Fortum: Interim Report January - March 2008

A major strategic step in Russia - Fortum acquired TGC-10 Clear improvement in operational performance - Comparable operating profit EUR 581 (512) million, +13% - Earnings per share EUR 0.51 (0.59), -14%. EPS in the first quarter 2007 included a non-recurring gain of EUR 0.20 per share. - Strong cash flow from operating activities EUR 542 (497) million - Fortum delivers on its strategy - acquires TGC-10 in Russia -------------------------------------------------------------------------------- | Key figures | I/08 | I/07 | 2007 | LTM | -------------------------------------------------------------------------------- | Sales, EUR million | 1,440 | 1,340 | 4,479 | 4,579 | -------------------------------------------------------------------------------- | Operating profit, EUR million | 609 | 490 | 1,847 | 1,966 | -------------------------------------------------------------------------------- | Comparable operating profit, EUR | 581 | 512 | 1,564 | 1,633 | | million | | | | | -------------------------------------------------------------------------------- | Profit before taxes, EUR million | 598 | 661 | 1,934 | 1,871 | -------------------------------------------------------------------------------- | Earnings per share, EUR | 0.51 | 0.59 | 1.74 | 1.67 | -------------------------------------------------------------------------------- | Net cash from operating | 542 | 497 | 1,670 | 1,715 | | activities, EUR million | | | | | -------------------------------------------------------------------------------- | Shareholders' equity per share, | 9.53 | 8.22 | 9.43 | | | EUR | | | | | -------------------------------------------------------------------------------- | Interest-bearing net debt | 5,228 | 3,932 | 4,466 | | | (at | | | | | | end of period), EUR million | | | | | -------------------------------------------------------------------------------- | Average number of shares, 1,000s | 887,085 | 890,263 | 889,997 | 889,485 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key financial ratios | 2007 | LTM | 2007* | LTM* | -------------------------------------------------------------------------------- | Return on capital employed, % | 16.5 | 14.4 | 14.0 | 13.1 | -------------------------------------------------------------------------------- | Return on shareholders' | 19.1 | 18,0 | 15.8 | 16.4 | | equity, % | | | | | -------------------------------------------------------------------------------- | Net debt/EBITDA | 1.9 | 2.2 | 2.2 | 2.4 | -------------------------------------------------------------------------------- *Adjusted for REC and Lenenergo gains Fortum's operating profit improved significantly from a year ago, mainly driven by better results in the Power Generation segment. Fortum's successful hedging, higher average Nord Pool spot price and higher nuclear volumes contributed to the improvement. Fortum's profit before taxes and earnings per share were lower than a year ago. This is due to the non-recurring gain of EUR 180 million from Hafslund ASA's sale of shares in Renewable Energy Corporation (REC), which was booked in Fortum's first-quarter results last year. The gain corresponds to EUR 0.20 per share in Fortum's first-quarter results last year. Electricity market conditions were challenging in the first quarter of 2008. The weather in the Nordic countries was very mild with even higher precipitation than in the first quarter of 2007. This lowered electricity and heat demand and led to lower sales volumes in Fortum's Heat and Distribution segments. Despite the warm weather, the Nord Pool spot price was higher than the previous year, mainly due to higher CO2 and coal prices. However, the high precipitation and mild winter temperatures resulted in decreasing prices towards the end of the period. Fortum's net cash from operating activities improved to EUR 542 (497) million. In the first quarter 2008, Fortum acquired a controlling stake in the Russian territorial generating company TGC-10. At the end of the first quarter, Fortum's holding in TGC-10 was 76.49%. Of this holding, 29.07 percentage points were acquired from United Energy Systems of Russia (RAO UES) for approximately EUR 0.8 billion, and 47.42 percentage points through a share issue for approximately EUR 1.3 billion. This capital increase of EUR 1.3 billion will remain in TGC-10 and will be used to finance its committed capacity investment programme planned at EUR 2.2 billion. Fortum will also make a mandatory offer to purchase the remaining 23.51% of the shares held by minority shareholders. The total value of the mandatory offer is approximately EUR 0.6 billion. If Fortum reaches a 100% holding in TGC-10, the total value of the transaction will be around EUR 2.7 billion. In March, the Finnish Market Court decision overruled the conditional decision given by the Finnish Competition Authority in June 2006 on the acquisition of E.ON Finland. In their ruling, the Market Court stated that the Finnish Competition Authority had no grounds for setting conditions, because Fortum cannot be considered to have a dominant position in the power generation and wholesale market. According to the Market Court, the relevant geographical market area in power generation and wholesale consists of at least Finland and Sweden. The Finnish Competition authority has appealed the decision to the Supreme Administrative Court. In the first quarter, the Power Generation segment's achieved Nordic power price was EUR 44.6 (39.2) per megawatt-hour (MWh), up by 14% from the previous year and clearly higher than the average spot price of electricity in Nord Pool, the Nordic power exchange. The average spot price of electricity in Nord Pool was EUR 38.0 (26.7) per MWh, approximately 42% higher than the same period the previous year. Changes in reported segments Following the acquisition of TGC-10, Fortum has made adjustments to its reporting structure. A new Russia segment is created, including - TGC-10, which is consolidated in the balance sheet. TGC-10's income statement will be consolidated from the beginning of the second quarter 2008. - The TGC-1 shareholding, which is transferred from the Power Generation segment. - Minor assets from shareholdings in Lenenergo spin-off companies, transferred from the Distribution, Markets and Other segments. - The 2007 non-recurring gain on the sale of Lenenergo shares (EUR 232 million), transferred from the Distribution segment. - The 2007 gain on the sale of WGC-5 shares (EUR 12 million), transferred from the Power Generation segment. Profit from the associated company Hafslund ASA is now reported in the Other segment, including the REC gain accounted for in 2007 (EUR 180 million). In Fortum's earlier reporting, share of profit from Hafslund ASA was included in the Power Generation segment. Financial results January - March Group sales were EUR 1,440 (1,340) million. Group operating profit totalled EUR 609 (490) million. Comparable operating profit increased to EUR 581 (512) million. The Power Generation, Distribution and Markets segments improved from a year ago, while the Heat segment performed worse. Sales by segment -------------------------------------------------------------------------------- | EUR million | I/08 | I/07 | 2007 | LTM | -------------------------------------------------------------------------------- | Power Generation | 717 | 641 | 2,350 | 2,426 | -------------------------------------------------------------------------------- | Heat | 493 | 479 | 1,356 | 1,370 | -------------------------------------------------------------------------------- | Distribution | 232 | 225 | 769 | 776 | -------------------------------------------------------------------------------- | Markets | 519 | 519 | 1,683 | 1,683 | -------------------------------------------------------------------------------- | Russia | - | - | - | - | -------------------------------------------------------------------------------- | Other | 20 | 19 | 81 | 82 | -------------------------------------------------------------------------------- | Eliminations | -541 | -543 | -1,760 | -1,758 | -------------------------------------------------------------------------------- | Total | 1,440 | 1,340 | 4,479 | 4,579 | -------------------------------------------------------------------------------- Comparable operating profit by segment -------------------------------------------------------------------------------- | EUR million | I/08 | I/07 | 2007 | LTM | -------------------------------------------------------------------------------- | Power Generation | 395 | 330 | 1,095 | 1,160 | -------------------------------------------------------------------------------- | Heat | 121 | 137 | 290 | 274 | -------------------------------------------------------------------------------- | Distribution | 87 | 78 | 231 | 240 | -------------------------------------------------------------------------------- | Markets | -10 | -14 | -1 | 3 | -------------------------------------------------------------------------------- | Russia | - | - | - | - | -------------------------------------------------------------------------------- | Other | -12 | -19 | -51 | -44 | -------------------------------------------------------------------------------- | Total | 581 | 512 | 1,564 | 1,633 | -------------------------------------------------------------------------------- Operating profit by segment -------------------------------------------------------------------------------- | EUR million | I/08 | I/07 | 2007 | LTM | -------------------------------------------------------------------------------- | Power Generation | 431 | 300 | 1,115 | 1,246 | -------------------------------------------------------------------------------- | Heat | 130 | 142 | 294 | 282 | -------------------------------------------------------------------------------- | Distribution | 86 | 79 | 233 | 240 | -------------------------------------------------------------------------------- | Markets | -20 | -12 | 12 | 4 | -------------------------------------------------------------------------------- | Russia | - | - | 244 | 244 | -------------------------------------------------------------------------------- | Other | -18 | -19 | -51 | -50 | -------------------------------------------------------------------------------- | Total | 609 | 490 | 1,847 | 1,966 | -------------------------------------------------------------------------------- Profit before taxes was EUR 598 (661) million. The Group's net financial expenses increased to EUR 45 (31) million. The increase is attributable to a higher average level of debt, higher short-term interest rates and lower, EUR -2 (2) million, change in the fair value of derivatives. Hafslund ASA is showing the fair value change in the REC shareholding through the income statement, while Fortum is showing the fair value change in equity. The cumulative fair value change booked in Fortum's equity and based on the remaining number of shares reported by Hafslund ASA was approximately EUR 380 million at the end of March 2008 (EUR 790 million at the end of December 2007). Minority interests accounted for EUR 24 (30) million. The minority interests are mainly attributable to Fortum Värme Holding AB, in which the City of Stockholm has a 50% economic interest. Taxes for the period totalled EUR 122 (109) million. The tax rate according to the income statement was 20.4% (16.5%). The tax rate in the first quarter of 2007 was lowered by the non-taxable gain of EUR 180 million from Hafslund's sale of REC shares. The profit for the period was EUR 452 (522) million. Fortum's earnings per share were EUR 0.51 (0.59). Return on capital employed was 14.4% for the last twelve months (16.5% at year-end 2007), and return on shareholders' equity was 18.0% for the last twelve months (19.1% at year-end 2007). The adjusted return on capital employed and return on shareholders' equity, excluding the REC and Lenenergo gains, were 13.1% and 16.4%, respectively for the last twelve months (at year-end 2007 14.0% and15.8%, respectively.) Market conditions According to preliminary statistics, the Nordic countries consumed 114 (116) terawatt-hours (TWh) of electricity in the first quarter of 2008, a decrease of about 2% from previous year. The decrease was mainly due to mild winter temperatures. Year 2008 started with the Nordic water reservoirs being 9 TWh above the long-term average. At the end of March, they were 9 TWh above the long-term average and 7 TWh above the corresponding level at the end of March 2007. During the first quarter, the average spot price for power in Nord Pool was EUR 38.0 (26.7) per MWh or 42% higher than in the corresponding period in 2007. The higher price was due to higher CO2 and coal prices. The high precipitation and mild winter temperatures resulted in decreasing prices towards the end of the period. The second EU emission trading period 2008-2012, with new national emission allocations, started at the beginning of 2008. During the first quarter, the average market price of CO2 emission allowances (EUA) for 2008 was EUR 21.4 per tonne CO2. In 2007, the corresponding price for CO2 emission allowances for 2007 was EUR 2.1 per tonne CO2. Coal and oil prices increased dramatically in 2007. During the first quarter of 2008, coal prices remained at these high levels and oil prices continued to increase. In Germany, the average spot price for the first quarter was EUR 56.2 (29.7) per MWh, significantly higher than in the Nordic area. This resulted in a net export from the Nordic area to Germany. Total power and heat generation figures Fortum's total power generation during the first quarter of 2008 was 15.2 (15.2) TWh, of which 14.9 (14.9) TWh was in the Nordic countries, representing 13% (13%) of the total Nordic electricity consumption. Fortum's total heat generation during the first quarter of 2008 was 9.0 (9.8) TWh, of which 7.6 (8.4) TWh was in the Nordic countries. During the first quarter of 2008, approximately 90% (89%) of the power generated by Fortum within the EU countries was CO2-free. 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 and heat | I/08 | I/07 | 2007 | LTM | | generation, TWh | | | | | -------------------------------------------------------------------------------- | Power generation | 15.2 | 15.2 | 52.2 | 52.2 | -------------------------------------------------------------------------------- | Heat generation | 9.0 | 9.8 | 26.1 | 25.3 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fortum's own power generation | I/08 | I/07 | 2007 | LTM | | by source, TWh, | | | | | | total in the | | | | | | Nordic countries | | | | | -------------------------------------------------------------------------------- | Hydropower | 6.3 | 6.4 | 20.0 | 19.9 | -------------------------------------------------------------------------------- | Nuclear power | 6.9 | 6.5 | 24.9 | 25.3 | -------------------------------------------------------------------------------- | Thermal power | 1.7 | 2.0 | 6.2 | 5.9 | -------------------------------------------------------------------------------- | Total | 14.9 | 14.9 | 51.1 | 51.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fortum's own power generation | I/08 | I/07 | 2007 | LTM | | by source, %, total in the | | | | | | Nordic countries | | | | | -------------------------------------------------------------------------------- | Hydropower | 42 | 43 | 39 | 39 | -------------------------------------------------------------------------------- | Nuclear power | 46 | 44 | 49 | 49 | -------------------------------------------------------------------------------- | Thermal power | 12 | 13 | 12 | 12 | -------------------------------------------------------------------------------- | Total | 100 | 100 | 100 | 100 | -------------------------------------------------------------------------------- Total power and heat sales figures Fortum's total power sales were 17.1 (17.5) TWh, of which 16.8 (17.2) TWh were in the Nordic countries. This represents approximately 15% (15%) of Nordic electricity consumption during January-March 2008. Fortum's total heat sales were 9.7 (10.0) TWh, of which 7.2 (7.6) TWh were in the Nordic countries. -------------------------------------------------------------------------------- | Fortum's total electricity *) | I/08 | I/07 | 2007 | LTM | | and heat sales, EUR million | | | | | -------------------------------------------------------------------------------- | Electricity sales | 759 | 675 | 2,370 | 2,454 | -------------------------------------------------------------------------------- | Heat sales | 395 | 388 | 1,096 | 1,103 | -------------------------------------------------------------------------------- *) Nord Pool transactions are calculated as a net amount of hourly sales and purchases at the Group level. -------------------------------------------------------------------------------- | Fortum's total electricity | I/08 | I/07 | 2007 | LTM | | sales *) by area, TWh | | | | | -------------------------------------------------------------------------------- | Sweden | 8.4 | 8.4 | 27.6 | 27.6 | -------------------------------------------------------------------------------- | Finland | 7.8 | 8.2 | 29.0 | 28.6 | -------------------------------------------------------------------------------- | Other countries | 0.9 | 0.9 | 3.1 | 3.1 | -------------------------------------------------------------------------------- | Total | 17.1 | 17.5 | 59.7 | 59.3 | -------------------------------------------------------------------------------- *) Nord Pool transactions are calculated as a net amount of hourly sales and purchases at the Group level. -------------------------------------------------------------------------------- | Fortum's total heat sales by | I/08 | I/07 | 2007 | LTM | | area, TWh | | | | | -------------------------------------------------------------------------------- | Sweden | 3.4 | 3.5 | 9.2 | 9.1 | -------------------------------------------------------------------------------- | Finland | 3.7 | 4.0 | 11.1 | 10.8 | -------------------------------------------------------------------------------- | Other countries** | 2.6 | 2.5 | 6.8 | 6.9 | -------------------------------------------------------------------------------- | Total | 9.7 | 10.0 | 27.1 | 26.8 | -------------------------------------------------------------------------------- **) Including the UK, which is reported in the Power Generation segment, other sales. 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 business units Generation, Portfolio Management and Trading (PMT), and Service. -------------------------------------------------------------------------------- | EUR million | I/08 | I/07 | 2007 | LTM | -------------------------------------------------------------------------------- | Sales | 717 | 641 | 2,350 | 2,426 | -------------------------------------------------------------------------------- | - power sales | 646 | 566 | 2,019 | 2,099 | -------------------------------------------------------------------------------- | - other sales | 71 | 75 | 331 | 327 | -------------------------------------------------------------------------------- | Operating profit | 431 | 300 | 1,115 | 1,246 | -------------------------------------------------------------------------------- | Comparable operating profit | 395 | 330 | 1,095 | 1,160 | -------------------------------------------------------------------------------- | Net assets (at period-end) | 5,633 | 5,636 | 5,599 | | -------------------------------------------------------------------------------- | Return on net assets, % | | | 19.2 | 21.7 | -------------------------------------------------------------------------------- | Comparable return on net assets, | | | 18.9 | 20.2 | | % | | | | | -------------------------------------------------------------------------------- | Gross investments | 18 | 16 | 145 | 147 | -------------------------------------------------------------------------------- | Number of employees | 3,544 | 3,371 | 3,511 | | -------------------------------------------------------------------------------- In January-March, the segment's power generation in the Nordic countries was 13.2 (13.1) TWh. The availability of the Swedish nuclear power plants increased after the unplanned shutdowns in 2007. In January-March, approximately 97% (96%) of the segment's power generation was CO2-free. -------------------------------------------------------------------------------- | Nordic power generation by | I/08 | I/07 | 2007 | LTM | | source, TWh | | | | | -------------------------------------------------------------------------------- | Hydropower | 6.3 | 6.4 | 20.0 | 19.9 | -------------------------------------------------------------------------------- | Nuclear power | 6.9 | 6.5 | 24.9 | 25.3 | -------------------------------------------------------------------------------- | Thermal power | 0.0 | 0.2 | 1.2 | 1.0 | -------------------------------------------------------------------------------- | Total | 13.2 | 13.1 | 46.1 | 46.2 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Power generation by area, TWh | I/08 | I/07 | 2007 | LTM | -------------------------------------------------------------------------------- | Sweden | 7.9 | 7.9 | 26.0 | 26.0 | -------------------------------------------------------------------------------- | Finland | 5.3 | 5.2 | 20.1 | 20.2 | -------------------------------------------------------------------------------- | Other countries | 0.4 | 0.3 | 1.1 | 1.2 | -------------------------------------------------------------------------------- | Total | 13.6 | 13.4 | 47.2 | 47.4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Nordic sales volume, TWh | 14.6 | 14.6 | 51.8 | 51.8 | -------------------------------------------------------------------------------- | of which pass-through sales | 1.1 | 1.4 | 5.2 | 4.9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Sales price, EUR/MWh | I/08 | I/07 | 2007 | LTM | -------------------------------------------------------------------------------- | Generation's Nordic power | 44.6 | 39.2 | 39.7 | 41.2 | | price* | | | | | -------------------------------------------------------------------------------- *) For the Power Generation segment in the Nordic countries, excluding pass-through sales. During the first quarter, the average spot price in Nord Pool was EUR 38.0 per MWh, while Generation's achieved Nordic power price was EUR 44.6 per MWh, up by 14% from a year ago. This was thanks to consistent hedging strategy. Generation's sales volume was 13.5 (13.2) TWh in the first quarter. In the first quarter, the comparable operating profit of the Power Generation segment was higher than in the corresponding period in the previous year. The higher achieved Nordic power price and better availability of nuclear generation contributed positively. This was partly offset by higher taxation in Sweden. On 20 February 2008, Fortum, the Russian territorial generating company TGC-1 and ECF Project Ltd signed an agreement according to which Fortum will purchase approximately 5 million tonnes of emission reduction units (ERU) from TGC-1. The ERUs will come from Joint Implementation projects conducted at TGC-1's production facilities during the Kyoto Period (2008-2012) of the European Emissions Trading Scheme. The projects TGC-1 will implement include reconstruction of hydro power plants, expansion and reconstruction of combined heat and power generation facilities as well as energy efficiency improvements within the district heating network. The purchase agreement is based on the Memorandum of Understanding between Fortum and RAO UES in 2006, and it is the biggest of its kind ever made in Russia. The ERUs purchased cover approximately half of Fortum's annual CO2 emissions; their value is approximately EUR 70 million based on the current market price of certified emission reductions (CER) originating from developing countries. 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 Nordic region. The segment also generates power in combined heat and power plants (CHP) and sells it to end-customers mainly through long-term contracts, as well as to Nord Pool. The segment includes the business units Värme, operating in Sweden, and Heat, operating in mainly other markets. -------------------------------------------------------------------------------- | EUR million | I/08 | I/07 | 2007 | LTM | -------------------------------------------------------------------------------- | Sales | 493 | 479 | 1,356 | 1,370 | -------------------------------------------------------------------------------- | - heat sales | 386 | 377 | 1,053 | 1,062 | -------------------------------------------------------------------------------- | - power sales | 77 | 75 | 202 | 204 | -------------------------------------------------------------------------------- | - other sales | 30 | 27 | 101 | 104 | -------------------------------------------------------------------------------- | Operating profit | 130 | 142 | 294 | 282 | -------------------------------------------------------------------------------- | Comparable operating profit | 121 | 137 | 290 | 274 | -------------------------------------------------------------------------------- | Net assets (at period-end) | 3,617 | 3,444 | 3,507 | | -------------------------------------------------------------------------------- | Return on net assets, % | | | 9.3 | 8.8 | -------------------------------------------------------------------------------- | Comparable return on net assets, | | | 9.2 | 8.6 | | % | | | | | -------------------------------------------------------------------------------- | Gross investments | 112 | 59 | 327 | 380 | -------------------------------------------------------------------------------- | Number of employees | 2,445 | 2,304 | 2,279 | | -------------------------------------------------------------------------------- The segment's heat sales during the first quarter amounted to 9.2 (9.5) TWh, most of which was generated in the Nordic countries. During the same period, power sales from CHP production totalled 1.7 (1.7) TWh. The Heat segment's comparable operating profit during the first quarter was EUR 16 million lower than the previous year. The decrease in the result was mainly due to higher fuel prices, higher CO2 costs and lower electricity and heat volumes. The large CHP plant projects in Espoo, Finland, Tarto, Estonia and Czestochowa, Poland proceeded. The preparations continued for the CHP plants in Järvenpää, Finland and Värtan and Brista, Sweden. -------------------------------------------------------------------------------- | Heat sales by area, TWh | I/08 | I/07 | 2007 | LTM | -------------------------------------------------------------------------------- | Sweden | 3.4 | 3.5 | 9.2 | 9.1 | -------------------------------------------------------------------------------- | Finland | 3.7 | 4.0 | 11.1 | 10.8 | -------------------------------------------------------------------------------- | Other countries | 2.1 | 2.0 | 4.8 | 4.9 | -------------------------------------------------------------------------------- | Total | 9.2 | 9.5 | 25.1 | 24.8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Power sales, TWh | I/08 | I/07 | 2007 | LTM | -------------------------------------------------------------------------------- | Total | 1.7 | 1.7 | 5.0 | 5.0 | -------------------------------------------------------------------------------- Distribution Fortum owns and operates distribution and regional networks and distributes electricity to a total of 1.6 million customers in Sweden, Finland, Norway and Estonia. -------------------------------------------------------------------------------- | EUR million | I/08 | I/07 | 2007 | LTM | -------------------------------------------------------------------------------- | Sales | 232 | 225 | 769 | 776 | -------------------------------------------------------------------------------- | - distribution network | 199 | 192 | 648 | 655 | | transmission | | | | | -------------------------------------------------------------------------------- | - regional network transmission | 23 | 24 | 81 | 80 | -------------------------------------------------------------------------------- | - other sales | 10 | 9 | 40 | 41 | -------------------------------------------------------------------------------- | Operating profit | 86 | 79 | 233 | 240 | -------------------------------------------------------------------------------- | Comparable operating profit | 87 | 78 | 231 | 240 | -------------------------------------------------------------------------------- | Net assets (at period-end) | 3,332 | 3,245 | 3,239 | | -------------------------------------------------------------------------------- | Return on net assets, % | | | 7.7 | 8.0 | -------------------------------------------------------------------------------- | Comparable return on net assets, | | | 7.6 | 8.0 | | % | | | | | -------------------------------------------------------------------------------- | Gross investments | 61 | 36 | 237 | 262 | -------------------------------------------------------------------------------- | Number of employees | 1,175 | 1,039 | 1,063 | | -------------------------------------------------------------------------------- In the first quarter of 2008, the volume of distribution and regional network transmissions totalled 7.9 (8.0) TWh and 5.0 (5.2) TWh, respectively. Warm weather had a negative impact on transmission volumes compared to last year. Electricity transmissions via the regional distribution network totalled 4.1 (4.3) TWh in Sweden and 0.9 (0.9) TWh in Finland. The comparable operating profit of the Distribution segment was EUR 87 million in the first quarter, EUR 9 million higher than the previous year. The improvement is mainly attributable to the heavy impact of the winter storms in Sweden during the first quarter of last year. In Sweden, the installation of automatic meters in Fortum's network areas continues. By the end of March, approximately 441,000 customers had the new meter. The main part of the installation work will be completed during 2008. Two investigations that may have a significant impact on the regulation of the network business have been presented to the Swedish government. The Energy Network Inquiry has published a report with a proposal of an advanced review of network company revenue effective 1 January 2012. The proposed regulation has similarities to the current Finnish regulation, with e.g. the repurchase value of the actual grid forming the regulatory capital base. In addition, the Grid Connection Inquiry has given its report with the objective to promote the development of renewable electricity production. In April 2008, the Finnish Energy Market Authority published the interim check of the allowed return for Finnish network companies in 2005 and 2006. The final decision regarding the 2005-2007 regulation period will be announced in late autumn 2008. -------------------------------------------------------------------------------- | Volume of distributed | I/08 | I/07 | 2007 | LTM | | electricity in distribution | | | | | | network, TWh | | | | | -------------------------------------------------------------------------------- | Sweden | 4.3 | 4.3 | 14.3 | 14.2 | -------------------------------------------------------------------------------- | Finland | 2.8 | 2.9 | 9.2 | 9.2 | -------------------------------------------------------------------------------- | Norway | 0.7 | 0.7 | 2.3 | 2.3 | -------------------------------------------------------------------------------- | Estonia | 0.1 | 0.1 | 0.2 | 0.2 | -------------------------------------------------------------------------------- | Total | 7.9 | 8.0 | 26.0 | 25.9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Number of electricity distribution | 31 Mar 2008 | 31 Dec 2007 | | customers by area, thousands | | | -------------------------------------------------------------------------------- | Sweden | 873 | 871 | -------------------------------------------------------------------------------- | Finland | 599 | 591 | -------------------------------------------------------------------------------- | Other countries | 123 | 122 | -------------------------------------------------------------------------------- | Total | 1,595 | 1,584 | -------------------------------------------------------------------------------- Markets Markets is responsible for retail sales of electricity to a total of 1.3 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 | I/08 | I/07 | 2007 | LTM | -------------------------------------------------------------------------------- | Sales | 519 | 519 | 1,683 | 1,683 | -------------------------------------------------------------------------------- | - power sales | 501 | 496 | 1,582 | 1,587 | -------------------------------------------------------------------------------- | - other sales | 18 | 23 | 101 | 96 | -------------------------------------------------------------------------------- | Operating profit | -20 | -12 | 12 | 4 | -------------------------------------------------------------------------------- | Comparable operating profit | -10 | -14 | -1 | 3 | -------------------------------------------------------------------------------- | Net assets (at period-end) | 169 | 140 | 247 | | -------------------------------------------------------------------------------- | Return on net assets, % | | | 6.9 | 1.7 | -------------------------------------------------------------------------------- | Comparable return on net assets, % | | | -0.6 | 1.2 | -------------------------------------------------------------------------------- | Gross investments | 1 | 1 | 3 | 3 | -------------------------------------------------------------------------------- | Number of employees | 814 | 942 | 935 | | -------------------------------------------------------------------------------- During the first quarter, Markets' electricity sales totalled 11.2 (11.9) TWh. The sales volume was lower than at the same time last year, mainly due to some expired long-term contracts in Finland and warm weather causing lower consumption in the consumer segment. Markets' power sales were slightly higher than in the same period last year. Markets' first-quarter comparable operating profit improved from a year ago but was still clearly negative. The segment typically procures its electricity according to its procurement strategy months in advance from the Nord Pool forward markets. As a result of the tight market situation, especially in Finland, Markets was unable to fully transfer its increased procurement costs to retail sales prices. Markets raised its retail electricity prices in Sweden and Finland in the beginning of February. The Finnish electricity heating sales price was raised by 10% and the Swedish current-price product sales price by 9%. Despite the tight Nordic market situation, Markets has been able to increase the number of customers. The customer net flow was positive in Sweden while the number of customers decreased slightly in Finland. Fortum is the leading retailer of eco-labelled electricity on the Nordic market. The sale of eco-labelled Norppasähkö and Bra Miljöval electricity has continued to increase in the first quarter of 2008. In January 2008, Markets introduced two new eco-labels for the Finnish and Swedish market - electricity produced without CO2 emissions and electricity produced entirely from renewable energy sources. Russia The segment comprises power and heat generation and sales in Russia. The segment includes the listed company TGC-10 and Fortum's holding in TGC-1. -------------------------------------------------------------------------------- | EUR million | I/08 | I/07 | 2007 | LTM | -------------------------------------------------------------------------------- | Sales | - | - | - | - | -------------------------------------------------------------------------------- | - power sales | - | - | - | - | -------------------------------------------------------------------------------- | - heat sales | - | - | - | - | -------------------------------------------------------------------------------- | - other sales | - | - | - | - | -------------------------------------------------------------------------------- | Operating profit | - | - | 244 | 244 | -------------------------------------------------------------------------------- | Comparable operating profit | - | - | 0 | 0 | -------------------------------------------------------------------------------- | Net assets (at period-end) | 2,264 | 302 | 456 | | -------------------------------------------------------------------------------- | Return on net assets, % | | | 66.3 | 32.1 | -------------------------------------------------------------------------------- | Comparable return on net assets, | | | 0.0 | 0.0 | | % | | | | | -------------------------------------------------------------------------------- | Gross investments | 1,031 | - | 245 | 1,276 | -------------------------------------------------------------------------------- | Number of employees | 7,187 | - | - | | -------------------------------------------------------------------------------- The segment Russia comprises TGC-10, Fortum's 25.7% holding in TGC-1 and some minor assets from shareholdings in companies spun-off from Lenenergo. TGC-10 is fully consolidated in the ending balance sheet of the quarter. TGC-10's income statement will be consolidated from the beginning of the second quarter of 2008. Fortum's other holdings in the segment are accounted for as associated companies. The segment also includes two non-recurring gains booked in 2007: the sale of Lenenergo shares for EUR 232 million, previously booked in the Distribution segment's operating profit (non-recurring items) in the third quarter of 2007, and the gain on the sale of WGC-5 shares, EUR 12 million, previously booked in the Power Generation segment's operating profit (non-recurring items) in the fourth quarter of 2007. Fortum participated in a share auction conducted on 28 February 2008 to acquire a controlling stake in the listed Russian company TGC-10. Fortum acquired a 29.07% stake of the company from RAO UES for EUR 0.8 billion. In addition, Fortum acquired a further 47.42% stake in TGC-10 through a share issue for EUR 1.3 billion. This capital increase of EUR 1.3 billion will remain in TGC-10 and will be used to finance its committed capacity investment programme planned at EUR 2.2 billion. TGC-10 is a territorial generating company founded in 2006 and operating in the Urals and West Siberia region. The total installed capacity is 3,000 MW power and 15,800 MW heat with an annual production of 18 TWh power and 27 TWh heat. The company has an extensive investment plan to further increase its power production capacity by 2,300 MW by 2013. The generation assets are located in an area with a significant oil and gas industry. The number of employees is 7,187. In the last twelve months as of the end of the third quarter 2007, TGC-10's sales were EUR 590 million and its operating profit EUR 26 million. Capital expenditures, divestments and investments in shares Capital expenditures and investments in shares in January-March totalled EUR 1,227 (115) million. Investments, excluding acquisitions, were EUR 175 (100) million. In Lithuania, Fortum acquired a 14.73% share in UAB Klaipedos Energija from Stadtwerke Leipzig GmbH on 29 February 2008. Fortum now owns a 19.63% share of the company. UAB Klaipedos Energija generates and distributes district heat to the residents and industries in the cities of Klaipeda and Gargzdai. The net sales of the company are around EUR 27 million, annual heat sales 1 TWh and power sales 20 gigawatthours (GWh). In Latvia, Fortum acquired 100% of the shares in Jelgavas Kogeneracija SIA at the end of March. The acquired company provides district heating to the city of Jelgava. The annual heat sales are 200 GWh, the sales EUR 10 million, and the number of employees 170. Financing During the first quarter, Fortum's net debt increased by EUR 762 million. At the end of the quarter, the interest-bearing net debt stood at EUR 5,228 (4,466 at year end 2007) million. The interest bearing net debt at the quarter end includes interest-bearing liabilities of EUR 271 million and cash of EUR 1,293 million in the recently acquired TGC-10. Net debt to EBITDA for the last twelve months was 2.2 (1.9 at year end 2007). The increase in net debt is mainly due to the acquisition of 76.49% of TGC-10. Net debt to EBITDA excluding REC and Lenenergo sales gains for the last twelve months was 2.4 (2.2 at the end of 2007). The Group's net financial expenses for the first quarter were EUR 45 (31) million. The increase is attributable to higher average net debt and higher average interest rates in 2008. Net financial expenses include fair value loss/gain on financial instruments of EUR -2 (2) million. Group liquidity remained good. At the end of the first quarter, cash and marketable securities totalled EUR 2,237 million (including EUR 1,293 million in TGC-10). The Group also had access to approximately EUR 2.8 billion of undrawn committed credit facilities. The reason for the high cash position at the end of the quarter was the preparation for the Group dividend payment of EUR 1,198 million in early April. During the first quarter, Fortum raised a syndicated loan facility of EUR 3,500 million. The loan facility is structured as a 3-year term loan of EUR 2,000 million to be used for acquisition financing of TGC-10, and as a 5-year revolving credit facility of EUR 1,500 million to be used for general corporate purposes. At the end of the first quarter, EUR 2,100 million of the new facility had been drawn. Following the announcement of the acquisition of TGC-10, Moody's Investor service confirmed Fortum Corporation's long-term credit rating "A2" (stable). Standard & Poor's has placed its "A-" long-term corporate credit rating on Fortum on CreditWatch with negative implications. Shares and share capital During the first quarter 2008, a total of 159.4 (281.0) million Fortum Corporation shares, totalling EUR 4,422 million, were traded. Fortum's market capitalisation, calculated using the closing quotation of the last trading day of the quarter, was EUR 22,897 million. The highest quotation of Fortum Corporation shares on the OMX Nordic Exchange Helsinki in the first quarter of 2008 was EUR 33.00, the lowest EUR 23.27, and the volume weighted average quotation EUR 27.77. The closing quotation on the last trading day of the quarter was EUR 25.81 (21.83). Relating to the 2002B share option scheme, a total of 0.2 million options for a total of EUR 6.2 million were traded during the first quarter of 2008. A total of 439,535 shares subscribed on the basis of share option schemes were entered into the trade register in the first quarter of 2008. At the end of the first quarter 2008, Fortum Corporation did not own its own shares. After registrations, Fortum Corporation's share capital is EUR 3,041,954,816.20 and the total number of registered shares is 887,122,593 at the end of the first quarter of 2008. The share capital of Fortum Corporation increased by a total of EUR 1,494,419. At quarter-end, the amount of shares that can still be subscribed for and registered under the share option schemes is a maximum of 0.1% (1,244,452 shares) of Fortum's quarter-end share capital and voting rights. At quarter-end, the Finnish state's holding in Fortum was 50.8%. The proportion of nominee registrations and direct foreign shareholders was 35.6%. Currently, the Board of Directors has no unused authorisations from the Annual General Meeting of Shareholders to issue convertible loans or bonds with warrants or to issue new shares. The Board of Directors has an authorisation from the Annual General Meeting of Shareholders on 1 April 2008 to buy Fortum Corporation's own shares. The authorisation, amounting to EUR 300 million or 15 million shares, is valid until the next Annual General Meeting. Group personnel The average number of employees in the Group during the period from January to March was 8,356 (8,165). The number of employees at the end of the period was 15,689 (8,190). The increase in the number employees is due to the acquisition of TGC-10. Events after the period under review In the beginning of April, Fortum submitted the Environmental Impact Assessment (EIA) report of the third nuclear power plant unit in Loviisa to the Finnish Ministry of Employment and the Economy. The EIA indicates that a 1,000 - 1,800 MW nuclear power plant unit (Loviisa 3) can be built on the Hästholmen island in Loviisa. After the Ministry issues its statement, Fortum will make decisions regarding further measures. Annual General Meeting Fortum Corporation's Annual General Meeting, which was held in Helsinki on 1 April 2008, adopted the financial statements of the parent company and the Group for 2007, discharged Fortum's Supervisory Board, Board of Directors and the President and CEO from liability for 2007, and decided to pay a dividend of EUR 1.35 per share for 2007. Of this total dividend, EUR 0.77 per share was in accordance with the Group's dividend policy and EUR 0.58 per share was additional dividend proposed in order to steer Fortum's capital structure towards the agreed target level. The dividend payment date was 11 April 2008. The Annual General Meeting authorised the Board of Directors to repurchase the company's own shares by using non-restricted equity. The authorisation is valid until the next Annual General Meeting. The shares will be repurchased in order to steer Fortum's capital structure towards the target. The maximum amount of shares to be repurchased is 15 million shares. In addition, the amount of funds used for the repurchases may not exceed EUR 300 million. The shares will be repurchased through public trading of the securities on OMX Nordic Exchange Helsinki Oy, which means that they will not be purchased in proportion to the holdings of the shareholders. The repurchase price of the shares shall be based on the public trading price of Fortum shares. Shares repurchased by the company shall be cancelled by a separate decision of the Board of Directors. Outlook The key market driver influencing Fortum's business performance is the Nordic wholesale price of electricity. Key drivers behind the wholesale price development are the Nordic hydrological situation and supply-demand balance, CO2 emissions allowance prices and fuel prices. The Swedish krona and Russian rouble exchange rates also affect Fortum's reported results, as results generated by Fortum in Sweden and Russia are translated into euros. Fortum's financial results are exposed to a number of strategic, financial and operational risks. For further details on Fortum's risks and risk management, see Fortum's Operating and Financial Review and Financial Statements. In Russia, one of the key assumptions in the TGC-10 acquisition is the continuation of the Russian power reform. The Russian wholesale power market is expected to be fully liberalised in 2011. TGC-10 is committed and contractually obligated to a significant investment programme, amounting to approximately EUR 2.2 billion. The programme is estimated to be completed by the end of 2013. The completion of the investment programme depends on e.g. the power sector reform and the availability of key components. The contractual obligations of TGC-10's investment programme include penalty clauses tied to the availability of the new generating capacity. 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. In mid-April 2008, the Nordic water reservoirs were about 8 TWh above the long-term average and 5 TWh above the corresponding level of 2007. In late April, the market price for emission allowances (EUA) for 2008 was about EUR 24-25 per tonne CO2. At the same time, the electricity forward price for the rest of 2008 was around EUR 42-44 per MWh and for 2009 around EUR 52-53 per MWh. The first and last quarters of the year are usually the strongest quarters for the power and heat businesses. Fortum Power Generation's achieved Nordic power price typically depends on e.g. the hedge ratio, hedge price, spot price, utilisation and optimisation of Fortum's flexible production portfolio - even on an hourly basis - and currency fluctuations. If Fortum would not hedge any of its production volumes, a 1 EUR/MWh change in the spot price would result in approximately a EUR 50 million change in Fortum's annual operating profit. At the beginning of April 2008, Fortum had hedged approximately 60% of the Power Generation segment's estimated Nordic electricity sales volume for the year 2008 at approximately EUR 45 per MWh. For the calendar year 2009, approximately 35% of the Power Generation segment's estimated Nordic electricity sales volume was hedged at approximately EUR 48 per MWh. These hedge ratios may vary significantly depending on Fortum's actions on the electricity derivatives markets. Hedge prices are also influenced by changes in the SEK/EUR exchange rates, as part of the hedges are conducted in SEK. The acquisition of TGC-10 is expected to marginally dilute Fortum's EPS during 2008 and 2009. Fortum expects the full benefits of its targeted annual efficiency improvements in TGC-10 to reach at least EUR 30 million. Fortum's results in the first quarter of 2008 were good, despite challenging market conditions. The Group's financial position is strong. With its flexible and climate-benign production portfolio, Fortum continues to be well positioned for the future. Espoo, 23 April 2008 Fortum Corporation Board of Directors Further information: Mikael Lilius, President and CEO, tel. +358 10 452 9100 Juha Laaksonen, CFO, tel. +358 10 452 4519 The financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted by the EU. The interim financials have not been audited. Publication of results in 2008: Interim Report January-June will be published on 17 July 2008 Interim Report January-September will be published on 22 October 2008 Distribution: OMX Nordic Exchange Helsinki Key media www.fortum.com Information on the financial statements release, including detailed quarterly information, is available on Fortum's website at: www.fortum.com/investors -------------------------------------------------------------------------------- | FORTUM GROUP | -------------------------------------------------------------------------------- | JANUARY-MARCH 2008 | -------------------------------------------------------------------------------- | Interim Financial Statements are unaudited | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED INCOME STATEMENT | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | | Note | Q1 2008 | Q1 2007 | 2007 | Last | | | | | | | | twelve | | | | | | | | months | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Sales | | 4 | 1 440 | 1 340 | 4 479 | 4 579 | -------------------------------------------------------------------------------- | Other income | | | 61 | 5 | 393 | 449 | -------------------------------------------------------------------------------- | Materials and services | | | -521 | -486 | -1 572 | -1 607 | -------------------------------------------------------------------------------- | Employee benefit costs | | | -136 | -126 | -495 | -505 | -------------------------------------------------------------------------------- | Depreciation, amortisation | 4, 12 | -111 | -112 | -451 | -450 | | and impairment charges | | | | | | -------------------------------------------------------------------------------- | Other expenses | | | -124 | -131 | -507 | -500 | -------------------------------------------------------------------------------- | Operating profit | | | 609 | 490 | 1 847 | 1 966 | -------------------------------------------------------------------------------- | Share of profit of | 4, 13 | 34 | 202 | 241 | 73 | | associates and joint | | | | | | | ventures | | | | | | -------------------------------------------------------------------------------- | Interest expense | | | -60 | -44 | -220 | -236 | -------------------------------------------------------------------------------- | Interest income | | | 17 | 12 | 76 | 81 | -------------------------------------------------------------------------------- | Fair value gains and | | -2 | 2 | 7 | 3 | | losses on financial | | | | | | | instruments | | | | | | -------------------------------------------------------------------------------- | Other financial | | | 0 | -1 | -17 | -16 | | expenses - net | | | | | | | -------------------------------------------------------------------------------- | Finance costs - net | | | -45 | -31 | -154 | -168 | -------------------------------------------------------------------------------- | Profit before income | | | 598 | 661 | 1 934 | 1 871 | | tax | | | | | | | -------------------------------------------------------------------------------- | Income tax expense | | 9 | -122 | -109 | -326 | -339 | -------------------------------------------------------------------------------- | Profit for the period | | | 476 | 552 | 1 608 | 1 532 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Attributable to: | | | | | | | -------------------------------------------------------------------------------- | Equity holders of the | | | 452 | 522 | 1 552 | 1 482 | | Company | | | | | | | -------------------------------------------------------------------------------- | Minority interest | | | 24 | 30 | 56 | 50 | -------------------------------------------------------------------------------- | | | | 476 | 552 | 1 608 | 1 532 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share for | | | | | | | profit attributable to the | | | | | | | equity | | | | | | -------------------------------------------------------------------------------- | holders of the company | 10 | | | | | | during the year (in € per | | | | | | | share) | | | | | | -------------------------------------------------------------------------------- | Basic | | | 0.51 | 0.59 | 1.74 | 1.67 | -------------------------------------------------------------------------------- | Diluted | | | 0.51 | 0.58 | 1.74 | 1.66 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED BALANCE | | | | | | | SHEET | | | | | | -------------------------------------------------------------------------------- | MEUR | | Note | March 31 | March 31 | Dec 31 | | | | | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ASSETS | | | | | | -------------------------------------------------------------------------------- | Non-current assets | | | | | | -------------------------------------------------------------------------------- | Intangible assets | | 12 | 416 | 89 | 85 | -------------------------------------------------------------------------------- | Property, plant and | | 12 | 12 970 | 11 192 | 11 343 | | equipment | | | | | | -------------------------------------------------------------------------------- | Participations in associates | 4, 13 | 2 511 | 2 318 | 2 853 | | and joint ventures | | | | | -------------------------------------------------------------------------------- | Share in State Nuclear Waste | 16 | 522 | 453 | 516 | | Management Fund | | | | | -------------------------------------------------------------------------------- | Other long-term | | | 73 | 102 | 99 | | investments | | | | | | -------------------------------------------------------------------------------- | Deferred tax assets | | | 1 | 7 | 3 | -------------------------------------------------------------------------------- | Derivative financial | | 6 | 172 | 123 | 153 | | instruments | | | | | | -------------------------------------------------------------------------------- | Long-term | | | 767 | 674 | 736 | | interest-bearing | | | | | | | receivables | | | | | | -------------------------------------------------------------------------------- | Total non-current assets | | | 17 432 | 14 958 | 15 788 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current assets | | | | | | -------------------------------------------------------------------------------- | Inventories | | | 297 | 286 | 285 | -------------------------------------------------------------------------------- | Derivative financial | | 6 | 185 | 329 | 140 | | instruments | | | | | | -------------------------------------------------------------------------------- | Trade and other | | | 1 340 | 1 099 | 1 034 | | receivables | | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | | | 2 237 | 1 067 | 427 | -------------------------------------------------------------------------------- | Total current assets | | | 4 059 | 2 781 | 1 886 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets | | | 21 491 | 17 739 | 17 674 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EQUITY | | | | | | -------------------------------------------------------------------------------- | Capital and reserves | | | | | | | attributable to the | | | | | | -------------------------------------------------------------------------------- | Company's equity holders | | | | | | -------------------------------------------------------------------------------- | Share capital | | 14 | 3 042 | 3 034 | 3 040 | -------------------------------------------------------------------------------- | Other restricted funds | | | 83 | 73 | 78 | -------------------------------------------------------------------------------- | Fair value and other | | | 407 | 542 | 715 | | reserves | | | | | | -------------------------------------------------------------------------------- | Retained earnings | | | 4 923 | 3 674 | 4 526 | -------------------------------------------------------------------------------- | Total | | | 8 455 | 7 323 | 8 359 | -------------------------------------------------------------------------------- | Minority interest | | | 948 | 271 | 292 | -------------------------------------------------------------------------------- | Total equity | | | 9 403 | 7 594 | 8 651 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | LIABILITIES | | | | | | -------------------------------------------------------------------------------- | Non-current liabilities | | | | | | -------------------------------------------------------------------------------- | Interest-bearing | | 15 | 6 633 | 3 516 | 4 288 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Derivative financial | | 6 | 119 | 91 | 139 | | instruments | | | | | | -------------------------------------------------------------------------------- | Deferred tax liabilities | | | 1 899 | 1 826 | 1 687 | -------------------------------------------------------------------------------- | Nuclear provisions | | 16 | 522 | 453 | 516 | -------------------------------------------------------------------------------- | Pension and other | | | 343 | 155 | 144 | | provisions | | | | | | -------------------------------------------------------------------------------- | Other liabilities | | | 459 | 485 | 486 | -------------------------------------------------------------------------------- | Total non-current | | | 9 975 | 6 526 | 7 260 | | liabilities | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current liabilities | | | | | | -------------------------------------------------------------------------------- | Interest-bearing | | 15 | 832 | 1 483 | 605 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Derivative financial | | 6 | 165 | 92 | 260 | | instruments | | | | | | -------------------------------------------------------------------------------- | Trade and other payables | | | 1 116 | 2 044 | 898 | | 1) | | | | | | -------------------------------------------------------------------------------- | Total current liabilities | | | 2 113 | 3 619 | 1 763 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total liabilities | | | 12 088 | 10 145 | 9 023 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total equity and | | | 21 491 | 17 739 | 17 674 | | liabilities | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Dividend of EUR 1,122 million decided by the Annual General Meeting on 28 | | March 2007 is included in Trade and other payables 31 March 2007, see Note | | 11. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | Shar | Other | Fair | Trea | Reta | Attrib | Minor | Total | | | e | restr | value | sury | ined | utable | ity | | | | capi | icted | and | shar | earn | to the | | | | | tal | funds | other | es | ings | equity | | | | | | | reser | | | holder | | | | | | | ves | | | s | | | -------------------------------------------------------------------------------- | Total equity | 3 | 78 | 715 | - | 4 | 8 359 | 292 | 8 651 | | at 31.12.2007 | 040 | | | | 526 | | | | -------------------------------------------------------------------------------- | Translation | | | | | -50 | -50 | -12 | -62 | | and other | | | | | | | | | | differences | | | | | | | | | -------------------------------------------------------------------------------- | Cash flow | | | 99 | | | 99 | 1 | 100 | | hedges | | | | | | | | | -------------------------------------------------------------------------------- | Other fair | | | -411 | | | -411 | | -411 | | value | | | | | | | | | | adjustments 1) | | | | | | | | | -------------------------------------------------------------------------------- | Total gains | - | - | -312 | - | -50 | -362 | -11 | -373 | | and losses not | | | | | | | | | | recognised in | | | | | | | | | | Income | | | | | | | | | | statement | | | | | | | | | -------------------------------------------------------------------------------- | Net profit for | | | | | 452 | 452 | 24 | 476 | | the period | | | | | | | | | -------------------------------------------------------------------------------- | Total | - | - | -312 | - | 402 | 90 | 13 | 103 | | recognised | | | | | | | | | | income for the | | | | | | | | | | period | | | | | | | | | -------------------------------------------------------------------------------- | Stock options | 2 | | | | | 2 | | 2 | | exercised | | | | | | | | | -------------------------------------------------------------------------------- | Changes due to | | | 4 | | | 4 | 643 | 647 | | business | | | | | | | | | | combinations | | | | | | | | | -------------------------------------------------------------------------------- | Changes | | 5 | | | -5 | 0 | | 0 | | between | | | | | | | | | | restricted and | | | | | | | | | | unrestricted | | | | | | | | | | equity | | | | | | | | | -------------------------------------------------------------------------------- | Total equity | 3 | 83 | 407 | - | 4 | 8 455 | 948 | 9 403 | | at 31.03.2008 | 042 | | | | 923 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total equity | 3 | 74 | 511 | - | 4 | 7 908 | 253 | 8 161 | | at 31.12.2006 | 023 | | | | 300 | | | | -------------------------------------------------------------------------------- | Translation | | | | | -25 | -25 | -11 | -36 | | and other | | | | | | | | | | differences | | | | | | | | | -------------------------------------------------------------------------------- | Cash flow | | | -168 | | | -168 | -2 | -170 | | hedges | | | | | | | | | -------------------------------------------------------------------------------- | Other fair | | | 372 | | | 372 | | 372 | | value | | | | | | | | | | adjustments 1) | | | | | | | | | -------------------------------------------------------------------------------- | Total gains | - | - | 204 | - | -25 | 179 | -13 | 166 | | and losses not | | | | | | | | | | recognised in | | | | | | | | | | Income | | | | | | | | | | statement | | | | | | | | | -------------------------------------------------------------------------------- | Net profit for | | | | | 1 | 1 552 | 56 | 1 608 | | the period | | | | | 552 | | | | -------------------------------------------------------------------------------- | Total | - | - | 204 | - | 1 | 1 731 | 43 | 1 774 | | recognised | | | | | 527 | | | | | income for the | | | | | | | | | | period | | | | | | | | | -------------------------------------------------------------------------------- | Stock options | 17 | | | | | 17 | | 17 | | exercised | | | | | | | | | -------------------------------------------------------------------------------- | Cash dividend | | | | | -1 | -1 122 | | -1 | | 2) | | | | | 122 | | | 122 | -------------------------------------------------------------------------------- | Repurchase of | | | | -175 | | -175 | | -175 | | own shares | | | | | | | | | -------------------------------------------------------------------------------- | Cancellation | | | | 175 | -175 | 0 | | 0 | | of own shares | | | | | | | | | -------------------------------------------------------------------------------- | Changes | | 4 | | | -4 | 0 | | 0 | | between | | | | | | | | | | restricted and | | | | | | | | | | unrestricted | | | | | | | | | | equity | | | | | | | | | -------------------------------------------------------------------------------- | Changes in | | | | | | 0 | -4 | -4 | | minority | | | | | | | | | | through | | | | | | | | | | business | | | | | | | | | | combinations | | | | | | | | | -------------------------------------------------------------------------------- | Total equity | 3 | 78 | 715 | - | 4 | 8 359 | 292 | 8 651 | | at 31.12.2007 | 040 | | | | 526 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Includes the fair value change of Renewable Energy Corporation (REC) | | shareholding in Hafslund and the effect of Hafslund's sale of REC shares. | -------------------------------------------------------------------------------- | See Note 13 Changes in | | | | | | | | participations in associates | | | | | | | | and joint ventures. | | | | | | | -------------------------------------------------------------------------------- | 2) See Note 11 | | | | | | | | | | Dividends. | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONDENSED CONSOLIDATED CASH FLOW STATEMENT | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | | Note | | Q1 2008 | Q1 2007 | 2007 | Last | | | | | | | | | twelve | | | | | | | | | months | -------------------------------------------------------------------------------- | Cash flow from | | | | | | | | | operating | | | | | | | | | activities | | | | | | | | -------------------------------------------------------------------------------- | Operating profit | | | | 720 | 602 | 2 298 | 2 416 | | before | | | | | | | | | depreciations | | | | | | | | -------------------------------------------------------------------------------- | Non-cash flow items | | | | -37 | 1 | -286 | -324 | | and divesting | | | | | | | | | activities | | | | | | | | -------------------------------------------------------------------------------- | Financial items and realised | -45 | -38 | -10 | -17 | | foreign exchange gains and losses | | | | | -------------------------------------------------------------------------------- | Taxes | | | | -77 | -118 | -383 | -342 | -------------------------------------------------------------------------------- | Funds from | | | | 561 | 447 | 1 619 | 1 733 | | operations | | | | | | | | -------------------------------------------------------------------------------- | Change in working | | | | -19 | 50 | 51 | -18 | | capital | | | | | | | | -------------------------------------------------------------------------------- | Total net cash from | | | | 542 | 497 | 1 670 | 1 715 | | operating | | | | | | | | | activities | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from | | | | | | | | | investing | | | | | | | | | activities | | | | | | | | -------------------------------------------------------------------------------- | Capital | | 4, | | -164 | -100 | -592 | -656 | | expenditures 1) | | 12 | | | | | | -------------------------------------------------------------------------------- | Acquisition of | 7 | | -764 | -8 | -10 | -766 | | subsidiaries, net of | | | | | | | | cash acquired | | | | | | | -------------------------------------------------------------------------------- | Acquisition of | | 13 | | -8 | | -271 | -279 | | associates 2) | | | | | | | | -------------------------------------------------------------------------------- | Acquisition of | | | | 0 | | -4 | -4 | | other long-term | | | | | | | | | investments | | | | | | | | -------------------------------------------------------------------------------- | Proceeds from sales | | | | 4 | 7 | 14 | 11 | | of fixed assets | | | | | | | | -------------------------------------------------------------------------------- | Proceeds from sales of | 7 | | 0 | | 0 | 0 | | subsidiaries, net of | | | | | | | | cash disposed | | | | | | | -------------------------------------------------------------------------------- | Proceeds from sales | | 13 | | | | 304 | 304 | | of associates | | | | | | | | -------------------------------------------------------------------------------- | Proceeds from sales of | | | 0 | | 29 | 29 | | other long-term | | | | | | | | investments | | | | | | | -------------------------------------------------------------------------------- | Change in | | | | -30 | -36 | -79 | -73 | | interest-bearing | | | | | | | | | receivables | | | | | | | | -------------------------------------------------------------------------------- | Total net cash used | | | | -962 | -137 | -609 | -1 434 | | in investing | | | | | | | | | activities | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow before | | | | -420 | 360 | 1 061 | 281 | | financing | | | | | | | | | activities | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from | | | | | | | | | financing | | | | | | | | | activities | | | | | | | | -------------------------------------------------------------------------------- | Net change in loans | | | | 2 257 | 540 | 488 | 2 205 | -------------------------------------------------------------------------------- | Dividends paid to the | | | | | -1 122 | -1 122 | | Company's equity | | | | | | | | holders | | | | | | | -------------------------------------------------------------------------------- | Repurchase of own | | | | | | -175 | -175 | | shares | | | | | | | | -------------------------------------------------------------------------------- | Other financing | | | | 1 | 10 | 18 | 9 | | items | | | | | | | | -------------------------------------------------------------------------------- | Total net cash used | | | | 2 258 | 550 | -791 | 917 | | in financing | | | | | | | | | activities | | | | | | | | -------------------------------------------------------------------------------- | Total net increase | | | | | | | | | (+)/decrease (-) in | | | | | | | | | cash | | | | | | | | -------------------------------------------------------------------------------- | and marketable | | | | 1 838 | 910 | 270 | 1 198 | | securities | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Capital expenditures in cash-flow do not include not yet paid | | | investments. Capitalised borrowing costs are included in interest costs | | | paid. | | -------------------------------------------------------------------------------- | 2) Acquisition of | | | | | | | | | | associates include | | | | | | | | | | share issues. | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | KEY RATIOS | | | | | | | | | -------------------------------------------------------------------------------- | MEUR | | | March | Dec | Sept | June | March | Last | | | | | 31 | 31 | 30 | 30 | 31 | twelv | | | | | 2008 | 2007 | 2007 | 2007 | 2007 | e | | | | | | | | | | month | | | | | | | | | | s | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EBITDA, MEUR | | | 720 | 2 298 | 1 663 | 1 040 | 602 | 2 416 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per | | | 0.51 | 1.74 | 1.33 | 0.85 | 0.59 | 1.67 | | share (basic), | | | | | | | | | | EUR | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital | | | 16 868 | 13 | 13 | 13 503 | 12 | 16 | | employed, MEUR | | | | 544 | 764 | | 593 | 868 | -------------------------------------------------------------------------------- | Interest-bearing | | | 5 228 | 4 466 | 4 456 | 4 610 | 3 932 | N/A | | net debt, MEUR | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital expenditure and | 1 227 | 972 | 646 | 253 | 115 | 2 084 | | gross investments in | | | | | | | | shares, MEUR | | | | | | | -------------------------------------------------------------------------------- | Capital | | | 175 | 655 | 382 | 236 | 100 | 730 | | expenditure, | | | | | | | | | | MEUR | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on | | | 17.3 | 16.5 | 15.1 | 14.8 | 18.0 | 14.4 | | capital | | | | | | | | | | employed, % 1) | | | | | | | | | -------------------------------------------------------------------------------- | Adjusted return | | | | 14.0 | | | | 13.1 | | on capital | | | | | | | | | | employed, % 2) | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on | | | 21.0 | 19.1 | 17.8 | 17.2 | 21.1 | 18.0 | | shareholders' | | | | | | | | | | equity, % 1) | | | | | | | | | -------------------------------------------------------------------------------- | Adjusted return | | | | 15.8 | | | | 16.4 | | on shareholders' | | | | | | | | | | equity, % 2) | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net debt / | | | 1.8 | 1.9 | 2.1 | 2.2 | 1.6 | 2.2 | | EBITDA 1) | | | | | | | | | -------------------------------------------------------------------------------- | Adjusted Net | | | | 2.2 | 2.3 | | | 2.4 | | debt / EBITDA 3) | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest | | | 14.1 | 12.8 | 12.4 | 11.5 | 15.3 | 12.7 | | coverage | | | | | | | | | -------------------------------------------------------------------------------- | Funds from | | 42.9 | 36.3 | 33.9 | 36.1 | 45.5 | 33.2 | | operations/interest-b | | | | | | | | | earing net debt, % | | | | | | | | | 1) | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gearing, % | | | 56 | 52 | 52 | 58 | 52 | N/A | -------------------------------------------------------------------------------- | Equity per | | | 9.53 | 9.43 | 9.21 | 8.68 | 8.22 | N/A | | share, EUR | | | | | | | | | -------------------------------------------------------------------------------- | Equity-to-assets | | | 44 | 49 | 48 | 46 | 43 | N/A | | ratio, % | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Average number | | | 8 356 | 8 304 | 8 305 | 8 257 | 8 165 | N/A | | of employees | | | | | | | | | -------------------------------------------------------------------------------- | Number of | | | 15 689 | 8 303 | 8 306 | 8 541 | 8 190 | N/A | | employees | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Average number | | | 887 | 889 | 890 | 890 | 890 | 889 | | of shares, 1 000 | | | 085 | 997 | 984 | 770 | 263 | 485 | | shares | | | | | | | | | -------------------------------------------------------------------------------- | Diluted adjusted | | 888 | 891 | 892 | 893 | 893 | 890 | | average number of | | 177 | 395 | 815 | 140 | 252 | 564 | | shares, 1 000 shares | | | | | | | | -------------------------------------------------------------------------------- | Number of | | | 887 | 886 | 892 | 891 | 890 | N/A | | registered | | | 123 | 683 | 119 | 472 | 685 | | | shares, 1 000 | | | | | | | | | | shares | | | | | | | | | -------------------------------------------------------------------------------- | Number of shares | | N/A | N/A | N/A | N/A | N/A | N/A | | excluding treasury | | | | | | | | | shares, 1000 shares | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Quarterly figures are | | | | | | | | annualised. | | | | | | | -------------------------------------------------------------------------------- | 2) Adjusted for REC and | | | | | | | | Lenenergo gains in 2007. | | | | | | | -------------------------------------------------------------------------------- | 3) Based on EBITDA excluding capital gain from the sale of Fortum's holding | | in Lenenergo amounting to EUR 232 million. | -------------------------------------------------------------------------------- | For definitions, see Note | | | | | | | | 23. | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1. BASIS OF | | | | | | | | | | PREPARATION | | | | | | | | | -------------------------------------------------------------------------------- The condensed interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted by the EU. The condensed interim financial report should be read in conjunction with the annual financial statements for the year ended 31 December 2007. -------------------------------------------------------------------------------- | 2. ACCOUNTING | | | | | | | | | | POLICIES | | | | | | | | | -------------------------------------------------------------------------------- The accounting policies adopted are consistent with those of the Group's annual financial statements for the year ended 31 December 2007, except for changes listed below. Early adoption of IFRS 8 Operating Segments Following the acquisition of the Russian company TGC-10, Fortum has changed its segment reporting during Q1 2008. A new Russia segment is introduced, which then means that the future segment structure will have one segment based on geographical area, combined with segments based on type of business operations. Due to the change in segments structure, Fortum is early adopting IFRS 8 Operating segments. The new Russia segment includes: - TGC-10, which is consolidated from 31 March 2008 (see Note 7) - the TGC-1 shareholding, which is transferred from the Power Generation segment - minor assets from shareholdings in Lenenergo spin-off companies, transferred from Distribution, Markets and Other segments In addition to introducing a new segment, assets and profits from the associated company Hafslund has been transferred from Power Generation segment to Other segment. Segments Power Generation, Heat, Distribution and Markets as well as Other will remain as previously reported with exception from the items stated above. Power Generation consists of the business units Generation, Portfolio Management and Trading (PMT) aswell as Service. The business units Generation and PMT have from a financial reporting perspective one common set of financial measures. No separate pricing mechanism is in use between the business units. Service business unit provides services both internal and external, but its core activities refers to Generation business. The two business units Heat and Värme are aggregated to the Heat segment based on the similarity in the nature of business, customers etc. Financial target setting, follow up and allocation of resources in the Group's performance management process is based on the business units' comparable operating profit including share of profit from associated companies and comparable return on net assets. Consolidation by segment is based on the same principles as for the Group as a whole. Inter-segment transactions are based on commercial terms. Due to the large number of customers and the variety of its business activities, there are no individual customer whose business volume is material compared with Fortum's total business volume. Power Generation segment is selling the produced electricity mainly through Nordpool. For further information regarding the segments business activities and geographical areas, see the Financial statements 2007 Note 5 Primary Segment information. Comparison numbers for 2007 have been restated, resulting in the following effects in operating profit and non-recurring items: - the 2007 non-recurring gain on the sale of Lenenergo shares (EUR 232 miilion), transferred from Distribution segment to the new Russia segment - the gain on the sale of WGC-5 shares (EUR 12 million), transferred from Power Generation segment to the new Russia segment - share of profits from associates regarding Hafslund during 2007, including the gain from Hafslund's divestment of shares in REC in Q 1 2007, has been transferred from Power Generation segment to Other segment. In attachment, the segment numbers are disclosed prior and after the change in segment structure. New interpretations The following new interpretations are mandatory for the financial year ending 31 December 2008: - IFRIC 11 IFRS 2: Group and treasury share transactions The share-based payment arrangements established within Fortum Group are not subject to IFRIC 11 because they are cash-settled. - IFRIC 14 IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction provides guidance how to assess the limit in IAS 19 on the amount of the surplus that can be recognised as an asset in particular when there is a minimum funding requirement. IFRIC 14 is not expected to have a significant impact on Group's accounts. The interpretation has not yet been endorsed in the EU. - IFRIC 12 Service concession arrangements is not relevant to Fortum as no member of the Group is a service concession operator providing for public sector services. The interpretation has not yet been endorsed in the EU. These new interpretations have not had any effect on the reported income statement, balance sheet or disclosures. For further information on accounting of associates, see Note 13 below. -------------------------------------------------------------------------------- | 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS | -------------------------------------------------------------------------------- The preparation of Interim financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, income and expense. Annual results may differ from these estimates. In preparing these interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual financial statements as at and for the year ended 31 December 2007. -------------------------------------------------------------------------------- | 4. SEGMENT INFORMATION | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SALES BY SEGMENT | Q1 2008 | Q1 2007 | 2007 | Last | | MEUR | | | | twelve | | | | | | months | -------------------------------------------------------------------------------- | Power Generation | 717 | 641 | 2 350 | 2 426 | -------------------------------------------------------------------------------- | - of which internal | 53 | 156 | 323 | 220 | -------------------------------------------------------------------------------- | Heat | 493 | 479 | 1 356 | 1 370 | -------------------------------------------------------------------------------- | - of which internal | 7 | 24 | 38 | 21 | -------------------------------------------------------------------------------- | Distribution | 232 | 225 | 769 | 776 | -------------------------------------------------------------------------------- | - of which internal | 3 | 2 | 9 | 10 | -------------------------------------------------------------------------------- | Markets | 519 | 519 | 1 683 | 1 683 | -------------------------------------------------------------------------------- | - of which internal | 32 | 44 | 155 | 143 | -------------------------------------------------------------------------------- | Russia | - | - | - | - | -------------------------------------------------------------------------------- | - of which internal | - | - | - | - | -------------------------------------------------------------------------------- | Other | 20 | 19 | 81 | 82 | -------------------------------------------------------------------------------- | - of which internal | 20 | 16 | 72 | 76 | -------------------------------------------------------------------------------- | Eliminations 1) | -541 | -543 | -1 760 | -1 758 | -------------------------------------------------------------------------------- | Total | 1 440 | 1 340 | 4 479 | 4 579 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) 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 | Q1 2008 | Q1 2007 | 2007 | Last | | SEGMENTS | | | | twelve | | MEUR | | | | months | -------------------------------------------------------------------------------- | Power Generation | 431 | 300 | 1 115 | 1 246 | -------------------------------------------------------------------------------- | Heat | 130 | 142 | 294 | 282 | -------------------------------------------------------------------------------- | Distribution | 86 | 79 | 233 | 240 | -------------------------------------------------------------------------------- | Markets | -20 | -12 | 12 | 4 | -------------------------------------------------------------------------------- | Russia | - | - | 244 | 244 | -------------------------------------------------------------------------------- | Other | -18 | -19 | -51 | -50 | -------------------------------------------------------------------------------- | Total | 609 | 490 | 1 847 | 1 966 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | COMPARABLE OPERATING PROFIT | | Q1 2008 | Q1 2007 | 2007 | Last | | BY SEGMENTS | | | | | twelve | | MEUR | | | | | months | -------------------------------------------------------------------------------- | Power Generation | | | 395 | 330 | 1 095 | 1 160 | -------------------------------------------------------------------------------- | Heat | | | 121 | 137 | 290 | 274 | -------------------------------------------------------------------------------- | Distribution | | | 87 | 78 | 231 | 240 | -------------------------------------------------------------------------------- | Markets | | | -10 | -14 | -1 | 3 | -------------------------------------------------------------------------------- | Russia | | | - | - | - | - | -------------------------------------------------------------------------------- | Other | | | -12 | -19 | -51 | -44 | -------------------------------------------------------------------------------- | Comparable operating | | | 581 | 512 | 1 564 | 1 633 | | profit | | | | | | | -------------------------------------------------------------------------------- | Non-recurring items | | | 2 | 1 | 250 | 251 | -------------------------------------------------------------------------------- | Other items effecting | | | 26 | -23 | 33 | 82 | | comparability | | | | | | | -------------------------------------------------------------------------------- | Operating profit | | | 609 | 490 | 1 847 | 1 966 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NON-RECURRING ITEMS BY | | | Q1 2008 | Q1 2007 | 2007 | Last | | SEGMENTS | | | | | | twelve | | MEUR | | | | | | months | -------------------------------------------------------------------------------- | Power Generation | | | 0 | 0 | 2 | 2 | -------------------------------------------------------------------------------- | Heat | | | 2 | 0 | 2 | 4 | -------------------------------------------------------------------------------- | Distribution | | | 0 | 1 | 0 | -1 | -------------------------------------------------------------------------------- | Markets | | | | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Russia | | | | | 244 | 244 | -------------------------------------------------------------------------------- | Other | | | 0 | 0 | 2 | 2 | -------------------------------------------------------------------------------- | Total | | | 2 | 1 | 250 | 251 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OTHER ITEMS EFFECTING | Q1 2008 | Q1 2007 | 2007 | Last | | COMPARABILITY BY SEGMENTS | | | | twelve | | MEUR | | | | months | -------------------------------------------------------------------------------- | Power Generation 1) | | | 36 | -30 | 18 | 84 | -------------------------------------------------------------------------------- | Heat | | | 7 | 5 | 2 | 4 | -------------------------------------------------------------------------------- | Distribution | | | -1 | 0 | 2 | 1 | -------------------------------------------------------------------------------- | Markets | | | -10 | 2 | 13 | 1 | -------------------------------------------------------------------------------- | Russia | | | - | - | - | - | -------------------------------------------------------------------------------- | Other | | | -6 | 0 | -2 | -8 | -------------------------------------------------------------------------------- | Total | | | 26 | -23 | 33 | 82 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Including effects from the | | | | | | | accounting of Fortum's part | | | | | | | of | | | | | | -------------------------------------------------------------------------------- | the Finnish State Nuclear Waste | -9 | -5 | 17 | 13 | | Management Fund with (EUR | | | | | | million): | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | DEPRECIATION, AMORTISATION AND | Q1 2008 | Q1 | 2007 | Last | | IMPAIRMENT CHARGES BY SEGMENTS | | 2007 | | twelv | | MEUR | | | | e | | | | | | month | | | | | | s | -------------------------------------------------------------------------------- | Power Generation | | | | | 24 | 26 | 103 | 101 | -------------------------------------------------------------------------------- | Heat | | | | | 42 | 40 | 163 | 165 | -------------------------------------------------------------------------------- | Distribution | | | | | 41 | 39 | 162 | 164 | -------------------------------------------------------------------------------- | Markets | | | | | 2 | 4 | 11 | 9 | -------------------------------------------------------------------------------- | Russia | | | | | - | - | - | - | -------------------------------------------------------------------------------- | Other | | | | | 2 | 3 | 12 | 11 | -------------------------------------------------------------------------------- | Total | | | | | 111 | 112 | 451 | 450 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHARE OF PROFITS IN | | Q1 2008 | Q1 | 2007 | Last | | ASSOCIATES AND JOINT VENTURES | | | 2007 | | twelve | | BY SEGMENTS | | | | | months | | MEUR | | | | | | -------------------------------------------------------------------------------- | Power | | | | | -8 | -6 | -23 | -25 | | Generation 1) | | | | | | | | | -------------------------------------------------------------------------------- | Heat | | | | | 7 | 7 | 24 | 24 | -------------------------------------------------------------------------------- | Distribution | | | | | 10 | 6 | 18 | 22 | -------------------------------------------------------------------------------- | Markets | | | | | 0 | 1 | 0 | -1 | -------------------------------------------------------------------------------- | Russia | | | | | - | - | - | - | -------------------------------------------------------------------------------- | Other | | | | | 25 | 194 | 222 | 53 | -------------------------------------------------------------------------------- | Total | | | | | 34 | 202 | 241 | 73 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) The main part of the associated companies in Power Generation are power | | production companies from which Fortum purchases produced electricity at | | production costs including interest costs and income taxes. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | PARTICIPATIONS IN ASSOCIATES AND JOINT | March 31 | March 31 | Dec 31 | | VENTURES BY SEGMENTS | 2008 | 2007 | 2007 | | MEUR | | | | -------------------------------------------------------------------------------- | Power Generation | | | | 800 | 783 | 806 | -------------------------------------------------------------------------------- | Heat | | | | 172 | 157 | 158 | -------------------------------------------------------------------------------- | Distribution | | | | 233 | 221 | 229 | -------------------------------------------------------------------------------- | Markets | | | | 8 | 9 | 8 | -------------------------------------------------------------------------------- | Russia | | | | 490 | 277 | 455 | -------------------------------------------------------------------------------- | Other | | | | 808 | 871 | 1 197 | -------------------------------------------------------------------------------- | Total | | | | 2 511 | 2 318 | 2 853 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CAPITAL EXPENDITURE BY | Q1 2008 | Q1 2007 | 2007 | Last | | SEGMENTS | | | | twelve | | MEUR | | | | months | -------------------------------------------------------------------------------- | Power Generation | 18 | 16 | 93 | 95 | -------------------------------------------------------------------------------- | Heat 1) | 91 | 44 | 309 | 356 | -------------------------------------------------------------------------------- | Distribution 2) | 61 | 36 | 236 | 261 | -------------------------------------------------------------------------------- | Markets | 1 | 1 | 3 | 3 | -------------------------------------------------------------------------------- | Russia | - | | | | -------------------------------------------------------------------------------- | Other | 4 | 3 | 14 | 15 | -------------------------------------------------------------------------------- | Total | 175 | 100 | 655 | 730 | -------------------------------------------------------------------------------- 1) Increase is mainly due to ongoing large CHP-plant construction projects in Espoo in Finland, Tarto in Estonia and Czestochowa in Poland. 2) Increase is mainly due to installation of new meters in Fortum's network areas in Sweden (Automatic Meter Management, AMM) -------------------------------------------------------------------------------- | GROSS INVESTMENTS IN | Q1 2008 | Q1 2007 | 2007 | Last | | SHARES BY SEGMENTS | | | | twelve | | MEUR | | | | months | -------------------------------------------------------------------------------- | Power Generation | | | | 52 | 52 | -------------------------------------------------------------------------------- | Heat | | 21 | 15 | 18 | 24 | -------------------------------------------------------------------------------- | Distribution | | | | 1 | 1 | -------------------------------------------------------------------------------- | Markets | | 0 | | 0 | 0 | -------------------------------------------------------------------------------- | Russia 1) | | 1 031 | | 245 | 1 276 | -------------------------------------------------------------------------------- | Other | | 0 | | 1 | 1 | -------------------------------------------------------------------------------- | Total | | 1 052 | 15 | 317 | 1 354 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) See Note 7 | | | | | | | Acquisitions and | | | | | | | disposals. | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NET ASSETS BY SEGMENTS | March 31 | March 31 | Dec 31 | | MEUR | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | Power Generation | 5 633 | 5 636 | 5 599 | -------------------------------------------------------------------------------- | Heat | 3 617 | 3 444 | 3 507 | -------------------------------------------------------------------------------- | Distribution | 3 332 | 3 245 | 3 239 | -------------------------------------------------------------------------------- | Markets | 169 | 140 | 247 | -------------------------------------------------------------------------------- | Russia | 2 264 | 302 | 456 | -------------------------------------------------------------------------------- | Other and Eliminations | 822 | 937 | 1 237 | -------------------------------------------------------------------------------- | Total | 15 837 | 13 704 | 14 285 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | RETURN ON NET ASSETS BY | Last | Dec 31 | | SEGMENTS | twelve | 2007 | | % | months | | -------------------------------------------------------------------------------- | Power Generation | 21.7 | 19.2 | -------------------------------------------------------------------------------- | Heat | 8.8 | 9.3 | -------------------------------------------------------------------------------- | Distribution | 8.0 | 7.7 | -------------------------------------------------------------------------------- | Markets | 1.7 | 6.9 | -------------------------------------------------------------------------------- | Russia | 32.1 | 66.3 | -------------------------------------------------------------------------------- | Other | 0.4 | 17.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | COMPARABLE RETURN ON NET ASSETS | Last | Dec 31 | | BY SEGMENTS | twelve | 2007 | | % | months | | -------------------------------------------------------------------------------- | Power Generation | | 20.2 | 18.9 | -------------------------------------------------------------------------------- | Heat | | 8.6 | 9.2 | -------------------------------------------------------------------------------- | Distribution | | 8.0 | 7.6 | -------------------------------------------------------------------------------- | Markets | | 1.2 | -0.6 | -------------------------------------------------------------------------------- | Russia | | 0.0 | 0.0 | -------------------------------------------------------------------------------- | Other 1) | | 2.8 | -2.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Excluding approximately EUR 180 million gain in relation to | | | Hafslund's divestment of REC-shares Q1 2007 included in the share of | | | profits of associates and joint ventures. | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 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. Average net assets are calculated using the | | | opening balance and end of each quarter values. | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ASSETS BY SEGMENTS | March 31 | March 31 | Dec 31 | | MEUR | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | Power Generation | 6 155 | 6 037 | 6 154 | -------------------------------------------------------------------------------- | Heat | 4 033 | 3 830 | 3 928 | -------------------------------------------------------------------------------- | Distribution | 3 874 | 3 735 | 3 778 | -------------------------------------------------------------------------------- | Markets | 612 | 617 | 630 | -------------------------------------------------------------------------------- | Russia | 2 541 | 302 | 456 | -------------------------------------------------------------------------------- | Other and Eliminations | 934 | 1 057 | 1 392 | -------------------------------------------------------------------------------- | Assets included in Net | 18 149 | 15 578 | 16 338 | | assets | | | | -------------------------------------------------------------------------------- | Interest-bearing | 792 | 710 | 747 | | receivables | | | | -------------------------------------------------------------------------------- | Deferred taxes | 1 | 7 | 3 | -------------------------------------------------------------------------------- | Other assets | 312 | 377 | 159 | -------------------------------------------------------------------------------- | Cash and cash equivalents | 2 237 | 1 067 | 427 | -------------------------------------------------------------------------------- | Total assets | 21 491 | 17 739 | 17 674 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | LIABILITIES BY SEGMENTS | March 31 | March 31 | Dec 31 | | MEUR | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | Power Generation | 522 | 401 | 555 | -------------------------------------------------------------------------------- | Heat | 416 | 386 | 421 | -------------------------------------------------------------------------------- | Distribution | 542 | 490 | 539 | -------------------------------------------------------------------------------- | Markets | 443 | 477 | 383 | -------------------------------------------------------------------------------- | Russia | 277 | - | - | -------------------------------------------------------------------------------- | Other and Eliminations | 112 | 120 | 155 | -------------------------------------------------------------------------------- | Liabilities included in | 2 312 | 1 874 | 2 053 | | Net assets | | | | -------------------------------------------------------------------------------- | Deferred tax liabilities | 1 899 | 1 826 | 1 687 | -------------------------------------------------------------------------------- | Other | 412 | 1 446 | 390 | -------------------------------------------------------------------------------- | Total liabilities | 4 623 | 5 146 | 4 130 | | included in Capital | | | | | employed | | | | -------------------------------------------------------------------------------- | Interest-bearing | 7 465 | 4 999 | 4 893 | | liabilities | | | | -------------------------------------------------------------------------------- | Total equity | 9 403 | 7 594 | 8 651 | -------------------------------------------------------------------------------- | Total equity and | 21 491 | 17 739 | 17 674 | | liabilities | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | AVERAGE NUMBER OF | Q1 2008 | Q1 2007 | 2007 | | EMPLOYEES | | | | -------------------------------------------------------------------------------- | Power Generation | 3 523 | 3 350 | 3 475 | -------------------------------------------------------------------------------- | Heat | 2 324 | 2 311 | 2 302 | -------------------------------------------------------------------------------- | Distribution | 1 144 | 1 037 | 1 060 | -------------------------------------------------------------------------------- | Markets | 846 | 914 | 936 | -------------------------------------------------------------------------------- | Russia | - | - | - | -------------------------------------------------------------------------------- | Other | 519 | 553 | 531 | -------------------------------------------------------------------------------- | Total | 8 356 | 8 165 | 8 304 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NUMBER OF EMPLOYEES | March 31 | March 31 | Dec 31 | | | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | Power Generation | 3 544 | 3 371 | 3 511 | -------------------------------------------------------------------------------- | Heat | 2 445 | 2 304 | 2 279 | -------------------------------------------------------------------------------- | Distribution | 1 175 | 1 039 | 1 063 | -------------------------------------------------------------------------------- | Markets | 814 | 942 | 935 | -------------------------------------------------------------------------------- | Russia | 7 187 | - | - | -------------------------------------------------------------------------------- | Other | 524 | 534 | 515 | -------------------------------------------------------------------------------- | Total | 15 689 | 8 190 | 8 303 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 5. QUARTERLY SEGMENT INFORMATION | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Extended quarterly information is available on Fortum's website | | | | www.fortum.com/investors/financial information. | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | QUARTERLY SALES BY | Q1 | Q4 | Q3 | Q2 | Q1 | | SEGMENTS | 2008 | 2007 | 2007 | 2007 | 2007 | | MEUR | | | | | | -------------------------------------------------------------------------------- | Power Generation | 717 | 685 | 502 | 522 | 641 | -------------------------------------------------------------------------------- | - of which internal | 53 | 5 | 70 | 92 | 156 | -------------------------------------------------------------------------------- | Heat | 493 | 439 | 186 | 252 | 479 | -------------------------------------------------------------------------------- | - of which internal | 7 | -1 | 4 | 11 | 24 | -------------------------------------------------------------------------------- | Distribution | 232 | 206 | 166 | 172 | 225 | -------------------------------------------------------------------------------- | - of which internal | 3 | 3 | 2 | 2 | 2 | -------------------------------------------------------------------------------- | Markets | 519 | 482 | 331 | 351 | 519 | -------------------------------------------------------------------------------- | - of which internal | 32 | 49 | 30 | 32 | 44 | -------------------------------------------------------------------------------- | Russia | - | - | - | - | - | -------------------------------------------------------------------------------- | - of which internal | - | - | - | - | - | -------------------------------------------------------------------------------- | Other | 20 | 21 | 19 | 22 | 19 | -------------------------------------------------------------------------------- | - of which internal | 20 | 20 | 17 | 19 | 16 | -------------------------------------------------------------------------------- | Eliminations | -541 | -513 | -344 | -360 | -543 | -------------------------------------------------------------------------------- | Total | 1 440 | 1 320 | 860 | 959 | 1 340 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | QUARTERLY OPERATING PROFIT | Q1 | Q4 | Q3 | Q2 | Q1 | | BY SEGMENTS | 2008 | 2007 | 2007 | 2007 | 2007 | | MEUR | | | | | | -------------------------------------------------------------------------------- | Power Generation | | 431 | 351 | 221 | 243 | 300 | -------------------------------------------------------------------------------- | Heat | | 130 | 121 | -2 | 33 | 142 | -------------------------------------------------------------------------------- | Distribution | | 86 | 51 | 50 | 53 | 79 | -------------------------------------------------------------------------------- | Markets | | -20 | 2 | 15 | 7 | -12 | -------------------------------------------------------------------------------- | Russia | | 0 | 12 | 232 | - | - | -------------------------------------------------------------------------------- | Other | | -18 | -17 | -6 | -9 | -19 | -------------------------------------------------------------------------------- | Total | | 609 | 520 | 510 | 327 | 490 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | QUARTERLY COMPARABLE | Q1 | Q4 | Q3 | Q2 | Q1 | | OPERATING PROFIT BY | 2008 | 2007 | 2007 | 2007 | 2007 | | SEGMENTS | | | | | | | MEUR | | | | | | -------------------------------------------------------------------------------- | Power | | | | 395 | 363 | 185 | 217 | 330 | | Generation | | | | | | | | | -------------------------------------------------------------------------------- | Heat | | | | 121 | 120 | -3 | 36 | 137 | -------------------------------------------------------------------------------- | Distribution | | | | 87 | 50 | 51 | 52 | 78 | -------------------------------------------------------------------------------- | Markets | | | | -10 | -1 | 11 | 3 | -14 | -------------------------------------------------------------------------------- | Russia | | | | 0 | - | - | - | - | -------------------------------------------------------------------------------- | Other | | | | -12 | -16 | -6 | -10 | -19 | -------------------------------------------------------------------------------- | Total | | | | 581 | 516 | 238 | 298 | 512 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | QUARTERLY NON-RECURRING ITEMS | Q1 | Q4 | Q3 | Q2 | Q1 | | BY SEGMENTS | 2008 | 2007 | 2007 | 2007 | 2007 | | MEUR | | | | | | -------------------------------------------------------------------------------- | Power Generation | | 0 | 0 | 0 | 2 | 0 | -------------------------------------------------------------------------------- | Heat | | 2 | 1 | 0 | 1 | 0 | -------------------------------------------------------------------------------- | Distribution | | 0 | 0 | -1 | 0 | 1 | -------------------------------------------------------------------------------- | Markets | | - | -1 | 1 | 0 | 0 | -------------------------------------------------------------------------------- | Russia | | - | 12 | 232 | - | - | -------------------------------------------------------------------------------- | Other | | 0 | 1 | 0 | 1 | 0 | -------------------------------------------------------------------------------- | Total | | 2 | 13 | 232 | 4 | 1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | QUARTERLY OTHER ITEMS | | Q1 | Q4 | Q3 | Q2 | Q1 | | EFFECTING COMPARABILITY | | 2008 | 2007 | 2007 | 2007 | 2007 | | MEUR | | | | | | | -------------------------------------------------------------------------------- | Power | | | | 36 | -12 | 36 | 24 | -30 | | Generation | | | | | | | | | | 1) | | | | | | | | | -------------------------------------------------------------------------------- | Heat | | | | 7 | 0 | 1 | -4 | 5 | -------------------------------------------------------------------------------- | Distribution | | | | -1 | 1 | 0 | 1 | 0 | -------------------------------------------------------------------------------- | Markets | | | | -10 | 4 | 3 | 4 | 2 | -------------------------------------------------------------------------------- | Russia | | | | - | - | - | - | - | -------------------------------------------------------------------------------- | Other | | | | -6 | -2 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Total | | | | 26 | -9 | 40 | 25 | -23 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Including effects from | | | | | | | the accounting of Fortum's | | | | | | | part of the Finnish | | | | | | -------------------------------------------------------------------------------- | State Nuclear Waste | | -9 | -7 | 33 | -4 | -5 | | Management Fund with | | | | | | | | (EUR million): | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 6. FINANCIAL RISK MANAGEMENT | -------------------------------------------------------------------------------- The Group has not made any significant change in policies regarding risk management during the period. Aspects of the Group's financial risk management objectives and policies are consistent with that disclosed in the consolidated financial statements as at and for the year ended 31 December 2007. The tables below disclose the notional values or volumes and net fair values for the Group's derivatives used in different areas mainly for hedging purposes. -------------------------------------------------------------------------------- | DERIVATIVES | | | | | | | -------------------------------------------------------------------------------- | MEUR | | March 31 | March 31 | Dec 31 | | | | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | Interest and | Notiona | Net | Notio | Net | Notional | Net fair | | currency | l value | fair | nal | fair | value | value | | derivatives | | value | value | value | | | -------------------------------------------------------------------------------- | Interest rate | 2 856 | 20 | 3 092 | 2 | 3 500 | -16 | | swaps | | | | | | | -------------------------------------------------------------------------------- | Forward foreign | 5 020 | -5 | 6 923 | 71 | 4 452 | 30 | | exchange | | | | | | | | contracts | | | | | | | -------------------------------------------------------------------------------- | Forward rate | 745 | - | - | - | 741 | 0 | | agreements | | | | | | | -------------------------------------------------------------------------------- | Interest rate and | 3 131 | 49 | 3 014 | 17 | 3 293 | 66 | | currency swaps | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Electricity | Volume | Net | Volum | Net | Volume | Net fair | | derivatives | | fair | e | fair | | value | | | | value | | value | | | -------------------------------------------------------------------------------- | | TWh | MEUR | TWh | MEUR | TWh | MEUR | -------------------------------------------------------------------------------- | Sales swaps | 121 | 61 | 121 | 730 | 119 | -651 | -------------------------------------------------------------------------------- | Purchase swaps | 96 | -61 | 90 | -567 | 88 | 461 | -------------------------------------------------------------------------------- | Purchased options | 0 | 0 | 6 | 1 | 0 | 0 | -------------------------------------------------------------------------------- | Written options | 4 | 2 | 9 | 0 | 2 | -1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Oil derivatives | Volume | Net | Volum | Net | Volume | Net fair | | | | fair | e | fair | | value | | | | value | | value | | | -------------------------------------------------------------------------------- | | 1000 | MEUR | 1000 | MEUR | 1000 bbl | MEUR | | | bbl | | bbl | | | | -------------------------------------------------------------------------------- | Sales swaps and | 464 | -4 | 545 | -2 | 460 | -4 | | futures | | | | | | | -------------------------------------------------------------------------------- | Purchase swaps | 692 | 9 | 1 003 | 4 | 795 | 9 | | and futures | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Coal derivatives | Volume | Net | Volum | Net | Volume | Net fair | | | | fair | e | fair | | value | | | | value | | value | | | -------------------------------------------------------------------------------- | | kt | MEUR | kt | MEUR | kt | MEUR | -------------------------------------------------------------------------------- | Sold | 105 | -1 | - | - | 150 | -1 | -------------------------------------------------------------------------------- | Bought | 330 | 4 | - | - | 375 | 1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CO2 emission | Volume | Net | Volum | Net | Volume | Net fair | | allowance | | fair | e | fair | | value | | derivatives | | value | | value | | | -------------------------------------------------------------------------------- | | ktCO2 | MEUR | ktCO2 | MEUR | ktCO2 | MEUR | -------------------------------------------------------------------------------- | Sold | 3 951 | -13 | 405 | 0 | 3 101 | -13 | -------------------------------------------------------------------------------- | Bought | 3 896 | 14 | 415 | 0 | 3 121 | 13 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Share derivatives | Notiona | Net | Notio | Net | Notional | Net fair | | | l value | fair | nal | fair | value | value | | | | value | value | value | | | -------------------------------------------------------------------------------- | | MEUR | MEUR | MEUR | MEUR | MEUR | MEUR | -------------------------------------------------------------------------------- | Share forwards 1) | 35 | 40 | 36 | 48 | 36 | 66 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Cash-settled share forwards are used as a hedging | | | | instrument for Fortum Group's performance share arrangement. | | | -------------------------------------------------------------------------------- On 20 February 2008, Fortum, the Russian Territorial Generating Company No. 1 (TGC-1) and ECF Project Ltd signed an agreement according to which Fortum will purchase approximately 5 million tonnes of emission reduction units (ERU) from TGC-1. The ERUs will come from Joint Implementation projects conducted at TGC-1's production facilities during the Kyoto Period (2008-2012) of the European Emissions Trading Scheme. Depending on the timing of the volumes, the agreement will fully be classified as an own use contract and valued at cost. Since the timing, volumes (and also the market price for the ERUs) are uncertain, the agreement is treated as an own use contract until more information is available, i.e. with no impact to income statement or balance sheet. The ERUs purchased cover approximately half of Fortum's annual CO2 emissions and their value is approximately EUR 70 million based on the current market price of Certified Emission Reductions originating from developing countries. -------------------------------------------------------------------------------- | 7. ACQUISITIONS AND | | | | | | | | | | DISPOSALS | | | | | | | | | -------------------------------------------------------------------------------- Total Gross investment in subsidiary shares (see definition of key figures) amounted to EUR 1,045 (18) million of which EUR 1,031 million represents the acquisition of TGC-10. In Latvia, Fortum acquired 100% of the shares in Jelgavas Kogeneracija SIA at the end of March. The acquired company provides district heating to the city of Jelgava. The annual heat sales are 200 GWh, the sales EUR 10 million, and the number of employees 170. The gross investment was EUR 10 million. In Sweden, Fortum acquired additional 11,22% shares in Hofors Energi AB. After this acquisition Fortum's total ownership of the shares in Hofors Energi AB is 60%. The acquired company provides district heating to the Hofors area. The annual heat sales are 130 GWh, the sales EUR 7 million, and Fortum has alraedy earlier taken care of operations in the company. The gross investment was EUR 3 million. No divestments of shares in subsidiaries have taken place during the period. Acquisition of TGC-10 In March Fortum acquired 76.49% of TGC-10 which is a Russian territorial generating company founded in 2006 and operating in the Urals and West Siberia region. The total installed capacity is 3,000 MW electricity and 15,800 MW heat with an annual production of 18 TWh electricity and 27 TWh heat. The company is committed and contractually obligated to an extensive investment plan to further increase its electricity capacity with 2,300 MW by 2013. The contractual obligations of TGC-10's investment programme include penalty clauses tied to the availability of the new generating capacity. Total sales for last twelve months in TGC-10 were EUR 590 million and operating profit was EUR 26 million based on Q3 2007 published Interim Financial statements. The acquisition was made through an acquisition of shares and through participation in a share issue. On 20 March 2008 Fortum paid for 47.42% of the shares in TGC-10 through a share issue for approximately EUR 1.3 billion. The capital received by TGC-10 will remain in the company and will be used to finance its committed capacity investment programme planned at EUR 2.2 billion. On 26 March Fortum paid for an additional 29.07% of the shares in TGC-10 from United Energy Systems of Russia (RAO UES). Fortum will make a mandatory offer to purchase the remaining shares held by the minority shareholders. The gross investment for the total transaction was EUR 1,031 million, excluding cash in TGC-10 (mainly coming from the share issue) and including interest-bearing liabilities in the company. The purchase price allocation is based on a preliminary balance sheet as of 31 March 2008 of TGC-10. The latest IFRS interim financial statements published from TGC-10 is Q3 2007. The fair value adjustments are highly preliminary, since all valuation effects have not been finalised, in particular regarding potential obligations. The Fortum Q1 2008 Interim report does not include any income statement effect from TGC-10. -------------------------------------------------------------------------------- | MEUR | | | | | TGC-10 | -------------------------------------------------------------------------------- | Purchase consideration | | | | | | -------------------------------------------------------------------------------- | Cash paid | | | | | 2 069 | -------------------------------------------------------------------------------- | Direct costs relating | | | | | 7 | | to the acquisition | | | | | | -------------------------------------------------------------------------------- | Total purchase | | | | | 2 076 | | consideration | | | | | | -------------------------------------------------------------------------------- | Fair value of the | | | | | 1 737 | | acquired assets | | | | | | -------------------------------------------------------------------------------- | Goodwill | | | | | 339 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | | Acquired | Allocate | Total | | | | | | d | | -------------------------------------------------------------------------------- | Fair value of the | | | Book | Fair | Value | | acquired net | | | Values | Values | | | identifiable assets: | | | | | | -------------------------------------------------------------------------------- | Cash and cash | | | 1 321 | | 1 321 | | equivalents | | | | | | -------------------------------------------------------------------------------- | Property, plant and | | | 539 | 988 | 1 527 | | equipment | | | | | | -------------------------------------------------------------------------------- | Other assets | | | 282 | | 282 | -------------------------------------------------------------------------------- | Non-interest-bearing | | | -93 | -388 | -481 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Interest-bearing | | | -276 | | -276 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Net identifiable assets | | | 1 773 | 600 | 2 373 | -------------------------------------------------------------------------------- | Minority interests | | | -417 | -219 | -636 | -------------------------------------------------------------------------------- | Total | | | 1 356 | 381 | 1 737 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gross investment in | | | | | | | TGC-10: | | | | | | -------------------------------------------------------------------------------- | Purchase consideration | | | | | 2 076 | | settled in cash | | | | | | -------------------------------------------------------------------------------- | Cash and cash | | | | | 1 321 | | equivalents in | | | | | | | subsidiaries acquired | | | | | | -------------------------------------------------------------------------------- | Cash outflow on | | | | | 755 | | acquisition | | | | | | -------------------------------------------------------------------------------- | Interest-bearing debt | | | | | 276 | | in subsidiaries | | | | | | | acquired | | | | | | -------------------------------------------------------------------------------- | Total | | | | | 1 031 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 8. EXCHANGE RATES | -------------------------------------------------------------------------------- The balance sheet date rate is based on exchange rate published by the European Central Bank for the closing date. The average exchange rate is calculated as an average of each months ending rate from the European Central Bank during the year and ending rate previous year. Key exchange rates for Fortum Group applied in the accounts: -------------------------------------------------------------------------------- | Average rate | March 31 | Dec 31 | Sept 30 | June 30 | March 31 | | | 2008 | 2007 | 2007 | 2007 | 2007 | -------------------------------------------------------------------------------- | Sweden (SEK) | 9.4265 | 9.2475 | 9.2185 | 9.2020 | 9.1787 | -------------------------------------------------------------------------------- | Norway (NOK) | 7.9998 | 8.0253 | 8.0466 | 8.1205 | 8.1563 | -------------------------------------------------------------------------------- | Poland (PLN) | 3.5676 | 3.7792 | 3.8285 | 3.8439 | 3.8858 | -------------------------------------------------------------------------------- | Russia (RUB) | 36.4660 | 35.0759 | 34.8320 | 34.6997 | 34.5633 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet | March 31 | Dec 31 | Sept 30 | June 30 | March 31 | | date rate | 2008 | 2007 | 2007 | 2007 | 2007 | -------------------------------------------------------------------------------- | Sweden (SEK) | 9.3970 | 9.4415 | 9.2147 | 9.2525 | 9.3462 | -------------------------------------------------------------------------------- | Norway (NOK) | 8.0510 | 7.9580 | 7.7185 | 7.9725 | 8.1190 | -------------------------------------------------------------------------------- | Poland (PLN) | 3.5220 | 3.5935 | 3.7730 | 3.7677 | 3.8668 | -------------------------------------------------------------------------------- | Russia (RUB) | 37.1130 | 35.9860 | 35.3490 | 34.8070 | 34.6580 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 9. INCOME TAX | | | | | | | | | | EXPENSE | | | | | | | | | -------------------------------------------------------------------------------- Tax rate according to the income statement for the period January to March 2008 was 20.4% (16.5%). The tax rate for the period is higher than in the comparable period 2007 mainly due to the impact of Hafslund´s sale of REC shares in March 2007, which impacted the share of profits from associates for the period with approximately EUR 180 million. The tax rate used in the income statement is always impacted by the fact that share of profits of associates and joint ventures is recorded based on Fortum's share of profits after tax. The tax rate for the period calculated excluding the share of profits from associates and joint ventures was 21.6% (23.7%). The tax rate for the full year 2007, excluding the share of profits from associates and Lenenergo sales gain was 22.3%. -------------------------------------------------------------------------------- | 10. EARNINGS PER SHARE | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | The calculation of basic and diluted earnings per share is based on the | | following data: | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | | Q1 2008 | Q1 2007 | 2007 | -------------------------------------------------------------------------------- | Earnings (MEUR): | | | | | | -------------------------------------------------------------------------------- | Profit attributable to the | | 452 | 522 | 1 552 | | equity holders of the Company | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Number of shares | | | | | | | (thousands): | | | | | | -------------------------------------------------------------------------------- | Weighted average number of | | | | | | shares for the purpose of | | | | | -------------------------------------------------------------------------------- | basic earnings per | | | 887 085 | 890 263 | 889 997 | | share | | | | | | -------------------------------------------------------------------------------- | Effect of dilutive | | | 1 092 | 2 989 | 1 398 | | share options | | | | | | -------------------------------------------------------------------------------- | Weighted average number of | | | | | | shares for the purpose of | | | | | -------------------------------------------------------------------------------- | diluted earnings per | | | 888 177 | 893 252 | 891 395 | | share | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 11. DIVIDEND PER | | | | | | | | | | SHARE | | | | | | | | | -------------------------------------------------------------------------------- The Annual General Meeting on 1 April 2008 decided to distribute a dividend of EUR 1.35 per share to the shareholders of which EUR 0.77 per share was paid from Fortum's recurring earnings and EUR 0.58 per share as additional dividend in order to steer the company's capital structure towards the target. The total dividend amounts to EUR 1,198 million based on the amount of shares registered as of 4 April 2008. The dividend was paid out 11 April 2008. These financial statements do not reflect this dividend. The Annual General Meeting on 28 March 2007 decided to distribute a dividend of EUR 1.26 per share to the shareholders of which EUR 0.73 per share is in accordance with the Group´s dividend policy. An additional dividend of EUR 0.53 per share was decided to steer Fortum´s capital structure towards agreed target. The total dividend was EUR 1,122 million based on the amount of shares registered as of 2 April 2007. The dividend was paid on 11 April 2007. In Q1 2007 the total dividend was included in trade and other payables. -------------------------------------------------------------------------------- | 12. CHANGES IN INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | | | March 31 | March 31 | Dec 31 | | | | | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | Opening balance | | | 11 428 | 11 567 | 11 567 | -------------------------------------------------------------------------------- | Increase through | | | 1 857 | 13 | 16 | | acquisition of | | | | | | | subsidiary companies | | | | | | -------------------------------------------------------------------------------- | Capital expenditures | | | 175 | 100 | 655 | -------------------------------------------------------------------------------- | Changes of nuclear | | | - | - | 25 | | asset retirement cost | | | | | | -------------------------------------------------------------------------------- | Changes of emission | | | 0 | 0 | -9 | | rights | | | | | | -------------------------------------------------------------------------------- | Disposals | | | -2 | -6 | -11 | -------------------------------------------------------------------------------- | Depreciation, | | | -111 | -112 | -451 | | amortisation and | | | | | | | impairment | | | | | | -------------------------------------------------------------------------------- | Translation differences | | | 39 | -281 | -364 | -------------------------------------------------------------------------------- | Closing balance | | | 13 386 | 11 281 | 11 428 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 13. CHANGES IN PARTICIPATIONS IN ASSOCIATES AND JOINT VENTURES | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | | March 31 | March 31 | Dec 31 | | | | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | Opening balance | | 2 853 | 2 197 | 2 197 | -------------------------------------------------------------------------------- | Share of profits of | | 34 | 202 | 241 | | associates and joint | | | | | | ventures | | | | | -------------------------------------------------------------------------------- | Investments | | 7 | - | 1 | -------------------------------------------------------------------------------- | Share issues and | | 1 | - | 294 | | shareholders' | | | | | | contributions | | | | | -------------------------------------------------------------------------------- | Increase through | | 35 | - | - | | acquisition of | | | | | | subsidiaries | | | | | -------------------------------------------------------------------------------- | Reclassifications | | -1 | - | - | -------------------------------------------------------------------------------- | Divestments | | - | | -68 | -------------------------------------------------------------------------------- | Dividend income received | | -2 | -2 | -178 | -------------------------------------------------------------------------------- | Fair value and other | | -416 | -79 | 366 | | changes in equity | | | | | -------------------------------------------------------------------------------- | Closing balance | | 2 511 | 2 318 | 2 853 | -------------------------------------------------------------------------------- In Lithuania, Fortum acquired a 14.73% share in UAB Klaipedos Energija from Stadtwerke Leipzig GmbH on 29 February 2008. Fortum now owns a 19.63% share of the company. UAB Klaipedos Energija generates and distributes district heat to the residents and industries in the cities of Klaipeda and Gargzdai. The net sales of the company are around EUR 27 million, annual heat sales 1 terawatthour (TWh) and power sales 20 gigawatthours (GWh). The investment was EUR 7 million. Accounting for the share of profits from Hafslund ASA According to Fortum Group accounting policies the share of profits from Hafslund has been included in Fortum Group figures based on the previous quarter information since Hafslund's interim reports are published later than Fortum's interim reports. Hafslund will publish January-March 2008 results on 6 May 2008. When calculating the share of profits in Hafslund, Fortum has in accordance with Fortum's accounting policies reclassified Hafslund's accounting treatment for the shareholding in Renewable Energy Corporation (REC). Hafslund has classified the shareholding in REC as financial assets at fair value through profit and loss while Fortum has classified the REC shareholding as available for sale financial assets with fair value changes recorded directly through equity, only when Hafslund divests shares in REC, the cumulative fair value change effects Fortum's income statement. Since REC has been listed on the Oslo stock exchange as of 9 May 2006, Fortum is accounting for the fair value change in REC based on the closing price on the Oslo stock exchange at each closing date. The amount of shares is based on the amount published by Hafslund in the previous quarter if other information is not available. Hafslund sold 35 million shares in REC in March 2007. In accordance with the accounting policy Fortum recognised approximately EUR 180 million in relation to Hafslund's divestment of REC shares as a part of the share of profits from associates and joint ventures in Q1 2007. The cumulative fair value change in Fortum's equity, based on the remaining number of shares reported by Hafslund, was approximately EUR 380 million at 31 March 2008, which represents a decrease with EUR 410 milion from 31 December 2007. -------------------------------------------------------------------------------- | 14. SHARE CAPITAL | | | | | -------------------------------------------------------------------------------- | MEUR | | | Number of shares | Share | | | | | | capital | -------------------------------------------------------------------------------- | Registered shares at 1 | | | 886 683 058 | 3 040 | | January 2008 | | | | | -------------------------------------------------------------------------------- | Shares subscribed with options and | 439 535 | 2 | | registered by 31 March 2008 | | | -------------------------------------------------------------------------------- | Registered shares at 31 | | | 887 122 593 | 3 042 | | March 2008 | | | | | -------------------------------------------------------------------------------- | Unregistered shares | | | - | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | | | Number of shares | Share | | | | | | capital | -------------------------------------------------------------------------------- | Registered shares at 1 | | | 887 393 646 | 3 023 | | January 2007 | | | | | -------------------------------------------------------------------------------- | Shares subscribed with options | | 5 199 412 | 17 | | and registered by 31 Dec 2007 | | | | -------------------------------------------------------------------------------- | Cancellation of own | | | -5 910 000 | - | | shares | | | | | -------------------------------------------------------------------------------- | Registered shares at 31 | | | 886 683 058 | 3 040 | | Dec 2007 | | | | | -------------------------------------------------------------------------------- | Unregistered shares | | | 50 000 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 15. | | | | | | | | | | INTEREST-BEARING | | | | | | | | | | LIABILITIES | | | | | | | | | -------------------------------------------------------------------------------- During the first quarter Fortum raised a syndicated loan facility of EUR 3,500 million. The loan facility is structured as a 3 year term loan of EUR 2,000 million to be used for acquisition financing of TGC-10, and as a 5 year revolving credit facility of EUR 1,500 million to be used for general corporate purposes. As per the end of the first quarter EUR 2,100 million of the new facility was drawn. The amount of re-borrowing from the Finnish nuclear waste fund was increased by EUR 50 million to EUR 708 million. Fortum also increased the amount of short term financing by issuing Commercial Papers (CPs) in the Finnish and Swedish markets. Per quarter end the amount of short term CPs outstanding was EUR 617 million. During the quarter a long term Eurobond (originally issued in 2001) of EUR 500 million was repaid. The reported interest-bearing debt increased during the quarter by EUR 2,572 million from EUR 4,893 million to EUR 7,465 million. Cash increased by EUR 1,810 million from EUR 427 million to EUR 2,237 million including cash held by TGC-10 amounting to EUR 1,293 million. The dividends both in 2007 and 2008 were paid after the reporting date. -------------------------------------------------------------------------------- | 16. NUCLEAR RELATED | | | | | | | | ASSETS AND LIABILITIES | | | | | | | -------------------------------------------------------------------------------- | MEUR | | | | March 31 | March 31 | Dec 31 | | | | | | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | Carrying values in the | | | | | | | | balance sheet: | | | | | | | -------------------------------------------------------------------------------- | Nuclear provisions | | | | 522 | 453 | 516 | -------------------------------------------------------------------------------- | Share in the State | | | | 522 | 453 | 516 | | Nuclear Waste | | | | | | | | Management Fund | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Legal liability and actual share of | | | | | the State Nuclear Waste Management | | | | | Fund: | | | | -------------------------------------------------------------------------------- | Liability for nuclear waste | 816 | 685 | 816 | | management according to the Nuclear | | | | | Energy Act | | | | -------------------------------------------------------------------------------- | Funding obligation | | | | 698 | 649 | 698 | | target | | | | | | | -------------------------------------------------------------------------------- | Fortum's share of the | | | 698 | 649 | 673 | | State Nuclear Waste | | | | | | | Management Fund | | | | | | -------------------------------------------------------------------------------- Nuclear related provisions The provisions related to nuclear waste management, i.e. decommissioning of the power plant and spent fuel, are based on cash-flows for future costs which are also the basis for the legal liability. An updated cost estimate is done every year and an updated technical plan is made every third year. The legal liability decided by the government in January 2008 was based on an updated technical plan and Fortum accounted for the effects based on the submitted proposal in Q3 2007. Fortum's share in the State Nuclear Waste Management Fund Fortum contributes funds to the State Nuclear Waste Management Fund based on the yearly funding obligation target decided by the governmental authorities in January each year in connection with the decision of size of the legal liability. The fund is from an IFRS perspective overfunded with EUR 176 million, since Fortum's share of the Fund as of 31 March 2008 is EUR 698 million and the carrying value in the balance sheet is EUR 522 million. Effects to comparable operating profit and operating profit Following the updated technical plan, Fortum had in Q3 2007 a one-time effect to Comparable operating profit of EUR -13 million in the Power Generation segment mainly due to changes in estimated cash-flows for disposal of spent fuel. Any costs increase which is related to already spent fuel is always recognised immediately in Comparable operating profit. Operating profit in Power Generation segment is affected by the accounting principle for Fortum's share of the Finnish Nuclear Waste Management Fund, since the carrying value of the Fund in Fortum's balance sheet can maximum be equal to the amount of the provisions according to IFRS. As long as the Fund is overfunded from an IFRS perspective, the effects to operating profit from this adjustment will be positive if the provisions increase more than the Fund and negative if actual value of the fund increases more than the provisions. This accounting effect is not included in Comparable operating profit in Fortum financial reporting, see Other items effecting comparability in Note 4 and 5. Fortum had an effect from this adjustment in Q3 2007 of EUR +33 million and the cumulative effect for the full year 2007 was EUR +17 million. The effect in Q1 2008 was EUR -9 million compared to EUR -5 million in Q1 2007. Associated companies As disclosed in the Financial Statement 2007, Fortum has not been able to account for the nuclear related assets and provisions according to Fortum accounting principles for its Swedish nuclear associated companies, since the separate cash-flow information for the provisions is not available. -------------------------------------------------------------------------------- | 17. PLEDGED ASSETS | | | | | -------------------------------------------------------------------------------- | MEUR | | March 31 | March 31 | Dec 31 | | | | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | On own behalf | | | | | -------------------------------------------------------------------------------- | For debt | | | | | -------------------------------------------------------------------------------- | Pledges | | 230 | 216 | 170 | -------------------------------------------------------------------------------- | Real estate mortgages | | 138 | 49 | 138 | -------------------------------------------------------------------------------- | For other commitments | | | | | -------------------------------------------------------------------------------- | Real estate mortgages | | 102 | 56 | 103 | -------------------------------------------------------------------------------- | On behalf of associated | | | | | companies and joint ventures | | | | -------------------------------------------------------------------------------- | Pledges and real estate | | 3 | 3 | 3 | | mortgages | | | | | -------------------------------------------------------------------------------- Pledged assets for debt Finnish participants in the State Nuclear Waste Management Fund are allowed to borrow from the Fund. In Q1 2008 Fortum increased the reborrowing from the Fund (see Note 15) and therefore pledged additional Kemijoki shares as a security. The total amount of shares pledged, have a carrying value of EUR 208 million (145 million) as of 31 March 2008 (and 31 December 2007 respectively). Pledged assets for other commitments Fortum has given real estate mortgages in Naantali and Inkoo power plants in Finland, total value of EUR 102 million, as a security to the State Nuclear Waste Management Fund for the uncovered part of the legal liability, uncertainties and unexpected events. The size of the securities given is updated yearly in Q2 based on the decisions regarding the legal liabilities and the funding target which takes place around year-end every year. Fortum estimates the amount of real estate mortgages given as a security to increase with approximately EUR 100 million during Q2 2008. -------------------------------------------------------------------------------- | 18. COMMITMENTS | | | | | -------------------------------------------------------------------------------- | MEUR | | March 31 | March 31 | Dec 31 | | | | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | Operating lease | | | | | | commitments | | | | | -------------------------------------------------------------------------------- | Due within a year | | 24 | 19 | 21 | -------------------------------------------------------------------------------- | Due after one year and | | 44 | 31 | 31 | | within five years | | | | | -------------------------------------------------------------------------------- | Due after five years | | 92 | 75 | 69 | -------------------------------------------------------------------------------- | Total | | 160 | 125 | 121 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital commitments for the purchase of property, plant and equipment and | | intangible assets amounts to EUR 467 million as at 31 March 2008 (EUR 436 | | million at year end 2007). | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 19. CONTINGENT | | | | | | LIABILITIES | | | | | -------------------------------------------------------------------------------- | MEUR | | March 31 | March 31 | Dec 31 | | | | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | On own behalf | | | | | -------------------------------------------------------------------------------- | Other contingent | | 213 | 146 | 224 | | liabilities | | | | | -------------------------------------------------------------------------------- | On behalf of associated | | | | | companies and joint ventures | | | | -------------------------------------------------------------------------------- | Guarantees | | 235 | 207 | 235 | -------------------------------------------------------------------------------- | Other contingent | | 125 | 125 | 125 | | liabilities | | | | | -------------------------------------------------------------------------------- | On behalf of others | | | | | -------------------------------------------------------------------------------- | Guarantees | | 10 | 14 | 10 | -------------------------------------------------------------------------------- | Other contingent | | 1 | 2 | 1 | | liabilities | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other contingent liabilities on own behalf, EUR 213 million, have decreased | | with EUR 11 million since 31 December 2007. The main reason for the decrease | | is effects due exchange rate changes for the guarantees issued for the | | fulfillment of various cantractual obligations relating to Fortum's Service | | business in the UK. | -------------------------------------------------------------------------------- Guarantees on behalf of associated companies According to law, nuclear companies operating in Finland and Sweden shall give securities to the Finnish State Nuclear Waste Management Fund and the Swedish Nuclear Waste Fund respectively, to guarantee that sufficient funds exist to cover future expenses of decommissioning of power plant and disposal of spent fuel. Fortum estimates that the guarantee given on behalf of Teollisuuden Voima Oy (TVO) to the Finnish fund will increase from currently EUR 32 million to EUR 70 million during Q2 2008. The size of the guarantee is updated yearly in Q2, based on the decisions regarding legal liability and the funding target which takes place around year-end. In Sweden, Fortum has given guarantees on behalf of Forsmarks Kraftgrupp AB and OKG AB to the Swedish fund. Starting on 1 January 2008, a new law applies for financing of future fees to the fund for spent nuclear fuel and decommisioning of the plant. Following the implementation of the new law, Fortum estimates that the total amount of guarantees relating to nuclear waste management in Sweden will increase from SEK 1 841 million (EUR 196 million) to SEK 5 314 million (EUR 565 million) during Q2 2008. This amount will also apply for 2009. -------------------------------------------------------------------------------- | 20. LEGAL ACTIONS AND OFFICIAL PROCEEDINGS | -------------------------------------------------------------------------------- In March the Finnish Market Court decision overruled the conditional decision given by the Finnish Competition Authority in June 2006 on the acquisition of E.ON Finland. In their ruling, the Market Court stated that the Finnish Competition Authority had no grounds for setting conditions, because Fortum cannot be condidered to have a dominant position in the power generation and wholesale market. According to the Market Court, the relevant geographical market area in power generation and wholesale consist of at least Finland and Sweden. The Finnish Competition authority has appealed the decision to the Supreme Administrative Court. -------------------------------------------------------------------------------- | 21. RELATED PARTY TRANSACTIONS | -------------------------------------------------------------------------------- Related party transactions are described in the annual financial statements as of the year ended 31 December 2007. No material changes have occurred during the period. The Finnish State owned 50.86% of the shares in Fortum 31 December 2007. After the changes in amount of shares during 2007, increase in amount of shares due to the share subscriptions under the option schemes, the Finnish state owned 50.83% of the Company's shares at 31 March 2008. -------------------------------------------------------------------------------- | ASSOCIATED COMPANY TRANSACTIONS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | Q1 2008 | Q1 2007 | 2007 | -------------------------------------------------------------------------------- | Sales to associated | 35 | 43 | 129 | | companies | | | | -------------------------------------------------------------------------------- | Interest on associated | 8 | 6 | 26 | | company loan receivables | | | | -------------------------------------------------------------------------------- | Purchases from associated | 134 | 130 | 519 | | companies | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ASSOCIATED COMPANY | | | | | BALANCES | | | | -------------------------------------------------------------------------------- | MEUR | March 31 | March 31 | Dec 31 | | | 2008 | 2007 | 2007 | -------------------------------------------------------------------------------- | Long-term | 671 | 576 | 636 | | interest-bearing loan | | | | | receivables | | | | -------------------------------------------------------------------------------- | Trade receivables | 14 | 11 | 17 | -------------------------------------------------------------------------------- | Other receivables | 7 | 7 | 7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Long-term loan payables | 184 | 164 | 171 | -------------------------------------------------------------------------------- | Trade payables | 22 | 15 | 25 | -------------------------------------------------------------------------------- | Other payables | 34 | 24 | 53 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TRANSACTIONS AND | | | | | | | | | BALANCES WITH JOINT | | | | | | | | | VENTURES | | | | | | | | -------------------------------------------------------------------------------- | Transactions and balances with joint ventures as at and for | | | | the period ended 31 March 2008 are not material for the | | | | Group. | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 22. EVENTS AFTER THE BALANCE SHEET DATE | -------------------------------------------------------------------------------- Fortum Corporation's Annual General Meeting AGM) was held on April 1 2008. The AGM authorised the board of Directors to repurchase the company's own shares by using non-restricted equity. The authorisation is valid until the next AGM. The maximum amount of shares to be repurchased is 15 million shares for a maximum amount of EUR 300 million. Shares repurchased shall be cancelled by a separate decision of the Board of Directors. Regarding the decision for dividend payment, see Note 11. Norwegian Renewable Energy Corporation (REC) is partly owned by Fortum's associated company Hafslund ASA. Fortum shows the fair value changes of REC in equity. At end of March, the cumulative fair value change booked in Fortum's equity was approximately EUR 380 million. REC's share price has increased since the end of March. Based on REC's closing price on 22 April, the cumulative fair value change in Fortum's equity would have been approximately EUR 515 million. -------------------------------------------------------------------------------- | 23. DEFINITION | | | | | | | | | | | OF KEY FIGURES | | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EBITDA (Earnings | = | Operating profit + | | | | | | before interest, | | Depreciation, | | | | | | taxes, | | amortisation | | | | | | depreciation | | | | | | | -------------------------------------------------------------------------------- | and | | and impairment | | | | | | | amortisation) | | charges | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Comparable | = | Operating profit - non-recurring items - other | | | operating profit | | items effecting comparability | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-recurring | = | Mainly capital | | | | | | items | | gains and | | | | | | | | losses | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other items | = | Includes effects from financial derivatives | | | effecting | | hedging future cash-flows where hedge | | | comparability | | 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. | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Funds from | = | Net cash from operating activities before | | | operations (FFO) | | change in working capital | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital | = | Capitalised investments in property, plant and | | | expenditure | | equipment and intangible assets | | -------------------------------------------------------------------------------- | | | including maintenance, productivity, growth | | | | | and investments required by legislation | | -------------------------------------------------------------------------------- | | | including borrowing costs | | | | | | capitalised during construction | | | | | | period. Maintenance | | | -------------------------------------------------------------------------------- | | | investments expand lifetime of an existing | | | | | asset, maintain useage/availability and/or | | -------------------------------------------------------------------------------- | | | maintains reliability. Productivity | | | | | improves productivity an existing asset. | | | | | Growth | | -------------------------------------------------------------------------------- | | | investments' purpose is to build new assets | | | | | and/or to increase customer base within | | -------------------------------------------------------------------------------- | | | existing businesses. Legislation | | | | | investments are done at certain point of | | | | | time due to | | -------------------------------------------------------------------------------- | | | legal | | | | | | | | | requirem | | | | | | | | | ents. | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gross | = | Investments in subsidiary shares, shares in | | | investments in | | associated companies and other shares in | | | shares | | available for | | -------------------------------------------------------------------------------- | | | sale financial assets. Investments in | | | | | subsidiary shares are net of cash and grossed | | | | | with | | -------------------------------------------------------------------------------- | | | interest-bearing liabilities in | | | | | | the acquired company. | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on | = | Profit | | | | | x 100 | | shareholders' | | for the | | | | | | | equity, % | | year | | | | | | -------------------------------------------------------------------------------- | | | Total | | | | | | | | | equity | | | | | | | | | average | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on | = | Profit before taxes + interest | | x 100 | | capital | | and other financial expenses | | | | employed, % | | | | | -------------------------------------------------------------------------------- | | | Capital | | | | | | | | employed | | | | | | | | average | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on net | = | Operating profit + Share of profit | x 100 | | assets, % | | (loss) in associated companies and | | | | | joint | | | | | ventures | | -------------------------------------------------------------------------------- | | | Net | | | | | | | | | assets | | | | | | | | | average | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Comparable | = | Comparable operating profit + Share | x 100 | | return on net | | of profit (loss) in associated | | | assets, % | | companies | | -------------------------------------------------------------------------------- | | | and joint ventures (adjusted for IAS 39 effects | | | | | and major sales gains or losses) | | -------------------------------------------------------------------------------- | | | Comparable net | | | | | | | | assets average | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital employed | = | Total assets - non-interest bearing liabilities | | | | | - deferred tax liabilities - provisions | | -------------------------------------------------------------------------------- | | | - | | | | | | | | | provisio | | | | | | | | | ns | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net assets | = | Non-interest bearing assets + interest-bearing | | | | | assets related to the Nuclear Waste Fund - | | -------------------------------------------------------------------------------- | | | non-interest bearing liabilities - provisions | | | | | (non-interest bearing assets and liabilities do | | | | | not include | | -------------------------------------------------------------------------------- | | | finance related items, tax and deferred tax and | | | | | assets and liabilities from fair valuations of | | -------------------------------------------------------------------------------- | | | derivatives where hedge | | | | | | accounting is applied) | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Comparable net | = | Net assets adjusted for non-interest bearing | | | assets | | assets and liabilities arising from financial | | | | | derivatives | | -------------------------------------------------------------------------------- | | | hedging future cash-flows where hedge | | | | | accounting is not applied according to IAS 39 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest-bearing | = | Interest-bearing liabilities - | | | | net debt | | cash and cash equivalents | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gearing, % | = | Interest-beari | | | | x 100 | | | | ng net debt | | | | | -------------------------------------------------------------------------------- | | | Total | | | | | | | | | equity | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity-to-assets | = | Total equity | | | x 100 | | ratio, % | | including minority | | | | | | | interest | | | | -------------------------------------------------------------------------------- | | | Total | | | | | | | | | assets | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net debt / | = | Interest-beari | | | | | | EBITDA | | ng net debt | | | | | -------------------------------------------------------------------------------- | | | Operating profit + Depreciation, | | | | | amortisation and impairment charges | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest | = | Operatin | | | | | | | coverage | | g profit | | | | | | -------------------------------------------------------------------------------- | | | Net interest | | | | | | | | expenses | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per | = | Profit for the period | | | | | share (EPS) | | - minority interest | | | | -------------------------------------------------------------------------------- | | | Average number of | | | | | | | shares during the | | | | | | | period | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity per | = | Sharehol | | | | | | | share, EUR | | der's | | | | | | | | | equity | | | | | | -------------------------------------------------------------------------------- | | | Number of shares excluding treasury | | | | | shares at the end of the period | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Last twelve | = | Twelve months | | | | | months | | preceding the | | | | | | | reporting date | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ATTACHMENT TO | | | | | | | | | | THE PRESS | | | | | | | | | | RELEASE | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SEGMENT INFORMATION: COMPARISON BETWEEN OLD | | | | | AND CURRENT SEGMENT STRUCTURES 2007 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SALES BY SEGMENT | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 | | | 2007 | 2007 | 2007 | Curre | 2007 | 2007 | 2007 | Old | | | Curre | Curre | Curre | nt | Old | Old | Old | | | | nt | nt | nt | | | | | | -------------------------------------------------------------------------------- | Power | 641 | 1 163 | 1 665 | 2 350 | 641 | 1 163 | 1 665 | 2 350 | | Generati | | | | | | | | | | on | | | | | | | | | -------------------------------------------------------------------------------- | - of | 156 | 248 | 318 | 323 | 156 | 248 | 318 | 323 | | which | | | | | | | | | | internal | | | | | | | | | -------------------------------------------------------------------------------- | Heat | 479 | 731 | 917 | 1 356 | 479 | 731 | 917 | 1 356 | -------------------------------------------------------------------------------- | - of | 24 | 35 | 39 | 38 | 24 | 35 | 39 | 38 | | which | | | | | | | | | | internal | | | | | | | | | -------------------------------------------------------------------------------- | Distribu | 225 | 397 | 563 | 769 | 225 | 397 | 563 | 769 | | tion | | | | | | | | | -------------------------------------------------------------------------------- | - of | 2 | 4 | 6 | 9 | 2 | 4 | 6 | 9 | | which | | | | | | | | | | internal | | | | | | | | | -------------------------------------------------------------------------------- | Markets | 519 | 870 | 1 201 | 1 683 | 519 | 870 | 1 201 | 1 683 | -------------------------------------------------------------------------------- | - of | 44 | 76 | 106 | 155 | 44 | 76 | 106 | 155 | | which | | | | | | | | | | internal | | | | | | | | | -------------------------------------------------------------------------------- | Russia | - | - | - | - | - | - | - | - | -------------------------------------------------------------------------------- | - of | - | - | - | - | - | - | - | - | | which | | | | | | | | | | internal | | | | | | | | | -------------------------------------------------------------------------------- | Other | 19 | 41 | 60 | 81 | 19 | 41 | 60 | 81 | -------------------------------------------------------------------------------- | - of | 16 | 35 | 52 | 72 | 16 | 35 | 52 | 72 | | which | | | | | | | | | | internal | | | | | | | | | -------------------------------------------------------------------------------- | Eliminat | -543 | -903 | -1 | -1 | -543 | -903 | -1 247 | -1 760 | | ions | | | 247 | 760 | | | | | -------------------------------------------------------------------------------- | Total | 1 340 | 2 299 | 3 159 | 4 479 | 1 340 | 2 299 | 3 159 | 4 479 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OPERATING PROFIT BY SEGMENTS | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 | | | 2007 | 2007 | 2007 | Curre | 2007 | 2007 | 2007 | Old | | | Curre | Curre | Curre | nt | Old | Old | Old | | | | nt | nt | nt | | | | | | -------------------------------------------------------------------------------- | Power | 300 | 543 | 764 | 1 115 | 298 | 542 | 762 | 1 125 | | Generation | | | | | | | | | -------------------------------------------------------------------------------- | Heat | 142 | 175 | 173 | 294 | 142 | 175 | 173 | 294 | -------------------------------------------------------------------------------- | Distributi | 79 | 132 | 182 | 233 | 79 | 132 | 414 | 465 | | on | | | | | | | | | -------------------------------------------------------------------------------- | Markets | -12 | -5 | 10 | 12 | -12 | -5 | 10 | 12 | -------------------------------------------------------------------------------- | Russia | - | - | 232 | 244 | - | - | - | - | -------------------------------------------------------------------------------- | Other | -19 | -28 | -34 | -51 | -17 | -27 | -32 | -49 | -------------------------------------------------------------------------------- | Total | 490 | 817 | 1 327 | 1 847 | 490 | 817 | 1 327 | 1 847 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | COMPARABLE OPERATING PROFIT BY SEGMENTS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 | | | 2007 | 2007 | 2007 | Curre | 2007 | 2007 | 2007 | Old | | | Curre | Curre | Curre | nt | Old | Old | Old | | | | nt | nt | nt | | | | | | -------------------------------------------------------------------------------- | Power | 330 | 547 | 732 | 1 095 | 328 | 546 | 730 | 1 093 | | Generation | | | | | | | | | -------------------------------------------------------------------------------- | Heat | 137 | 173 | 170 | 290 | 137 | 173 | 170 | 290 | -------------------------------------------------------------------------------- | Distribution | 78 | 130 | 181 | 231 | 78 | 131 | 181 | 231 | -------------------------------------------------------------------------------- | Markets | -14 | -11 | 0 | -1 | -14 | -11 | 0 | -1 | -------------------------------------------------------------------------------- | Russia | - | - | - | - | - | - | - | - | -------------------------------------------------------------------------------- | Other | -19 | -29 | -35 | -51 | -17 | -29 | -33 | -49 | -------------------------------------------------------------------------------- | Comparable | 512 | 810 | 1 048 | 1 564 | 512 | 810 | 1 048 | 1 564 | | operating | | | | | | | | | | profit | | | | | | | | | -------------------------------------------------------------------------------- | Non-recurrin | 1 | 5 | 237 | 250 | 1 | 5 | 237 | 250 | | g items | | | | | | | | | -------------------------------------------------------------------------------- | Other items | -23 | 2 | 42 | 33 | -23 | 2 | 42 | 33 | | effecting | | | | | | | | | | comparabilit | | | | | | | | | | y | | | | | | | | | -------------------------------------------------------------------------------- | Operating | 490 | 817 | 1 327 | 1 847 | 490 | 817 | 1 327 | 1 847 | | profit | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NON-RECURRING ITEMS BY SEGMENTS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 | | | 2007 | 2007 | 2007 | Curren | 2007 | 2007 | 2007 | Old | | | Curre | Curre | Curre | t | Old | Old | Old | | | | nt | nt | nt | | | | | | -------------------------------------------------------------------------------- | Power | 0 | 2 | 2 | 2 | 0 | 2 | 2 | 14 | | Generatio | | | | | | | | | | n | | | | | | | | | -------------------------------------------------------------------------------- | Heat | 0 | 1 | 1 | 2 | 0 | 1 | 1 | 2 | -------------------------------------------------------------------------------- | Distribut | 1 | 1 | 0 | 0 | 1 | 0 | 232 | 232 | | ion | | | | | | | | | -------------------------------------------------------------------------------- | Markets | 0 | 0 | 1 | 0 | 0 | 0 | 1 | 0 | -------------------------------------------------------------------------------- | Russia | - | 0 | 232 | 244 | - | - | - | - | -------------------------------------------------------------------------------- | Other | 0 | 1 | 1 | 2 | 0 | 2 | 1 | 2 | -------------------------------------------------------------------------------- | Total | 1 | 5 | 237 | 250 | 1 | 5 | 237 | 250 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OTHER ITEMS EFFECTING | | | | | | | | | COMPARABILITY BY | | | | | | | | | SEGMENTS | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | Q1 | Q1-Q2 | Q1-Q | 2007 | Q1 | Q1-Q | Q1-Q3 | 2007 | | | 2007 | 2007 | 3 | Curre | 2007 | 2 | 2007 | Old | | | Curre | Curre | 2007 | nt | Old | 2007 | Old | | | | nt | nt | Curr | | | Old | | | | | | | ent | | | | | | -------------------------------------------------------------------------------- | Power | -30 | -6 | 30 | 18 | -30 | -6 | 30 | 18 | | Generation 1) | | | | | | | | | -------------------------------------------------------------------------------- | Heat | 5 | 1 | 2 | 2 | 5 | 1 | 2 | 2 | -------------------------------------------------------------------------------- | Distribution | 0 | 1 | 1 | 2 | 0 | 1 | 1 | 2 | -------------------------------------------------------------------------------- | Markets | 2 | 6 | 9 | 13 | 2 | 6 | 9 | 13 | -------------------------------------------------------------------------------- | Russia | - | - | - | - | - | - | - | - | -------------------------------------------------------------------------------- | Other | 0 | 0 | 0 | -2 | 0 | 0 | 0 | -2 | -------------------------------------------------------------------------------- | Total | -23 | 2 | 42 | 33 | -23 | 2 | 42 | 33 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Including effects from the | | | | | | | | accounting of Fortum's part | | | | | | | | of | | | | | | | -------------------------------------------------------------------------------- | the Finnish State | | | | | | | | | Nuclear Waste | | | | | | | | | Management Fund with | | | | | | | | -------------------------------------------------------------------------------- | (EUR | -5 | -9 | 24 | 17 | -5 | -9 | 24 | 17 | | million): | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | DEPRECIATION, AMORTISATION AND IMPAIRMENT CHARGES BY SEGMENTS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 | | | 2007 | 2007 | 2007 | Curre | 2007 | 2007 | 2007 | Old | | | Curre | Curre | Curre | nt | Old | Old | Old | | | | nt | nt | nt | | | | | | -------------------------------------------------------------------------------- | Power | 26 | 52 | 79 | 103 | 26 | 51 | 78 | 102 | | Generation | | | | | | | | | -------------------------------------------------------------------------------- | Heat | 40 | 80 | 120 | 163 | 40 | 80 | 120 | 163 | -------------------------------------------------------------------------------- | Distributi | 39 | 79 | 119 | 162 | 39 | 79 | 119 | 162 | | on | | | | | | | | | -------------------------------------------------------------------------------- | Markets | 4 | 7 | 9 | 11 | 4 | 7 | 9 | 11 | -------------------------------------------------------------------------------- | Russia | - | - | - | - | - | - | - | - | -------------------------------------------------------------------------------- | Other | 3 | 5 | 9 | 12 | 3 | 6 | 10 | 13 | -------------------------------------------------------------------------------- | Total | 112 | 223 | 336 | 451 | 112 | 223 | 336 | 451 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHARE OF PROFITS IN ASSOCIATES AND JOINT VENTURES BY SEGMENTS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 | | | 2007 | 2007 | 2007 | Curre | 2007 | 2007 | 2007 | Old | | | Curre | Curre | Curre | nt | Old | Old | Old | | | | nt | nt | nt | | | | | | -------------------------------------------------------------------------------- | Power | -6 | -12 | -21 | -23 | 188 | 195 | 194 | 196 | | Generation | | | | | | | | | -------------------------------------------------------------------------------- | Heat | 7 | 12 | 16 | 24 | 7 | 12 | 16 | 24 | -------------------------------------------------------------------------------- | Distributi | 6 | 9 | 13 | 18 | 6 | 9 | 13 | 18 | | on | | | | | | | | | -------------------------------------------------------------------------------- | Markets | 1 | 1 | 0 | 0 | 1 | 1 | 0 | 3 | -------------------------------------------------------------------------------- | Russia | - | - | - | - | - | - | - | - | -------------------------------------------------------------------------------- | Other | 194 | 207 | 215 | 222 | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Total | 202 | 217 | 223 | 241 | 202 | 217 | 223 | 241 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | PARTICIPATIONS IN ASSOCIATES AND JOINT VENTURES BY SEGMENTS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | March | June | Sept | Dec | March | June | Sept | Dec 31 | | | 31 | 30 | 30 | 31 | 31 | 30 | 30 | 2007 | | | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | Old | | | Curre | Curre | Curre | Curre | Old | Old | Old | | | | nt | nt | nt | nt | | | | | -------------------------------------------------------------------------------- | Power | 783 | 775 | 768 | 806 | 1 861 | 2 026 | 2 367 | 2 455 | | Generatio | | | | | | | | | | n | | | | | | | | | -------------------------------------------------------------------------------- | Heat | 157 | 146 | 151 | 158 | 157 | 146 | 151 | 158 | -------------------------------------------------------------------------------- | Distribut | 221 | 220 | 226 | 229 | 291 | 290 | 229 | 232 | | ion | | | | | | | | | -------------------------------------------------------------------------------- | Markets | 9 | 9 | 8 | 8 | 9 | 9 | 8 | 8 | -------------------------------------------------------------------------------- | Russia | 277 | 277 | 455 | 455 | - | - | - | - | -------------------------------------------------------------------------------- | Other | 871 | 1 044 | 1 147 | 1 197 | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Total | 2 318 | 2 471 | 2 755 | 2 853 | 2 318 | 2 471 | 2 755 | 2 853 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CAPITAL | | | | | | | | | | EXPENDITURE BY | | | | | | | | | | SEGMENTS | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 | | | 2007 | 2007 | 2007 | Curren | 2007 | 2007 | 2007 | Old | | | Curre | Curre | Curre | t | Old | Old | Old | | | | nt | nt | nt | | | | | | -------------------------------------------------------------------------------- | Power | 16 | 40 | 61 | 93 | 16 | 40 | 61 | 93 | | Generati | | | | | | | | | | on | | | | | | | | | -------------------------------------------------------------------------------- | Heat | 44 | 109 | 189 | 309 | 44 | 109 | 189 | 309 | -------------------------------------------------------------------------------- | Distribu | 36 | 78 | 119 | 236 | 36 | 78 | 119 | 236 | | tion | | | | | | | | | -------------------------------------------------------------------------------- | Markets | 1 | 2 | 2 | 3 | 1 | 2 | 2 | 3 | -------------------------------------------------------------------------------- | Russia | - | - | - | - | - | - | - | - | -------------------------------------------------------------------------------- | Other | 3 | 7 | 11 | 14 | 3 | 7 | 11 | 14 | -------------------------------------------------------------------------------- | Total | 100 | 236 | 382 | 655 | 100 | 236 | 382 | 655 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | GROSS INVESTMENTS IN SHARES BY SEGMENTS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 | | | 2007 | 2007 | 2007 | Curre | 2007 | 2007 | 2007 | Old | | | Curre | Curre | Curre | nt | Old | Old | Old | | | | nt | nt | nt | | | | | | -------------------------------------------------------------------------------- | Power | - | 0 | 0 | 52 | - | 0 | 245 | 297 | | Generation | | | | | | | | | -------------------------------------------------------------------------------- | Heat | 15 | 15 | 17 | 18 | 15 | 15 | 17 | 18 | -------------------------------------------------------------------------------- | Distributi | - | - | - | 1 | - | 0 | 0 | 1 | | on | | | | | | | | | -------------------------------------------------------------------------------- | Markets | - | - | - | 0 | - | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Russia | - | - | 245 | 245 | - | | | - | -------------------------------------------------------------------------------- | Other | - | 2 | 2 | 1 | - | 2 | 2 | 1 | -------------------------------------------------------------------------------- | Total | 15 | 17 | 264 | 317 | 15 | 17 | 264 | 317 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NET ASSETS BY SEGMENTS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | March | June | Sept | Dec | March | June | Sept | Dec | | | 31 | 30 | 30 | 31 | 31 | 30 | 30 | 31 | | | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | | | Curre | Curre | Curre | Curre | Old | Old | Old | Old | | | nt | nt | nt | nt | | | | | -------------------------------------------------------------------------------- | Power | 5 636 | 5 657 | 5 659 | 5 599 | 6 607 | 6 818 | 7 164 | 7 148 | | Generation | | | | | | | | | -------------------------------------------------------------------------------- | Heat | 3 444 | 3 333 | 3 402 | 3 507 | 3 444 | 3 333 | 3 402 | 3 507 | -------------------------------------------------------------------------------- | Distributi | 3 245 | 3 282 | 3 292 | 3 239 | 3 314 | 3 351 | 3 296 | 3 243 | | on | | | | | | | | | -------------------------------------------------------------------------------- | Markets | 140 | 149 | 157 | 247 | 140 | 149 | 157 | 247 | -------------------------------------------------------------------------------- | Russia | 302 | 305 | 482 | 456 | - | - | - | - | -------------------------------------------------------------------------------- | Other and | 937 | 1 052 | 1 144 | 1 237 | 199 | 127 | 117 | 140 | | Eliminatio | | | | | | | | | | ns | | | | | | | | | -------------------------------------------------------------------------------- | Total | 13 | 13 | 14 | 14 | 13 | 13 778 | 14 136 | 14 | | | 704 | 778 | 136 | 285 | 704 | | | 285 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | RETURN ON NET ASSETS BY SEGMENTS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | % | | Dec 31 | Dec 31 | | | | 2007 Current | 2007 | | | | | Old | -------------------------------------------------------------------------------- | Power Generation | | 19.2 | | 19.2 | -------------------------------------------------------------------------------- | Heat | | 9.3 | | 9.3 | -------------------------------------------------------------------------------- | Distribution | | 7.7 | | 14.5 | -------------------------------------------------------------------------------- | Markets | | 6.9 | | 6.9 | -------------------------------------------------------------------------------- | Russia | | 66.3 | | - | -------------------------------------------------------------------------------- | Other | | 17.1 | | 0.0 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | COMPARABLE RETURN ON NET ASSETS BY SEGMENTS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | % | | Dec 31 | Dec 31 | | | | 2007 Current | 2007 | | | | | Old | -------------------------------------------------------------------------------- | Power Generation | | 18.9 | | 17.7 | -------------------------------------------------------------------------------- | Heat | | 9.2 | | 9.2 | -------------------------------------------------------------------------------- | Distribution | | 7.6 | | 7.5 | -------------------------------------------------------------------------------- | Markets | | -0.6 | | -0.6 | -------------------------------------------------------------------------------- | Russia | | 0.0 | | - | -------------------------------------------------------------------------------- | Other | | -2.1 | | - | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ASSETS BY SEGMENTS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | March | June | Sept | Dec | March | June | Sept | Dec 31 | | | 31 | 30 | 30 | 31 | 31 | 30 | 30 | 2007 | | | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | Old | | | Curre | Curre | Curre | Curre | Old | Old | Old | | | | nt | nt | nt | nt | | | | | -------------------------------------------------------------------------------- | Power | 6 037 | 6 161 | 6 254 | 6 154 | 7 014 | 7 327 | 7 764 | 7 724 | | Generation | | | | | | | | | -------------------------------------------------------------------------------- | Heat | 3 830 | 3 686 | 3 766 | 3 928 | 3 830 | 3 686 | 3 766 | 3 928 | -------------------------------------------------------------------------------- | Distributi | 3 735 | 3 729 | 3 741 | 3 778 | 3 804 | 3 798 | 3 745 | 3 782 | | on | | | | | | | | | -------------------------------------------------------------------------------- | Markets | 617 | 496 | 468 | 630 | 617 | 496 | 468 | 630 | -------------------------------------------------------------------------------- | Russia | 302 | 305 | 482 | 456 | - | - | - | - | -------------------------------------------------------------------------------- | Other and | 1 057 | 1 166 | 1 264 | 1 392 | 313 | 236 | 232 | 274 | | Eliminatio | | | | | | | | | | ns | | | | | | | | | -------------------------------------------------------------------------------- | Assets | 15 | 15 | 15 | 16 | 15 | 15 | 15 975 | 16 338 | | included | 578 | 543 | 975 | 338 | 578 | 543 | | | | in Net | | | | | | | | | | assets | | | | | | | | | -------------------------------------------------------------------------------- | Interest-b | 710 | 718 | 738 | 747 | 710 | 718 | 738 | 747 | | earing | | | | | | | | | | receivable | | | | | | | | | | s | | | | | | | | | -------------------------------------------------------------------------------- | Deferred | 7 | 4 | 3 | 3 | 7 | 4 | 3 | 3 | | taxes | | | | | | | | | -------------------------------------------------------------------------------- | Other | 377 | 307 | 138 | 159 | 377 | 307 | 138 | 159 | | assets | | | | | | | | | -------------------------------------------------------------------------------- | Cash and | 1 067 | 879 | 815 | 427 | 1 067 | 879 | 815 | 427 | | cash | | | | | | | | | | equivalent | | | | | | | | | | s | | | | | | | | | -------------------------------------------------------------------------------- | Total | 17 | 17 | 17 | 17 | 17 | 17 | 17 669 | 17 674 | | assets | 739 | 451 | 669 | 674 | 739 | 451 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | LIABILITIES BY SEGMENTS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | March | June | Sept | Dec | March | June | Sept | Dec 31 | | | 31 | 30 | 30 | 31 | 31 | 30 | 30 | 2007 | | | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | Old | | | Curre | Curre | Curre | Curre | Old | Old | Old | | | | nt | nt | nt | nt | | | | | -------------------------------------------------------------------------------- | Power | 401 | 504 | 595 | 555 | 407 | 509 | 600 | 576 | | Generation | | | | | | | | | -------------------------------------------------------------------------------- | Heat | 386 | 353 | 364 | 421 | 386 | 353 | 364 | 421 | -------------------------------------------------------------------------------- | Distributi | 490 | 447 | 449 | 539 | 490 | 447 | 449 | 539 | | on | | | | | | | | | -------------------------------------------------------------------------------- | Markets | 477 | 347 | 311 | 383 | 477 | 347 | 311 | 383 | -------------------------------------------------------------------------------- | Russia | 0 | 0 | 0 | 0 | - | - | - | - | -------------------------------------------------------------------------------- | Other and | 120 | 114 | 120 | 155 | 114 | 109 | 115 | 134 | | Eliminatio | | | | | | | | | | ns | | | | | | | | | -------------------------------------------------------------------------------- | Liabilitie | 1 874 | 1 765 | 1 839 | 2 053 | 1 874 | 1 765 | 1 839 | 2 053 | | s included | | | | | | | | | | in Net | | | | | | | | | | assets | | | | | | | | | -------------------------------------------------------------------------------- | Deferred | 1 826 | 1 788 | 1 715 | 1 687 | 1 826 | 1 788 | 1 715 | 1 687 | | tax | | | | | | | | | | liabilitie | | | | | | | | | | s | | | | | | | | | -------------------------------------------------------------------------------- | Other | 1 446 | 395 | 351 | 390 | 1 446 | 395 | 351 | 390 | -------------------------------------------------------------------------------- | Total | 5 146 | 3 948 | 3 905 | 4 130 | 5 146 | 3 948 | 3 905 | 4 130 | | liabilitie | | | | | | | | | | s included | | | | | | | | | | in Capital | | | | | | | | | | employed | | | | | | | | | -------------------------------------------------------------------------------- | Interest-b | 4 999 | 5 489 | 5 271 | 4 893 | 4 999 | 5 489 | 5 271 | 4 893 | | earing | | | | | | | | | | liabilitie | | | | | | | | | | s | | | | | | | | | -------------------------------------------------------------------------------- | Total | 7 594 | 8 014 | 8 493 | 8 651 | 7 594 | 8 014 | 8 493 | 8 651 | | equity | | | | | | | | | -------------------------------------------------------------------------------- | Total | 17 | 17 | 17 | 17 | 17 | 17 | 17 669 | 17 674 | | equity and | 739 | 451 | 669 | 674 | 739 | 451 | | | | liabilitie | | | | | | | | | | s | | | | | | | | | --------------------------------------------------------------------------------