FORTUM’S FINANCIAL STATEMENTS 1999

Fortum Group’s net sales in 1999 were EUR 8,232 million (1998: EUR 8,494 million). Operating profit increased by 21% to EUR 721 million. Profit before extraordinary items was EUR 510 million  (EUR 377 million). Earnings per share rose by 51% to EUR 0.41. Shareholders’ equity per share was EUR 6.00 (EUR 5.06).
           
Our results improved significantly towards the end of 1999. At the beginning of the year, the price of crude oil was low, but increased in March. In June-July, it strengthened further, and production at the Åsgard oil field had just begun. Our performance was further boosted as a result of internal improvement measures and gains on the sales of non-core assets.
 
The Board of Directors propose that Fortum pays a dividend of EUR 0.18 a share in respect of 1999.
 
Prospects: We expect the market price of crude oil to decrease from its current high level, while we anticipate that the market price of electricity will continue at its low level. On this basis, our management estimates that our 2000 profit before extraordinary items will be somewhat lower than in 1999.
 
Key figures
 
 
  1999
  1998
Change %
Net sales, EUR million
 8,232
 8,494
- 3
Operating profit, EUR million
   721
   595
+21
Profit before extraordinary items, EUR million
 
   510
 
   377
 
+35
Investments, EUR million
 1,059
 1,702
-38
Interest-bearing net debt, EUR million
 3,818
 3,898
- 2
Return on capital employed, %
 
   8.6
 
   7.8
 
Return on shareholders’ equity, %
   7.7
   5.7
 
Gearing, %
    79
    93
 
Equity-to-assets ratio, %
    40
    38
 
Earnings per share, EUR
  0.41
  0.27
+51
Shareholders’ equity/share, EUR
  6.00
  5.06
+18
Average number of employees
17,461
19,003
 -8
 
 
 
 
SUMMARY OF THE BOARD OF DIRECTORS’ REPORT ON ACTIVITIES FOR 1999
 
Fortum focuses on energy. In 1999, we divested a significant number of operations and assets which were not energy related and the reorganisation of the ownership of Gasum Oy, as required by the European Commission, was completed. As a result of the divestment of non-core assets, Fortum realised EUR 1.1 billion in cash, and recorded EUR 646 million in capital gains.
 
Our organisational efficiency was improved from 1 January 2000 when the former division-based structure was replaced with a flatter, and more decentralised, corporate governance model. As part of this restructure, the former corporate staffs and divisional staffs were combined, as a result of which jobs in these units reduced by approximately a quarter. In December, we relocated our head office to Keilaniemi, Espoo.
 
Market review of principal activities
 
Oil and Gas Upstream
 
The price of crude oil almost tripled during 1999. At the beginning of the year, the light Brent Blend hovered around USD 10 a barrel but, from March, it began to rise, and went as high as USD 27 a barrel before the end of the year. During the year overall, Brent traded at approximately USD 18 a barrel compared with approximately USD 13 a barrel in 1998.
 
In 1999, we produced an average of 32,700 oil-equivalent barrels of oil and gas a day, or 1.65 million tonnes a year. Our share of production from the Åsgard field, which came on stream in May, is 7%. Gas production at Åsgard is scheduled to begin at the end of 2000.
 
Oil Refining and Marketing
 
The international refining margin was extremely slim at the beginning of the year, but returned to a more normal level towards the year end. The annual average was about a half of the 1998 figure and was less than USD 1 a barrel. The refining margin of our own refineries was, however, better than the international reference margin.
 
In 1999, bulk sales of our petroleum products in Finland were approximately 7.9 million tonnes (1998: 8.3 million tonnes). Sales of our petroleum products to other countries rose by 8% to 4.8 million tonnes.
 
Crude oil trading operations were adjusted to meet the needs of oil supply and exports. The net sales of the trading function amounted to approximately EUR 790 million, down 27% on 1998.
 
Our retail and direct sales of petroleum products in Finland rose to 3.8 million tonnes (1998: 3.5 million tonnes). While sales also developed favourably in the Baltic countries and Poland, there was a noticeable fall in Russia.
 
Power and Heat Generation and Sales
 
The system price of electricity markets in the Nordic countries was low, at an average of EUR 13.5 (EUR 13.8) per megawatt-hour. The Nordic countries used a total of 374 terawatt-hours of electricity in 1999, unchanged from the previous year.
 
Our electricity sales in the Nordic countries were 41.6 terawatt-hours (44.3 TWh), of which 29.6 TWh (29.1 TWh) was sales in Finland. In Sweden, electricity sales fell to 12.0 TWh (15.2 TWh) including 50% of Birka Energi AB’s sales. Outside the Nordic countries, sales rose to 2.2 TWh (0.2 TWh). The average price of our electricity decreased by 11% from the previous year.
 
Heat sales rose to 15.7 TWh (13.4 TWh).
 
Electricity Distribution
 
Distribution prices of electricity were stable. Our subsidiaries and associated companies distributed 4.0 TWh of electricity (3.5 TWh) to Finnish customers and 8.6 TWh (6.9 TWh) to Swedish customers, including 50% of Birka Energi AB’s electricity distribution. In Estonia, we distributed 0.1 TWh of electricity.
 
Net sales
 
At EUR 8,232 million, the Group’s net sales for 1999 fell by 3% from the previous year (EUR 8,494 million). The decline was mainly attributable to the divestments of non-core assets, the change of Gasum from a subsidiary to an associated company, cuts in the volume of oil trading, and a decrease in the price of electricity. The most significant units sold were Neste Chemicals and Enermet. In contrast, net sales were boosted by the increase in the price of crude oil and the appreciation of the US dollar.
 
Breakdown of net sales by market area showed no material change. Finland and the rest of the Nordic countries constitute our most important market area: together they accounted for 61% of our 1999 net sales.
 
Result
 
There was a significant increase in net profit for the period. In particular, our performance benefited from the price of crude oil, which increased during the review period, the appreciation of the US dollar, increased gains on the sales of fixed assets, the formation of Birka Energi, and the savings made from improving the efficiency of our operations. The results were, however, decreased by the low market price of electricity and the reduced volume of sales.
 
Operating profit for 1999 increased by 21% to EUR 721 million. It was boosted by inventory gains, which was a result of higher oil prices and principally affected statutory crude oil stockpiling, and the appreciation of the coal stock, which was a result of higher coal prices. These totalled EUR 81 million (in 1998, inventory loss and write-down on coal stock amounted to EUR 46 million).
 
Operating profit includes gains on the sale of fixed assets and share holdings, at EUR 155 million (EUR 81 million). The most significant of these were the divestments of Asko shares, tankers, and gas turbines. It also includes a loss on derivatives made by Birka Energy, of which our share was EUR 18 million. The operating profit for the reference year 1998 included EUR 34 million for liability for nuclear waste disposal.
 
Breakdown of operating profit (EUR million):
 
1999                  1998
Oil and Gas Upstream                                           82                         9
Oil Refining and Marketing                                   182                      108
Power and Heat Generation and Sales                 245                      241
Electricity Distribution                            122                      123
Service                                                                 12                             8
Engineering                                                             12                            16
Other operations                                             -24                        10
Eliminations                                                          -17                          -12
Total                                                                 614                          503
Discontinued operations                             107                        92    
Total                                                                 721                          595
 
Excluding Birka Energi, our associated companies have been consolidated by the equity method. Our share of the results of these companies totalled EUR 36 million (EUR 42 million). Birka Energi has been consolidated by using the proportionate method on the basis of 50% ownership.
 
Our net financing expenses were EUR 211 million (EUR 218 million). Profit before extraordinary items was EUR 510 million (EUR 377 million).
 
Profit before taxes was EUR 970 million (EUR 372 million). Extraordinary items principally comprised divestments carried out as part of the restructuring of the Group. The sale of Gasum shares and the business operations of Neste Chemicals and Enermet contributed approximately EUR 491 million. In connection with the ruling on MTBE by the authorities of California, we made an additional depreciation of EUR 26 million on our Edmonton, Canada, MTBE facility.
 
Taxes for the financial year totalled EUR 245 million (EUR 132 million).
 
Net profit for the period was EUR 703 million (EUR 213 million) and earnings per share EUR 0.41 (EUR 0.27). Return on capital employed was 8.6% (7.8%) and return on shareholders’ equity 7.7% (5.7%).
 
Financing and financial position
 
The Group’s financial position improved during the year. At the year end, gearing (net liabilities/shareholders’ equity) was 79% (93%).
 
Interest-bearing net debt was EUR 3,818 million (EUR 3,898 million) at the end of the year. Share acquisitions carried out during the review period, on the one hand, and cash proceeds resulting from the divestment of major assets, on the other, had a significant influence on interest-bearing net debt. Our Finnish commercial paper programmes were combined into a single EUR 500 million programme, when the ECP programme dominated in US dollars was discontinued.
 
The Group's net financing expenses were at the previous year’s level. Net financing expenses accounted for 2.6% (2.6%) of net sales.
 
The Group’s liquidity continued to be good. At the end of the year, liquid assets totalled EUR 775 million (EUR 564 million). The increase was a result of the divestment of Neste Chemicals, completed in November. In addition, we had a total of EUR 630 million of undrawn syndicated loans.
 
Our most important loan currencies, including finance-leasing arrangements, were the Swedish krona (approximately 63% of all loans), euro (approximately 18%), and the US dollar (approximately 17%). Of the share of the Swedish krona, about a half came from Birka Energi. At the end of the year, the average interest rate of the loans, after hedging arrangements, was 5.5%.
 
Investments
 
During 1999 we invested EUR 1,059 million (EUR 1,702 million), a major portion of which was accounted for by acquisitions by the Power and Heat sector. The total includes EUR 8 million (EUR 785 million) of interest-bearing net liabilities of the acquired subsidiaries at the time of acquisition.
 
The share acquisitions of the year totalled EUR 328 million (EUR 1,064 million), and the most significant share acquisitions, excluding net liabilities at the time of acquisition, were:
 
Espoon Sähkö Oyj                            EUR 87 million
Länsivoima Oyj                              EUR 39 million
Koillis-Pohjan Sähkö Oy            EUR 21 million
Lahden Lämpövoima Oy                        EUR 91 million
Lidingö Energi AB, Sweden          EUR 34 million
          
Our most important investments were in the Åsgard oil and gas field in Norway and the Grangemouth power plant in Great Britain. By the end of 1999, we had invested EUR 500 million in Åsgard and are anticipating investing a further EUR 50 million to begin gas production at the end of 2000, as planned.
 
By the end of 1999, we had invested EUR 107 million in the construction of the Grangemouth combined heat and power (CHP) plant. Grangemouth is scheduled for completion in 2000. It will have electricity generation capacity of 130 MW and steam generation capacity of 250 MW.
 
Divestments
 
In May, we sold our 50% holding in Gasum Oy as required by the European Commission. The shares were acquired by the Finnish State, Ruhrgas Energie Beteiligungs-AG, and a Finnish industrial consortium. As a result of the transaction, our shareholding in Gasum reduced to 25%. The transaction price of EUR 290 million resulted in a capital gain of EUR 324 million.
 
In August, we sold the business operations of Enermet Oy to the private equity fund Industri Kapital. The transaction price of EUR 98 million resulted in a capital gain of EUR 68 million. As part of the transaction, we acquired a 30% holding in the newly-established Enermet Group Oy.

In October, we sold four of our tankers and agreed to charter the vessels back to our shipping unit. For the total sale price of EUR 43 million, a capital gain of EUR 27 million was entered.
 
In February, the Chemicals business was incorporated in Neste Chemicals Oy. In November, we divested Neste Chemicals to Industri Kapital. The transaction price of EUR 505 million resulted in a capital gain of EUR 99 million. 
 
In addition to the above mentioned divestments, we sold stocks and shares and, for example, peak load gas turbines.
 
Changes in Group structure
 
At the beginning of 1999, Neste Oyj’s name was changed to be Fortum Oil and Gas Oy, Imatran Voima Oy’s name to Fortum Power and Heat Oy, IVO Generation Services Ltd to Fortum Service Oy, and IVO Power Engineering Ltd to Fortum Engineering Ltd.
 
Following the share acquisitions in January 1999, our holding in Koillis-Pohjan Sähkö Oy increased to 99%, and in February, Länsivoima Oyj, our subsidiary, acquired 28% of Espoon Sähkö Oyj’s shares.
 
In August 1999, we bought somewhat more than 10% of Länsivoima’s shares from Kemijoki Oy. Following the completion of a redemption offer at the end of the year, our share of Länsivoima rose to 78%.
 
During the year, Birka Energi acquired the shares of Lidingö Energi AB.
 
Towards the end of the year, Fortum and Birka Energi established a new company, Svensk Naturgas AB, to investigate the natural gas markets in the Stockholm area.
 
Research and development
 
Investment in research and development, at EUR 72 million, represented 0.9% of net sales.
 
In Oil Refining and Marketing, we continued the development of motor fuels and motor oils with increasingly low environmental impact. In Power and Heat Generation and Sales, we focused on customer-orientated additional services that employ the latest information and telecommunications technologies.
 
Environment
 
Our production facilities continued to develop ISO-14001-compliant environmental systems and BS 8800-compliant safety systems. Process safety at our production facilities developed well, and the number of injuries and deviations in safety decreased from 1998.
 
During the year, operations of our units, with the exception of a few minor infringements, complied with valid permits and environmental regulations. Fortum’s management is not aware of any environmental liability-related cases that would have a material impact on its financial position. 
 
Business development
 
Fortum continues to consolidate its strategy and geographical focus. We aim to continue to focus our operations on the energy sector, particularly on those areas in which we are most competitive and which offer the best opportunities for creating value. This means that we are likely to develop our business operations in northern Europe.
 
The geographical focus of investments geared to support growth will be on the Nordic countries and on Germany. In the rest of the Baltic Rim, we aim to capitalise on growth opportunities. Our investments will be targeted towards electricity distribution and generation, and, in oil refining, on environmentally-benign motor fuels and speciality products.
 
We aim to create a flexible structure, which is in harmony with market conditions. As a part of this structural development, our objective is to combine the power and electricity distribution businesses of Länsivoima Oyj and Fortum.
 
Following changes in the market, we are focusing our business on energy end-users. At Fortum’s Energy House, we are continuing the development of customer service concepts and related IT applications.
 
As part of the strategic development of our principal businesses, our engineering operations will be focused to meet the strategic needs of the Oil and Gas, and Power and Heat sectors. As to our other engineering operations, we will make decisions about the operating options during the coming year.
 
We will shift our focus in oil and gas exploration and production (E&P) to gas. Because of the market convergence of the power generation and gas businesses, we will develop operations in tandem with those of the gas business.
 
Option schemes
 
At the beginning of the year, two employee incentive schemes were introduced. As part of the management option scheme, 130 people  who were nominated by the Board of Directors, subscribed for stock options which entitle them to subscribe for Fortum shares between 1 October 2002 and 1 October 2005. The subscription price is a minimum of EUR 5.61, with the precondition that Fortum’s earnings per share and share price performance are at least on a par with, or better than, the average of a peer group made up of European listed companies. As a result of the subscriptions made under this scheme, our share capital may increase by a maximum of FIM 300 million, or 15 million shares.
 
In April, we issued a bond loan with warrants, to be subscribed for by the employees. The maximum amount of the bond loan was FIM 25 million, but as 1,859 employees subscribed for it, to a value of FIM 41 million, the allocations had to be scaled down. The shares attached to the scheme can be subscribed for from 17 May 2002 to 17 May 2005, at a maximum price of EUR 5.03, and may result in our share capital rising by a maximum of FIM 148 million, or 7.4 million shares.
 
Employees
 
In 1999, Fortum Group employed an average of 17,461 people (19,003 in 1998), and at the end of the year 15,048 people (18,201). The decrease was principally attributed to Gasum, Enermet, and Neste Chemicals, which together resulted in a decrease of about 3,500 people. At the end of 1999, Fortum Corporation, the Group’s parent company, employed 37 people. At the beginning of 2000, a total of 348 employees of our subsidiaries became employees of Fortum Corporation.
 
Group management
 
The Supervisory Board has 17 members. The Chairman of the Supervisory Board is Ilkka-Christian Björklund and the Deputy Chairman is Ben Zyskowicz. The meetings of the Supervisory Board are attended by four employee representatives.
 
The members of Fortum’s Board of Directors are Matti Vuoria (Chairman), Krister Ahlström (Deputy Chairman), Jaakko Ihamuotila, L.J. Jouhki, Heikki Marttinen, Heikki Pentti, and Erkki Virtanen. Gerhard Wendt retired from the Board on reaching the age of 65 in November.
 
The President and CEO of the company is Heikki Marttinen.
 
As part of the new corporate governance model, at the beginning of 2000, the Board of Directors appointed heads for the Group’s four sectors: Veli-Matti Ropponen, Tapio Kuula, Pekka Päätiläinen, and Anders Palmgren.
 
Events after the review period
 
In January 2000, the agreement to acquire the entire share capital of the German utility Elektrizitätswerk Wesertal GmbH for EUR 390 million, which had been signed in September 1999, was finalised. Wesertal sells electricity, heat and gas. Through its shares in power plants, it has access to about 550 MW of electricity generation capacity.
 
Also in January 2000, we signed a letter of intent with Stora Enso Oyj, the Finnish forest industry company, through which we will acquire Stora Enso’s power assets outside mills, excluding those shares in the Finnish power company Pohjolan Voima Oy that Stora Enso owns. The letter of intent covers a total of 1,511 MW of electricity generation capacity with an annual electricity generation of 6.7 TWh. The transaction also covers regional electricity distribution in Sweden. The debt-free value of the contract is approximately EUR 1.85 billion. The closing of this transaction is subject to approval by e.g. the competition authorities, but the objective is to complete the transaction during spring 2000.
 
Prospects for 2000
 
We expect the market price of crude oil to decrease from its current high level, while we anticipate the market price of electricity remaining at its low level. On this basis, our management estimates that our 2000 profit, before extraordinary items, will be somewhat lower than in 1999. 
 
Proposal for the distribution of dividends
 
The Group’s non-restricted and distributable equity at 31 December 1999 was EUR 2,062 million. The parent company’s distributable equity at 31 December 1999 was EUR 432 million.
 
At the annual general meeting, which will be held on 17 April 2000, the Board of Directors will propose that Fortum Corporation pays a dividend of EUR 0.18 per share, making a total of EUR 141 million for 1999.
 
ENCLOSURES
 
Consolidated income statement, Net sales by business operations (segments), Operating profit by business operations (segments), Consolidated balance sheet, Key ratios, Contingent liabilities and derivatives, Net sales and operating profit by quarter
 
Fortum Corporation
 
Antti Ruuskanen
Corporate Executive Vice President, Communications
 
 
DISTRIBUTION
Helsinki Exchanges
Key media
 
 
FOR FURTHER INFORMATION, PLEASE CONTACT:
Heikki Marttinen, President and CEO, tel. +358 10 45 24100
Eero Aittola, Corporate Executive Vice President, Chief Financial Officer, tel. +358 10 45 24234
Jari Mäntylä, Corporate Controller, tel. +358 10 45 25258
Antti Ruuskanen, Corporate Executive Vice President,
Communications, tel. +358 10 45 24850
Raija Norppa-Rahkola, Corporate Vice President, Investor Relations, tel. +358 10 45 24135
 
ENCLOSURES
 
FORTUM GROUP
 
 
 
 
 
 
 
 
JANUARY-DECEMBER 1999
 
 
 
 
 
 
 
 
Audited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED INCOME STATEMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUR mill.
 
Oct-Dec 99
Oct-Dec 98
Jan-Dec 99
Jan-Dec 98
 
 
 
 
 
 
 
 
Net sales
 
2,344
2,095
8,232
8,494
 
Share of profits (losses) of associated companies
2
4
36
42
 
Other operating income
 
54
48
187
102
 
Depreciation, amortisation and write-downs
-129
-110
-507
-496
 
Other operating expenses
 
-2,083
-1,845
-7,227
-7,547
 
Operating profit
 
188
192
721
595
 
Financial income and expenses
 
-56
-63
-211
-218
 
Profit before extraordinary items
132
129
510
377
 
Extraordinary income
 
100
0
493
11
 
Extraordinary expenses
 
-32
0
-33
-16
 
Profit before taxes
 
200
129
970
372
 
Income taxes
 
 
 
 
 
 
For the financial period and
 
 
 
 
 
 
previous periods  
 
-48
-42
-231
-130
 
Change in deferred tax liabilities
0
-6
-14
-2
 
Total
 
-48
-48
-245
-132
 
Minority interests
 
-3
-6
-22
-27
 
Net profit for the period
 
149
75
703
213
 
 
 
 
 
 
 
 
Earnings per share, EUR
 
 
 
0.41
0.27
 
Average number of shares, 1,000 shares
784783
784783
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NET SALES BY BUSINESS OPERATIONS (SEGMENTS)
 
 
 
 
 
 
 
 
 
 
 
EUR mill.
 
Oct-Dec 99
Oct-Dec 98
Jan-Dec 99
Jan-Dec 98
 
 
 
 
 
 
 
 
Oil and Gas Upstream
 
95
26
230
146
 
Oil Refining and Marketing
 
1670
1115
5200
4886
 
Power and Heat Generation and Sales
405
421
1443
1456
 
Electricity Distribution
 
98
92
347
340
 
Service
 
94
81
290
250
 
Engineering
 
185
140
479
411
 
Other Operations
 
38
33
137
115
 
Internal invoicing
 
-255
-125
-717
-451
 
Total
 
2,330
1,783
7,409
7,153
 
Discontinued Operations  1)
 
14
312
823
1,341
 
Net sales
 
2,344
2,095
8,232
8,494
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1) Includes Gasum, Enermet, Infrarödteknik and Neste Chemicals.
 
 
 
 
 
 
 
 
OPERATING PROFIT BY BUSINESS OPERATIONS (SEGMENTS)
 
 
 
 
 
 
 
 
 
 
EUR mill.
 
Oct-Dec 99
Oct-Dec 98
Jan-Dec 99
Jan-Dec 98
 
 
 
 
 
 
 
 
Oil and Gas Upstream  2)
 
40
1
82
9
 
Oil Refining and Marketing
 
49
10
182
108
 
Power and Heat Generation and Sales
63
100
245
241
 
Electricity Distribution
 
40
30
122
123
 
Service
 
10
4
12
8
 
Engineering
 
12
13
12
16
 
Other Operations
 
-15
26
-24
10
 
Eliminations
 
-6
-5
-17
-12
 
Total
 
193
179
614
503
 
Discontinued Operations   3)
 
-5
13
107
92
 
Operating profit
 
188
192
721
595
 
 
 
 
 
 
 
 
2) Treatment of Gasum has been changed from a subsidiary company to an associated company in all reporting periods.
 
 
 
 
 
 
3) Includes the impact of change in Gasum holding, Enermet, Infrarödteknik, Neste Chemicals and Asko.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED BALANCE SHEET
 
 
 
 
 
 
 
 
 
 
 
 
 
EUR mill.
 
 
 
Jan-Dec 99
Jan-Dec 98
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
Fixed assets and other long-term investments
9,261
8,845
 
Current assets
 
 
 
 
 
 
Inventories
 
 
 
661
576
 
Receivables
 
 
 
1,379
1,192
 
Cash and cash equivalents
 
 
 
775
564
 
Total
 
 
 
2,815
2,332
 
Total
 
 
 
12,076
11,177
 
 
 
 
 
 
 
 
SHAREHOLDERS' EQUITY AND LIABILITIES
 
 
 
 
Shareholders' equity
 
 
 
 
 
 
Share capital  4)
 
 
 
2,640
2,640
 
Other equity
 
 
 
2,065
1,335
 
Total
 
 
 
4,705
3,975
 
Minority interests
 
 
 
126
210
 
Provisions for liabilities and charges
 
83
64
 
Deferred tax liabilities
 
 
 
665
679
 
Long-term liabilities
 
 
 
3,644
3,961
 
Short-term liabilities
 
 
 
2,853
2,288
 
Total
 
 
 
12,076
11,177
 
 
 
 
 
 
 
 
4) The share capital of Fortum Corporation was FIM 15,696 million as of December 31, 1999.
 
 
 
 
 
 
 
Equity per share, EUR
 
 
 
6.00
5.06
 
Number of shares, 1,000 shares
 
784783
784783
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
KEY RATIOS
 
 
 
Jan-Dec 99
Jan-Dec 98
 
 
 
 
 
 
 
 
Interest-bearing net debt, EUR mill.
 
3,818
3,898
 
Investments, EUR mill.
 
 
 
1,059
1,702
 
Average number of employees
 
 
 
17,461
19,003
 
Return on capital employed, %
 
8.6
7.8
 
Return on shareholders' equity, %
 
7.7
5.7
 
Gearing, %
 
 
 
79
93
 
Equity-to-assets ratio, %
 
 
 
40
38
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONTINGENT LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
 
 
EUR mill.
 
 
 
Jan-Dec 99
Jan-Dec 98
 
 
 
 
 
 
 
 
Contingent liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
On own behalf
 
 
 
 
 
 
For debt
 
 
 
 
 
 
Pledges
 
 
 
290
341
 
Real estate mortgages
 
 
 
134
150
 
Company mortgages
 
 
 
44
53
 
Other mortgages
 
 
 
54
52
 
For other commitments
 
 
 
 
 
 
Pledges
 
 
 
86
70
 
Real estate mortgages
 
 
 
96
138
 
Company mortgages
 
 
 
6
-
 
Sale and leaseback
 
 
 
28
11
 
Other contingent liabilities
 
 
 
748
682
 
Total
 
 
 
1,486
1,497
 
 
 
 
 
 
 
 
On behalf of associated companies
 
 
 
 
Pledges
 
 
 
4
-
 
Real estate mortgages
 
 
 
1
-
 
Guarantees
 
 
 
261
249
 
Total
 
 
 
266
249
 
 
 
 
 
 
 
 
On behalf of persons referred to in § 11:7 of the Companies Act
 
Guarantees
 
 
 
0
0
 
 
 
 
 
 
 
 
On behalf of others
 
 
 
 
 
 
Pledges
 
 
 
0
8
 
Real estate mortgages
 
 
 
0
0
 
Guarantees
 
 
 
91
37
 
Other contingent liabilities
 
 
 
2
38
 
Total
 
 
 
93
83
 
 
 
 
 
 
 
 
Total
 
 
 
1,845
1,829
 
 
 
 
 
 
 
 
Operating lease liabilities
 
 
 
 
 
 
Due within a year
 
 
 
50
41
 
Due after a year
 
 
 
138
158
 
Total
 
 
 
188
199
 
 
 
 
 
 
 
 
Finance leases have been recognised as assets and liabilities.
 
 
 
 
 
 
 
 
Liability for nuclear waste disposal
 
471
459
 
Share of reserves in the Nuclear Waste Disposal Fund
-385
-330
 
Liabilities in the balance sheet  5)
86
129
 
Excess of security given over obligations
 
1
 
 
 
 
 
 
 
 
 
5) Mortgaged bearer papers as security
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives
 
 
Jan-Dec
 
 
Jan-Dec
 
 
 
 
 
1999
 
 
1998
 
 
Interest and currency derivatives
 
EUR mill.
 
Contract or notional value
Fair value
Not recognised as an income
Contract or notional value
Fair value
Not recognised as an income
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
 
1,975
0
17
1080
-20
-20
 
Purchased interest rate options
2
0
0
33
0
0
 
Written interest rate options
-
-
-
236
-3
-3
 
 
 
 
 
 
 
 
 
 
Forward foreign exchange contracts 6),7)
1,767
-18
-19
1887
9
-1
 
Currency swaps
 
885
1
-27
535
17
-13
 
Purchased currency options
 
54
-1
-1
93
-1
-1
 
Written currency options
 
54
-1
-1
93
1
1
 
 
 
 
 
 
 
 
 
 
6) incl. also closed forward and future positions
 
 
 
7) incl. contracts used for equity hedging
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil futures and forward instruments
Volume
 
 
1000 bbl
Fair value
 
EUR mill.
Not recog nised as an income EUR mill. 
Volume
 
 
1000 bbl
Fair value
 
EUR mill.
Not recog nised as an income EUR mill.
 
 
 
 
 
 
 
 
 
 
Sales contracts
 
22,154
-26
-4
9,585
5
5
 
Purchase contracts
 
17,063
7
3
2,586
-2
-2
 
Options
 
 
 
 
 
 
 
 
Purchased
 
1,477
0
0
325
0
0
 
Written
 
1,546
-1
0
425
0
0
 
 
 
 
 
 
 
 
 
 
Electricity derivatives
 
Volume
 
 
TWh
Fair value
 
EUR mill
Not recog nised as an income EUR mill. 
Volume
 
 
TWh
Fair value
 
EUR mill
Not recog nised as an income EUR mill. 
 
 
 
 
 
 
 
 
 
 
Sales contracts
 
21
44
44
19
33
37
 
Purchase contracts
 
21
-61
-43
22
-41
-41
 
Options
 
 
 
 
 
 
 
 
Purchased
 
0
0
0
0
0
0
 
Written
 
2
0
0
1
0
0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In addition to other contingent liabilities, a guarantee has been given on behalf of Gasum Oy, which covers 75% of the natural gas commitments arising from the natural gas supply agreement between Gasum and OOO Gazexport. The fair values of derivative contracts subject to public trading are based on market prices as of the balance sheet date. The fair values of other derivatives are based on the present value of cash flows resulting from the contracts, and, in respect of options, on evaluation models.
 
 
QUARTERLY NET SALES BY BUSINESS OPERATIONS (SEGMENTS)
 
 
 
 
 
 
 
 
 
 
EUR mill.
I/99
II/99
III/99
IV/99
1999
 
 
 
 
 
 
 
 
Oil and Gas Upstream
29
35
71
95
230
 
Oil Refining and Marketing
964
1,170
1,396
1,670
5,200
 
Power and Heat Generation and Sales
439
294
305
405
1,443
 
Electricity Distribution
99
77
73
98
347
 
Service
63
65
68
94
290
 
Engineering
78
111
105
185
479
 
Other Operations
25
40
34
38
137
 
Internal invoicing
-123
-155
-184
-255
-717
 
Total
1,574
1,637
1,868
2,330
7,409
 
Discontinued Operations  8)
325
275
209
14
823
 
Net sales
1,899
1,912
2,077
2,344
8,232
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUR mill.
I/98
II/98
III/98
IV/98
1998
 
 
 
 
 
 
 
 
Oil and Gas Upstream
45
37
38
26
146
 
Oil Refining and Marketing
1,354
1,226
1,191
1,115
4,886
 
Power and Heat Generation and Sales
437
322
276
421
1,456
 
Electricity Distribution
91
83
74
92
340
 
Service
49
60
60
81
250
 
Engineering
77
103
91
140
411
 
Other Operations
24
32
26
33
115
 
Internal invoicing
-112
-111
-103
-125
-451
 
Total
1,965
1,752
1,653
1,783
7,153
 
Discontinued Operations  8)
386
340
303
312
1,341
 
Net sales
2,351
2,092
1,956
2,095
8,494
 
 
 
 
 
 
 
 
8) Includes Gasum, Enermet, Infrarödteknik and Neste Chemicals.
 
 
 
 
 
 
 
 
QUARTERLY OPERATING PROFIT BY BUSINESS OPERATIONS (SEGMENTS)
 
 
 
 
 
 
 
 
 
EUR mill.
I/99
II/99
III/99
IV/99
1999
 
 
 
 
 
 
 
 
Oil and Gas Upstream  9)
1
9
32
40
82
 
Oil Refining and Marketing
6
40
87
49
182
 
Power and Heat Generation and Sales
160
21
1
63
245
 
Electricity Distribution
44
19
19
40
122
 
Service
3
0
-1
10
12
 
Engineering
0
-5
5
12
12
 
Other Operations
6
-10
-5
-15
-24
 
Eliminations
-10
3
-4
-6
-17
 
Total
210
77
134
193
614
 
Discontinued Operations  10)
34
31
47
-5
107
 
Operating profit
244
108
181
188
721
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUR mill.
I/98
II/98
III/98
IV/98
1998
 
 
 
 
 
 
 
 
Oil and Gas Upstream  9)
7
2
-1
1
9
 
Oil Refining and Marketing
5
32
61
10
108
 
Power and Heat Generation and Sales
121
35
-15
100
241
 
Electricity Distribution
39
29
25
30
123
 
Service
4
-2
2
4
8
 
Engineering
-2
1
4
13
16
 
Other Operations
-3
-6
-7
26
10
 
Eliminations
-1
-3
-3
-5
-12
 
Total
170
88
66
179
503
 
Discontinued Operations  10)
36
27
16
13
92
 
Operating profit
206
115
82
192
595
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9) Treatment of Gasum has been changed from a subsidiary company to an associated company in all reporting periods.
 
 
 
 
 
 
10) Includes the impact of change in Gasum holding, Enermet, Infrarödteknik, Neste Chemicals and Asko.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 EUR = 5,94573 FIM