Annual Report 2012 - Fingrid

of reserves, which safeguard the system security of
the power system, rose by 11 million euros during
the period under review because the temporary
purchases of frequency controlled reserves in the
hourly market in Finland and from the other Nordic
TSOs were more expensive than earlier. The personnel
costs increased to 22 (20) million euros partly
owing to an increase in the number of personnel.
The maintenance management costs rose by 3
million euros, mainly due to the repair costs of the
Fenno-Skan 2 cable fault. The inter-TSO compensation
costs went up by 2 million euros, because electricity
imports from Sweden to Finland increased
considerably from 2011.
The operating profit of the Group was 95 (57) million
euros. Of the change in the fair value of commodity
derivatives, -13 (-5) million euros were recognised
in the income statement. The consolidated
profit for the year was 67 (33) million euros. The
return on investment was 5.6 (3.6) per cent and the
return on equity 12.4 (6.5) per cent. The equity ratio
was 27.3 (25.7) per cent at the end of the review
period. Revenue of the parent company was 504
(434) million euros and profit for the financial year
41 (22) million euros.
The Energy Market Authority supervises the reasonableness
of the proceeds of network operators. According
to the preliminary information supplied by
the Energy Market Authority, Fingrid’s proceeds between
2008 and 2011 were approx. 245 million euros
below the permitted level. The present supervision
period commenced on 1 January 2012 and it
will finish on 30 December 2015.
Despite the debt crisis in the euro zone, the money
and capital markets worked reasonably well for
companies in 2012. The bond market in particular
was thriving more than ever before. Towards the
end of the year, the financing margins decreased,
as did the short-term and long-term reference rates
of interest. The company made use of the international
and domestic money and capital markets in
order to finance the capital expenditure and to refinance
the interest-bearing borrowings.
The company’s gross capital expenditure in 2012
was 139 million euros (244 million euros in 2011).
Of this amount, a total of 94 (173) million euros
were used for the transmission grid and 26 (68) million
euros for reserve power. IT-related capital expenditure
was approximately 11 (3) million euros.
The cash flow from the operations of the Group deducted
by capital expenditure improved to -1 (-148)
million euros due to the considerably better profit
and smaller level of capital expenditure.
The financial position of the Group continued to
be satisfactory. The net financial costs excluding
the change in the fair value of derivatives were 21
million euros (19 million euros in 2011). Interest
income was 3 (4) million euros. The net financial
costs in accordance with IFRS were 7 (23) million
euros, including the positive change of 14 million
euros (negative 3 million euros) in the fair value of
derivatives.
The financial assets at 31 December 2012 totalled
214 (204) million euros. The interest-bearing borrowings
totalled 1,244 (1,224) million euros, of
which 1,032 (845) million euros were long-term and
212 (379) million euros were short-term. The counterparty
risk arising from the currency derivative
contracts and interest rate derivative contracts was
77 (63) million euros.
International rating agencies updated Fingrid Oyj’s
credit ratings in 2012. On 16 October 2012, Fitch
Ratings affirmed Fingrid Oyj’s senior unsecured
debt rating of A+, long-term Issuer Default Rating
(IDR) of A and short-term IDR of F1. Fitch Ratings
rated the outlook on the long-term IDR as stable.
Standard & Poor’s Rating Services (S&P) updated
Fingrid’s long-term credit rating at AA- and
the short-term rating at A-1+ on 2 November 2012.
S&P assessed then that Fingrid’s outlook is negative.
On 16 January 2013, S&P revised Fingrid Oyj’s
outlook from negative to stable. On 14 December
2012, Moody’s Investors Service updated Fingrid’s
long-term credit rating at A1 and the short-term
rating at P-1. Moody’s rated the outlook to be stable.
The retained high credit ratings guaranteed access
to competitive financing both in the commercial
paper and bond markets. The company’s financing
is based on long-term co-operation with banks and
22 FINGRID OYJ