Stock exchange release

Fortum discusses its capital expenditure and increases TGC-10 efficiency improvement target in Capital Markets Day

30 October 2008, 8:30 EET

Fortum Corporation
Stock Exchange Release
30.10.2008 at 8.30 EET

Fortum discusses its capital expenditure and increases TGC-10 efficiency improvement target in Capital Markets Day Fortum Capital Markets Day for analysts, portfolio managers and bankers is held today on 30 October in Espoo, Finland. During the event, Fortum management will discuss the company's strategy and financial position. Fortum confirms its strategy focusing on the Nordic countries, Russia and the Baltic rim area, and stresses the strength of its balance sheet and its good liquidity. The company had liquid funds amounting to EUR 1.7 billion and undrawn committed credit facilities of EUR 1.9 billion on 28 October. Fortum's maturing debt for the reminder of 2008 is EUR 0.3 billion and for 2009 EUR 0.5 billion. There is significant flexibility in Fortum's investment programme - the level of annual investments can be adjusted depending on the overall economic conditions and availability of funding at a reasonable cost. The annual level of Fortum's capital expenditure including investments in Russia is estimated to be within a range of EUR 1.0-1.5 billion during 2009-2013. In 2009, capital expenditure is expected to be close to the higher end of the range. During 2009, two new combined heat and power plants (Suomenoja, Finland and Tartu, Estonia) will be commissioned bringing volume and earnings growth. Fortum's Russian acquisition, Territorial Generating Company 10 (TGC-10) has committed and contractually obligated to an extensive investment programme which will increase its electricity generation capacity by approximately 70% to 5,300 MW by 2013. The value and timing of the investment programme in new capacity, initially estimated by TGC-10 at EUR 2.2 billion, has been reviewed as the contract negotiations and programme execution have progressed. The Russian capacity investment programme is now estimated to amount to approximately EUR 2.5 billion. Out of this, approximately EUR 400 million will have been spent during 2007-2008. Fortum has put considerable efforts into integrating TGC-10 to Fortum. Fortum management model, organisational structure and the way of working were in place at the beginning of September. The integration has proceeded well and several targets for efficiency improvements have been identified. Consequently, the previously announced annual efficiency improvements of at least EUR 30 million are expected to increase to over EUR 100 million and to be reached in 2011. In April 2008, Fortum made a mandatory public tender offer (MTO) for the entire share capital of TGC-10 to TGC-10's minorities. The MTO has now been completed. Fortum's ownership in TGC-10 reached approximately 93.4% including shares owned by TGC-10's fully-owned subsidiary. Fortum has paid approximately EUR 443 million for share purchases under the MTO. The total consideration for Fortum's current ownership in TGC-10 amounts approximately to EUR 2.5 billion including the EUR 1.3 billion new share issue Fortum subscribed to in February. TGC-10 will continue to be a key focus area for Fortum also in the coming years. Fortum Corporation Maria Romantschuk SVP Corporate Communications Further information: Juha Laaksonen, CFO, Fortum Corporation, +358 50 4524519 Mika Paloranta, Vice President, IR, Fortum Corporation, +358 50 4524138 Distribution: NASDAQ OMX Helsinki Key media