PRO FORMA FINANCIAL INFORMATION ON FORTUM IN RELATION TO THE SEPARATION OF NESTE
OIL
Not for release, publication or distribution in the United States of America.
On 10 March 2005, Fortum Corporation announced that it would be proposing to
shareholders at the Annual General Meeting on 31 March 2005 a dividend
distribution of approximately 85% of the shares outstanding of Neste Oil
Corporation.
The remaining approximately 15% of Neste Oil shares, subject to market
conditions, will be sold to retail investors in Finland and to institutional
investors in Finland and internationally. The dividend distribution is
conditional upon the acceptance of Neste Oil shares for trading on the Main List
of the Helsinki Stock Exchange.
After the separation of the oil businesses Fortum's core businesses are the
generation, distribution and sale of electricity and heat, the operation and
maintenance of power plants as well as energy related services.
Unaudited combined pro forma financial information
The unaudited combined pro forma financial information set forth below is
presented to illustrate the certain key financials of Fortum Group ('Fortum') for
the period ended as of 31 December 2004 as if the separation of Neste Oil Group
('Neste Oil') through dividend distribution of approximately 85% of the shares
and selling of the remaining approximately 15% of the shares had taken place on 1
January 2004 relating to income statement data and 31 December 2004 relating to
balance sheet data. The combined pro forma financial information is based on the
audited consolidated financial statements year 2004 of Fortum, the audited
combined carve-out and consolidated financial statements year 2004 of Neste Oil
and the unaudited adjustments relating directly to the transactions and internal
eliminations between remaining Fortum and Neste Oil.
In the pro forma calculation it is assumed that the net debt of Fortum had
decreased by repayment of short-term loans equalling the net debt of Neste Oil
amounting to EUR 865 million according to Finnish GAAP at the end of 2004 and
proceeds from the selling of the approximately 15% shareholding of Neste Oil
Corporation. However, inasmuch as the actual level of Neste Oil's interest-
bearing net debt as of such date or at anytime thereafter is subject to various
factors, including the operating results and cash flows of Neste Oil during the
three months ended 31 March, 2005 and thereafter, no assurance can be given as to
the actual level of interest-bearing net debt as of such date or at any time
thereafter. In this pro forma calculation assumed proceeds from selling of the
shares are equal to approximately 15% of the book value of the consolidated
equity of Neste Oil as of 31 December 2004 according to Finnish GAAP which might
be different from the market value of the shares. The adjustments do not include
potential income, capital gains or losses, savings or expenses.
In the pro forma calculation the unaudited IFRS impact to the remaining Fortum is
also illustrated.
The combined pro forma financial information has been given solely for
illustrative purposes and, due to its nature, does not as such provide a true and
fair view of Fortum's financial position or results year 2004 or thereafter.
Pro forma Fortum Group income statement related data
(EUR million) Fortum Neste Adjust-m Fortum IFRS Fortum
(1) Oil ents (3)
(1),(2)
Pro Adj. Pro
forma (3), forma
(3) (4) IFRS
(3)
12 months to 31 December 2004
- Net Sales 11,665 -7,909 85(5) 3,841 -6 3,835
- EBITDA 2,425 -830 -14(6) 1,581 -18 1,563
- Operating profit 1,914 -712 -14(6) 1,188 7 1,195
Pro forma Fortum Group balance sheet related data and key ratios
(EUR million) Fortum Neste Adjust-m Fortum IFRS Fortum
(1) Oil ents
(1),(7) (3)
Pro Adj. Pro
forma (3),(4) forma
(3) IFRS
(3)
As of 31 December 2004
- Net Debt 4,896 -865 -129(8) 3,902 95 3,997
- Shareholders' 7,394 -860 129(8) 6,663 -22(9) 6,641
equity
- Minority 261 -5 - 256 -111 145
interests
- Total assets 16,704 -2,838 153(5) 14,019 - -
- Gearing (10) 64% - - 56% - 59%
Note:
(1) Audited
(2) Based on Neste Oil combined carve-out financial statements for 2004 in
accordance with generally accepted accounting principles in Finland ("Finnish
GAAP")
(3) Unaudited
4) Based on Appendix: "Transition to International Financial Reporting Standards
IFRS (2005)" in Fortum Corporation financial statements 2004 disclosed February
3, 2005, Note 24 and 25 "Transition to International Financial Reporting
Standards IFRS (2005)" in Neste Oil consolidated financial statements as of
December 31, 2004 and Neste Oil combined carve-out financial statements for 2004
respectively and as well as intragroup items.
(5) Adjustments reflect reversal of the eliminations of the intragroup items i.e.
no change in operating profit.
(6) Adjustment reflect adding back the carved-out corporate staff costs included
in Neste Oil combined carve-out financial statements since no savings are
assumed.
(7) Based on Neste Oil consolidated financial statements as of 31 December 2004
in accordance with generally accepted accounting principles in Finland ("Finnish
GAAP")
(8) Adjustment reflect the impact of the assumed sale of approximately 15% of the
shares in Neste Oil. In this pro forma calculation the assumed proceeds from
selling of the shares are equal to approximately 15% of the book value of the
equity of Neste Oil as of December 31, 2004 according to Finnish GAAP which might
be different from the market value of the shares.
(9) IFRS adjustments related to the remaining Fortum.
(10) Gearing is calculated as Interest-bearing net debt over shareholders' equity
plus minority interest.
Fortum Corporation will publish a detailed IFRS transition stock exchange release
in early April.
A teleconference for international analysts and investors will be arranged on
Tuesday, 15 March at 4:00 pm Finnish time (GMT+2). To listen to the call please
dial +44 (0) 1452 568 061.
Fortum Corporation
Carola Teir-Lehtinen
Senior Vice President, Corporate Communications
Distribution:
Helsinki Stock Exchange
Key media
For further information please contact
Juha Laaksonen, CFO, tel. +358 10 452 4519
The information contained herein is not for publication or distribution into the
United States. The material set forth herein is for informational purposes only
and is not intended, and should not be construed, as an offer of securities for
sale into the United States. The securities described herein have not been and
will not be registered under the U.S. Securities Act of 1933, as amended, or the
laws of any state, and may not be offered or sold within the United States,
except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and applicable state laws. There
is no intention to register any portion of the offering in the United States or
to conduct a public offering of securities in the United States.
The information contained herein shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of the securities
referred to herein, in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration, exemption from registration or
qualification under the securities law of any such jurisdiction.
This document does not constitute an offer of securities to the public in the
United Kingdom. No prospectus has been or will be registered in the United
Kingdom in respect of the shares consequently the shares must not be sold or
offered for sale in the United Kingdom, except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their business or whom it
is reasonable to suppose will acquire, hold, manage or dispose of investments (as
principal or agent) for the purposes of their business.
This communication is made to or is directed at persons who are (i) outside the
United Kingdom or (ii) "investment professionals" under Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (the
"Order") or (iii) "high net worth companies, unincorporated associations etc."
under Article 49(2)(a) to (d) of the Order (together referred to as "relevant
persons"). Any investments or services referred to in this communication are
offered only to relevant persons. This communication should only be relied on by
relevant persons.