Equity and dividend distribution
5.5 Equity and dividend distribution
The shareholders’ equity is composed of two share classes. The shareholder breakdown and voting rights are illustrated in the following graphs.
|SHAREHOLDERS BY CATEGORY 31 DEC|
|Number of shares||Of all shares
|Financial and insurance institutions||1,557||46.83||29.12|
|Shareholders, 31 Dec 2016|
|Number of shares||Of all shares
|Republic of Finland, represented by the Ministry of Finance|
|Aino Holding Ky||878||26.41||11.74|
|National Emergency Supply Agency||828||24.90||33.20|
|Mutual Pension Insurance Company Ilmarinen||661||19.88||17.15|
|Imatran Seudun Sähkö Oy||10||0.30||0.13|
|Elo Mutual Pension Insurance||1||0.03||0.01|
|OP Insurance Ltd||1||0.03||0.01|
|The State Pension Fund||1||0.03||0.01|
The company's share capital is EUR 55,922,485.55. Fingrid shares are divided into Serias A shares and Series B shares. The number of Series A shares is 2,078 and the number of Series B shares is 1,247.
The maximum number of shares is 13,300, as in 2015. The shares have no par value.
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 minimum dividend specified below from the funds available for profit distribution. If the annual minimum 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 minimum 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.
Equity is composed of the share capital, share premium account, revaluation reserve (incl. hedging and fair value reserves), translation reserve, and retained earnings. The hedging reserve includes changes in the fair value of hedging instruments for loss power. The translation reserve includes translation differences in the net capital investments of associated companies in accordance with the equity method of accounting. The profit for the financial year is posted in retained earnings.
Share premium account
The share premium account includes the difference between the counter value of the shares and the value obtained. The share premium account consists of restricted equity as referred to in the Finnish Limited Liability Companies Act. The share capital can be increased by transferring funds from the share premium account. The share premium account can be decreased in order to cover losses or, under certain conditions, it can be returned to the owners.
The revaluation reserves include changes in the fair value of derivative instruments used for hedging cash flow (hedging reserve) and changes in the fair value (fair value reserve) of available-for-sale investments (publicly quoted and unquoted securities).The company discontinued hedge accounting in 2014 and changes in the fair value of derivatives are no longer transferred to the hedging reserve. Changes in the value of the hedging reserve are caused solely by the dissolution of the previously recorded fair value and its recognition in the income statement, EUR 11.6 million annually in 2015 and 2016, taking into account the deferred tax rate (20%). The changes in the fair value reserve are due to a change in the fair value of available-for-sale shares minus taxes (20%). In 2016, the company gave up a timeshare for EUR 152,000.
Changes to equity funds during the financial year are presented in the statement of changes in equity.
|21. SHAREHOLDERS BY CATEGORY|
|The share capital is broken down as follows||Number of shares||Of all shares
|Series A shares||2,078||62.50||83.33|
|Series B shares||1,247||37.50||16.67|
The purpose of Fingrid’s dividend policy is to ensure that the shareholders receive a reasonable return on their investment while also maintaining the company’s financial position such that it enables long-term implementation of the strategy and supports operational flexibility.
Fingrid Oyj's distributable funds in the financial statements total EUR 175,954,253.06. In 2016, EUR 90.0 million was paid in dividends (EUR 65.0). Since the closing date, the Board of Directors has proposed that a dividend of EUR 37,536.09 for Series A shares and EUR 16,038.49 for Series B shares be distributed per share (2015: EUR 33,686.24 for Series A shares; EUR 16,038.49 for Series B shares), totalling EUR 98.0 (90.0) million.
The distributable funds are calculated on the basis of the parent company’s equity. Dividends are paid based on the distributable funds of the parent company.
Fingrid updated its dividend policy in 2014. The guiding principle for Fingrid’s dividend policy is to distribute substantially all of the parent company profit as dividend. When making the decision, however, the economic conditions, the company’s near term investment and development needs as well as any prevailing financial targets of the company are always taken into account. The graph below indicates the differences between the consolidated IFRS income statement and the parent company’s FAS income statement.
The Board of Directors' proposal concerning dividend distribution is not recorded in the financial statements. The liability and equity is recognised only after a decision is made by the Annual General Meeting of Shareholders