Notes to the financial statements of parent company

7.4 Notes to the financial statements of parent company

1. ACCOUNTING PRINCIPLES

Fingrid Oyj's financial statements have been drawn up in accordance with the Finnish Accounting Standards (FAS). The items in the financial statements are valued at original acquisition cost.

Foreign currency transactions

Commercial transactions and financial items denominated in foreign currencies are recognised at the foreign exchange mid-rate quoted by the European Central Bank (ECB) at the transaction date. Interest-bearing liabilities and receivables and the derivatives hedging these items are valued at the mid-rate quoted by the ECB at the closing date. Foreign exchange gains and losses on interest-bearing liabilities and receivables, and on the instruments hedging these items, are recognised at maturity under finance income and costs. Foreign exchange rate differences arising from the derivatives used to hedge commercial currency flows are recognised to adjust the corresponding item in the income statement.

Interest and currency derivative

Interest rate and currency swaps, foreign exchange forwards and interest rate options are used, in accordance with the Treasury Policy, to hedge the interest rate and foreign exchange risk, as well as the commercial items, in Fingrid’s balance sheet items. The accounting principles for derivative contracts are the same as for the underlying items. The interest rate items of interest rate and currency swaps and interest rate options are accrued and recognised in the income statement under interest income and costs. The interest portion of forward foreign exchange contracts hedging the interest-bearing liabilities and receivables is accrued over the maturity of the contracts and recognised under finance income and costs. Premiums paid or received on interest rate options are accrued over the hedging period.

Electricity derivatives
Fingrid hedges its loss energy purchases by employing forward instruments quoted on the NASDAQ OMX Oslo ASA. There can also be trading in the OTC market in instruments corresponding to Nasdaq OMX Oslo ASA’s financial instruments. The profits and losses arising from these contracts are used to adjust the loss energy purchases in the income statement in the period in which the hedging impacts profit or loss.

Research and development expenses

Research and development expenses are treated 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 useful life of the fixed asset. Depreciation on fixed assets taken into use during the financial year is calculated on an item-by-item basis 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 useful life, maximum = 10 years
Computer software = 3 years

Buildings and structures

Substation buildings and separate buildings = 40 years
Substation structures = 30 years
Buildings and structures at gas turbine power plants  = 20-40 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 costs* = 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

* Disposal costs are discounted at present value and added to the value of the fixed asset and recognised under provisions for liabilities and charges.

Goodwill is depreciated over a 20-year period, since grid operations are 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 recognised according to the FIFO principle at 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 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 Euro Medium Term Note (EMTN) programme. The current interest-bearing liabilities consist of commercial papers issued under the domestic and international programmes and of the current portion of noncurrent borrowings 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 recognised as an expense, and the commitment fees are recognised as an expense over the maturity of the facility.

Financial risk management

The principles applied to the management of financial risks are presented in chapters 5.2 and 5.3 of the Notes to the Consolidated Financial Statements.

Income taxes

Taxes include the accrued tax corresponding to the profit for the financial year as well as tax adjustments for previous financial years.

Deferred taxes

Deferred tax assets and liabilities are not recorded in the income statement or balance sheet. Information concerning these is presented in the notes.

2. TURNOVER BY BUSINESS AREA

The business of Fingrid Oyj comprises entirely transmission grid business with system responsibility. For that reason, there is no distribution of turnover by business area.

2. TURNOVER BY BUSINESS AREA
The business of Fingrid Oyj comprises entirely transmission grid business with system responsibility. For that reason, there is no distribution of turnover by business area.
TURNOVER, €1,000 2016 2015
Grid service income 382,395 333,005
Imbalance power sales 153,881 137,127
Cross-border transmission 24,015 11,174
ITC income 13,199 15,298
Estlink congestion income 0 4,180
Nordic congestion income 0 86,762
Income from peak load capacity services 295 273
Income from guarantee-of-origin services 244 458
Other operating income 7,382 4,127
Total 581,410 592,403
3. OTHER OPERATING INCOME, €1,000 2016 2015
     
Rental income 922 1,196
Capital gains of fixed assets 3,796 2,424
Contributions received 282 199
Congestion income 6,325 0
Other income 1,368 1,539
Total 12,693 5,358
4. MATERIALS AND SERVICES, €1,000 2016 2015
     
Purchases during the financial year 170,793 154,208
Loss energy purchases 57,555 68,566
Change in inventories, increase (-) or decrease (+) 396 178
Materials and consumables 228,745 222,951
Services 13,010 10,481
Total 241,755 233,432
5. PERSONNEL EXPENSES, €1,000 2016 2015
     
Salaries and bonuses 22,735 21,320
Pension expenses 4,433 3,518
Other personnel expenses 1,430 967
Total 28,598 25,804
Salaries and bonuses of the members of the Board of Directors and President and CEO, €1,000 2016 2015
Juhani Järvi, Chairman (since 6 June 2014) 34 19
Helena Walldén, Chairman (until 6 April 2016) 11 38
Juha Majanen, Vice Chairman (since 22 March 2012) 23 21
Sanna Syri, Member of the Board (since 14 April 2015) 20 13
Esko Torsti, Member of the Board (since 22 March 2012) 20 18
Anu Hämäläinen, Member of the Board (since 6 April 2016) 14  
Sirpa Ojala, Member of the Board (until 14 April 2015)   5
Jukka Ruusunen, Presiden and CEO 352 324
     
Number of salaried employees in the company during the financial year:    
Personnel, average 336 319
Personnel, 31 Dec 334 315
DEPRECATION ACCORDING TO PLAN, €1,000 2016 2015
Goodwill 6,433 6,433
Other non-current expenses 5,856 5,961
Buildings and structures 8,100 7,303
Machinery and equipment 50,973 47,643
Transmission lines 36,904 35,982
Total* 108,267 103,323
Deprecation on the electricity grid (notes 12 and 13) 88,967 94,249
7. OTHER OPERATING EXPENSES, €1,000 2016 2015
Contracts, assignments etc. undertaken externally 53,277 45,722
Grid rents 241 229
Other rental expenses 2,575 2,498
Other costs 9,681 9,455
Total 65,774 57,904
8. AUDITORS’ FEES, €1,000 2016 2015
PricewaterhouseCoopers Oy:    
Auditing fee 61 42
Tax consulting 21 16
Assignments referred to in the Auditing Act, Chapter 1, Section 1, Subsection 2 3 0
Other fees 60 58
Total 142 116
9. FINANCE INCOME AND COSTS, €1,000 2016 2015
Dividend income from Group companies 294 0
Dividend income from others 565 556
Interest and other finance income from others 7,332 13,274
  8,192 13,829
Interest and other finance costs to Group companies 0 -0
Interest and other finance costs to others -28,313 -36,665
  -28,313 -36,665
Total -20,121 -22,835
10. INCOME TAXES, €1,000 2016 2015
Income taxes for the financial year 25,722 30,721
Total 25,722 30,721
     
Deferred tax assets and liabilities, €1,000
Deferred tax assets    
On temporary differences 296 334
  296 334
Deferred tax liabilities    
On temporary differences 242 256
On appropriations 89,779 89,779
  90,021 90,035
Total 89,725 89,701
11. GOODWILL, €1,000 2016 2015
Cost at 1 Jan 128,664 128,664
Cost at 31 Dec 128,664 128,664
Accumulated depreciation according to plan 1 Jan -117,942 -111,509
Depreciation according to plan 1 Jan–31 Dec -6,433 -6,433
Carrying amount 31 Dec 4,289 10,722
     
Accumulated depreciation difference 1 Jan -10,722 -17,155
Decrease in depreciation difference reserve 1 Jan–31 Dec 6,433 6,433
Accumulated depreciation in excess of plan 31 Dec -4,289 -10,722

 

12. OTHER NON-CURRENT EXPENSES, €1,000 2016 2015
Cost at 1 Jan 180,861 180,215
Increases 1 Jan–31 Dec 3,548 2,576
Decreases 1 Jan–31 Dec -690 -1,929
Cost at 31 Dec 183,719 180,861
Accumulated depreciation according to plan 1 Jan -98,519 -93,724
Decreases, depreciation according to plan 1 Jan–31 Dec 427 1,166
Depreciation according to plan 1 Jan–31 Dec -5,856 -5,961
Carrying amount 31 Dec* 79,770 82,342
     
Accumulated depreciation difference 1 Jan -55,954 -57,354
Increase in depreciation difference reserve 1 Jan–31 Dec -737 -753
Decrease in depreciation difference reserve 1 Jan–31 Dec 1,496 2,154
Accumulated depreciation in excess of plan 31 Dec -55,195 -55,954
*Net capital expenditure in electricity grid, €1,000 2016 2015
Carrying amount 31 Dec 74,378 77,101
Carrying amount 1 Jan -77,101 -80,742
Depreciation according to plan 1 Jan–31 Dec 3,941 5,050
Decreases 1 Jan–31 Dec 263 763
Total 1,482 2,171
13. TANGIBLE ASSETS, €1,000 2016 2015
Land and water areas    
Cost at 1 Jan 15,349 14,974
Increases 1 Jan–31 Dec 393 442
Decreases 1 Jan–31 Dec -41 -67
Cost at 31 Dec 15,701 15,349
     
Buildings and structures    
Cost at 1 Jan 218,637 200,650
Increases 1 Jan–31 Dec 34,634 18,214
Decreases 1 Jan–31 Dec -168 -227
Cost at 31 Dec 253,104 218,637
Accumulated depreciation according to plan 1 Jan -51,436 -44,192
Decreases, depreciation according to plan 1 Jan–31 Dec 73 59
Depreciation according to plan 1 Jan–31 Dec -8,100 -7,303
Carrying amount 31 Dec 193,640 167,201
Accumulated depreciation difference 1 Jan -13,534 -13,590
Increase in depreciation difference reserve 1 Jan–31 Dec -970 -852
Decrease in depreciation difference reserve 1 Jan–31 Dec 925 908
Accumulated depreciation in excess of plan 31 Dec -13,579 -13,534
     
Machinery and equipment    
Cost at 1 Jan 1,029,839 991,645
Increases 1 Jan–31 Dec 61,839 38,824
Decreases 1 Jan–31 Dec -100 -630
Cost at 31 Dec 1,091,578 1,029,839
Accumulated depreciation according to plan 1 Jan -464,296 -416,959
Decreases, depreciation according to plan 1 Jan–31 Dec 8 306
Depreciation according to plan 1 Jan–31 Dec -50,973 -47,643
Carrying amount 31 Dec 576,317 565,543
Accumulated depreciation difference 1 Jan -184,046 -188,372
Increase in depreciation difference reserve 1 Jan–31 Dec -782 -2,012
Decrease in depreciation difference reserve 1 Jan–31 Dec 7,665 6,338
Accumulated depreciation in excess of plan 31 Dec -177,163 -184,046
     
Transmission lines    
Cost at 1 Jan 1,221,808 1,197,089
Increases 1 Jan–31 Dec 74,414 30,003
Decreases 1 Jan–31 Dec -5,565 -5,283
Cost at 31 Dec 1,290,658 1,221,808
Accumulated depreciation according to plan 1 Jan -448,824 -416,065
Decreases, depreciation according to plan 1 Jan–31 Dec 3,944 3,223
Depreciation according to plan 1 Jan–31 Dec -36,904 -35,982
Carrying amount 31 Dec 808,875 772,985
Accumulated depreciation difference 1 Jan -369,891 -357,675
Increase in depreciation difference reserve 1 Jan–31 Dec -50,934 -14,391
Decrease in depreciation difference reserve 1 Jan–31 Dec 36,904 2,175
Accumulated depreciation in excess of plan 31 Dec -383,922 -369,891
     
Other property, plant and equipment    
Cost at 1 Jan 118 118
Cost at 31 Dec 118 118
     
Prepayments and purchases in progress    
Cost at 1 Jan 120,816 78,687
Increases 1 Jan–31 Dec 116,534 134,335
Transfers to other tangible and intangible assets 1 Jan - 31 Dec -177,946 -92,206
Cost at 31 Dec 59,404 120,816
     
Tangible assets total* 1,654,054 1,642,011
     
*Net capital expenditure in electricity grid, €1,000 2016 2015
Carrying amount 31 Dec 1,618,586 1,635,324
Carrying amount 1 Jan -1,635,324 -1,598,045
Depreciation according to plan 1 Jan–31 Dec 85,026 89,199
Decreases 1 Jan–31 Dec 1,742 2,451
Total 70,030 128,930
 
14. INVESTMENTS, €1,000 2016 2015
Interests in Group companies    
Cost at 1 Jan 505 505
Increases 1 Jan–31 Dec 3 0
Cost at 31 Dec 507 505
     
Interests in associated companies    
Cost at 1 Jan 8,588 8,642
Decreases 1 Jan–31 Dec 0 -55
Cost at 31 Dec 8,588 8,588
     
Other shares and interests    
Cost at 1 Jan 1,885 1,417
Increases 1 Jan–31 Dec 227 469
Decreases 1 Jan–31 Dec -147 0
Cost at 31 Dec 1,965 1,885
Investments total 11,060 10,978
15. INVENTORIES, €1,000 2016 2015
Materials and consumables at 31 Dec 12,139 12,647
Work in progress 131 18
Total 12,269 12,665
16. OTHER NON-CURRENT RECEIVABLES, €1,000 2016 2015
Loan receivables from Group companies 2,808 0
Loan receivables from associated companies 4,000 2,500
Total 6,808 2,500
17. RECEIVABLES FROM GROUP COMPANIES, €1,000 2016 2015
Current:    
Trade receivables 799 209
Interest receivables 27 0
Total 827 209
18. RECEIVABLES FROM ASSOCIATED COMPANIES, €1,000 2016 2015
Current:    
Trade receivables 125 39
Interest receivables 18 9
Total 144 48
19. PREPAYMENTS AND ACCRUED INCOME, €1,000 2016 2015
Interest and other financial items 7,333 8,202
Accruals of sales and purchases 1,666 6,111
Other prepayments and accrued income 200 178
Total 9,199 14,491
20. UNRECORDED EXPENSES AND PAR VALUE DIFFERENTIALS ON THE ISSUE OF LOANS INCLUDED IN PREPAYMENTS AND ACCRUED INCOME, €1,000 2016 2015
Par value differentials 1,039 1,184
21. CASH AND CASH EQUIVALENTS, €1,000 2016 2015
Commercial papers 12,991 53,935
Short-term money market funds 44,402 39,324
Bank deposits 10,000 10,000
Cash in hand and bank receivables 11,939 13,099
Total 79,333 116,358
22. SHAREHOLDERS' EQUITY, €1,000 2016 2015
     
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 162,088 103,346
Dividend distribution -90,000 -65,000
Profit from previous financial years 31 Dec 72,088 38,346
Profit for the financial year 103,866 123,742
     
Shareholders’ equity 31 Dec 287,799 273,933
Distributable shareholders’ equity 175,954 162,088
Number of shares Series A shares Series B shares Total
1 Jan 2016 2,078 1,247 3,325
31 Dec 2016 2,078 1,247 3,325
        

Series A shares confer three votes each at the Annual General Meeting and Series B shares one vote each. When electing members of the Board of Directors, Series A shares confer 10 votes each at the Annual General Meeting and Series B shares one vote each.

Series B shares have the right before Series A shares to obtain the annual dividend specified below from the funds available for profit distribution. 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, such that Series B shares have the right over Series A shares to receive the annual dividend and the undistributed amount. Series B shares have no right to receive any other dividend.

Fingrid Oyj's Annual General Meeting decides on the annual dividend.

Eighty-two (82) per cent of the dividends to be distributed for each financial year is distributed for all Series A shares and eighteen (18) per cent for all Series B shares, however such that EUR twenty (20) million of the dividends to be distributed for each financial year is first distributed for all Series B shares. If the above-mentioned EUR twenty (20) million minimum amount for the financial period is not distributed (all or in part) for Series B shares in a financial period, Series B shares confer the right to receive the undistributed minimum amount in question (or the accumulated undistributed minimum amount accrued during such financial periods) in the next profit distribution, in any disbursements paid out, or in any other distribution of assets prior to any other dividends, disbursements or asset distribution until the undistributed minimum amount has been distributed in full for Series B shares.

There are no non-controlling interests.

23. ACCUMULATED APPROPRIATIONS, €1,000 2016 2015
Accumulated depreciation from the difference between depreciation according to plan and depreciation carried out in taxation 448,897 448,897
24. BONDS, €1,000         2016 2015
           
Currency Nominal value Maturity date Interest    
EUR 20,000 11.4.2017 floating rate 20,000 20,000
EUR 25,000 11.4.2017 floating rate 25,000 25,000
EUR 30,000 15.6.2017 3,07% 30,000 30,000
EUR 50,000 21.9.2020 floating rate 50,000  
EUR 30,000 19.9.2022 floating rate 30,000  
EUR 30,000 11.9.2023 2,71% 30,000 30,000
EUR 300,000 3.4.2024 3,50% 300,000 300,000
EUR 25,000 27.3.2028 2,71% 25,000 25,000
EUR 10,000 12.9.2028 3,27% 10,000 10,000
EUR 80,000 24.4.2029 2,95% 80,000 80,000
EUR 30,000 30.5.2029 2,89% 30,000 30,000
        630,000 550,000
           
JPY 500,000 22.6.2017 1,28% 4,507 4,507
        4,507 4,507
           
NOK 200,000 17.10.2016 5,15%   24,620
NOK 200,000 11.4.2017 5,16% 24,620 24,620
NOK 200,000 10.11.2017 5,12% 23,725 23,725
NOK 200,000 12.11.2019 5,37% 23,725 23,725
NOK 100,000 16.9.2025 4,31% 12,512 12,512
        84,582 109,201
           
SEK 100,000 15.1.2016 3,30%   10,390
SEK 500,000 18.10.2016 floating rate   54,900
SEK 500,000 18.10.2016 3,50%   54,900
SEK 1,000,000 19.11.2018 floating rate 107,308 107,308
        107,308 227,497
           
Bonds, non-current, total       698,544 746,396
Bonds, current, total       127,852 144,809
           
Total       826,396 891,205
   
25. LOANS FALLING DUE IN FIVE YEARS OR MORE, €1,000 2016 2015
Bonds 517,512 487,512
Loans from financial institutions 90,216 107,879
Total 607,728 595,391
26. LIABILITIES TO GROUP COMPANIES, €1,000 2016 2015
Current:    
Other liabilities 1,103 503
Total 1,103 503
27. LIABILITIES TO ASSOCIATED COMPANIES, €1,000 2016 2015
Current:    
Trade payables 152 2
Total 152 2
28. OTHER LIABILITIES, €1,000 2016 2015
Current:    
Other loans/Commercial papers (international and domestic) 120,128 75,003
Value added tax 11,860 7,787
Electricity tax 3,093 3,045
advances received 923 15
Other liabilities 667 582
Total 136,671 86,432
29. ACCRUALS, €1,000 2016 2015
Current:    
Interest and other financial items 12,822 14,739
Salaries and additional personnel expenses 5,693 4,310
Accruals of sales and purchases 5,766 3,784
Other accruals 5,277 13,336
Total 29,558 36,170
30. PROVISIONS FOR LIABILITIES AND CHARGES, €1,000 2016 2015
Creosote-impregnated and CCA-impregnated wooden towers, disposal costs 1,481 1,668
Total 1,481 1,668
31. DERIVATIVE AGREEMENTS, €1,000
  2016       2015       Hierarchy level
Interest rate and currency derivatives Fair value
pos.
Fair value
neg.
Net fair
value
Nominal value Fair value
pos.
Fair value
neg.
Net fair
value
Nominal value  
  31.12.16 31.12.16 31.12.16 31.12.16 31.12.15 31.12.15 31.12.15 31.12.15  
Cross-currency swaps 6,930 -12,487 -5,558 196,396 15,286 -20,297 -5,011 341,205 Level 2
Forward contracts 46   46 2,271   -88 -88 4,505 Level 2
Interest rate swaps 26,667 -6,725 19,943 360,000 24,348 -9,442 14,905 430,000 Level 2
Bought interest rate options 1,350   1,350 518,820 862   862 358,820 Level 2
Total 34,993 -19,212 15,781 1,077,487 40,496 -29,827 10,668 1,134,531  
Electricity derivatives Fair value
pos.
Fair value
neg.
Net fair
value
Volume
TWh
Fair value
pos.
Fair value
neg.
Net fair
value
Volume
TWh
 
  31.12.16 31.12.16 31.12.16 31.12.16 31.12.15 31.12.15 31.12.15 31.12.15  
Electricity forward contracts. NASDAQ OMX Commodities, not designated as hedge accounting 1,639.52 -8,157.40 -6,517.87 4.07   -49,060.14 -49,060.14 4.22 Level 1
Total 1,639.52 -8,157.40 -6,517.87 4.07   -49,060.14 -49,060.14 4.22  
                   
32. COMMITMENTS AND CONTINGENT LIABILITIES, €1,000 2016 2015
     
Rental liabilities    
Liabilities for the next year 3,536 2,643
Liabilities for subsequent years 28,653 23,299
  32,189 25,942
Right-of-use agreements    
Liabilities for the next year 7,601 8,017
Liabilities for subsequent years 72,677 81,048
  80,278 89,065
Pledges    
Pledge covering property lease agreements 9 9
Pledge covering customs credit account 280 280
Default fund covering electricity exchange purchases 0 863
  289 1,151
Other financial commitments    
Rent security deposit, guarantee 38 38
Credit facility commitment fee and commitment fee:    
Commitment fee for the next year 395 326
Liabilities for subsequent years 1,154 1,154
  1,587 1,518
33. OPERATING CASH FLOW ADJUSTMENTS, €1,000 2016 2015
Business transactions not involving a payment transaction    
Depreciation 108,267 103,323
Capital gains/losses (-/+) on tangible and intangible assets -3,778 -2,129
Total 104,489 101,194

34. LEGAL PROCEEDINGS AND PROCEEDINGS BY AUTHORITIES

A lawsuit was initiated against Fingrid in December 2016, demanding non-specified damages due to an alleged breach of contract. The alleged injury is continuous and the claim amounted to EUR 135,000 by the time the lawsuit was initiated. Fingrid has contested the claims presented in the lawsuit. The case is currently before the court. In Fingrid’s view, the legal proceedings are not likely to have a substantial impact on the company’s financial result or financial position. Thus no provisions were recognised in the financial statements in relation to these proceedings.

There are no other ongoing legal proceedings or proceedings by authorities that would have a material impact on Fingrid's business.

35. SEPARATION OF BUSINESSES IN ACCORDANCE WITH THE ELECTRICITY MARKET ACT

Imbalance power and regulating power

Each electricity market party must ensure its electricity balance by making an agreement with either Fingrid or some other party. Fingrid buys and sells imbalance power in order to stabilise the hourly power balance of an electricity market party (balance responsible party). Imbalance power trade and pricing 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 responsible parties can participate in the Nordic balancing power market by submitting bids on 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.

Fingrid is also responsible for the national balance settlement. The balance settlement takes place after the utilisation hours by determining the actual electricity generation, consumption and electricity trade. The outcome of the balance settlement is power balances for each party to the electricity trade. 

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 by virtue of Chapter 12 of the Electricity Market Act. The management of balance operation is a part of grid operations.

The income statement of the balance service unit is separated by means of cost accounting as follows:

Income direct
Separate direct
Production costs matching principle
Administrative costs matching principle
Depreciation matching principle in accordance with
Fingrid Oyj's depreciation principle
Finance income and costs on the basis of imputed debt
Income taxes based on result

 

The average number of personnel during 2016 was 12 (14). The operating profit was 4 (6) per cent of turnover.

MANAGEMENT OF BALANCE OPERATION, SEPARATED INCOME STATEMENT 1 Jan - 31 Dec, 2016 1 Jan - 31 Dec, 2015
€1,000 €1,000
TURNOVER* 165,393 148,240
Other operating income 1 1
Materials and services* -156,520 -136,914
Personnel costs -1,385 -1,552
Depreciation and amortisation expense -181 -306
Other operating expenses -1,129 -1,208
     
OPERATING PROFIT 6,178 8,261
Finance income and costs 48 30
     
PROFIT/LOSS BEFORE APPROPRIATIONS AND TAXES 6,226 8,291
Appropriations -89 35
Income taxes -884 0
PROFIT/LOSS FOR THE FINANCIAL YEAR 5,253 8,327
MANAGEMENT OF BALANCE OPERATION, SEPARATED BALANCE SHEET    
ASSETS 31 Dec 2016 31 Dec 2015
  €1,000 €1,000
NON-CURRENT ASSETS    
     
Intangible assets    
Other non-current expenses 385 415
     
Tangible assets    
Machinery and equipment 247 254
Prepayments and purchases in progress 62 62
     
Investments    
Interests in associated companies 2,001 2,001
     
TOTAL NON-CURRENT ASSETS 2,695 2,732
     
CURRENT ASSETS    
     
Non-current    
Loan receivables from associated companies 4,000 2,500
     
Current receivables    
Trade receivables 27,420 21,368
Receivables from Group companies 18,469 14,899
Receivables from associated companies 144 48
Other receivables 1,504 1,616
  47,537 37,931
     
Cash in hand and bank receivables 1 1
     
TOTAL CURRENT ASSETS 51,538 40,432
TOTAL ASSETS 54,233 43,164
SHAREHOLDERS' EQUITY AND LIABILITIES 31 Dec 2016 31 Dec 2015
€1,000 €1,000
     
EQUITY    
Share capital 32 32
Share premium account 286 286
Profit from previous financial years 16,620 8,293
Profit for the financial year 5,253 8,327
TOTAL SHAREHOLDERS' EQUITY 22,190 16,937
     
ACCUMULATED APPROPRIATIONS -470 -560
     
LIABILITIES    
Current liabilities    
Trade payables 30,724 26,020
Liabilities to Group companies 906 766
Accruals 884  
  32,513 26,786
TOTAL LIABILITIES 32,513 26,786
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 54,233 43,164

Development of information exchange

It is Fingrid’s task to develop the exchange of information required for electricity trade and imbalance settlement as set out in the Electricity Market Act. Fingrid’s information exchange services are part of the electricity markets’ information exchange environment. In order to develop the effective and accurate exchange of information, Fingrid works in close co-operation with e.g. electricity market parties, interest groups, service providers, supervisory authorities, legislators, organisations that develop national and international communications and other transmission system operators.

In accordance with a decision by the Energy Market Authority, Fingrid Oyj must separate the duties pertaining to the development of information exchange by virtue of Chapter 12 of the Electricity Market Act. The development of information exchange is a part of grid operations.

The separation of the income statement for the development of information exchange is realised by means of cost accounting as follows:

Income = direct
Separate costs = direct
Administrative costs = matching principle
Income taxes = based on result

DEVELOPMENT OF INFORMATION EXCHANGE, SEPARATED INCOME STATEMENT 1 Jan - 31 Dec, 2016 1 Jan - 31 Dec, 2015
€1,000 €1,000
     
TURNOVER 595 528
Personnel costs -144 -165
Other operating expenses -392 -236
     
OPERATING PROFIT 59 127
     
PROFIT/LOSS BEFORE APPROPRIATIONS AND TAXES 59 127
Income taxes -12 -25
PROFIT/LOSS FOR THE FINANCIAL YEAR 48 102
DEVELOPMENT OF INFORMATION EXCHANGE, SEPARATED BALANCE SHEET    
ASSETS 31 Dec 2016 31 Dec 2015
€1,000 €1,000
CURRENT ASSETS    
Trade receivables   56
Other receivables 147 159
TOTAL CURRENT ASSETS 147 215
TOTAL ASSETS 147 215
SHAREHOLDERS' EQUITY AND LIABILITIES 31 Dec 2016 31 Dec 2015
€1,000 €1,000
     
EQUITY    
Share capital 3 3
Profits/losses from previous financial years -636 -738
Profit for the financial year 48 102
TOTAL SHAREHOLDERS' EQUITY -586 -634
     
LIABILITIES    
Current liabilities    
Trade payables 12 10
Liabilities to Group companies 686 716
Other liabilities 36 123
  734 849
     
TOTAL LIABILITIES 734 849
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 147 215

Grid operations

Grid operations refers to licensed electricity system operation that takes place on the electricity grid. Electricity system operations are defined in Chapter 1 of the Electricity Market Act (588/2013) and grid operations are defined in Chapter 5. Of Fingrid Oyj’s operations, activities related to the management of the power reserve system and guarantees of origin for electricity, as well as the data hub project that was started in 2015 are not included in grid operations. Operations that are not part of grid operations constitute ‘other operations’ as referred to in Chapter 12 of the Electricity Market Act and must be separated from grid operations in accordance with that Chapter.

The income statement and balance sheet of grid operations and other operations have, in compliance with Chapter 12 of the Electricity Market Act, been 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 principle
Finance income and costs on the basis of imputed debt
Income taxes based on result
Balance sheet items matching principle
SEPARATED INCOME STATEMENT TRANSMISSION SYSTEM OPERATION OTHER OPERATION
1 Jan - 31 Dec, 2016 1 Jan - 31 Dec, 2016
€1,000 €1,000
TURNOVER 578,390 3,019
Other operating income 12,693  
Materials and services -241,755  
Personnel costs -27,796 -802
Depreciation and amortisation expense -108,267  
Other operating expenses -64,229 -1,545
     
OPERATING PROFIT 149,037 673
Finance income and costs -20,451 329
     
PROFIT BEFORE EXTRAORDINARY ITEMS 128,587 1,002
     
PROFIT/LOSS BEFORE APPROPRIATIONS AND TAXES 128,587 1,002
Income taxes -25,522 -200
PROFIT/LOSS FOR THE FINANCIAL YEAR 103,065 802
SEPARATED BALANCE SHEET
  TRANSMISSION SYSTEM OPERATION OTHER OPERATION
ASSETS 31 Dec 2016 31 Dec 2016
  €1,000 €1,000
Intangible assets:    
Goodwill 4,289  
Other intangible assets 79,770  
  84,059  
Tangible assets    
Land and water areas 15,701  
Buildings and structures 193,640  
Machinery and equipment 576,317  
Transmission lines 808,875  
Other property, plant and equipment 118  
Prepayments and purchases in progress 59,404  
  1,654,054  
Investments:    
Interests in Group companies   507
Interests in associated companies 8,588  
Other shares and interests 1,965  
  10,553 507
     
TOTAL NON-CURRENT ASSETS 1,748,666 507
     
CURRENT ASSETS    
Inventories 12,269  
     
Receivables    
Non-current    
Loan receivables from Group companies   2,808
Loan receivables from associated companies 4,000  
  4,000 2,808
Current    
Trade receivables 70,674  
Receivables from Group companies 3,706 827
Receivables from associated companies 144  
Other receivables 1,298  
Prepayments and accured income 9,199  
  85,022 827
Financial securities 57,394  
Cash in hand and bank receivables 21,939  
TOTAL CURRENT ASSETS 180,623 3,634
TOTAL ASSETS 1,929,289 4,141
SEPARATED BALANCE SHEET    
  TRANSMISSION SYSTEM OPERATION OTHER OPERATION
SHAREHOLDERS' EQUITY AND LIABILITIES 31 Dec 2016 31 Dec 2016
  €1,000 €1,000
     
EQUITY    
Share capital 55,920 3
Share premium account 55,922  
Profit from previous financial years 72,630 -542
Profit for the financial year 103,065 802
TOTAL SHAREHOLDERS' EQUITY 287,537 262
     
ACCUMULATED APPROPRIATIONS 448,897  
     
PROVISIONS FOR LIABILITIES AND CHARGES 1,481  
     
LIABILITIES    
Non-current liabilities    
Bonds 698,544  
Loans from financial institutions 151,203  
  849,748  
Current liabilities    
Bonds 127,852  
Loans from financial institutions 21,662  
Trade payables 24,802  
Liabilities to Group companies 1,103 3,706
Liabilities to associated companies 152  
Other liabilities 136,653 19
Accruals 29,404 154
  341,627 3,879
TOTAL LIABILITIES 1,191,374 3,879
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 1,929,289 4,141

 

Other non-current assets included in the separated balance sheet for grid operations
SEPARATED BALANCE SHEET  
  TRANSMISSION SYSTEM OPERATION
ASSETS 31 Dec 2016
  €1,000
Intangible assets:  
Other intangible assets 5,392
  5,392
Tangible assets  
Land and water areas 15,459
Buildings and structures 4,170
Machinery and equipment 14,512
Transmission lines 1,209
Other property, plant and equipment 118
Prepayments and purchases in progress 59,404
  94,872
   
TOTAL NON-CURRENT ASSETS 100,264
   

Congestion income in grid operations

The congestion income received by a grid owner must be used for the purposes stated in EC Regulation 714/2009, Article 16, Paragraph 6: guaranteeing the actual availability of the allocated capacity, and maintaining or increasing interconnection capacities through network investments. As a consequence of the change in the regulation governing Fingrid’s grid pricing, the company will include the congestion income received after 1 January 2016 as accruals in the item other liabilities in the balance sheet. Of the accruals, congestion income will be recognised in the income statement as other operating income when their corresponding costs, as defined in the regulation, accrue as annual expenses in the income statement. Alternatively, they are entered in the balance sheet against investments, as defined by regulation, to lower the acquisition cost of property, plant and equipment, which lowers the depreciation of the property, plant and equipment in question. The congestion income received before 1 January 2016 was recognised in turnover. The congestion income from 2016 was used for improving and maintaining the cross-border transmission connections, and in part also for the Hirvisuo–Pyhänselkä transmission network investment, which supports the cross-border transmission from northern Sweden.

Congestion income, €1,000 2016
Congestion income on 1 Jan 0
Accumulated congestion income 39,863
Expenses matching congestion income -6,325
Investments matching congestion income -33,538
Congestion income on 31 Dec 0
   

Countertrade

In terms of the costs arising from countertrade used to safeguard system security in grid operations, congestion income may be used to offset countertrade costs arising from cross-border transmission connections.

Counter trade, €1,000 2016 2015
Counter-trade between Finland and Sweden 2,531 783
Counter-trade between Finland and Estonia 87 768
Counter-trade between Finland's internal connections 1,242 2,233
Total counter-trade 3,861 3,784
36. EMISSION RIGHTS
Fingrid has not been granted free-of-charge emission rights for the emissions trade period 2013–2020.
The use of emission rights had no impact on the financial result in 2016.
  2016 2015
Total CO2 emissions tCO2 10,326 6,697