Public March 2019 Finland´s Transmission System Operator
Disclaimer These materials have been prepared based upon information that Fingrid Fingrid Oyj assumes no obligation to, and expressly disclaims any Oyj believes to be reliable. Market data presented is based on the obligation to, update or revise any forward-looking statements, whether as information and belief of Fingrid Oyj's management and has not been a result of new information, future events or otherwise. independently verified. Certain data in this presentation was obtained from various external data sources and Fingrid Oyj has not verified such data The circulation of these materials may, in certain countries, be subject to with independent sources. Such data involves risks and uncertainties and specific regulation and the person(s) in possession of this presentation is subject to change based on various factors. Fingrid Oyj makes no should observe such restrictions. representation or warranty, express or implied, as to the accuracy or completeness of the information contained in these materials and Nothing in these materials shall constitute or form part of any legal accordingly, Fingrid Oyj accepts no responsibility or liability (in negligence agreement, or any offer to sell or the solicitation of any offer to buy any or otherwise) for the information contained herein. securities or notes issued under Fingrid Oyj's commercial paper or medium-term note programs. These materials may contain forward-looking statements. These forward- looking statements are based on management’s current expectations and beliefs, as well as a number of assumptions concerning future events. These statements are subject to risks, uncertainties, assumptions and other important factors, many of which are outside management’s control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation.
Table of Contents • Executive summary 4 • Company overview 9 • Operations • Description of operations 26 • Efficiency of operations 36 • Earnings model 43 • Pricing 52 • Capex 58 • Operating environment 64 • Financials • Financial performance 74 • Financing 85 • Ratings 92
Executive summary 4 31.3.2019
Fingrid is the sole transmission system operator (TSO) in Finland Fingrid transmits Fingrid manages Fingrid continuously in its own network cross-border ensures power approximately connections system production 75% between Finland and consumption and Sweden, balance in Finland of electricity transmitted Estonia, Russia in Finland and Norway 5 Fingrid Debt Investor Presentation 31.3.2019
Fingrid's network covers entire Finland 14 300 km 10 reserve power of power lines over 114 substation plants 320 km 46 000 towers > 930 MW reserve of submarine cable 6 Fingrid Debt Investor Presentation 31.3.2019
Fingrid has achieved its targets in 2011 - 2018 2011 2018 Net profit MEUR 33 MEUR 183 Return Below regulatory allowed At regulatory allowed* Dividend MEUR 7 MEUR 171 Efficiency High benchmark study rankings High benchmark study rankings Investments In schedule and budget In schedule and budget Fingrid has a proven track record of continuously executing its defined strategy *Cumulative deficit MEUR -5 in 2016-2018 7 Fingrid Debt Investor Presentation 31.3.2019
Key investment considerations Regulation Fair, stable and predictable regulatory model Ownership The Finnish state owns 53% and Finnish financial institutions 47% Strategic importance Considered as strategically important holding to the Finnish state* Operating leverage Construction and maintenance of the network is outsourced Efficiency & Quality Fingrid is one of the most cost efficient and reliable TSOs worldwide Financials Continuous solid operating profitability Rating Fingrid benefits from AA-/A+ ratings (S&P, Fitch) * Source: Prime Minister's Office, Finland. (2016). Government resolution on state-ownership policy. Fingrid provides a solid long-term investment in a stable operating environment 8 Fingrid Debt Investor Presentation 31.3.2019
Company overview 9 31.3.2019
Vision We are a forerunner for electricity network operations • We are respected and influential in energy matters in Finland and abroad • We are a manifestation of professional skills and efficiency • We are able to renew ourselves and we boldly embrace changes 10 Fingrid Debt Investor Presentation 31.3.2019
Mission Fingrid is Finland’s transmission system operator. We secure reliable electricity for our customers and society and shape the clean, market-oriented power system of the future. 11 Fingrid Debt Investor Presentation 31.3.2019
Our values In all our operations, we are transparent impartial efficient responsible 12 Fingrid Debt Investor Presentation 31.3.2019
Balanced strategy CUSTOMERS AND SOCIETY We secure reliable electricity and a well-functioning electricity market for society. We offer affordable services that meet our customers’ needs. FINANCE We operate cost-effectively and bring value to our owners. INTERNAL PROCESSES Adequacy of the transmission system System operation Promoting the electricity market We carry out investments and maintenance We operate the national grid proactively We actively maintain and develop the safely and efficiently at the right time. and reliably. electricity market. PERSONNEL AND EXPERTISE An open, collaborative, renewing and target-oriented work community. 13 Fingrid Debt Investor Presentation 31.3.2019
Corporate level strategic choices World class efficiency Focus on core operations Customer oriented We utilize innovatively the best available technologies and the Outstanding execution of our core We develop our business operations in possibilities of digitalization. We operations. We do not seek to expand a customer oriented manner and for the maintain the required core into new businesses or to participate in benefit of Finland. competitive businesses. competences in-house. We cooperate with the best partners. Security and sustainability Integration oriented Market oriented During the transformation of the power We actively promote the integration of We trust that well functioning markets system we maintain the current high European and Baltic sea electricity produce the best and most innovative level of system operation. Sustainability markets taking into account the solutions in all areas. and safety are in focus in everything we interests of Finland. do. 14 Fingrid Debt Investor Presentation 31.3.2019
Strategy implementation – continuous improvement and change initiatives Real time markets RAC on track Keeping the nation Decentralized OL3 to the network powered and the markets resources on the rolling. markets Carrying out investments Digital substation Data in order and safely and effectively in productive use Implementing Fingrid in the pocket network codes Engaging culture 15 Fingrid Debt Investor Presentation 31.3.2019
Fingrid operates in a matrix organisation structure Fingrid Oyj Jukka Ruusunen, President & CEO 84% of Fingrid's GRID ASSET POWER MARKETS FINANCE AND ICT HRD LEGAL AND COMMUNICATI SERVICES MANAGEMENT SYSTEM TREASURY ADMINISTRATI personnel holds AND OPERATIONS ON VE AFFAIRS PLANNING an academic degree Full-time, permanent employees at the end of 2018 Asta Kari Kuusela* Reima Päivinen Sihvonen- Jussi Jyrinsalo Jan Montell Kari Suominen Tiina Miettinen Marina Louhija Punkka** Customers Executive Jussi Jyrinsalo management team Finance and business development Jan Montell is highly regarded Adequacy of transmission system Kari Kuusela in the Finnish Reima Päivinen System operation Asta business community Promoting the electricity market Sihvonen-Punkka Personnel and expertise Tiina Miettinen Fully implemented matrix structure ensures efficient strategy implementation and personnel engagement *Mr. Kari Kuusela will retire in July 2019 and will be replaced by Mr. Timo Kiiveri **Ms. Asta Sihvonen-Punkka nominated as deputy CEO as of July 2019 16 Fingrid Debt Investor Presentation 31.3.2019
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