Dec

806,686

762,628




Accumulated depreciation according to plan 1 Jan

-212,453

-187,821

Decreases, depreciation according to plan 1 Jan - 31 Dec

384


Depreciation according to plan 1 Jan - 31 Dec

-24,146

-24,632

Carrying amount 31 Dec

570,471

550,175




Accumulated depreciation difference 1 Jan

-137,690

-108,804

Increase in depreciation difference reserve 1 Jan - 31 Dec

-54,819

-53,518

Decrease in depreciation difference reserve 1 Jan - 31 Dec

24,237

24,632

Accumulated depreciation in excess of plan 31 Dec

-168,272

-137,690




Other tangible assets



Cost at 1 Jan

100

88

Increases 1 Jan - 31 Dec

7

13

Decreases 1 Jan - 31 Dec

 

 

Cost at 31 Dec

107

100




Advance payments and purchases in progress



Cost at 1 Jan

58,289

61,343

Increases 1 Jan - 31 Dec

80,076

69,650

Decreases 1 Jan - 31 Dec

-57,285

-72,704

Cost at 31 Dec

81,081

58,289




Total*

1,108,354

1,080,577




*Net capital expenditure in electricity grid, 1,000 €

2008

2007




Carrying amount 31 Dec

1,029,072

1,000,588

Carrying amount 1 Jan

-1,000,588

-982,512

Depreciation according to plan 1 Jan - 31 Dec

50,752

47,701

Decreases 1 Jan - 31 Dec

27

84




Total

79,264

65,862



15. INVESTMENTS, 1,000 €

2008

2007




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

607

604

Increases 1 Jan - 31 Dec

114

3

Decreases 1 Jan - 31 Dec


 

Cost at 31 Dec

721

607




Total

7,867

7,753


16. INVENTORIES, 1,000 €

2008

2007

Materials and supplies

4,626

4,801

Work in progress

2

 

 



Total

4,628

4,801

17. RECEIVABLES FROM ASSOCIATED COMPANIES, 1,000 €

2008

2007




Current:



Loans receivable


110

Trade receivables

844

1,462

Prepayments and accrued income

 

1


844

1,573




Total

844

1,573



18. PREPAYMENTS AND ACCRUED INCOME, 1,000 €

2008

2007

Interests and other financial items

11,760

11,962

Accruals of sales and purchases

3,815

6,720

Taxes

136


Other

226

244




Total

15,938

18,927



19. UNRECORDED EXPENSES AND PAR VALUE 

  DIFFERENTIALS ON THE ISSUE OF LOANS INCLUDED IN 

  PREPAYMENTS AND ACCRUED INCOME, 1,000 €

2008

2007




Par value differentials

4,014

4,277



20. CASH AND CASH EQUIVALENTS, 1,000 €

2008

2007

Certificates of deposit

77,138

78,486

Commercial papers

119,254

83,900

Investments in money market funds

 

45,002

 

196,392

207,388




Bank Deposits


160

Cash in hand and bank receivables*

6,103

2,863


6,103

3,023




Total

202,494

210,411




*includes pledged bank accounts (note 31)





21. SHAREHOLDERS' EQUITY, 1,000 €

2008

2007

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

10,166

13,091

Dividend distribution

-7,169

-6,923

Profit from previous financial years 31 Dec

2,997

6,168




Profit for the financial year

6,470

3,999




Shareholders' equity 31 Dec

121,312

122,011




Distributable shareholders' equity

9,467

10,166


  

Number of shares, qty

Series 

A shares

Series 

B shares

Total

1 Jan 2008

2,078

1,247

3,325

31 Dec 2008

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 2008 is 6 % p.a. of the subscription price of the share. 


There are no minority interests.


22. ACCUMULATED PROVISIONS, 1,000 €

2008

 2007




Accumulated depreciation in excess of plan, the difference between depreciation 

according to plan and depreciation carried out in taxation

385,981

353,253



23. CAPITAL LOAN, 1,000 €

2008

2007




Debenture of capital loan nature 1999

30,000

30,000




Total

30,000

30,000



The terms of the capital loans 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 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.  

24. BONDS, 1,000 €


 

2008

2007

International:


Maturity date

Interest



EUR

25,000

06.04.2009

variable interest

25,000

25,000

EUR

10,000

31.03.2010

interest rate structure

10,000

10,000

EUR

10,000

16.03.2011

3.625 %

10,000

10,000

EUR

25,000

23.03.2011

variable interest

25,000

25,000

EUR

15,000

24.03.2011

variable interest

15,000

15,000

EUR

20,000

07.04.2011

variable interest

20,000

20,000

EUR

25,000

16.03.2012

variable interest

25,000

25,000

EUR

25,000

12.04.2012

variable interest

25,000

25,000

EUR

10,000

16.04.2013

variable interest

10,000

10,000

EUR

20,000

28.04.2013

variable interest

20,000

20,000

EUR

20,000

15.10.2013

4.30 %

20,000

20,000

EUR

24,000

02.07.2014

variable interest

24,000

24,000

EUR

20,000

11.04.2017

variable interest

20,000

20,000

EUR

25,000

11.04.2017

variable interest

25,000

25,000





274,000

274,000







FIM

100,000

04.09.2008

4.75 %


16,819

FIM

160,000

19.08.2013

5.20 %

26,910

26,910





26,910

43,729







USD

30,000

23.03.2009

variable interest

24,476

24,476





24,476

24,476







JPY

3,000,000

23.05.2008

0.925 %

 

27,700

JPY

3,000,000

15.07.2009

1.84 %

24,000

24,000

JPY

1,000,000

12.07.2010

2.00 %

10,215

10,215

JPY

2,000,000

16.10.2010

1.022 %

15,504

15,504

JPY

3,000,000

05.07.2011

1.31 % *

28,200

28,200

JPY

3,000,000

25.07.2012

1.3575 % **

25,400

25,400

JPY

3,000,000

20.04.2015

1.45 %

21,563

21,563





124,881

152,581







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

50,000







CZK

750,000

05.05.2010

variable interest

24,902

24,902





24,902

24,902







NOK

200,000

17.10.2016

5.15 %

24,620

24,620

NOK

200,000

11.04.2017

5.16 %

24,620

24,620





49,240

49,240







SEK

225,000

03.04.2012

variable interest

24,194

24,194

SEK

225,000

11.04.2012

variable interest

24,142

24,142

SEK

100,000

21.03.2013

variable interest

10,560

10,560

SEK

200,000

03.04.2013

3.70 %

21,305

21,305

SEK

175,000

04.04.2014

4.30 %

18,811

18,811

SEK

220,000

01.12.2015

interest rate structure

24,336

24,336





123,347

123,347







Bonds, long-term total



624,280

697,756

Bonds, short-term total



73,476

44,519






Total




697,756

742,275







*call option not exercised 5 July 2004




**call option not exercised 25 July 2006











  

25. LOANS FALLING DUE FOR PAYMENT IN FIVE YEARS OR 

  MORE, 1,000 €

2008

2007

Capital loan

30,000

30,000

Bonds

182,950

291,725

Loans from financial institutions

 

7,156




Total

212,950

328,881


26. LIABILITIES TO GROUP COMPANIES, 1,000 €

2008

2007

Current:



Other debts

259

524

Accruals

 

2




Total

259

526



27. LIABILITIES TO ASSOCIATED COMPANIES, 1,000 €

2008

2007

Current:



Trade payables

133

145




Total

133

145



28. OTHER DEBTS, 1,000 €

2008

2007

Current:



Other loans / Commercial papers (international and domestic)

172,649

148,552

Value added tax

4,324

6,599

Electricity tax

389

416

Other debts

541

499




Total

177,903

156,065



29. ACCRUALS, 1,000 €

2008

2007

Current:



Interests and other financial items

17,621

16,882

Salaries and additional personnel expenses

4,120

3,697

Accruals of sales and purchases

12,955

4,487

Other

 

79




Total

34,696

25,146



30. PROVISIONS FOR LIABILITIES AND CHARGES, 1,000 €

2008

2007

Creosote-impregnated or CCA-impregnated wooden towers, disposal expenses

1,955

2,007




Total

1,955

2,007


  


31. COMMITMENTS AND CONTINGENT LIABILITIES, 1,000 €

2008

2007

Rental liabilities



Liabilities for the next year

2,012

1,761

Liabilities for subsequent years

7,417

7,086


9,428

8,847

Pledges



Pledge covering property lease agreements

46

38

Pledged account in favour of the Customs Office

154

27

Pledged account covering electricity exchange purchases

5,664

45


5,865

110

Other financial commitments



Counterguarantee in favour of an associated company

1,700

1,700

Credit facility commitment fee and commitment fee:



Commitment fee for the next year

158

102

Commitment fee for subsequent years

409

393


2,268

2,194




Donation of five-year professorship to Helsinki University of Technology for 2006 - 2010

240

360



32. DERIVATIVE AGREEMENTS, 

  1,000 €

2008


2007



 


 

 

Interest and currency derivatives

Net fair value 

31 Dec 2008

Nominal value 

31 Dec 2008

Net fair value 

31 Dec 2007

Nominal value 

31 Dec 2007

Cross-currency swaps

-22,314

367,266

-47,497

376,358

Forward contracts

1,097

19,418

-3,517

72,401

Interest rate swaps

199

134,000

-572

181,000

Interest rate options, bought

2,371

330,000

11,289

370,000


 

 

 


Total

-18,648

850,684

-40,297

999,759


 


 


Electricity derivatives

Net fair value 

31 Dec 2008

Volume

 TWh 

31 Dec 2008

Net fair value 

31 Dec 2007

Volume

 TWh 

31 Dec 2007

Electricity forward contracts, Nord Pool 

Clearing 

-35,236

3.52

20,798

3.31

Electricity forward contracts, others

-125

0.07

1,993

0.14


 

 

 


Total

-35,361

3.59

22,792

3.46


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 2008.


33. 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.

Relating to the appeal by Fingrid to the decision 13 December 2007 by the Energy Market Authority the Market Court decided, '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'. The Energy Market Authority has for one appealed about the decision to the Suprime Administrative Court. RAO Nordic Oy has made an action inquiry to the Competition Authority, in order to clarify that Fingrid's cross-border transmission is accordance with the law for restrictions for competition.  


34. 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 with either Fingrid or some other party. Fingrid buys and sells balance power in order 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 agreement with equal and public terms and conditions.

Fingrid is responsible for the continuous power balance in Finland by buying and selling regulating power in Finland. The balance providers can participate in the Nordic balancing power market by submitting bids of their available capacity. The terms and conditions of participation in the regulating power market and the pricing of balancing power are based on the balance service agreement.

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 2008 was 12 (12). The operating profit was 6.5 (4.0) per cent of turnover. 



MANAGEMENT OF BALANCE OPERATION, SEPARATED PROFIT AND LOSS ACCOUNT

1 Jan - 31 Dec 2008 

1,000 €

1 Jan - 31 Dec 2007 

1,000 €




TURNOVER*

110,609

68,547


 


Materials and services*

-100,932

-63,801


 


Staff expenditure

-1,226

-1,058


 


Depreciation and amortisation expense

-486

-240


 


Other operating expenses

-779

-714


 


OPERATING PROFIT

7,186

2,733




Finance income and costs

0

0


 


PROFIT BEFORE PROVISIONS AND TAXES

7,186

2,733


 


Provisions

38

-315


 


Income taxes

-1,878

-629


 


PROFIT FOR THE FINANCIAL YEAR

5,345

1,789




*Turnover includes 5.8 (4.9) million euros of sales of balance power to balance provider Fingrid Oyj, and Materials and services includes 6.4 (4.8) million euros of its purchases.


  

MANAGEMENT OF BALANCE OPERATION, SEPARATED BALANCE SHEET


ASSETS


31 Dec 2008 

1,000 €

31 Dec 2007 

1,000 €




NON-CURRENT ASSETS






Intangible assets



Other non-current expenses

394

590


 

590

Tangible assets

 


Machinery and equipment

965

1,232

Advance payments and purchases in progress

578

129


1,543

1,361




TOTAL NON-CURRENT ASSETS

1,937

1,951




CURRENT ASSETS






Current receivables



Trade receivables

18

3,680

Receivables from Group companies

16,954

6,484


16,972

10,164


 


Cash in hand and bank receivables

1

1


 


TOTAL CURRENT ASSETS

16,973

10,165


 


TOTAL ASSETS

18,910

12,116



SHAREHOLDERS' EQUITY AND LIABILITIES

31 Dec 2008 

1,000 €

31 Dec 2007

 1,000 €




SHAREHOLDERS' EQUITY



Share capital

32

32

Share premium account

286

286

Profit from previous financial years

10,634

8,845

Profit for the financial year

5,345

1,789




TOTAL SHAREHOLDERS' EQUITY

16,297

10,952




ACCUMULATED PROVISIONS

4

42




LIABILITIES






Current liabilities



Trade payables

2,321

718

Other liabilities

289

405


2,609

1,122




TOTAL LIABILITIES

2,609

1,122


 


TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES

18,910

12,116





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

2008

2007




Return on investment (ROI) in transmission system operation, %

6.2

5.9





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                    


Fingrid was granted emission rights totaling 126.3 thousand tonnes for the years 2008 - 2010, of which Olkiluoto power station was granted a share of 112.3 thousand tonnes (for 2005 - 2007: 13.4 thousand tonnes). Of this volume 3.0 thousand tonnes were used in 2008 (2007: 6.6 thousand tonnes), of which Olkiluodo power station share was 0.8 thousand tonnes.

The use of emission rights did not impact the profit in 2005 to 2006, because the company only used emission rights obtained free of charge. In 2007 the company bought 2.0 thousand tonnes emission rights, which had a minor impact on the profit. During the accounting period of 2008 the sale of emission rights amounted to 15 thousand tonnes.  

3. Signatures for the annual review and for the financial statements



Helsinki, 13 February 2009





Arto Lepistö                        Timo Rajala                                   Timo Karttinen Chairman                   

Chairman                           1st Deputy Chairman                     2nd Deputy Chairman

 

Ari Koponen                        Ritva Nirkkonen                             Anja Silvennoinen


Jorma Tammenaho           Jukka Ruusunen

                                           President & CEO



Auditor's notation


A report on the audit carried out has been submitted today.


Helsinki, 16 February 2009


PricewaterhouseCoopers Oy

Authorised Public Accountants


Juha Tuomala, Authorised Public Accountant


 


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