8.4 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 derivatives

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 cross-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 power purchases against price risk by employing futures and forwards traded 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 fixed income 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. 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 6.2 and 6.3 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

The company enters deferred tax assets for the congestion income it uses for investments, and they become taxable income and tax in the year in which they were used. The tax assets entered for congestion income are recognised in accordance with the depreciation used in taxation for investments covered by congestion income. Congestion income allocated to investments is entered as a reduction in acquisition cost. For the rest, deferred tax assets and liabilities are not recorded in the income statement or balance sheet, but are instead 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.
TURNOVER, €1,000 2019 2018
Grid service income 394,857 428,437
Imbalance power sales 346,749 348,837
Cross-border transmission 11,608 35,516
ITC income 14,429 13,089
Income from peak load capacity services 74 234
Income from guarantee-of-origin services 58 239
Other operating income 18,397 18,285
Total 786,173 844,637
3. OTHER OPERATING INCOME, €1,000 2019 2018
Rental income 644 831
Capital gains of fixed assets 2,816 8,277
Contributions received 290 186
Other income 568 1,506
Total 4,319 10,801
4. MATERIALS AND SERVICES, €1,000 2019 2018
Purchases during the financial year 377,427 378,727
Loss energy purchases 53,856 48,796
Change in inventories, increase (-) or decrease (+) 970 1,138
Materials and consumables 432,253 428,662
Services 45,350 40,495
Total 477,603 469,157
5. PERSONNEL EXPENSES, €1,000 2019 2018
Salaries and bonuses 22,396 25,564
Pension expenses 3,518 4,437
Other personnel expenses 638 987
Total 26,552 30,988
Salaries and bonuses of the members of the Board of Directors and President and CEO, €1,000 2019 2018
Juhani Järvi, Chairman (since 6 June 2014) 42 41
Päivi Nerg, Vice Chairman (since 28 March 2018) 20 16
Juha Majanen, Vice Chairman (until 28 March 2018)   5
Sanna Syri, Member of the Board (since 14 April 2015) 21 21
Esko Torsti, Member of the Board (since 22 March 2012) 20 22
Anu Hämäläinen, Member of the Board (since 6 April 2016) 20 22
Jukka Ruusunen, President and CEO 523 452
     
Number of salaried employees in the company during the financial year:    
Personnel, average 368 362
Personnel, 31 Dec 368 365
DEPRECATION ACCORDING TO PLAN, €1,000 2019 2018
Other non-current expenses 8,107 7,164
Buildings and structures 10,083 9,752
Machinery and equipment 42,998 48,482
Transmission lines 37,052 36,986
Total* 98,240 102,385
* deprecation on the electricity grid (notes 12 and 13) 91,998 93,720
7. OTHER OPERATING EXPENSES, €1,000 2019 2018
Contracts, assignments etc. undertaken externally 25,142 29,821
Grid rents 234 241
Other rental expenses 3,609 3,714
Other costs 10,696 9,592
Total 39,682 43,368
8. AUDITORS’ FEES, €1,000 2019 2018
PricewaterhouseCoopers Oy:    
Auditing fee 104 79
Other fees 39 92
Total 143 171
9. FINANCE INCOME AND COSTS, €1,000 2019 2018
Dividend income from Group companies 171  
Dividend income from others  881 645
Interest income from Group companies 421  
Interest income from associated companies 22  
Interest and other finance income from others 6,743 4,547
  8,239 5,192
Interest and other finance costs to others  -21,849 -21,712
  -21,849 -21,712
Total -13,611 -16,520
10. INCOME TAXES, €1,000 2019 2018
Income taxes for the financial year  34,546 50,392
Income taxes for the previous financial years  411  
Changes in deferred taxes 1,786 -1,942
Total 36,742 48,450
Deferred tax assets in balance sheet, €1,000
On temporary differences from congestion income 9,003 10,788
Total 9,003 10,788
     
Deferred tax assets and liabilities of balance sheet, €1,000
Deferred tax assets    
On temporary differences  279 285
  279 285
Deferred tax liabilities    
On temporary differences  200 214
On appropriations  69,779 79,779
  69,980 79,993
Total 69,701 79,709
11. GOODWILL, €1,000 2019 2018
Cost at 1 Jan  128,664 128,664
Cost at 31 Dec  128,664 128,664
Accumulated depreciation according to plan 1 Jan  -128,664 -128,664
Accumulated depreciation in excess of plan 31 Dec 0 0
12. INTANGIBLE ASSETS, €1,000 2019 2018
Cost at 1 Jan  172,237 167,176
Increases 1 Jan–31 Dec  4,733 5,803
Decreases 1 Jan–31 Dec  -1,190 -742
Cost at 31 Dec  175,780 172,237
Accumulated depreciation according to plan 1 Jan  -94,636 -87,902
Decreases, depreciation according to plan 1 Jan–31 Dec   1,171 431
Depreciation according to plan 1 Jan–31 Dec  -8,107 -7,164
Carrying amount 31 Dec  74,208 77,601
Accumulated depreciation difference 1 Jan  -50,083 -52,047
Changes in depreciation difference reserve 1 Jan–31 Dec 2,831 1,964
Accumulated depreciation in excess of plan 31 Dec -47,252 -50,083
*Net capital expenditure in electricity grid, €1,000  2019 2018
Carrying amount 31 Dec  68,679 70,075
Carrying amount 1 Jan  -70,075 -71,258
Depreciation according to plan 1 Jan–31 Dec  4,441 4,091
Decreases 1 Jan–31 Dec  19 312
Total 3,064 3,219
13. TANGIBLE ASSETS, €1,000  2019 2018
Land and water areas    
Cost at 1 Jan  19,117 18,071
Increases 1 Jan–31 Dec  524 1,049
Decreases 1 Jan–31 Dec    -3
Cost at 31 Dec  19,641 19,117
     
Buildings and structures    
Cost at 1 Jan  305,089 279,331
Increases 1 Jan–31 Dec  26,825 26,780
Decreases 1 Jan–31 Dec    -1,022
Cost at 31 Dec  331,914 305,089
Accumulated depreciation according to plan 1 Jan  -78,829 -69,612
Decreases, depreciation according to plan 1 Jan–31 Dec     536
Depreciation according to plan 1 Jan–31 Dec  -10,083 -9,752
Carrying amount 31 Dec  243,002 226,260
Accumulated depreciation difference 1 Jan  -13,343 -13,542
Changes in depreciation difference reserve 1 Jan–31 Dec -57 199
Accumulated depreciation in excess of plan 31 Dec -13,400 -13,343
     
Machinery and equipment    
Cost at 1 Jan  1,179,798 1,142,267
Increases 1 Jan–31 Dec  50,791 43,870
Decreases 1 Jan–31 Dec    -6,339
Cost at 31 Dec  1,230,589 1,179,798
Accumulated depreciation according to plan 1 Jan  -628,200 -582,116
Decreases, depreciation according to plan 1 Jan–31 Dec     2,399
Depreciation according to plan 1 Jan–31 Dec  -42,998 -48,482
Carrying amount 31 Dec  559,391 551,599
Accumulated depreciation difference 1 Jan  -56,386 -86,466
Changes in depreciation difference reserve 1 Jan–31 Dec 27,174 30,079
Accumulated depreciation in excess of plan 31 Dec -29,213 -56,386
     
Transmission lines    
Cost at 1 Jan  1,295,079 1,286,459
Increases 1 Jan–31 Dec  36,650 10,541
Decreases 1 Jan–31 Dec  -4,810 -1,921
Cost at 31 Dec  1,326,918 1,295,079
Accumulated depreciation according to plan 1 Jan  -551,824 -515,918
Decreases, depreciation according to plan 1 Jan–31 Dec   4,404 1,081
Depreciation according to plan 1 Jan–31 Dec  -37,052 -36,986
Carrying amount 31 Dec  742,447 743,255
Accumulated depreciation difference 1 Jan  -279,085 -296,842
Changes in depreciation difference reserve 1 Jan–31 Dec 20,052 17,758
Accumulated depreciation in excess of plan 31 Dec -259,033 -279,085
     
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  59,596 83,656
Increases 1 Jan–31 Dec  106,599 75,934
Transfers to other tangible and intangible assets 1 Jan - 31 Dec -115,901 -99,995
Cost at 31 Dec  50,294 59,596
Tangible assets total* 1,614,893 1,599,945
     
*Net capital expenditure in electricity grid, €1,000  2019 2018
Carrying amount 31 Dec  1,589,030 1,569,901
Carrying amount 1 Jan  -1,569,901 -1,609,354
Depreciation according to plan 1 Jan–31 Dec  87,557 89,630
Decreases 1 Jan–31 Dec  407 5,209
Total 107,093 55,386
 
14. INVESTMENTS, €1,000 2019 2018
Interests in Group companies      
Cost at 1 Jan  843 507
Increases 1 Jan–31 Dec    336
Cost at 31 Dec  843 843
     
Interests in associated companies      
Cost at 1 Jan  8,588 8,588
Decreases 1 Jan–31 Dec  -500  
Cost at 31 Dec  8,087 8,588
Investments total 8,931 9,431
15. INVENTORIES, €1,000  2019 2018
Materials and consumables at 31 Dec 12,067 12,391
Total 12,067 12,391
16. OTHER NON-CURRENT RECEIVABLES, €1,000 2019 2018
Loan receivables from Group companies 21,394 9,142
Loan receivables from associated companies 1,125 1,750
Deferred tax assets 9,003 10,788
Total 31,522 21,680
17.  RECEIVABLES FROM GROUP COMPANIES,  €1,000 2019 2018
Current:       
Trade receivables   186 262
Interest receivables  284 116
Other receivables 2,072  
Total 2,542 378
18. RECEIVABLES FROM ASSOCIATED COMPANIES,  €1,000 2019 2018
Trade receivables   3,689 782
Interest receivables  4 9
Loan receivables 188 500
Total 3,881 1,291
19. PREPAYMENTS AND ACCRUED INCOME, €1,000 2019 2018
Interest and other financial items  3,826 5,810
Accruals of sales and purchases  3,234 2,880
Other prepayments and accrued income   800
Total 7,060 9,489
20. UNRECORDED EXPENSES AND PAR VALUE DIFFERENTIALS ON THE ISSUE OF LOANS INCLUDED IN PREPAYMENTS AND ACCRUED INCOME, €1,000 2019 2018
Par value differentials 1,217 1,423
21. CASH AND CASH EQUIVALENTS, €1,000 2019 2018
Commercial papers    4,498
Short-term fixed income funds  66,489 56,482
Bank deposits   10,000
Cash in hand and bank receivables  15,626 13,922
Total 82,116 84,902
22. SHAREHOLDERS' EQUITY, €1,000  2019 2018
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  222,365 201,313
Dividend distribution  -171,440 -173,518
Profit from previous financial years 31 Dec  50,925 27,795
Profit for the financial year 148,061 194,570
Shareholders’ equity 31 Dec  310,831 334,210
Distributable shareholders’ equity  198,986 222,365
Number of shares Series A shares Series B shares Total
1 Jan 2019 2,078 1,247 3,325
31 Dec 2019 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.

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 2019 2018
Accumulated depreciation from the difference between depreciation according to plan and depreciation carried out in taxation 348,897 398,897
Total 348,897 398,897
24. BONDS, €1,000 2019 2018
Currency Nominal value Maturity Interest Balance sheet value
EUR 50,000 20 Sep 2020 floating rate 50,000 50,000
EUR 30,000 19 Sep 2022 floating rate 30,000 30,000
EUR 30,000 11 Sep 2023 2.71% 30,000 30,000
EUR 300,000 3 Apr 2024 3.50% 300,000 300,000
EUR 100,000 23 Nov 2027 1.125% 100,000 100,000
EUR 25,000 27 Mar 2028 2.71% 25,000 25,000
EUR 10,000 12 Sep 2028 3.27% 10,000 10,000
EUR 80,000 24 Apr 2029 2.95% 80,000 80,000
EUR 30,000 30 May 2029 2.89% 30,000 30,000
        655,000 655,000
           
NOK 200,000 12.11.2019 5.37%   23,725
NOK 100,000 16.9.2025 4.31% 12,512 12,512
        12,512 36,237
           
Bonds, long-term total       617,512 667,512
Bonds, short-term total       50,000 23,725
Total       667,512 691,237
   
25.  LOANS FALLING DUE IN FIVE YEARS OR MORE, €1,000  2019 2018
Bonds 257,512 587,512
Loans from financial institutions 137,185 54,892
Total 394,697 642,404
26.  LIABILITIES TO GROUP COMPANIES, €1,000 2019 2018
Current:    
Other liabilities 1,599 2,880
Total 1,599 2,880
27.  LIABILITIES TO ASSOCIATED COMPANIES, €1,000  2019 2018
Current:    
Trade payables 3,920 2,226
Total 3,920 2,226
28.  OTHER LIABILITIES, €1,000 2019 2018
Current:    
Other loans/Commercial papers (international and domestic) 165,315 245,387
Value added tax 17,849 13,783
Electricity tax 4,107 4,443
Advances received 923 923
Other liabilities 713 591
Total 188,908 265,127
29. ACCRUALS, €1,000 2019 2018
Current:    
Interest and other financial items 11,056 11,306
Salaries and additional personnel expenses 6,716 7,685
Accruals of sales and purchases 16,401 18,113
Tax debts 11,681 15,930
Congestion income 72,378 1,292
Total 118,233 54,326
30. PROVISIONS FOR LIABILITIES AND CHARGES, €1,000  2019 2018
Creosote-impregnated and CCA-impregnated wooden towers, disposal costs  1,393 1,424
Total 1,393 1,424
31. DERIVATIVE AGREEMENTS, €1,000
  2019 2018 Hierarchy level
Interest rate and currency derivatives Fair value pos.
31.12.19
Fair value neg. 31.12.19 Net fair value 31.12.19 Nominal value 31.12.19 Fair value pos.
31.12.18
Fair value neg. 31.12.18 Net fair value 31.12.18 Nominal value 31.12.18  
Cross-currency swaps 1,509 -2,901 -1,393 12,512 2,571 -6,888 -4,316 36,237 Level 2
Forward contracts   -440 -440 15,878 7 -5 1 5,150 Level 2
Interest rate swaps 27,771 -3,564 24,207 265,000 23,575 -5,087 18,488 325,000 Level 2
Bought interest rate options 49   49 610,000 126   126 620,000 Level 2
Total 29,329 -6,905 22,423 903,389 26,279 -11,980 14,300 986,387  
Electricity derivatives Fair value pos.
31.12.19
Fair value neg.
31.12.19
Net fair value
31.12.19
Volume TWh 31.12.19 Fair value pos.
31.12.18
Fair value neg. 31.12.18 Net fair value 31.12.18 Volume TWh 31.12.19  
Electricity future contracts. NASDAQ OMX Commodities 8,015 -771 7,244 0.71 12,383 -385 11,997 1.87 Level 1
Electricity forward contracts. NASDAQ OMX Commodities 5,740   5,740 3.56 27,500 -3 27,496 2.58 Level 1
Total 13,755 -771 12,984 4.27 39,883 -389 39,494 4.45  
32. COMMITMENTS AND CONTINGENT LIABILITIES, €1,000 2019 2018
Rental liabilities    
Liabilities for the next year 3,504 4,054
Liabilities for subsequent years 35,597 25,927
  39,101 29,981
Right-of-use agreements    
Liabilities for the next year 8,663 8,663
Liabilities for subsequent years 45,233 53,674
  53,896 62,337
     
Pledges given as collateral for regulatory charges     490 480
     
Other financial commitments    
Rent security deposit, guarantee 38 38
Credit facility commitment fee and commitment fee:    
Commitment fee for the next year 414 345
Liabilities for subsequent years 568 862
  1,020 1,245
     
Unrecognised investment commitments 169,419 80,954
The investment commitments consist of agreements signed by the company to carry out grid construction projects.    

33. LEGAL PROCEEDINGS AND PROCEEDINGS BY AUTHORITIES

An accident took place on a work site in Laukaa, Finland, on 25 August 2017, where an employee of Revilla y Garcia S.L. died after having fallen from a power line tower. A civil court case has been raised in Spain for damages against Fingrid (the client linked with the accident), the main contractor, Technolines S.R.L. filial i Finland, and its sub-contractor, Revilla y Garcia S.L. Fingrid does not believe the claim against it is likely to succeed and, in Fingrid’s view, the legal proceedings or their outcome are not likely to have a substantial impact on the company’s earnings or financial position. The action raised in the case concerning social security based compensation has lapsed.

34. 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 balancing 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 responsible for organising national imbalance settlement. As of the beginning of May 2017, Fingrid has transferred the imbalance settlement to eSett Oy, a company jointly owned by the Finnish, Swedish, Norwegian and Danish transmission system operators.
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 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

The average number of personnel during 2019 was 8 (10). The operating profit was -1.8 (-0.8) per cent of turnover.

MANAGEMENT OF BALANCE OPERATION, SEPARATED INCOME STATEMENT 1 Jan - 31 Dec, 2019 1 Jan - 31 Dec, 2018
€1,000 €1,000
TURNOVER 356,290 355,698
Other operating income 184 1
Materials and services -358,590 -352,266
Personnel costs -887 -1,062
Depreciation and amortisation expens -561 -609
Other operating expenses -2,816 -4,530
OPERATING PROFIT -6,379 -2,768
Finance income and costs 22 64
     
PROFIT/LOSS BEFORE APPROPRIATIONS AND TAXES -6,357 -2,703
Appropriations 208 222
Income taxes    
PROFIT/LOSS FOR THE FINANCIAL YEAR -6,149 -2,482
MANAGEMENT OF BALANCE OPERATION, SEPARATED BALANCE SHEET
ASSETS 31 Dec 2019 31 Dec 2018
  €1,000 €1,000
NON-CURRENT ASSETS    
Intangible assets    
Other non-current expenses 351 811
Tangible assets    
Machinery and equipment 250 351
Investments    
Interests in associated companies 1,501 2,001
TOTAL NON-CURRENT ASSETS 2,102 3,163
CURRENT ASSETS    
Non-current    
Loan receivables from associated companies 1,125 2,250
Current receivables    
Trade receivables 3,311 5,740
Receivables from Group companies 6,235 10,319
Receivables from associated companies 16,027 21,184
Other receivables 1,497 2,516
  27,070 39,759
Cash in hand and bank receivables 1 1
TOTAL CURRENT ASSETS 28,196 42,010
TOTAL ASSETS 30,298 45,173
SHAREHOLDERS' EQUITY AND LIABILITIES 31 Dec 2019 31 Dec 2018
€1,000 €1,000
EQUITY    
Share capital 32 32
Share premium account 286 286
Profit from previous financial years 20,214 22,696
Profit for the financial year -6,149 -2,482
TOTAL SHAREHOLDERS' EQUITY 14,382 20,532
ACCUMULATED APPROPRIATIONS -818 -611
LIABILITIES     
Current liabilities    
Trade payables 3,311 2,199
Liabilities to associated companies 13,423 23,053
  16,734 25,252
TOTAL LIABILITIES 16,734 25,252
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 30,298 45,173

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, 2019 1 Jan - 31 Dec, 2018
€1,000 €1,000
TURNOVER 604 605
Other operating expenses -639 -368
OPERATING PROFIT -35 237
     
PROFIT/LOSS BEFORE APPROPRIATIONS AND TAXES -35 237
Income taxes 7 -47
PROFIT/LOSS FOR THE FINANCIAL YEAR -28 190
DEVELOPMENT OF INFORMATION EXCHANGE, SEPARATED BALANCE SHEET
ASSETS 31 Dec 2019 31 Dec 2018
€1,000 €1,000
CURRENT ASSETS    
Trade receivables   11 350
Receivables from Group companies 470  
Other receivables 225 83
TOTAL CURRENT ASSETS 706 433
TOTAL ASSETS 706 433
SHAREHOLDERS' EQUITY AND LIABILITIES 31 Dec 2019 31 Dec 2018
€1,000 €1,000
EQUITY    
Share capital 3 3
Profits/losses from previous financial years -331 -520
Profit for the financial year -28 190
TOTAL SHAREHOLDERS' EQUITY -356 -328
LIABILITIES    
Current liabilities    
Trade payables 1,062 353
Liabilities to Group companies   343
Other liabilities   65
  1,062 761
TOTAL LIABILITIES 1,062 761
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 706 433

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 datahub 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 STATEMEN TRANSMISSION SYSTEM OPERATION OTHER OPERATION
1 Jan - 31 Dec, 2019 1 Jan - 31 Dec, 2019
€1,000 €1,000
TURNOVER 784,742 1,431
Other operating income 4,319  
Materials and services -477,603  
Personnel costs -26,122 -431
Depreciation and amortisation expense -98,240  
Other operating expenses  -38,681 -1,001
     
OPERATING PROFIT 148,414 0
Finance income and costs -14,204 593
     
PROFIT/LOSS BEFORE APPROPRIATIONS AND TAXES  134,210 593
Appropriations 50,000  
Income taxes -36,624 -119
PROFIT/LOSS FOR THE FINANCIAL YEAR  147,587 474
SEPARATED BALANCE SHEET TRANSMISSION SYSTEM OPERATION OTHER OPERATION
ASSETS 31 Dec 2019 31 Dec 2019
  €1,000 €1,000
Intangible assets:    
Goodwill    
Other intangible assets 74,208  
  74,208  
Tangible assets    
Land and water areas 19,641  
Buildings and structures 243,002  
Machinery and equipment 559,391  
Transmission lines 742,447  
Other property, plant and equipment 118  
Prepayments and purchases in progress 50,294  
  1,614,893  
Investments:    
Interests in Group companies   843
Interests in associated companies 8,087  
Other shares and interests    
  8,087 843
TOTAL NON-CURRENT ASSETS 1,697,188 843
     
CURRENT ASSETS    
Inventories 12,067  
Receivables    
Non-current    
Loan receivables from Group companies   21,394
Loan receivables from associated companies 1,125  
Deferred tax assets 9,003  
  10,128 21,394
Current    
Trade receivables 68,439  
Receivables from Group companies 21,972 2,542
Receivables from associated companies 3,881  
Other receivables 9,462  
Prepayments and accured income 8,653  
  112,406 2,542
Financial securities 66,489  
Cash in hand and bank receivables 15,626  
TOTAL CURRENT ASSETS 216,716 23,936
TOTAL ASSETS 1,913,904 24,779
SEPARATED BALANCE SHEET TRANSMISSION SYSTEM OPERATION OTHER OPERATION
SHAREHOLDERS' EQUITY AND LIABILITIES 31 Dec 2019 31 Dec 2019
  €1,000 €1,000
EQUITY    
Share capital 55,920 3
Share premium account 55,922  
Profit from previous financial years 50,313 612
Profit for the financial year 147,587 474
TOTAL SHAREHOLDERS' EQUITY 309,742 1,089
ACCUMULATED APPROPRIATIONS 348,897  
PROVISIONS FOR LIABILITIES AND CHARGES 1,393  
LIABILITIES    
Non-current liabilities    
Bonds 617,512  
Loans from financial institutions 240,216  
  857,728  
Current liabilities    
Bonds 50,000  
Loans from financial institutions 17,662  
Trade payables 17,542  
Liabilities to Group companies   23,570
Liabilities to associated companies 3,920  
Other liabilities 188,896 11
Accruals 118,124 109
  396,144 23,691
TOTAL LIABILITIES 1,253,872 23,691
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 1,913,904 24,779
Other non-current assets included in the separated balance sheet for grid operations
SEPARATED BALANCE SHEET TRANSMISSION SYSTEM OPERATION
ASSETS 31 Dec 2019
  €1,000
Intangible assets:  
Other intangible assets 5,529
  5,529
Tangible assets  
Land and water areas 16,962
Buildings and structures 4,554
Machinery and equipment 3,228
Transmission lines 1,001
Other property, plant and equipment 118
Prepayments and purchases in progres 50,294
  76,157
TOTAL NON-CURRENT ASSETS 81,686

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. Congestion income accrued in 2019 has been used in accordance with regulations for the Alapitkä substation capacitor investment, which maintains cross-border transmission capacity. MEUR 72.4 in congestion income was left unused and will be used for future investments to improve the functioning of the electricity market.

Congestion income, €1,000 2019 2018
Congestion income on 1 Jan 1,292  
Accumulated congestion incom 73,001 29,632
Expenses matching congestion incom    
Investments matching congestion incom -1,915 -28,341
Congestion income on 31 Dec 72,378 1,292

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 2019 2018
Counter-trade between Finland and Sweden 137 1,916
Counter-trade between Finland and Estonia 485 58
Counter-trade between Finland's internal connection 279 2,161
Total counter-trade 902 4,135
35. 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 2019.
  2019 2018
Total CO2 emissions tCO2 5,142 8,223
36. PERMANENT LOCATION IN DENMARK IN INCOME TAXATION

Joint Nordic operational planning organisation

Fingrid has established, jointly with Svenska Kraftnät, Statnett and Energinet.dk, the Nordic Regional Security Coordinator (Nordic RSC) in Copenhagen for inter-TSO operational planning between the countries. The unit includes Fingrid employees who provide the service for Fingrid’s parent company, and this operation constitutes a permanent location in terms of income taxation and is income taxable to Denmark. The unit became operational in summer 2018.

INCOME STATEMENT 1 Jan - 31 Dec, 2019 1 Jan - 31 Dec, 2018
€1,000 €1,000
TURNOVER 897 423
Personnel costs -201 -129
Other operating expenses  -653 -274
OPERATING PROFIT 43 20
     
PROFIT/LOSS BEFORE APPROPRIATIONS AND TAXES  43 20
Income taxes -9 -4
PROFIT/LOSS FOR THE FINANCIAL YEAR 33 16