Financial result 2019

From the point of view of finances, 2019 turned out as expected. Transmission prices were lowered by an average of eight per cent starting from 1 January 2019. For 2020, the transmission pricing will stay at the level of 2019. Fingrid’s own calculations indicate a roughly EUR 15 million deficit for 2019 compared to the result allowed by the regulation. The company’s credit rating remained high, reflecting its strong overall financial situation and debt service capacity.

Fingrid is still one of the lowest-priced TSOs in Europe, while the company’s transmission reliability is among the best in the world. The company’s long- and short-term debt management and hedging against financing risks in the international capital markets continued according to plan. The effective use of capital employed is a key success factor for uninterrupted and continuously developing grid operations, and that will remain in our focus. Overall, the company’s finances and financing are on a stable footing, which enables a controlled transition to a clean power system.

Image: Turnover and profit from operations

The Group’s turnover was EUR 789.4 (852.8) million. Grid service income declined to EUR 385.0 (423.2) million, due to the reduced transmission fees. Electricity consumption in Finland totalled 86.1 (87.5) terawatt hours during the year. Fingrid transmitted a total of 68.7 (68.6) terawatt hours of electricity in its grid, representing 76.0 (75.4) per cent of the total transmission volume in Finland (consumption and inter-TSO). Imbalance power sales amounted to EUR 346.7 (348.8) million, on a par with the previous year. Cross-border transmission income from the connection between Finland and Russia decreased to EUR 11.6 (35.5) million, as a result of the lower cross-border transmission tariff. The transmission tariff used in imports from Russia is based on the difference between Finland’s and north-western Russia’s area prices. Fingrid’s congestion income from cross-border transmission lines totalled EUR 73.0 (29.6) million. The congestion income has been used, in accordance with the regulations, for the Forest Line connection’s network investment and for the Alapitkä capacitor investment. EUR 72.4 million in congestion income was left unused and will be used for future investments to improve the functioning of the electricity market. Other operating income declined to EUR 4.2 (10.8) million. The decline resulted from a decrease in capital gains from the sale of fixed assets.

The Group’s total costs amounted to EUR 678.1 (659.0) million. Imbalance power costs remained on the previous year’s level and totalled EUR 323.5 (320.0) million. Loss power costs grew to EUR 53.9 (47.7) million. The realised average price of loss power procurement was EUR 39.57 (37.88) per megawatt hour. The cost of reserves to safeguard the main grid’s system security remained on the previous year’s level and amounted to EUR 55.9 (56.7) million. Depreciation totalled EUR 97.8 (99.7) million. Grid maintenance costs amounted to EUR 21.6 (21.2) million. Personnel costs declined to EUR 26.4 (32.2) million, mainly as a result of the capitalisation of personnel costs related to investment projects. A total of EUR 3.4 (3.6) million was used for R&D projects.

Image: Costs total (excluding imbalance power) 2015–2019

The Group’s net financial costs in 2019 were EUR 10.1 (15.2) million, including a change of EUR 8.1 million (6.7) in the fair value of financial derivatives.

Fingrid’s financial capital consists of equity and liabilities, in other words debt financing. In 2019, equity amounted to 32.0% and liabilities amounted to 68.0% of the consolidated balance sheet total. Equity according to the regulatory balance sheet as required by the Energy Authority was 60.3% and the corresponding liabilities 39.7% in 2019.

Interest-bearing borrowings totalled EUR 1,120.0 (1,059.6) million, of which non-current borrowings accounted for EUR 884.7 (771.5) million and current borrowings for EUR 235.3 (288.1) million.

Image: Maturity profile of borrowings

The company’s liquidity remained good. Financial and cash assets recognised at fair value through profit or loss totalled EUR 82.8 (85.3) million on 31 December 2019. The company additionally has an undrawn revolving credit facility of EUR 300 million to secure liquidity (until 11 December 2022) and EUR 50 million in uncommitted overdraft facilities.

The counterparty risk arising from derivative contracts relating to financing was EUR 22.4 (14.3) million. Fingrid’s foreign exchange and commodity price risks were hedged.

Fingrid reports on its tax footprint and does not carry out special arrangements to minimise taxes. Dividends are mainly paid to the State of Finland and to Finnish pension insurance and insurance companies.

Image: Taxes in 2015–2019

Image: Profit before taxes

Fingrid's tax footprint, MEUR 2019 2018 2017
Taxes payable      
  Income tax 34.96 50.42 39.42
  Unemployment insurance contributions 0.47 0.73 0.74
  Social security contributions 0.20 0.19 0.22
  Real estate tax 0.42 0.42 0.42
Taxes payable total   36.04 51.75 40.80
Taxes to be collected and remitted      
  Value added tax, net remitted 55.28 75.05 62.00
  Electricity tax (incl. emergency-preparedness contribution) 52.13 44.81 35.71
  Tax prepayments 8.10 7.70 7.23
Taxes to be remitted total   115.51 127.56 104.95
The summary includes taxes and charges that Fingrid is under legal obligation to pay or to collect the tax or payment in question. However, taxes that are included in the purchase price of a product or service and which Fingrid is not under legal obligation to declare are not included in the summary data. Most of the summary’s taxes and charges concern Finland. The Group has had little business operations in Denmark since 2018, as a consequence of which a low amount of income tax has been paid to Denmark and a low amount of tax prepayments on the salaries paid to personnel in Denmark have been remitted. The Group’s operations mainly concern Finland.

 

Dual listing both in Ireland and London

Dual listing both in Ireland and London

In January 2019, we concluded an evaluation regarding dual listing of Fingrid’s debt issues and debt issuance programme. Based on the evaluation, Fingrid listed its EUR 1.5 billion Medium Term Note Programme on the Irish Stock Exchange, in addition to the London Stock Exchange. Fingrid’s debt issues listed on the London Stock Exchange were also dual listed on the Irish Stock Exchange. Dual listing enables the trading of debt issues and new debt issue listings on these two stock exchanges.

Fingrid signs loan agreements with EIB and NIB to reinforce the grid and support the integration of renewables

Fingrid signs loan agreements with EIB and NIB to reinforce the grid and support the integration of renewables

Fingrid and the European Investment Bank (EIB) signed a EUR 100 million loan agreement in support of reinforcing and developing Finland’s electricity transmission network in February 2019. The projects to be financed with this loan facility will promote targets linked with renewable energy as well as increase the grid capacity to enable the integration of new production capacity.

In October 2019, the Nordic Investment Bank (NIB) awarded Fingrid a twenty-year EUR 100 million loan agreement to support the expansion and upgrades of the main grid.