Fortum Corporation Interim Report January - June 2005

Fortum Corporation STOCK EXCHANGE RELEASE19 July 2005 at 8.30 am

Fortum Corporation
Interim Report January - June 2005


Solid business performance continued in Fortum
- Good results in the first half-year

January-June in brief
- Profit before taxes from continuing operations EUR 571 (538) million
- Comparable operating profit*) EUR 654 (608) million
- Earnings per share from continuing operations EUR 0.45 (0.45)
- Strong net cash from operating activities of EUR 454 (399) million in the
second quarter, net debt decreased to EUR 3,595 million
- A EUR 390 million tax free gain on the sale of Neste Oil shares booked in the
second quarter results

Items related to oil businesses are reported on a separate line as discontinued
operations in the income statement, and are not included in net sales or in
operating profit. All figures are reported according to IFRS.

Key figures II/05 II/04 I-II/05 I-II/04 2004 Last 12
Income statement and cash months
flow for continuing operations (LTM)

Net sales, EUR million 858 857 1,991 1,986 3,835 3,840
Operating profit, EUR 227 248 633 655 1,195 1,173
million
Comparable operating 261 211 654 608 1,148 1,194
profit,
EUR million*)
Profit before taxes, EUR 185 205 571 538 962 995
million
Earnings per share, 0.17 0.21 0.45 0.45 0.79 0.79
continuing operations,
EUR **)
Total earnings per share, 0.61 0.44 0.99 0.80 1.48 1.68
EUR
Total net cash from 435 594 649 1,047 1,758
operating activities, EUR
million
Net cash from operating 454 399 516 756 1,232
activities, continuing
operations, EUR million
Average number of shares, 872,316 849,698 852,625 858,710
000s

*) Comparable operating profit represents the underlying business performance by
excluding items effecting comparability. These are mainly caused by the
accounting effects from fair valuation of financial derivatives for future cash
flows where hedge accounting is not applied (IAS 39) or non-recurring items.

Comparable II/05 II/04 I-II/05 I-II/04 2004 Last 12
operating profit months
EUR million (LTM)
Comparable 261 211 654 608 1,148 1,194
operating profit
Non-recurring 12 -1 18 -7 18 43
items
Other items -46 38 -39 54 29 -64
effecting
comparability
Operating profit 227 248 633 655 1,195 1,173
See accounting principles for definitions and segment information for further
details.

**) Earnings per share in II/04 include a EUR 0.05 positive one-time effect from
change in Finnish tax rate from 29% to 26%.

Key figures I-II/05 I-II/04 2004 Last 12
Balance sheet months
(LTM)
Shareholders’ equity per 7.64 7.77 8.62
share, EUR
Interest-bearing net debt 3,595 5,512 5,095
(at end of period), EUR million
Return on capital employed, % 16.7 17.0 15.8 17.8
Return on shareholders’ equity, % 19.2 20.9 18.2 21.7
Gearing, % 53 82 67

During the first half of the year, Fortum's comparable operating profit shows
that business performance was better although reported operating profit was
slightly lower than in the first half of 2004. The comparable operating profit
was clearly higher than a year ago, EUR 654 compared to EUR 608 million. The
reported operating profit was lower at EUR 633 (655) million.

Items that effect comparability in operating profit are mainly caused by the
accounting effects from fair valuation of financial derivatives for hedging
future cash-flows where hedge accounting is not applied (IAS 39) and non-
recurring items. Fortum applies hedge accounting for the major part of future
cash-flow hedges, but some volatility will always effect the income statement.

The rise in electricity forward prices and stronger EUR/SEK exchange rates have
caused negative effects from the fair value changes on reported operating profit
in the second quarter.

In June 2005, the IASB decided to withdraw IFRIC Interpretation 3 in accounting
for CO2 emission allowances with immediate effect. Following the decision,
Fortum has changed the accounting treatment for emission allowances. The change
results in a positive effect on first quarter operating profit with EUR 2
million. See accounting principles.


Net sales and results

April - June

Group net sales stood at EUR 858 (857) million.

Group operating profit totalled EUR 227 (248) million. Comparable operating
profit stood at EUR 261 (211) million.

During the second quarter, the average spot price for power in Nord Pool was at
EUR 29.3 (29.5), or 1% lower than during the corresponding period in 2004.

The comparable operating profit of the Power generation segment was higher than
last year, mainly due to Fortum's higher Nordic Generation power price, which
increased to EUR 30.1 (28.3) per megawatt-hour. The impact of lower thermal and
nuclear production volumes were more than offset by higher hydro volumes. The
reported operating profit of the Power Generation segment was lower than last
year, mainly due to the accounting effects from IAS 39.

The operating profit of the Heat segment was better than last year, due to cost
efficiency improvements in Värme and the gain on the sale of the 50% stake in
North Transgas.

The Distribution segment was able to improve its operating profit slightly from
the previous year.

Markets' operating profit was better compared to last year. The customer
guarantee- related costs were lower than in the first quarter.


Net sales from continuing operations, by segment

EUR million II/05 II/04 I-II/05 I-II/04

Power Generation 476 488 1,010 1,048
Heat 206 198 591 559
Distribution 160 157 362 363
Markets 298 303 690 722
Other 22 25 45 45
Eliminations -304 -314 -707 -751
Total 858 857 1,991 1,986

Comparable operating profit from continuing operations, by segment

EUR million II/05 II/04 I-II/05 I-II/04

Power Generation 172 145 396 363
Heat 37 24 144 125
Distribution 55 51 121 132
Markets 8 5 15 14
Other -11 -14 -22 -26
Total 261 211 654 608

Operating profit from continuing operations, by segment

EUR million II/05 II/04 I-II/05 I-II/04

Power Generation 125 172 348 394
Heat 50 27 162 131
Distribution 56 55 127 138
Markets 8 5 14 21
Other -12 -11 -18 -29
Total 227 248 633 655


January - June

Group net sales from continuing operations stood at EUR 1,991 (1,986) million.
Group operating profit from continuing operations totalled EUR 633 (655)
million. Comparable operating profit stood at EUR 654 (608) million.

In January-June, the average spot price was EUR 27.6 (29.1) per megawatt-hour,
or 5% lower than during the corresponding period in 2004. Lower thermal power
generation volumes led to lower sales in the first half of 2005.

The comparable operating profit of the Power Generation segment was higher,
mainly due to Fortum's 6% higher Nordic Generation power price of EUR 30.8
(29.0) per megawatt-hour. The reported operating profit of the Power Generation
segment was lower than last year, mainly due to the accounting effects from IAS
39.

The Heat segment's net sales were higher than last year, mainly due to the
acquisitions in Poland and Lithuania. The Heat segment's power sales volume was
lower than last year. The segment's operating profit was clearly higher mainly
due to the strong second quarter of the year.

The Distribution segment's net sales were at the same level as last year. The
segment's operating profit was lower than last year, mainly due to the EUR 11
million in costs from the January storms in Sweden and Norway, which were booked
in the first-quarter earnings.

Markets' net sales were lower, mainly due to the expiration of some large
contracts. The segment continued to experience a positive inflow of customers.

Profit before taxes from continuing operations was EUR 571 (538) million.

The Group's net financial expenses from continuing operations amounted to EUR 78
(125) million. Net financial expenses include a positive, approximately EUR 9
(2) million change in the fair value of certain derivatives that do not qualify
for hedge accounting under IFRS (IAS 39).

The share of profit of associates and joint ventures from continuing operations
was EUR 16 (8) million.

Minority interests accounted for EUR 32 (22) million. The minority interests are
mainly attributable to Fortum Värme Holding, in which the City of Stockholm has
a 50% economic interest.

Taxes for the period totalled EUR 149 (131) million. The tax rate according to
the income statement was 26.1% (24.3%). In 2004, taxes for the period included a
decrease in deferred tax liabilities of EUR 43 million due to the change in the
Finnish income tax rate from 29% to 26%.

Total net profit for the period was EUR 896 (702) million. The net profit from
continuing operations was EUR 422 (407) million. Total Fortum earnings per share
were EUR 0.99 (0.80), and earnings per share from continuing operations were EUR
0.45 (0.45). Earnings per share last year included a positive effect of EUR 0.05
from the corporate tax rate change in Finland. Return on capital employed was
16.7% (17.0%) and return on shareholders' equity was 19.2% (20.9%).


Market conditions

According to preliminary statistics, the Nordic countries consumed 86 (87) TWh
of electricity during the second quarter of the year, which was 1.5% less than
during the corresponding period of the previous year. The decrease was due to
the strike and lock-out in the Finnish paper industry.

During the second quarter, the average spot price for power in Nord Pool, the
Nordic power exchange, was EUR 29.3 (29.5) per megawatt-hour, or 1% lower than
during the corresponding period in 2004 and 13% higher than during the previous
quarter. The increase in the spot price compared to the previous quarter was
mainly due to the increase in the market price for CO2 emissions allowances.
Power prices in the forward market increased during the first half of the year
for the same reason. In January - June, the average spot price was EUR 27.6
(29.1) per megawatt-hour, or 5% lower than during the corresponding period in
2004.

During the first half of the year, the market price for CO2 emissions allowances
increased from around EUR 7 per tonne to around EUR 25 per tonne of CO2, the
average for the second quarter being EUR 18.9 per tonne of CO2. The increase in
the CO2 price was supported by the EU's decision to cut the National Allocation
Plans for Poland, Czech Republic and Italy, and by rising gas prices as well as
dry weather in southern Europe. The high market price for CO2 emissions
allowances and the relatively low spot price for power has decreased thermal
power generation and increased hydro power generation in the Nordic countries.

In Continental Europe the spot price for power has been higher than in Nord
Pool, resulting in exports from the Nordic countries to Germany. Despite the
high Nordic hydro production, the Nordic water reservoirs have recovered during
the second quarter. In the beginning of July, the Nordic water reservoirs were 2
TWh below the average and 14 TWh above the corresponding level in 2004.

Fortum's power generation in the Nordic countries during January-June was 26.2
(27.4) TWh, 13% (14%) of Nordic electricity consumption.

Fortum's total power and heat generation figures are presented below. In
addition, the segment reviews include the respective figures by segment.


Fortum's total power II/05 II/04 I-II/05 I-II/04 2004 LTM
and heat generation, TWh

Power generation 12.1 12.6 26.8 28.0 55.5 54.3
Heat generation 4.5 4.7 14.2 14.0 25.4 25.6


Fortum's own power II/05 II/04 I-II/05 I-II/04 2004 LTM
generation by source, TWh,

total in the Nordic
countries
Hydropower 5.2 3.9 10.8 8.6 19.1 21.3
Nuclear power 5.9 6.5 12.9 13.5 25.8 25.2
Thermal power 0.8 1.8 2.5 5.3 9.5 6.7
Total 11.9 12.2 26.2 27.4 54.4 53.2


Fortum's own power II/05 II/04 I-II/05 I-II/04 2004 LTM
generation by source, %,

total in the Nordic
countries
Hydropower 44 32 41 32 35 40
Nuclear power 49 53 49 49 47 47
Thermal power 7 15 10 19 18 13
Total 100 100 100 100 100 100


Total electricity and heat sales figures

Fortum's total electricity sales amounted to 30.2 (31.5) TWh. Sales volumes in
the Nordic countries were at 29.5 (30.7) TWh, representing approximately 15%
(15%) of Nordic electricity consumption during January-June. Heat sales in the
Nordic countries amounted to 11.0 (11.4) TWh and in other countries to 2.4 (1.8)
TWh.

The segments sell their electricity to Nord Pool or external customers and
purchase electricity from Nord Pool or other external sources. In the table
below, Fortum's Nord Pool transactions are calculated as a net amount of hourly
sales and purchases at the Group level.


Fortum's total II/05 II/04 I-II/05 I-II/04 2004 LTM
electricity and heat
sales, EUR million
Electricity sales 454 453 1,000 1,017 2,017 2,000
Heat sales 167 156 481 440 809 850

Fortum's total II/05 II/04 I-II/05 I-II/04 2004 LTM
electricity sales by
area, TWh
Sweden 6.9 5.9 15.1 14.0 27.6 28.7
Finland 6.0 7.1 13.4 15.6 31.1 28.9
Other countries 0.7 0.8 1.7 1.9 3.6 3.4
Total 13.6 13.8 30.2 31.5 62.3 61.0

Fortum's total heat II/05 II/04 I-II/05 I-II/04 2004 LTM
sales by area, TWh
Sweden 1.7 1.6 5.6 5.6 9.6 9.6
Finland 1.7 2.2 5.3 5.7 10.5 10.1
Other countries 0.9 0.7 2.5 1.9 3.7 4.3
Total 4.3 4.5 13.4 13.2 23.8 24.0


SEGMENT REVIEWS

Power Generation

The business area comprises power generation and sales in the Nordic countries
and the provision of operation and maintenance services in the Nordic area and
selected international markets. The Power Generation segment sells its
production to Nord Pool. The segment includes the Generation, the Portfolio
Management and Trading (PMT), and the Service business units.

EUR million II/05 II/04 I-II/05 I-II/04 2004 LTM

Net sales 476 488 1,010 1,048 2,084 2,046
- power sales 381 381 834 847 1,695 1,682
- other sales 95 107 176 201 389 364
Operating profit 125 172 348 394 763 717
Comparable operating 172 145 396 363 730 763
profit
Net assets (at end of period) 5,970 6,142 6,218
Return on net assets, % 11.3 12.5 12.1 11.5
Comparable return on net 13.2 11.5 11.5 12.4
assets,%

The segment's power generation during the second quarter amounted to 11.1 (11.5)
TWh in the Nordic countries. The decrease was mainly due to lower thermal power
generation and nuclear power generation.

In January-June, the segment's power generation in the Nordic countries was 23.9
(24.8) TWh, of which about 10.8 (8.6) TWh or 45% (35%) was hydropower-based,
12.9 (13.5) TWh or 54% (54%) nuclear power-based, and 0.2 (2.7) TWh or 1% (11%)
thermal power-based. The increase in hydro power generation was due to a
strengthened hydrological situation compared to the corresponding period last
year. The decrease in thermal power generation was due to lower power prices
during the first quarter and higher fuel and CO2 allowance prices. The decrease
in nuclear power generation was mainly due to different timing of maintenance
periods compared to the previous year.


Power generation by II/05 II/04 I-II/05 I-II/04 2004 LTM
area, TWh
Sweden 6.5 5.8 14.0 12.8 25.8 27.0
Finland 4.6 5.7 9.9 12.0 24.0 21.9
Other countries 0.3 0.3 0.6 0.6 1.1 1.1
Total 11.4 11.8 24.5 25.4 50.9 50.0


Nordic sales volume, 12.3 12.8 26.7 28.0 55.7 54.4
TWh
of which pass-through 1.0 1.1 2.4 2.6 4.7 4.5
sales


Sales price, EUR/MWh II/05 II/04 I-II/05 I-II/04 2004 LTM

Nordic Generation power 30.1 28.3 30.8 29.0 29.2 30.0
price*)

*) For the Power Generation segment in the Nordic area, excluding pass-through
sales.

Fortum's average Nordic Generation power price (excluding pass-through items) in
the second quarter was 6% higher than a year ago, due to higher Finnish and
Swedish area spot prices and improved hedging prices. In the second quarter, the
average spot price for power in Nord Pool was 1% lower than a year ago. During
the first half of the year, Fortum's average Nordic Generation power price was
6% higher, although the average spot price in Nord Pool was 5% lower than during
the corresponding period in 2004. The related sales volume was 11.3 (11.7) TWh
in the second quarter and 24.3 (25.4) TWh for the first half of the year.

The regional power generation company of North-West Russia, Territorial
Generation Company 1 (TGC-1), has been established and will start its operation
on the first of October. Fortum is a part owner of this company through its
shareholding in Lenenergo.


Heat

The business area comprises heat generation and sales in the Nordic countries
and other parts of the Baltic Rim. Fortum is a leading heat producer in the
region. The segment also generates power in the combined heat and power plants
(CHP) and sells it to end-customers mainly by long-term contracts, as well as to
Nord Pool. The segment includes the Heat and Värme business units.

EUR million II/0 II/04 I-II/05 I-II/04 2004 LTM
5
Net sales 206 198 591 559 1,025 1,057
- heat sales 159 149 465 425 779 819
- power sales 28 27 83 90 159 152
- other sales 19 22 43 44 87 86
Operating profit 50 27 162 131 218 249
Comparable operating profit 37 24 144 125 207 226
Net assets (at end of period) 2,302 2,323 2,440
Return on net assets, % 14.2 11.8 9.8 11.1
Comparable return on net assets, % 12.7 11.3 9.3 10.1


The segment's heat sales during the second quarter amounted to 3.8 (4.1) TWh,
most of which was generated in the Nordic countries. In January-June, power
sales at combined heat and power plants (CHP) totalled 2.4 (2.7) TWh. The
decrease was mainly due to the strike and lock-out in the Finnish paper
industry.

During the two first two quarters, Fortum continued the integration and
development of Fortum Czestochowa S.A. in Poland. The company was acquired in
December 2004.

In April, Fortum acquired the majority (90%) shareholding in UAB Suomijos
Energija in Lithuania. The acquisition supports the growth targets of Fortum's
heat business in Lithuania.

In May, Fortum continued the restructuring of its gas assets and sold its 50%
stake in North Transgas Oy to OAO Gazprom.

Fortum Värme applied to the City Planning Office to locate a new biomass CHP
(Combined Heat and Power) plant of 300 MW heat and 130 MW electricity in Värtan
in Stockholm.

Heat sales by area, TWh II/05 II/04 I-II/05 I-II/04 2004 LTM

Sweden 1.7 1.6 5.6 5.6 9.6 9.6
Finland 1.7 2.2 5.3 5.7 10.5 10.1
Other countries 0.4 0.3 1.5 1.0 1.7 2.2
Total 3.8 4.1 12.4 12.3 21.8 21.9

Power sales, TWh II/05 II/04 I-II/05 I-II/04 2004 LTM

Total 0.8 0.9 2.4 2.7 4.8 4.5


Distribution

Fortum owns and operates distribution and regional networks and distributes
electricity to a total of 1.4 million customers in Sweden, Finland, Norway and
Estonia.

EUR million II/05 II/04 I-II/ I-II/04 2004 LTM
2005

Net sales 160 157 362 363 707 706
- distribution network 133 132 306 308 593 591
transmission
- regional network 19 19 42 42 83 83
transmission
- other sales 8 6 14 13 31 32
Operating profit 56 55 127 138 234 223
Comparable operating 55 51 121 132 240 229
profit
Net assets (at end of period) 3,036 3,107 3,091
Return on net assets, % 9.1 9.4 8.1 7.9
Comparable return on net assets,% 8.7 9.0 8.3 8.1


During the first half of the year, the volume of distribution and regional
transmissions totalled 12.2 (12.0) TWh and 9.1 (9.2) TWh, respectively.

Electricity transmissions via the regional distribution network to customers
outside the Group totalled 7.5 (7.6) TWh in Sweden and 1.6 (1.6) TWh in Finland.

Fortum has launched a project to provide Automatic Meter Management (AMM) to all
its electricity distribution customers. AMM means centralised and automatic
collection and management of meter and consumption data. The rollout is planned
to start in Sweden during 2006 for 850,000 customers and will likely be finished
by the end of 2008. The aim is to continue implementing AMM for Fortum's 500,000
customers in Finland, Norway and Estonia.

As of 1 July, the grid prices in Finland are identical in Fortum's all network
areas.

The Energy Market Authority EMI (Energimarknadsinspektionen) in Sweden has
proposed a functional demand that no customer shall be without electricity for
more than 24 hours. A penalty for outages lasting longer than 12 hours is also
proposed. A decision will follow later this year.

In Sweden, the process continues with the EMI about supervision of the year 2003
distribution tariffs in selected distribution areas. EMI has commented on the
supervised companies' arguments against the charge rate in the regulatory model.
Fortum has received a decision on one of its subsidiaries and will appeal.


Volume of distributed II/05 II/04 I-II/05 I-II/04 2004 LTM
electricity in
distribution network, Twh

Sweden 3.2 3.1 7.6 7.5 14.2 14.3
Finland 1.3 1.2 3.3 3.2 6.2 6.3
Norway 0.5 0.5 1.2 1.2 2.1 2.1
Estonia 0.0 0.0 0.1 0.1 0.2 0.2
Total 5.0 4.8 12.2 12.0 22.7 22.9


Number of electricity 30.6.2005 30.6.2004 2004
distribution customers by
area, 000s
Sweden 860 860 860
Finland 405 400 405
Other countries 115 115 115
Total 1,380 1,375 1,380


Markets

Markets is responsible for retail sales of electricity to a total of 1.2 million
private and business customers as well as to other electricity retailers in
Sweden, Finland and Norway. Markets buys its electricity through Nord Pool.


EUR million II/05 II/04 I-II/05 I-II/04 2004 LTM

Net sales 298 303 690 722 1,387 1,355
Operating profit 8 5 14 21 34 27
Comparable operating profit 8 5 15 14 23 24
Net assets (at end of period) 159 177 194
Return on net assets, % 14.6 36.8 25.3 15.2
Comparable return on net assets, % 15.7 24.5 17.1 13.5

During the second quarter, Markets' electricity sales totalled 9.0 (9.6) TWh
with sales for the first half of the year amounting to 20.8 (22.4) TWh. The
decrease was due to the ending of some large contracts at the end of 2004.

Retail electricity prices remained fairly stable on the Nordic market during the
second quarter despite the strongly rising market price level. Current prices
have reacted slowly to rising Nord Pool prices, but prices for new fixed-price
contracts have followed the futures price development in Nord Pool. Overall, the
retail price level during the second quarter was slightly lower than the
corresponding period the previous year.

The positive inflow of customers has continued during the second quarter as a
result of successful product launches, campaigns and new partnership contracts.
Positive development in customer service has continued as a consequence of
investments in customer service quality assurance.


Capital expenditures and investments in shares

Capital expenditures and investments in shares for continuing operations in
January-June totalled EUR 123 (158) million.

As a result of the redemption of Lenergo's own shares relating to its
reorganisation, Fortum's shareholding in Lenenergo increased to 32.8% of voting
shares. Fortum got four of the total of 11 seats in the Board of Directors of
Lenenergo on 30 June.


Financing

Net debt at the end of the second quarter stood at EUR 3,595 million (EUR 4,878
million on 31 March 2005). The reduction in net debt is mainly linked to the
separation of Neste Oil and good cash flow generation during the second quarter.
The weakening of the Swedish krona also had a reducing effect on net debt.
Proceeds from the repayment of internal loans and from the sale of shares in
Neste Oil amounted to EUR 1,381 million. During the second quarter, Fortum paid
out cash dividends of EUR 506 million.

Net cash from operating activities increased to EUR 516 (756) million for the
continuing activities.

The Group's net financial expenses were EUR 78 (125) million. The decrease is
mainly attributable to the lower interest rate, the lower level of net debt, and
a positive, approximately EUR 9 (2) million change in the fair value of certain
derivatives that do not qualify for hedge accounting under IFRS.

During June and July, Fortum's long-term credit rating from Moody's was upgraded
from Baa1 (stable) to A2 (stable). Fortum's long-term credit rating from
Standard & Poor's is BBB+ (stable).


Shares and share capital

In January-June, a total of 505.3 million Fortum Corporation shares totalling
EUR 6,568 million were traded. Fortum's market capitalisation, calculated using
the closing quotation of the last trading day of the quarter, was EUR 11,565
million. The highest quotation of Fortum Corporation shares on the Helsinki
Stock Exchange in the first half of the year was EUR 16.05, the lowest EUR
10.45, and the average quotation EUR 13.00. The closing quotation on the last
trading day of the quarter was EUR 13.25.

A total of 939,277 shares subscribed for based on share option schemes were
entered into the trade register in the second quarter of 2005. After these
subscriptions, Fortum's share capital is EUR 2,967,497,815 and the total number
of registered shares is 872,793,475.

On 3 June, the Finnish state sold 62.9 million Fortum shares to Finnish and
international investors. At the end of the quarter, the Finnish state's holding
in Fortum was 51.7%. The proportion of international shareholders stood at
32.9%.

Currently the Board of Directors has no unused authorisations from the General
Meeting of Shareholders to issue convertible loans or bonds with warrants, issue
new shares or acquire the company's own shares.


Group personnel

The average number of employees in the Group during the period from January to
June was 11,066 (13,097). The number of employees at the end of the period was
8,989 (13,140). The decrease is due to the separation of Neste Oil.


Events after the period under review

Fortum decided to extend the period of validity regarding its offer to buy the
shares of E.ON Finland Oyj owned by the City of Espoo to 30 September 2005 in
order to facilitate further negotiations on the details of the offer.

Fortum Markets has announced a price increase for current-price contracts in
Finland due to rising prices on the future market.


Outlook

The key market driver influencing Fortum's business performance is the market
price of power. Starting in 2005, emissions trading has become an important new
factor effecting the market price of power. The exchange rate of the Swedish
krona can also influence Fortum's results.

According to general market information, electricity consumption in the Nordic
countries is predicted to increase by about 1% a year over the next few years.
During the second quarter, the average spot price for power was EUR 29.3 (29.5)
per megawatt-hour on the Nordic power exchange, or 1% lower than the
corresponding figure in 2004.

In the mid-July, the Nordic water reservoirs were about 1 TWh below the average
and 15 TWh above the corresponding level for 2004. In the middle of July, the
market price for emissions allowances for 2005 ranged between EUR 24-25 per
tonne of CO2, and the market price for coal for the rest of 2005 was around EUR
51 per tonne. At the same time, the power price in the forward market for the
rest of 2005 was around EUR 37-40 per megawatt-hour.

At the beginning of July, Fortum had hedged approximately two-thirds of its
Nordic Power Generation sales volume for the next 12 months at approximately the
same price level as the achieved Nordic Generation power price during the last
12 months.

Thanks to the solid business performance and the separation of the oil
businesses, Fortum's financial position is strong. Also market fundamentals
support further good performance.


Espoo, 19 July 2005
Fortum Corporation
Board of Directors


The figures have not been audited.

Fortum's financial reporting:
- Interim Report January-September on 20 October 2005
- Financial statements January-December on 3 February 2006


Further information:
Mikael Lilius, President and CEO, tel. +358 10 452 9100
Juha Laaksonen, CFO, tel. +358 10 452 4519

Distribution:
Helsinki Stock Exchange
Key media


FORTUM GROUP
JANUARY-JUNE 2005

Interim financial statements are unaudited

CONDENSED CONSOLIDATED INCOME STATEMENT

MEUR Q2/2005 Q2/2004 Q1-Q2 Q1-Q2 2004 Last
2005 2004 twelve
months
Continuing operations:
Sales 858 857 1991 1986 3835 3840
Other income -11 50 10 82 91 19
Materials and services -294 -340 -712 -786 -1507 -1433
Employee benefit costs -124 -125 -253 -240 -462 -475
Depreciation, amortisation and -101 -99 -204 -192 -388 -400
impairment charges
Other expenses -101 -95 -199 -195 -374 -378
Operating profit 227 248 633 655 1195 1173
Share of profit of associates 1 4 16 8 12 20
and joint ventures
Finance costs-net -43 -47 -78 -125 -245 -198
Profit before income tax 185 205 571 538 962 995
Income tax expense -33 -20 -149 -131 -259 -277
Profit for the period from 152 185 422 407 703 718
continuing operations
Discontinued operations:
Profit for the period from 390 193 474 295 589 768
discontinued operations
Profit for the period 542 378 896 702 1292 1486

Attributable to:
Equity holders of the Company 535 376 864 680 1259 1443
Minority interest 7 2 32 22 33 43

542 378 896 702 1292 1486
Earnings per share for profit from
total Fortum Group attributable
to the equity holders of the company during
the year (in € per share)
Basic 0.61 0.44 0.99 0.80 1.48 1.68
Diluted 0.60 0.43 0.98 0.78 1.46

Earnings per share for profit from continuing
operations attributable to the equity holders
of the company during the year
(in € per share)
Basic 0.17 0.21 0.45 0.45 0.79 0.79
Diluted 0.16 0.21 0.44 0.44 0.78

Earnings per share for profit from discontinued
operations attributable to the equity holders
of the company during the year
(in € per share)
Basic 0.44 0.23 0.54 0.35 0.69 0.89
Diluted 0.44 0.22 0.54 0.34 0.68

CONDENSED CONSOLIDATED BALANCE STATEMENT
MEUR June 30 June Dec
2005 30 31
2004 2004
ASSETS
Non-current assets
Intangible assets 82 143 116
Property, plant and equipment 9965 11661 11925
Other long-term investments 2124 2219 2355
Other long-term receivables 89 90 90
Long-term interest bearing receivables 625 731 727
Total non-current assets 12885 14844 15213

Current assets
Inventories 234 596 654
Trade and other receivables 961 1281 1555
Cash and cash equivalents 552 194 145
Total current assets 1747 2071 2354

Total assets 14632 16915 17567

EQUITY
Capital and reserves attributable the
Company's equity holders
Share capital 2968 2889 2948
Other equity 3696 3712 4552
Total 6664 6601 7500
Minority interest 176 140 150
Total equity 6840 6741 7650

LIABILITIES
Non-current liabilities
Interest-bearing liabilities 3826 4552 4450
Deferred tax liabilities 1580 1774 1841
Provisions 574 560 608
Other liabilities 545 534 507
Total non-current liabilities 6525 7420 7406

Current liabilities
Interest-bearing liabilities 321 1154 790
Trade and other payables 946 1600 1721
Total current liabilities 1267 2754 2511

Total liabilities 7792 10174 9917

Total equity and liabilities 14632 16915 17567

CHANGE IN TOTAL EQUITY

MEUR Share Share Other Fair Retained Minori- Total
capital premium re- value ty
stricted and earnings
funds other
reserves

Total equity at 2948 62 13 134 4343 150 7650
31.12.2004
Stock options excercised 20 8 -13 15
Translation and other -78 -10 -88
differences
Cash dividend -506 -506
Share dividend *) -920 -920
Cash flow hedges -249 34 4 -211
Other fair value adjustments 4 4
Net profit for the period 864 32 896
Total equity at 2968 70 0 -111 3737 176 6840
30.6.2005

Total equity at 2886 36 5 63 3399 120 6509
31.12.2003
Stock options excercised 3 2 -3 2
Translation and other differences 15 -1 14
Cash dividend -359 -359
Cash flow hedges -139 11 -1 -129
Other fair value adjustments 2 2
Net profit for the period 680 22 702
Total equity at 2889 38 2 -74 3746 140 6741
30.6.2004

*) The effect from the share dividend on Fortum Group equity is EUR 920 million.
In the parent company the effect on retained earnings is EUR 969 million.

CONSOLIDATED CASH FLOW STATEMENT
MEUR Q1-Q2 Q1-Q2
2005 2004 2004
Cash flow from
operating activities
Operating profit before depreciations 852 855 1595
continuing operations
Non-cash flow items and divesting activities -9 -54 -49
Financial items and realised foreign -88 -15 -181
exchange gains and losses
Taxes -155 -70 -160
Funds form operations continuing operations 600 716 1205
Change in working capital -84 40 27
Net cash from operating activities 516 756 1232
continuing operations
Net cash from operating activities 133 291 526
discontinued operations
Total net cash from 649 1047 1758
operating activities

Cash flow from investing activities
Capital expenditures -123 -128 -335
Acquisition of shares -30 -179
Proceeds from sales of fixed assets 9 11 60
Proceeds from sales of shares 19 9 15
Change in other investments 10 -139 -20
Net cash used in investing activities -85 -277 -459
continuing operations
Net cash used in investing activities 1155 -89 -277
discontinued operations
Total net cash used in investing activities 1070 -366 -736

Cash flow before financing activities 1719 681 1022

Cash flow from financing activities
Net change in loans -846 -383 -811
Dividends paid to the Company´s equity holders -506 -357 -357
Other financing items 11 0 94
Net cash used in financing activities -1341 -740 -1074
continuing operations
Net cash used in financing activities 92 -182 -236
discontinued operations *)
Total net cash used in financing activities -1312 -922 -1310

Total net increase (+)/decrease (-) in 407 -241 -288
cash and marketable securities

Total net increase (+)/decrease (-) in cash and marketable 407
securities, continuing operations

*) The cash flow from financing activities discontinued operations in 2004 is
shown as used to repay loans since the Treasury operations have been
centralised for the total Fortum Group.

KEY RATIOS 1)
MEUR June March Dec 31 Sept June 30 March Last
30 31 2004 30 2004 31 twelve
2005 2005 2004 2004 months

Earnings per share 0.99 0.38 1.48 1.09 0.80 0.36 1.68
total Fortum (basic), EUR
Earnings per share 0.45 0.28 0.79 0.58 0.45 0.24 0.79
continuing operations
(basic), EUR

Capital employed, 10987 11907 12890 12762 12447 12156 -
MEUR 2)
Interest-bearing net 3595 4878 5095 5445 5512 5526 -
debt, MEUR
Capital expenditure and investments in
shares continuing
operations, MEUR 123 49 514 306 158 57 479
Capital expenditure 123 49 335 201 128 57 330
continuing operations, MEUR

Return on capital 16.7 18.2 15.8 15.0 17.0 18.6 17.8
employed, %
Return on shareholders' 19.2 19.5 18.2 18.4 20.9 19.9 21.7
equity, %
Interest coverage 11.3 11.6 8.0 7.8 8.3 7.1 9.5
Funds from operations/interest- 39.3 36.4 33.1 38.2 44.4 35.3
bearing net debt, %
Gearing, % 53 71 67 77 82 86 -
Equity per share, EUR 7.64 7.67 8.62 8.19 7.77 7.41 -
Equity-to-assets ratio, % 43 43 44 41 40 38 -

Average number of 11066 13135 12859 13112 13097 13023 -
employees
Average number of 872316 871710 852625 849823 849698 849698 858710
shares, 1 000 shares
Diluted adjusted 883629 883774 861772 870806 867907 867344 -
average number of
shares, 1 000 shares
Number of shares, 872793 871854 869749 850262 849813 849813 -
1 000 shares

1) Key ratios are based on Fortum total numbers including continuing and
discontinued operations if otherwise not stated.
2) Capital employed at March 31 2005 does not represent continuing operations
since 15% of the shares in Neste Oil and the interest-bearing receivable from
Neste Oil are included

SALES BY SEGMENTS
MEUR Q2 Q2 Q1-Q2 Q1-Q2 2004 Last
2005 2004 2005 2004 twelve
months

Power 476 488 1010 1048 2084 2046
Generation
- of which internal 13 26 68 62 128 134
Heat 206 198 591 559 1025 1057
- of which internal -1 3 11 39 49 21
Distribution 160 157 362 363 707 706
- of which internal 2 1 4 4 10 10
Markets 298 303 690 722 1387 1355
- of which internal 22 22 47 47 92 92
Other 22 25 45 45 90 90
- of which internal 15 24 37 43 93 87
Eliminations *) -304 -314 -707 -751 -1458 -1414
Sales from continuing operations 858 857 1991 1986 3835 3840
Sales from discontinued operations - 2000 2061 3710 7909
Eliminations - -27 -20 -48 -85
Total 858 2830 4032 5648 11659

*) Eliminations include sales and purchases with Nordpool that is netted on
Group level on an hourly basis and posted either as revenue or cost depending on
if Fortum is a net seller or net buyer during any particular hour

OPERATING PROFIT BY SEGMENTS
MEUR Q2 Q2 Q1-Q2 Q1-Q2 2004 Last
2005 2004 2005 2004 twelve
months

Power 125 172 348 394 763 717
Generation
Heat 50 27 162 131 218 249
Distribution 56 55 127 138 234 223
Markets 8 5 14 21 34 27
Other -12 -11 -18 -29 -54 -43
Operating profit from 227 248 633 655 1195 1173
continuing operations
Operating profit from 390 223 517 373 721
discontinued operations
Total 617 471 1150 1028 1916

*) The accounting treatment of CO2 emission allowances has been changed
according to the decision of IASB to withdraw the IFRIC 3 Emission rights with
immediate effect.

COMPARABLE OPERATING PROFIT BY SEGMENTS, CONTINUING OPERATIONS

MEUR Q2 Q2 Q1-Q2 Q1-Q2 2004 Last
2005 2004 2005 2004 twelve
months

Power 172 145 396 363 730 763
Generation
Heat 37 24 144 125 207 226
Distribution 55 51 121 132 240 229
Markets 8 5 15 14 23 24
Other -11 -14 -22 -26 -52 -48
Comparable operating profit 261 211 654 608 1148 1194
from continuing operations
Non-recurring items 12 -1 18 -7 18 43
Other items effecting -46 38 -39 54 29 -64
comparability
Operating profit from 227 248 633 655 1195 1173
continuing operations

NON-RECURRING ITEMS BY SEGMENTS
MEUR Q2 Q2 Q1-Q2 Q1-Q2 2004 Last
2005 2004 2005 2004 twelve
months

Power 0 -1 0 -7 9 16
Generation
Heat 11 0 11 0 4 15
Distribution 1 0 1 0 2 3
Markets 0 0 0 0 0 0
Other 0 0 6 0 3 9
Total 12 -1 18 -7 18 43

OTHER ITEMS EFFECTING COMPARABILITY BY SEGMENTS

MEUR Q2 Q2 Q1-Q2 Q1-Q2 2004 Last
2005 2004 2005 2004 twelve
months

Power -47 28 -48 38 24 -62
Generation
Heat 2 3 7 6 7 8
Distribution 0 4 5 6 -8 -9
Markets 0 0 -1 7 11 3
Other -1 3 -2 -3 -5 -4
Total -46 38 -39 54 29 -64

DEPRECIATION, AMORTISATION AND IMPAIRMENT CHARGES BY SEGMENTS

MEUR Q2 Q2 Q1-Q2 Q1-Q2 2004 Last
2005 2004 2005 2004 twelve
months

Power 28 27 56 55 104 105
Generation
Heat 31 31 62 59 124 127
Distribution 36 33 73 66 133 140
Markets 4 4 8 8 16 16
Other 2 4 5 4 11 12
Total depreciation, amortisation and
impairment charges
from continuing operations 101 99 204 192 388 400
Total depreciation, - 36 36 68 139
amortisation and impairment charges
from discontinued operations
Total 101 135 240 260 527

SHARE OF PROFITS IN ASSOCIATES AND JOINT VENTURES BY SEGMENTS

MEUR Q2 Q2 Q1-Q2 Q1-Q2 2004 Last
2005 2004 2005 2004 twelve
months

Power -6 -3 -4 -8 -18 -14
Generation *)
Heat 2 3 8 8 15 15
Distribution 6 3 13 8 16 21
Markets 0 0 0 0 0 0
Other -1 1 -1 0 -1 -2
Share of profits in associates 1 4 16 8 12 20
and joint ventures from
continuing operations
Share of profits in associates - 8 -2 11 36
and joint ventures from
discontinued operations
Total 1 12 14 19 48

*) The main part of the associated companies in Power Generation are power
production companies from which Fortum purchase produced electricity at cost.
The share of profit according to IFRS also includes depreciations on fair value
adjustments made when acquiring the shareholdings.

INVESTMENTS IN ASSOCIATES AND JOINT VENTURES BY SEGMENTS

MEUR June 30 June Dec
2005 30 31
2004 2004

Power 1190 1156 1208
Generation
Heat 139 91 127
Distribution 205 189 196
Markets 9 9 8
Other 0 0 0
Investments in associates and joint ventures 1543 1445 1539
from continuing operations
Investments in associates and joint ventures - 123 140
from discontinued operations
Total 1543 1568 1679

CAPITAL EXPENDITURE AND INVESTMENTS IN SHARES BY SEGMENTS

MEUR Q2 Q2 Q1-Q2 Q1-Q2 2004
2005 2004 2005 2004

Power 21 46 39 60 210
Generation
Heat 21 27 33 50 175
Distribution 25 26 40 40 106
Markets 3 0 4 2 6
Other 4 2 7 6 17
Capital expenditure and investments in 74 101 123 158 514
shares from continuing operations
Capital expenditure and investments in - 68 99 118 316
shares from discontinuing operations
Total 74 169 222 276 830

NET ASSETS BY SEGMENTS
MEUR June 30 June Dec
2005 30 31
2004 2004

Power 5970 6142 6218
Generation
Heat 2302 2323 2440
Distribution 3036 3107 3091
Markets 159 177 194
Other and 231 126 -43
Eliminations
Net assets from continuing operations 11698 11875 11900
Net assets from discontinued operations - 1799 2011
Eliminations - 0 2
Total 11698 13674 13913

RETURN ON NET ASSETS BY SEGMENTS

% June March Dec 31 Sept June 30 March Last
30 31 2004 30 2004 31 twelve
2005 2005 2004 2004 months

Power 11.3 14.6 12.1 11.0 12.5 14.0 11.5
Generation
Heat 14.2 19.3 9.8 8.6 11.8 18.3 11.1
Distribution 9.1 10.1 8.1 8.3 9.4 11.3 7.9
Markets 14.6 11.5 25.3 37.9 36.8 77.6 15.2

COMPARABLE RETURN ON NET ASSETS BY SEGMENTS

% June March Dec 31 Sept June 30 March Last
30 31 2004 30 2004 31 twelve
2005 2005 2004 2004 months

Power 13.2 14.9 11.5 10.5 11.5 13.8 12.4
Generation
Heat 12.7 18.5 9.3 8.0 11.3 17.8 10.1
Distribution 8.7 9.4 8.3 8.3 9.0 11.1 8.1
Markets 15.7 13.5 17.1 26.7 24.5 43.4 13.5

Return on net assets is calculated by dividing the sum of operating profit and
share of profit of associated companies and joint ventures with average net
assets.

ASSETS BY SEGMENTS
MEUR June 30 June Dec
2005 30 31
2004 2004

Power 6473 7114 7108
Generation
Heat 2556 2560 2742
Distribution 3433 3474 3514
Markets 424 452 375
Other and 343 -259 -156
Eliminations
Assets from continuing operations 13229 13341 13583
Assets from discontinuing operations - 2538 2756
Eliminations - -31 -32
Assets included in Net assets 13229 15848 16307
Interest-bearing receivables 628 731 728
Deferred taxes 73 32 106
Other assets 150 110 281
Cash and cash equivalents 552 194 145
Total assets 14632 16915 17567

LIABILITIES BY SEGMENTS
MEUR June 30 June Dec
2005 30 31
2004 2004

Power 503 972 890
Generation
Heat 254 237 302
Distribution 397 367 423
Markets 265 275 181
Other and Eliminations 112 -385 -113
Liabilities from continuing operations 1531 1466 1683
Liabilities from discontinuing operations - 739 745
Eliminations - -31 -34
Liabilities included in Net assets 1531 2174 2394
Deferred tax liabilities 1580 1774 1841
Other 534 520 442
Total liabilities included in capital employed 3645 4468 4677
Interest-bearing liabilities 4147 5706 5240
Total equity 6840 6741 7650
Total equity and liabilities 14632 16915 17567


CHANGES IN INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT

MEUR June 30 June Dec
2005 30 31
2004 2004

Opening balance 12041 11923 11923
Acquisition of subsidiary companies 7 - 31
Capital expenditures 222 244 648
Disposals -12 -29 -152
Depreciation, amortisation and impairment -240 -260 -527
Translation differences -362 -74 118
Closing balance before de-consolidation of Neste Oil 11656 11804 12041
De-consolidation of Neste Oil -1609
Closing balance 10047 11804 12041


QUARTERLY SALES BY SEGMENTS
MEUR Q2 Q1 Q4 Q3 Q2 Q1
2005 2005 2004 2004 2004 2004

Power 476 534 583 453 488 560
Generation
- of which internal 13 55 55 11 26 36
Heat 206 385 316 149 198 361
- of which internal -1 12 9 1 3 36
Distribution 160 202 194 150 157 206
- of which internal 2 2 3 3 1 3
Markets 298 392 378 287 303 419
- of which internal 22 25 28 17 22 25
Other 22 23 23 22 25 20
- of which internal 15 22 11 7 9 10
Eliminations -304 -403 -410 -296 -314 -437
Sales from continuing operations 858 1133 1084 765 857 1129
Sales from discontinued operations - 2061 2108 2091 2000 1710
Eliminations - -20 -17 -20 -27 -21
Total 858 3174 3175 2836 2830 2818

QUARTERLY OPERATING PROFIT BY SEGMENTS
MEUR Q2 Q1 Q4 Q3 Q2 Q1
2005 2005 *) 2004 2004 2004 2004

Power 125 223 241 128 172 222
Generation
Heat 50 112 75 12 27 104
Distribution 56 71 51 45 55 83
Markets 8 6 0 13 5 16
Other -12 -6 -4 -21 -11 -18
Operating profit from 227 406 363 177 248 407
continuing operations
Operating profit from 390 127 183 165 223 150
discontinued operations
Total 617 533 546 342 471 557

*) The accounting treatment of CO2 emission allowances has been changed
according to the decision of IASB to withdraw the IFRIC 3 Emission rights with
immediate effect.

QUARTERLY COMPARABLE OPERATING PROFIT BY SEGMENTS, CONTINUING OPERATIONS

MEUR Q2 Q1 Q4 Q3 Q2 Q1
2005 2005 2004 2004 2004 2004

Power 172 224 232 135 145 218
Generation
Heat 37 107 75 7 24 101
Distribution 55 66 57 51 51 81
Markets 8 7 -1 10 5 9
Other -11 -11 -14 -12 -14 -12
Comparable operating profit 261 393 349 191 211 397
from continuing operations
Non-recurring items 12 6 29 -4 -1 -6
Other items effecting comparability -46 7 -15 -10 38 16
Operating profit from 227 406 363 177 248 407
continuing operations

QUARTERLY NON-RECURRING ITEMS IN OPERATING BY SEGMENTS
MEUR Q2 Q1 Q4 Q3 Q2 Q1
2005 2005 2004 2004 2004 2004

Power 0 0 18 -2 -1 -6
Generation
Heat 11 0 4 0 0 0
Distribution 1 0 2 0 0 0
Markets 0 0 0 0 0 0
Other 0 6 5 -2 0 0
Total 12 6 29 -4 -1 -6

Includes positive one-time effects of change in treatment of Finnish TEL
disability pension liability in Q4 2004.

QUARTERLY OTHER ITEMS EFFECTING COMPARABILITY
MEUR Q2 Q1 Q4 Q3 Q2 Q1
2005 2005 2004 2004 2004 2004

Power -47 -1 -9 -5 28 10
Generation
Heat 2 5 -4 5 3 3
Distribution 0 5 -8 -6 4 2
Markets 0 -1 1 3 0 7
Other -1 -1 5 -7 3 -6
Total -46 7 -15 -10 38 16

DISCONTINUED OPERATIONS (including eliminations between Fortum and
discontinued operations)
MEUR Q2 Q2 Q1-Q2 Q1-Q2 2004
2005 2004 2005*) 2004

Sales - 2000 2061 3710 7909
Other income 390 19 395 31 66
Materials and services - -1565 -1726 -3009 -6439
Employee benefit costs - -54 -57 -106 -211
Depreciation, amortisation and - -36 -36 -68 -139
impairment charges
Other expenses - -141 -120 -185 -465
Operating profit 390 223 517 373 721
Share of profit of associates - 8 -2 11 36
and joint ventures
Finance costs-net - 0 -6 -20 -19
Profit before income tax 390 231 509 364 738
Income tax expense - -38 -35 -69 -149
Profit for the year from 390 193 474 295 589
discontinued operations

*) The accounting treatment of CO2 emission allowances has been changed
according to the decision of IASB to withdraw the IFRIC 3 Emission rights with
immediate effect.

CONTINGENT LIABILITIES
MEUR June 30 June Dec
2005 30 31
2004 2004
Contingent liabilities
On own behalf
For debt
Pledges 155 162 160
Real estate mortgages 53 91 113
For other
commitments
Real estate mortgages 66 57 59

Sale and leaseback - 8 -
Other contingent liabilities 101 82 76
Total 375 400 408
On behalf of associated companies and joint ventures
Pledges and real estate mortgages 3 11 12
Guarantees 171 442 335
Other contingent liabilities 182 182 182
Total 356 635 529
On behalf of others
Guarantees 65 13 3
Other contingent liabilities 2 5 5
Total 67 18 8
Total 798 1053 945

Operating lease liabilities
Due within a year 14 72 87
Due after one year and within five years 37 85 81
Due after five years 8 64 64
Total 59 221 232

NUCLEAR
MEUR
June June Dec
30 30 31
2005 2004 2004
Liability for nuclear waste disposal according to the
Nuclear Energy Act in Finland
Liability 1) 596 570 596
Share of reserves in the Nuclear Waste Fund 2) -596 -570 -581
Liabilities in the balance sheet 3) 0 0 15


1) Discounted liability in the balance sheet is EUR 409 (378) million as of 30
June 2005 (and 2004 respectively).
2) Value of the fund asset in the balance sheet is EUR 409 (378) million as of
30 June 2005 (and 2004 respectively) due to IFRIC Interpretation 5, which states
that it can not exceed the value of the related liabilities
3) Mortgaged bearer
papers as security.

The company has a collective contingent liability with Neste Oil Oyj of the
demerged Fortum Oil and Gas Oy's liabilities based on the Finnish Companies
Act's Chapter 14a Paragraph 6.

DERIVATIVES
MEUR June 30 June 30 Dec
2005 2004 31
2004

Interest and currency Notion Net Notion Net Notion Net
derivatives al fair al fair al fair
value value value value value value

Forward interest rate - - 218 -1 - -
agreements
Interest rate swaps 3009 15 4012 -90 1218 -28
Forward foreign 7533 154 7280 13 8176 -32
exchange contracts
Interest rate and currency swaps 314 3 327 1 310 -7
Purchased currency options - - 1697 -16 438 17
Written currency options - - 1718 -3 438 6

Electricity derivatives Volume Net Volume Net Volume Net
fair fair fair
value value value
TWh MEUR TWh MEUR TWh MEUR

Sales contracts 80 -465 70 -382 70 204
Purchase contracts 45 333 40 297 42 -53
Purchased options 1 2 1 -1
Written options 7 -21 1 -

Oil derivatives Volume Net Volume Net Volume Net
fair fair fair
value value value
1000 MEUR 1000 MEUR 1000 MEUR
bbl bbl bbl

Sales contracts 45 -1 16536 -10 44588 26
Purchase contracts 755 12 57027 17 70258 7
Purchased options - - 7350 -1 4797 2
Written options - - 5500 1 6784 -2

Accounting principles

This interim report has been prepared in accordance with IAS 34, Interim
Financial Reporting. As of 2005 Fortum is applying International Financial
reporting Standards (IFRS).

The most important changes for Fortum continuing
operations are:
- Derivatives are being carried at fair value in the balance sheet. Fair
value changes effects the income statement if hedge accounting is not applied.
(IAS 39)
- Fortum´s part of the Finnish nuclear waste fund and the future liabilities
for spent fuel and decomissioning regarding nuclear production are disclosed
gross in the balance sheet according to IFRIC Interpretation 5.
- The minority preference shares with option agreement in Nybroviken Kraft AB
Group accounted for as minority interest under Finnish GAAP is reclassified as
interest-bearing liabilities under IFRS.
- The accounting of pension liabilities according to IAS 19 creates a change
to Finnish GAAP, but impacts mainly 2004 since the accounting treatment of the
Finnish TEL´s disability pension component changed during the year.
- The oil operations in Fortum are regarded as discontinued operations as of
March 31, 2005. Discontinued operations are disclosed on one line in the income
statement and shown separately in the cash-flow. 2004 comparison financials are
restated.

Fortum has in a press release on April 26, 2005, described the impact of the
trabnsition to IFRS on 2004 financial information. The document also included
restated quarterly information and reconciliations of equity and net profit
between Finnish GAAP and IFRS.
The detailed accounting principles used can be found on the Fortum website:
www.fortum.com/Investors/Financial Information

Emission allowances

As of January 1, 2005 Fortum implemented IFRIC interpretation 3 in accounting
for CO2 emission allowances. In June 2005 the IASB decided to withdraw IFRIC 3
with immediate effect

Following this decision, Fortum has changed accounting treatment for emission
allowances. Fortum will instead account for the CO2 allowances are based on
currently valid IFRS standards where purchased CO2 emission allowances are
accounted for as intangible assets at cost, whereas CO2 emission allowances
received free of charge are accounted for at nominal value. A provision is
recognised to cover the obligation to return emission allowances and it is
measured at its probable settlement amount. This means that the effect in
operating profit will reflect the difference between what has been emitted and
received emission allowances. This difference is valued at fair value or the
value of the purchased allowances.

The effects from the change of accounting principle on previously reported
income statement as of March 31, 2005 are:
MEUR Current
Reported reporting
earlier
Operating profit -3 -1

Profit for the period from continuing operations -2 -1
Profit for the period from discontinued operations -3 0
Total profit for the period -5 -1

Definitions of key figures


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

Non-recurring = Mainly capital gains and losses
items

Other items effecting = Includes effects from financial derivatives
comparability 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.

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

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

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

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

Net assets = Non-interest bearing assets + interest-bearing
assets related to the Nuclear
Waste Fund - non-interest bearing liabilities -
provisions
(excluding finance related items, tax and
deferred tax and assets and
liabilities from fair valuations of derivatives
where hedge accounting is
applie
d)

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

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

Equity per share, EUR = Shareholder's
equity
Number of shares at the close of
the period

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

Interest = Operating
coverage profit
Net interest expenses

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