FORTUM CLARIFIES ITS FINANCING STRUCTURE

FORTUM CLARIFIES ITS FINANCING STRUCTURE - preference shares issued by Fortum Capital Ltd. to be redeemed The Board of Directors has decided to redeem the preference shares issued by Fortum Corporation’s subsidiary, Fortum Capital Limited. The redemption will take place on 30 December 2003. The preference shares, worth EUR 1.2 billion, were issued in connection with the financing arrangements related to the acquisition of Stora Enso power assets in June 2000. Fortum will finance the redemption with debt. All of the preference shares have carried a fixed dividend of 6.7% per annum. The interest rate swap arrangements that Fortum simultaneously entered into has brought Fortum's effective cost of funding below the fixed rate dividend. The proceeds of the bond offering made by Fortum in early November with favourable market terms will be used for the redemption. As a result, a slightly lower level of financing costs will be achieved. The arrangement has been accounted for as a minority interest in Fortum Group’s financial statements. In the consolidated income statement and balance sheet, the effect of this minority interest has been approximately EUR -80 million and EUR 1.2 billion respectively. These amounts will be replaced by approximately similar amounts in financial expenses and interest-bearing liabilities. The impact on the balance sheet will materialise as of the redemption date, and the impact on financial expenses as of 2004. Impact on the amount of net debt has already been taken into account in calculating the adjusted gearing ratio disclosed in the Interim Financial Statements. The redemption will improve the return of equity ratio, whereas the return of capital employed will remain unchanged. Fortum expects this transaction to have no effect on its credit ratings. Fortum Corporation Carola Teir-Lehtinen Senior Vice President, Corporate Communications Further information: Juha Laaksonen, CFO, tel. +358 10 452 4519 Seppo Viitanen, Group Treasurer, tel. +358 50 452 4477 Distribution: Helsinki Exchanges Key media www.fortum.com Attachment Impact of the redemption on Fortum Group's key figures The unaudited Combined Pro Forma Financial Information set forth below is presented to illustrate the consolidated results of Fortum as if the redemption of the preference shares had taken place on December 31, 2002. The combined unaudited pro forma financial information has been given solely for illustrative purposes and due to its nature does not as such provide a true picture of Fortum Group's financial position or results. Unaudited Last Adjustments Last twelve twelve months, months, Q3,2003 Q3,2003, pro-forma Net financial expenses MEUR -262 -80 *) -342 Minority interests in MEUR -80 80 0 income statement Earnings per share EUR 0.86 0 0.86 Net cash from operating MEUR 1,755 -80 1,675 activities Net cash from financing MEUR -1,943 80 -1,863 activities Q3/2003 Q3/2003, pro-forma Equity per share EUR 7.30 0 7.30 Minority interests in MEUR 1,449 -1,200 **) 249 balance sheet Net debt MEUR 4,420 1,200 5,620 Gearing % 58 30 88 ***) Equity-to-assets ratio % 47 -7 40 ROCE % 10.6 0 10.6 ROE % 10.5 0.7 11.2 *) Not including the expected slightly lower funding cost. **) Nominal value of preference shares ***) The pro-forma gearing is the same as adjusted gearing disclosed in the published Interim Report January-September 2003