Financial responsibility

To Caruna, financial responsibility means a profitable business that forms the basis for the long-term development of our operations and for the maintenance of reliable electricity distribution.

Financial responsibility and management

Our responsibility as a company is to ensure that our business is profitable and to improve our operations and network assets with a long-term view. The profitability and competitiveness of our business enables us to be a reliable employer and a significant investor in the networks and buyer of services.
 

We should achieve the targeted financial performance taking into consideration the expectations and needs of the different stakeholders and the environment.

We should achieve the targeted financial performance taking into consideration the expectations and needs of the different stakeholders and the environment. Efficient and responsible practices cover good governance principles, open and transparent communications, an operational model able to ensure the well-being of the personnel, active interaction with stakeholders and consideration of environmental values.

Caruna manages its financial responsibilities in accordance with the company’s general leadership principles. Clearly defined responsibilities, goals, ongoing monitoring, and internal supervision are management cornerstones. In addition to these, risk assessment is critical for financial management. A comprehensive coverage of market and operative risks allows us to optimise Caruna’s financial performance and minimise any factors threatening its business operations.

The Caruna Finances unit is in charge of financial reporting and verifying the accuracy of the reports every month. The Group has adequate financial reporting systems used in accordance with principles of internal control.

The Caruna Finances unit provides the Management Team, the Board of Directors and the Audit Committee with Group, company and business unit level reports on financial performance.

The Board uses this information to assess the Group’s current and future financial position. The company’s financial statements are approved by the Board.

In addition to the Audit Committee and internal audits, the accuracy of financial reporting and functionality of processes are audited by an independent authorised public audit company. The Group’s consolidated financial statements are prepared in accordance with IFRS standards, and the legal entity financial statements are prepared according to Finnish Accounting Principles.

Direct economic impact

Total income from customers (MEUR)

Payments to suppliers (MEUR)

Compensation to personnel (MEUR)

  • Salaries, remunerations, and social security costs

Compensation to investors and shareholders (MEUR)

  • Financing costs to shareholders
  • Financing costs to others

Support in public interest and taxes (EUR thousands)

We invested MEUR

into the development of our electricity network in 2015.

DIRECT ECONOMIC IMPACT

Direct economic value generated and distributed, EUR thousand    2015 2014*
Income from customers
Net sales  287,523  180,438
Other operating income 9,184 4,979
  Fair value adjustments -2,001 -1,398
Total   294,706 184,019
Payments to suppliers
 Acquired materials and services 72,631 44,126
 Other expenses 69,761 110,685
Tax on property -184 -101
Sponsoring -113
  Total   142,095 154,710
Compensation to personnel
Salaries, remunerations, and social security costs 24,001 18,293
Total   24,001 18,293
Compensation to investors and shareholders
Financing costs to shareholders 88,747  66,466
Financing costs to others 81,274 35,755
Total  170,021  102,241
Support in public interest and taxes
Income tax from the financial period 366  822
Tax on property 184 101
Sponsoring 113
Total   663 923
 
ECONOMIC VALUE GENERATED -42,074 -92,148

 

*In 2014 Caruna Oy and Caruna Espoo Oy have been consolidated into the Caruna Group during the period 1 April – 31 December, Suomi Power Networks Sähkönsiirto et Cie SNC during the period 1 April – 18 June and the other companies for the whole year of 2014.

The most significant cash flows in Caruna’s business comprise electricity distribution fees, purchases from service and goods suppliers, compensation for shareholders and investors, network renewal and maintenance investments, personnel wages, and tax-like charges.

We are committed to improving our networks and the reliability of our electricity distribution activities by 2028, as required by the Electricity Market Act. We invested MEUR 173 into the development of our electricity network in 2015 and MEUR 98 in 2014.

Indirect economic impacts

Caruna’s operations also have indirect economic impacts.

Caruna has 270 employees, and in 2015 Caruna also employed roughly 2,000 contractors.

Caruna has 270 employees, and in 2015 Caruna also employed roughly 2,000 contractors in various projects around Finland. In addition to that, Caruna employs indirectly 4,000 people.

Caruna follows Finnish legislation in the payment, collection, accounting, and reporting of its taxes. For Caruna, accurate and timely actions in filing tax returns and dealing with other legislator obligations is of primary importance.

The term ‘tax footprint’ refers to the income the society receives from a company’s corporate taxes and tax-like payments. In addition to direct and indirect taxes, Caruna’s tax footprint includes reports on tax withheld from employee wages and social security contributions.

CARUNA’S TAX FOOTPRINT 2015 2014*
 Taxes borne Income tax 366 822
Unemployment insurance premiums 680 409
Social security contributions 331 301
Tax on property 184 101
Transfer tax 20 41,255
Total taxes borne 1,581 42,888
Collected and accounted tax Value-added tax (net accounted) 42,639 29,039
Electricity tax 199,340 100,490
Withholding tax 6,180 4,215
Total taxes collected 248,159 133,744


*In 2014 Caruna Oy and Caruna Espoo Oy have been consolidated into the Caruna Group during the period 1 April – 31 December, Suomi Power Networks Sähkönsiirto et Cie SNC during 1 April – 18 June and the other companies for the whole year of 2014.

The tax footprint summary includes taxes and tax-like payments that Caruna is legally obliged to pay or collect. However, the summary does not cover taxes included in the purchase price of products or services and that Caruna is not legally required to report.

Risk management

Caruna ensures the continuity of its operations by identifying and managing risks.

Exceptional weather conditions

Caruna ensures the continuity of its operations by identifying and managing risks.

Caruna’s most significant operational risks relate to exceptional weather conditions, such as strong storms, heavy snowfall and exceptionally severe frost, which can affect the distribution and transmission networks’ reliability of supply. The main measures we can use to prevent distribution disturbances are clearing power line corridors and building the networks underground, where they remain protected from fallen trees because of strong winds or heavy snowfall. We also develop our network structures to allow the isolation of any faulty sections during outages. This, in turn, helps us minimise the number of customers affected by the outage.

Should a disturbance occur, it is crucially important to be adequately prepared and have contingency plans in place.

Unfavourable changes in the regulation environment

In the long run, operational risks arise particularly from changes in regulations, whereas in the short term they also result from interpretations of regulations and rules. However, the Finnish regulatory environment can be considered stable. The new regulation period that commenced in 2016 offers an eight-year long planning frame instead of a four-year one.

Supplier risk

Our suppliers may occasionally be unable to deliver ordered network projects and services for various reasons, such as liquidation, for example. Caruna’s procurement model ensures Caruna remains in a good and healthy position for competition in each of its network areas. Should any contractor-specific problems occur, our systematic procurement management model generates fast signals from the market, consequently enabling us to step in and carry out necessary corrective actions early on.