Glossary

To help you better understand our business we have opened up some of the industry-specific and financial terminology used on our website. Use the links below to view terms.

Definition of key ratios A-I

Average share price = Amount traded in euros during the period/Number of shares traded during the period

Capital employed = Total assets - non-interest bearing liabilities - deferred tax liabilities - provisions

Cash flow per share = Net cash from operating activities/Average number of shares during the period

Comparable net assets = Net assets adjusted for non-interest bearing assets and liabilities arising from financial derivatives hedging future cash-flows where hedge accounting is not applied according to IAS 39

Comparable operating profit = Operating profit - non-recurring items - other items effecting comparability

Comparable return on net assets, % = Comparable operating profit + Share of profit (loss) in associated companies and joint ventures (adjusted for IAS 39 effects)/Comparable net assets average x 100

Dividend yield, % = Dividend per share/Share price at the end of the period x 100

Earnings per share (EPS) = Profit for the period - minority interest/Average number of shares during the period

EBITDA (Earnings before interest, taxes, depreciation and amortisation)continuing operations = Operating profit continuing operations + Depreciation, amortisation and impairment charges continuing operations

Equity per share = Shareholder's equity/Number of shares at the end of the period

Equity-to-assets ratio, % = Total equity including minority interest/Total assets x 100

Funds from operations (FFO) = Net cash from operating activities before change in working capital

Gearing, % = Interest-bearing net debt/Total equity x 100

Gross investments in shares = Subsidiary shares, shares in associated companies and other shares in available for sale financial assets. Investments in subsidiary shares are net of cash and grossed with interest-bearing liabilities in the acquired company

Interest-bearing net debt = Interest-bearing liabilities - cash and cash equivalents

Interest coverage = Operating profit/Net interest expenses

Definition of key ratios J-Z

Market capitalisation = Number of shares at the end of the period x Share price at the end of the period

Net assets = Non-interest bearing assets + interest-bearing assets related to the Nuclear Waste Fund - non-interest bearing liabilities - provisions (non-interest bearing assets and liabilities do not include finance related items,tax and deferred tax and assets and liabilities from fair valuations of derivatives where hedge accounting is applied)

Net debt / EBITDA = Interest-bearing net debt/Operating profit + Depreciation, amortisation and impairment charges

Net debt / EBITDA continuing operations = Interest-bearing net debt/Operating profit continuing operations + Depreciation, amortisation and impairment charges continuing operations

Non-recurring items = Mainly capital gains and losses

Other items effecting comparability = Includes effects from financial derivatives hedging future cash-flows where hedge accounting is not applied according to IAS 39 and effects from the accounting of Fortum´s part of the Finnish Nuclear Waste Fund where the asset in the balance sheet cannot exceed the related liabilities according to IFRIC interpretation 5.

Payout ratio, % = Dividend per share/Earnings per share x 100

Payout ratio continuing operations, % = Dividend per share continuing operations/Earnings per share continuing operations x 100

Price/earnings (P/E) ratio = Share price at the end of the period/Earnings per share

Return on capital employed, % = Profit before taxes + interest and other financial expenses/Capital employed average x 100

Return on capital employed continuing operations, % = Profit before taxes continuing operations + interest and other financial expenses continuing operations/Capital employed continuing operations average x 100

Return on net assets, % = Operating profit + Share of profit (loss) in associated companies and joint ventures/Net assets average x 100

Return on shareholders' equity, % = Profit for the year/Total equity average x 100

Trading volumes = Number of shares traded during the period in relation to the weighted average number of shares during the period

Energy

Base-load power = Power generation that meets steady year-round demand for electricity.

CHP = Combined heat and power generation. A method of power generation whereby the thermal energy passed through a turbine is utilized for industrial purposes and/or district heating.

Coal-fired power plant = A power plant in which a steam turbine is driven by the steam produced by burning coal in a boiler.

Combined cycle gas turbine power plant = A power plant in which exhaust gases, typically from the combustion of natural gas, are used to drive a gas turbine directly and then are routed through a boiler to produce steam to drive a steam turbine.

District heating = Means of providing heating to a number of buildings from a centrally located source.

Gas turbine = A high-speed machine used for converting heat energy from the exhaust gases produced during combustion into mechanical work. Natural gas or light fuel oil can be used as fuel.

Grid = Network of high voltage lines used for electricity transmission.

Hydroelectric power = Electricity generated by utilizing the downward movement of water.

Hydroelectric power plant = A power plant utilizing a water flow to turn hydro-turbines.

Intermediate-level waste = Nuclear waste which contains an intermediate amount of radioactive substances, the treatment of which requires radiation protection measures but not cooling. Intermediate-level wastes include ion-exchange resins used for purifying nuclear reactor water.

Low-level waste = Nuclear waste which contains a small amount of radioactive materials, the treatment of which requires only minor radiation protection measures.

Natural gas = Any hydrocarbons or mixture of hydrocarbons and other gases consisting primarily of methane which at normal operating conditions is in a gaseous state.

Nord Pool = The Nordic electricity exchange.

Nuclear fuel = Material containing fissile nuclides which, when placed in a reactor, enables a self-sustaining nuclear chain reaction.

Nuclear power plant = A power plant where energy is generated by a controlled nuclear fission reaction.

Peak-load power = Electricity generation required to meet peak-load demand for electricity.

Peat = Soil material consisting of partially decomposed organic matter, formed by the slow decay of aquatic and semi-aquatic plants in swamps and bogs; used as fuel in energy production.

Pressurized water reactor = A light-water nuclear reactor in which heat is transferred from the reactor core to a heat exchanger via water kept under high pressure, so that high temperatures can be maintained in the primary system without boiling the water. Steam is generated in a secondary system.

Process steam = Steam used for thermal energy for industrial purposes.

Renewable energy = Renewable energy sources include wood and biomass, as well as solar, wind and tidal energy, and hydroelectric power.

Spot market = With respect to commodities such as oil, a term used to describe the international trade in one-off cargoes or shipments, in which prices closely follow demand and availability. With respect to electricity, short-term daily spot trading.

Transformer = Device that transforms the voltage level of electricity

Sustainability

Acid deposition (Acid rain) = The fallout of sulphur and nitrogen oxides released into the atmosphere with combustion gases as sulphuric and nitric acid.

Acidification = The change in the pH of soil and water caused by acid deposition.

Biodiversity = The existence of a wide variety of plant and animal species in their natural environment (diversity in habitats and species and genetic diversity within species).

Carbon dioxide, CO2 = A gas generated when fossil fuels are burned, see greenhouse gas.

Certification = Verification of compliance with an environmental, safety or quality management system standard (e.g. ISO 14001). Verification is made by an accredited organisation.

Combustion gas emissions = Gaseous by-products, such as CO2, SO2 and NO2, generated in the combustion of fuels.

Dow Jones Sustainability Indexes = The Dow Jones Sustainability Indexes track the financial performance of the leading sustainability-driven companies worldwide based on specific criteria.

Eco-labelled energy = Electricity produced in accordance with certain criteria in an environmentally benign manner and with renewable sources of energy. For instance, ”Norppa” electricity in Finland and ”Bra miljöval” in Sweden.

Environmental permit = A licence defining maximum environmental values, granted by authorities.

Fossil fuel = Fuel derived from fossilised organic matter found in the earth’s crust. Such fuels include coal, oil and natural gas. Fossil fuels are non-renewable.

Greenhouse gas = A gas that absorbs heat radiation and traps it in the atmosphere, thus strengthening the greenhouse effect. The main greenhouse gases are carbon dioxide and methane.

ISO, International Organization for Standardization = An international standard-setting body whose quality, environmental and safety management standards (ISO 9000/14000/18000 series) have achieved an established position in industry.

Lost workday injury frequency, LWIF = The number of injuries resulting in an absence of more than one day per million working hours.

Low-NOx burner = A burner type generating lower amounts of nitrogen oxides.

Methane, CH4 = A hydrocarbon compound. Natural gas consists of more than 99 per cent methane.

Nitrogen oxides = NO and NO2 are produced during the combustion of fuel at power plants.

Nuclear waste = The waste containing radioactive matter created at nuclear plants.

Radioactivity = The emission of particle or electromagnetic radiation from atomic nuclei and the decay into nuclei with less energy.

Renewable energy = Renewable energy sources include wood and biomass, as well as solar, wind and tidal energy, and hydroelectric power. Renewable energy sources do not cause greenhouse gas emissions.

Small particles = Small particles of less than 0.01 millimetre in diameter naturally present in the atmosphere and created during combustion.

Sulphur dioxide, SO2 = Generated in the combustion of fuels containing sulphur.

Sustainable development = Development that fulfils the needs of present generations without compromising the ability of future generations to fulfil their own needs. Sustainable development is considered to encompass three dimensions: environmental, social and economic.

4/8/2011

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Glossary

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