Solid first-half year 2009 results

Solid first-half year 2009 results - Comparable operating profit EUR 1,002 (984) million, +2%; includes a EUR -78 million translation effect from weaker SEK - Earnings per share EUR 0.78 (EUR 0.78) - Very strong cash flow - net cash from operating activities EUR 1,526 (1,039) million - 94% (92%) of the generated power in the EU was CO2-free - 80% of Nordic power sales volume hedged for the rest of 2009 at EUR 50 per MWh. Hedges for 2010-2011 unchanged from the first quarter. - Power market liberalisation in Russia proceeded. The share of wholesale power sold at a competitive price was increased from 30% to 50% at the beginning of July. -------------------------------------------------------------------------------- | Key figures | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | | | | 9 | 8 | | | -------------------------------------------------------------------------------- | Sales, EUR million | 1,194 | 1,322 | 2,826 | 2,762 | 5,636 | 5,700 | -------------------------------------------------------------------------------- | Operating profit, EUR | 375 | 348 | 974 | 957 | 1,963 | 1,980 | | million | | | | | | | -------------------------------------------------------------------------------- | Comparable operating | 400 | 403 | 1,002 | 984 | 1,845 | 1,863 | | profit, EUR million | | | | | | | -------------------------------------------------------------------------------- | Profit before taxes, | 355 | 310 | 889 | 908 | 1,850 | 1,831 | | EUR million | | | | | | | -------------------------------------------------------------------------------- | Earnings per share, | 0.32 | 0.27 | 0.78 | 0.78 | 1.74 | 1.74 | | EUR | | | | | | | -------------------------------------------------------------------------------- | Net cash from | 704 | 497 | 1,526 | 1,039 | 2,002 | 2,489 | | operating activities, | | | | | | | | EUR million | | | | | | | -------------------------------------------------------------------------------- | Shareholders' equity | | | 8.42 | 8.08 | 8.96 | N/A | | per share, EUR | | | | | | | -------------------------------------------------------------------------------- | Interest-bearing net | | | 6,004 | 6,254 | 6,179 | N/A | | debt | | | | | | | | (at end of | | | | | | | | period), EUR million | | | | | | | -------------------------------------------------------------------------------- | Average number of | | | 888,23 | 887,13 | 887,25 | 887,760 | | shares, 1,000s | | | 0 | 1 | 6 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Key financial ratios | 2008 | LTM | -------------------------------------------------------------------------------- | Return on capital employed, % | 15.0 | 14.1 | -------------------------------------------------------------------------------- | Return on shareholders' equity, % | 18.7 | 19.9 | -------------------------------------------------------------------------------- | Net debt/EBITDA | 2.5 | 2.4 | -------------------------------------------------------------------------------- January-June comparable operating profit was EUR 1,002 million. The improvement from last year is mainly due to better performance in the Markets and Russia segments. The recession continued to affect Nordic power consumption, which was about 12 terawatt-hours (TWh), or 6%, lower in January-June 2009 than in the same period the previous year. Despite lower consumption, the Nord Pool average system price of electricity was EUR 36.1 (36.3) per megawatt-hour (MWh), at approximately the same level as last year. In the same period, the Power Generation segment achieved a higher sales price than a year ago, EUR 48.8 (46.2) per MWh, mainly thanks to hedging. The average SEK rate in the first half of 2009 decreased by approximately 15% from the first half of 2008. The translation effect caused by the decreased average SEK rate was approximately EUR -78 million in Fortum's January-June comparable operating profit, compared to the same period last year. The total translation effect in Fortum's comparable operating profit was EUR -84 million in the first half of 2009. Fortum's liquidity is strong. Liquid funds at the end of the second quarter of 2009 amounted to EUR 1,440 million and undrawn committed credit facilities were approximately EUR 2.9 billion. The integration of OAO Fortum (former TGC-10) has proceeded well. Fortum is well on track to reach the targeted annual efficiency improvements of approximately EUR 100 million by 2011. The power sector reform in Russia progressed as planned: The share of produced wholesale power sold on the competitive market in Russia was increased from 30% to 50% at the beginning of July. Financial results April-June Group sales were EUR 1,194 (1,322) million. Group operating profit totalled EUR 375 (348) million. Comparable operating profit totalled EUR 400 (403) million. The second-quarter net profit improved EUR 49 million from a year ago. Earnings per share were EUR 0.32 (0.27), 19% higher than in the second quarter of last year. The improvement stems from higher reported operating profit and lower interest and income tax expenses. The translation effect caused by the decreased average SEK rate was approximately EUR -28 million in Fortum's second-quarter comparable operating profit, compared to the same period last year. Sales by segment -------------------------------------------------------------------------------- | EUR million | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | | | | 9 | 8 | | | -------------------------------------------------------------------------------- | Power Generation | 625 | 721 | 1,330 | 1,438 | 2,892 | 2,784 | -------------------------------------------------------------------------------- | Heat | 248 | 284 | 761 | 777 | 1,466 | 1,450 | -------------------------------------------------------------------------------- | Distribution | 176 | 180 | 405 | 412 | 789 | 782 | -------------------------------------------------------------------------------- | Markets | 298 | 411 | 767 | 930 | 1,922 | 1,759 | -------------------------------------------------------------------------------- | Russia | 136 | 152 | 320 | 152 | 489 | 657 | -------------------------------------------------------------------------------- | Other | 19 | 21 | 37 | 41 | 83 | 79 | -------------------------------------------------------------------------------- | Netting of Nord Pool | -212 | -369 | -570 | -795 | -1,736 | -1,511 | | transactions | | | | | | | -------------------------------------------------------------------------------- | Eliminations | -96 | -78 | -224 | -193 | -269 | -300 | -------------------------------------------------------------------------------- | Total | 1,194 | 1,322 | 2,826 | 2,762 | 5,636 | 5,700 | -------------------------------------------------------------------------------- Comparable operating profit by segment -------------------------------------------------------------------------------- | EUR million | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | | | | 9 | 8 | | | -------------------------------------------------------------------------------- | Power Generation | 346 | 384 | 765 | 779 | 1,528 | 1,514 | -------------------------------------------------------------------------------- | Heat | 26 | 27 | 138 | 148 | 250 | 240 | -------------------------------------------------------------------------------- | Distribution | 54 | 49 | 135 | 136 | 248 | 247 | -------------------------------------------------------------------------------- | Markets | 6 | -15 | 4 | -25 | -33 | -4 | -------------------------------------------------------------------------------- | Russia | -16 | -33 | -11 | -33 | -92 | -70 | -------------------------------------------------------------------------------- | Other | -16 | -9 | -29 | -21 | -56 | -64 | -------------------------------------------------------------------------------- | Total | 400 | 403 | 1,002 | 984 | 1,845 | 1,863 | -------------------------------------------------------------------------------- Operating profit by segment -------------------------------------------------------------------------------- | EUR million | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | | | | 9 | 8 | | | -------------------------------------------------------------------------------- | Power Generation | 304 | 260 | 727 | 691 | 1,599 | 1,635 | -------------------------------------------------------------------------------- | Heat | 39 | 37 | 152 | 167 | 307 | 292 | -------------------------------------------------------------------------------- | Distribution | 54 | 51 | 135 | 137 | 248 | 246 | -------------------------------------------------------------------------------- | Markets | 7 | 31 | -4 | 11 | -35 | -50 | -------------------------------------------------------------------------------- | Russia | -16 | -33 | -11 | -33 | -91 | -69 | -------------------------------------------------------------------------------- | Other | -13 | 2 | -25 | -16 | -65 | -74 | -------------------------------------------------------------------------------- | Total | 375 | 348 | 974 | 957 | 1,963 | 1,980 | -------------------------------------------------------------------------------- January-June Group sales were EUR 2,826 (2,762) million. Group operating profit totalled EUR 974 (957) million. Comparable operating profit totalled EUR 1,002 (984) million. The share of profits/loss of associates and joint ventures was EUR -4 million, EUR 74 million lower than in the previous year. This was mainly due to the lower contribution from Hafslund ASA's fourth-quarter 2008 earnings. Hafslund's effect is EUR 59 million of the decrease. The Group's net financial expenses decreased to EUR 81 (119) million. The decrease is attributable to lower interest expenses, higher interest income and fair value gains. The change in fair value of derivatives was EUR 13 (-3) million. Profit before taxes was EUR 889 (908) million. Taxes for the period totalled EUR 172 (187) million. The tax rate according to the income statement was 19.3% (20.6%). The profit for the period was EUR 695 (695) million. Fortum's earnings per share were EUR 0.78 (0.78). Non-controlling (minority) interests accounted for EUR 22 (26) million. These are mainly attributable to Fortum Värme Holding AB, in which the city of Stockholm has a 50% economic interest. Return on capital employed was 14.1% for the last twelve months (15.0% at year-end 2008), and return on shareholders' equity was 19.9% for the last twelve months (18.7% at year-end 2008). Market conditions NORDIC COUNTRIES According to preliminary statistics, the Nordic countries consumed 81 (91) TWh of electricity in the second quarter of 2009, about 11% less than in the previous year. During the first half of the year, the Nordic countries consumed about 194 (206) TWh. The decrease is mainly due to the drop in industrial consumption as a result of the recession. According to Fortum's estimate, the Nordic industrial consumption decreased approximately 20% compared to the first half of 2008. The price of coal remained fairly stable during the second quarter of 2009 and was clearly lower compared to one year before. The average market price of coal (ICE Rotterdam) during the second quarter was USD 65 (156) per tonne. After a stable first quarter of 2009, the market price for oil (ICE Brent) increased markedly, rising from USD 50 per barrel to USD 70 per barrel during the second quarter. However, oil prices were at a significantly lower level compared to the second quarter of 2008, when the price reached USD 140 per barrel. During the second quarter, the average market price of CO2 emission allowances (EUA) for 2009 was EUR 13.9 per tonne CO2. The corresponding price for CO2 emission allowances for 2008 was EUR 25.7 per tonne CO2. Year 2009 started with the Nordic water reservoirs 5 TWh below the long-term average. At the end of the second quarter, the Nordic water reservoirs were 12 TWh below the long-term average and 19 TWh below the corresponding level last year. During the second quarter, the average system spot price for power in Nord Pool was EUR 34.0 (34.6) per MWh. During the second quarter, the Finnish and Swedish area prices were close to the system price level, at EUR 34.3 (46.4) per MWh in Finland and at EUR 34.3 (46.4) per MWh in Sweden. In January-June, the average system spot price for power in Nord Pool was EUR 36.1 (36.3) per MWh. The average Finnish and Swedish area prices were EUR 36.2 (42.8) per MWh and EUR 36.3 (42.8) per MWh, respectively. In Germany, the average spot price for the second quarter of 2009 was EUR 32.4 (65.5) per MWh, being slightly lower than in the Nordic area. During the second quarter imports from Germany to the Nordic area were higher area than usual, resulting in roughly equal imports and exports. RUSSIA According to preliminary statistics, electricity demand in January-June 2009 decreased by 7% compared to the corresponding period in 2008. Electricity demand in the second quarter of 2009 decreased, according to preliminary statistics, approximately by 7% compared to the corresponding period of the previous year. OAO Fortum (formerly TGC-10) operates in the Tuymen and Chelyabinsk areas, which belong to the Urals price area. Electricity consumption in the Urals region decreased by about 9 % compared to the previous year. In the Tyumen area, where industrial production is dominated by oil and gas industries, electricity demand decreased by approximately 1%. In the Chelyabinsk area, dominated by the metals industry, the decrease in electricity demand was over 25%. The average electricity spot price, excluding capacity price, in the European and Urals part of Russia declined to RUB 640 (649) per MWh during the second quarter of 2009. The regulated electricity prices increased from a year ago. The capacity prices are still mainly regulated and were, on average, higher than a year ago. The share of power sold on the liberalised market was increased from 30% to 50% in the beginning of July 2009. The rules for the long-term capacity market are currently under consideration by the Russian government. Total power and heat generation figures Fortum's total power generation during January-June 2009 was 34.1 (32.4) TWh, of which 25.3 (28.0) TWh was in the Nordic countries, representing 13% (14%) of the total Nordic electricity consumption. Fortum's total heat production during January-June 2009 was 27.7 (18.3) TWh, of which 11.2 (11.7) TWh was in the Nordic countries. The increase in the total power and heat generation volumes was mainly due to the inclusion of OAO Fortum, consolidated from the beginning of April 2008. The decrease in the Nordic hydropower generation was mainly due to lower precipitation and inflows into Nordic water reservoirs. Year 2008 was an exceptionally good hydro year. The decrease in the Nordic nuclear power generation is mainly due to the planned outage in Oskarshamn 3. Fortum's total power and heat generation figures are presented below. In addition, the respective figures by segment are presented in the segment reviews. -------------------------------------------------------------------------------- | Fortum's total power | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | and heat generation in | | | 9 | 8 | | | | the EU and Norway, TWh | | | | | | | -------------------------------------------------------------------------------- | Power generation | 11.8 | 13.4 | 25.8 | 28.6 | 52.6 | 49.8 | -------------------------------------------------------------------------------- | Heat generation | 4.2 | 4.9 | 13.3 | 13.9 | 25.0 | 24.4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fortum's total power | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | and heat generation in | | | 9 | 8 | | | | Russia, TWh *) | | | | | | | -------------------------------------------------------------------------------- | Power generation | 3.6 | 3.8 | 8.3 | 3.8 | 11.6 | 16.1 | -------------------------------------------------------------------------------- | Heat generation | 4.2 | 4.4 | 14.4 | 4.4 | 15.3 | 25.3 | -------------------------------------------------------------------------------- *) Power and heat generation numbers for Q1/09 have been revised -------------------------------------------------------------------------------- | Fortum's own power | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | generation by source, | | | 9 | 8 | | | | TWh, | | | | | | | | total in the | | | | | | | | Nordic countries | | | | | | | -------------------------------------------------------------------------------- | Hydropower | 5.2 | 6.1 | 10.9 | 12.4 | 22.9 | 21.4 | -------------------------------------------------------------------------------- | Nuclear power | 5.6 | 6.1 | 12.0 | 13.0 | 23.7 | 22.7 | -------------------------------------------------------------------------------- | Thermal power | 0.8 | 0.9 | 2.4 | 2.6 | 5.0 | 4.8 | -------------------------------------------------------------------------------- | Total | 11.6 | 13.1 | 25.3 | 28.0 | 51.6 | 48.9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fortum's own power | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | generation by source, | | | 9 | 8 | | | | %, total in the Nordic | | | | | | | | countries | | | | | | | -------------------------------------------------------------------------------- | Hydropower | 45 | 46 | 43 | 44 | 44 | 44 | -------------------------------------------------------------------------------- | Nuclear power | 48 | 47 | 48 | 47 | 46 | 46 | -------------------------------------------------------------------------------- | Thermal power | 7 | 7 | 9 | 9 | 10 | 10 | -------------------------------------------------------------------------------- | Total | 100 | 100 | 100 | 100 | 100 | 100 | -------------------------------------------------------------------------------- Total power and heat sales figures Fortum's total power sales during January-June 2009 were 39.6 (37.0) TWh, of which 28.8 (31.7) TWh were in the Nordic countries. This represents approximately 15% (15%) of the estimated Nordic electricity consumption during January-June 2009. Fortum's total heat sales during January-June 2009 were 28.6 (19.2) TWh, of which 10.3 (11.1) TWh were in the Nordic countries. -------------------------------------------------------------------------------- | Fortum's total | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | electricity* and heat | | | 9 | 8 | | | | sales in the EU and | | | | | | | | Norway, EUR million | | | | | | | -------------------------------------------------------------------------------- | Electricity sales | 620 | 704 | 1,404 | 1,463 | 2,959 | 2,900 | -------------------------------------------------------------------------------- | Heat sales | 195 | 224 | 602 | 619 | 1,157 | 1,140 | -------------------------------------------------------------------------------- * Nord Pool transactions are calculated as a net amount of hourly sales and purchases at the Group level. -------------------------------------------------------------------------------- | Fortum's total | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | electricity and heat | | | 9 | 8 | | | | sales in Russia, EUR | | | | | | | | million | | | | | | | -------------------------------------------------------------------------------- | Electricity sales | 91 | 105 | 194 | 105 | 332 | 421 | -------------------------------------------------------------------------------- | Heat sales | 44 | 43 | 125 | 43 | 141 | 223 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Fortum's total | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | electricity | | | 9 | 8 | | | | sales* by area, TWh | | | | | | | -------------------------------------------------------------------------------- | Finland | 6.3 | 7.2 | 13.7 | 15.0 | 28.7 | 27.4 | -------------------------------------------------------------------------------- | Sweden | 6.6 | 7.3 | 14.1 | 15.7 | 28.5 | 26.9 | -------------------------------------------------------------------------------- | Russia | 4.6 | 4.8 | 10.2 | 4.8 | 14.8 | 20.2 | -------------------------------------------------------------------------------- | Other countries | 0.7 | 0.6 | 1.6 | 1.5 | 3.0 | 3.1 | -------------------------------------------------------------------------------- | Total | 18.2 | 19.9 | 39.6 | 37.0 | 75.0 | 77.6 | -------------------------------------------------------------------------------- * Nord Pool transactions are calculated as a net amount of hourly sales and purchases at the Group level. -------------------------------------------------------------------------------- | Fortum's total heat | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | sales by area, TWh | | | 9 | 8 | | | -------------------------------------------------------------------------------- | Russia | 4.2 | 4.3 | 14.4 | 4.3 | 15.3 | 25.4 | -------------------------------------------------------------------------------- | Finland | 1.4 | 2.3 | 4.5 | 6.0 | 10.8 | 9.3 | -------------------------------------------------------------------------------- | Sweden | 1.7 | 1.6 | 5.7 | 5.0 | 9.1 | 9.8 | -------------------------------------------------------------------------------- | Poland | 0.4 | 0.6 | 2.2 | 2.1 | 3.6 | 3.7 | -------------------------------------------------------------------------------- | Other countries** | 0.7 | 0.7 | 1.8 | 1.8 | 3.4 | 3.4 | -------------------------------------------------------------------------------- | Total | 8.4 | 9.5 | 28.6 | 19.2 | 42.2 | 51.6 | -------------------------------------------------------------------------------- ** Including the UK, which is reported in the Power Generation segment, other sales. Fortum's emissions subject to the EU's trading scheme During the first half of 2009, approximately 94% (92%) of the power generated by Fortum within the EU countries was CO2-free. Fortum's total CO2 emissions subject to the EU's emissions trading scheme (ETS) in the first half of the year amounted to 3.8 (3.4) million tonnes of CO2. Fortum's total annual CO2 allowance allocation for its power and heat plants is approximately 5.9 million tonnes per year during 2008-2012. In Finland, Fortum's CO2 allocation is approximately 4.1 million tonnes of CO2 per annum, representing 11% of the Finnish national allocation. In Sweden, Fortum's free CO2 allocation is approximately 0.2 million tonnes of CO2 per annum, representing 0.7% of the Swedish national allocation. -------------------------------------------------------------------------------- | Total CO2 emissions | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | (million tonnes) | | | 9 | 8 | | | -------------------------------------------------------------------------------- | Total emissions | 4.5 | 4.3 | 11.5 | 6.7 | 17.6 | 22.4 | -------------------------------------------------------------------------------- | Emissions subject to | 1.2 | 1.2 | 3.8 | 3.4 | 7.2 | 7.6 | | ETS | | | | | | | -------------------------------------------------------------------------------- | Free emissions | - | - | - | - | 5.9 | - | | allocation | | | | | | | -------------------------------------------------------------------------------- | Emissions in Russia | 3.1 | 3.0 | 7.2 | 3.0 | 9.8 | 14.0 | -------------------------------------------------------------------------------- SEGMENT REVIEWS Power Generation The business area comprises power generation and sales in the Nordic countries and the provision of operation and maintenance services in the Nordic area and selected international markets. The Power Generation segment sells its production to Nord Pool. The segment includes the business units Generation, Portfolio Management and Trading (PMT), and Service. -------------------------------------------------------------------------------- | EUR million | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | | | | 9 | 8 | | | -------------------------------------------------------------------------------- | Sales | 625 | 721 | 1,330 | 1,438 | 2,892 | 2,784 | -------------------------------------------------------------------------------- | - power sales | 578 | 638 | 1,236 | 1,284 | 2,566 | 2,518 | -------------------------------------------------------------------------------- | - other sales | 47 | 83 | 94 | 154 | 326 | 266 | -------------------------------------------------------------------------------- | Operating profit | 304 | 260 | 727 | 691 | 1,599 | 1,635 | -------------------------------------------------------------------------------- | Comparable operating | 346 | 384 | 765 | 779 | 1,528 | 1,514 | | profit | | | | | | | -------------------------------------------------------------------------------- | Net assets (at | | | 5,384 | 5,524 | 5,331 | | | period-end) | | | | | | | -------------------------------------------------------------------------------- | Return on net assets, % | | | | | 29.6 | 30.7 | -------------------------------------------------------------------------------- | Comparable return on net | | | | | 28.0 | 28.3 | | assets, % | | | | | | | -------------------------------------------------------------------------------- | Gross investments | 48 | 32 | 100 | 50 | 134 | 184 | -------------------------------------------------------------------------------- | Number of employees | | | 3,435 | 3,790 | 3,520 | | -------------------------------------------------------------------------------- The segment's power generation during the second quarter amounted to 10.8 (12.3) TWh in the Nordic countries. In January-June, the segment's power generation in the Nordic countries was 22.9 (25.5) TWh. In January-June, approximately 97% (98%) of the segment's power generation was CO2-free. The decrease in the Nordic hydropower generation is mainly due to lower precipitation and inflows into Nordic water reservoirs. The decrease in the Nordic nuclear power generation is mainly due to the extensive power increase and safety modernisation outage in Oskarshamn 3, which started at the beginning of March and is expected to continue until late September. Oskarshamn 3 capacity will increase by ~250 megawats (MW) of which Fortum's share is approximately 110 MW. -------------------------------------------------------------------------------- | Power generation by | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | source, TWh | | | 9 | 8 | | | -------------------------------------------------------------------------------- | Hydropower, Nordic | 5.2 | 6.1 | 10.9 | 12.4 | 22.9 | 21.4 | -------------------------------------------------------------------------------- | Nuclear power, Nordic | 5.6 | 6.1 | 12.0 | 13.0 | 23.7 | 22.7 | -------------------------------------------------------------------------------- | Thermal power, Nordic | 0.0 | 0.1 | 0.0 | 0.1 | 0.3 | 0.2 | -------------------------------------------------------------------------------- | Total in the Nordic | 10.8 | 12.3 | 22.9 | 25.5 | 46.9 | 44.3 | | countries | | | | | | | -------------------------------------------------------------------------------- | Thermal in other | 0.3 | 0.1 | 0.6 | 0.5 | 1.0 | 1.1 | | countries | | | | | | | -------------------------------------------------------------------------------- | Total | 11.1 | 12.4 | 23.5 | 26.0 | 47.9 | 45.4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Nordic sales volume, | 12.1 | 13.3 | 25.5 | 27.9 | 52.1 | 49.7 | | TWh | | | | | | | -------------------------------------------------------------------------------- | of which pass-through | 0.9 | 1.0 | 1.8 | 2.1 | 3.7 | 3.4 | | sales | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Sales price, EUR/MWh | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | | | | 9 | 8 | | | -------------------------------------------------------------------------------- | Generation's Nordic | 48.0 | 47.9 | 48.8 | 46.2 | 49.3 | 50.8 | | power price* | | | | | | | -------------------------------------------------------------------------------- * For the Power Generation segment in the Nordic countries, excluding pass-through sales. During the second quarter of 2009, the average system spot price in Nord Pool was EUR 34.0 per MWh, with the Finnish and Swedish area prices being on average EUR 34.3 per MWh. During the same period, Generation's achieved Nordic power price was EUR 48.0 per MWh, slightly higher than a year ago. The segment's Nordic sales volume without pass-through items was 11.2 (12.3) TWh. During January-June 2009, the average system spot price in Nord Pool was EUR 36.1 per MWh, while the Finnish area price was EUR 36.2 per MWh and the Swedish area price EUR 36.3 per MWh. Generation's achieved Nordic power price was EUR 48.8 per MWh, up by 6% from a year ago. In the second quarter, the Power Generation segment's comparable operating profit was lower than in the corresponding period last year due to lower hydropower generation and the outage in Oskarshamn 3. In January-June 2009, the Power Generation segment's comparable operating profit was slightly lower than in the corresponding period last year. Lower hydropower and nuclear generation volumes decreased the operating profit more than the higher achieved power price could offset. The SEK translation effect in the segment's first-half-year comparable operating profit was approximately EUR -55 million, compared to the same period a year ago. Fortum is a shareholder in Teollisuuden Voima Oyj (TVO), a nuclear generation company operating two nuclear power units in Olkiluoto, Finland. TVO is in the process of building a third unit, Olkiluoto 3, which is estimated to start up in summer 2012. In late March, TVO's shareholders committed to providing a EUR 300 million subordinated shareholder's loan to TVO. Fortum's share of this commitment is at maximum EUR 75 million. 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 mainly in other markets. -------------------------------------------------------------------------------- | EUR million | II/0 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | | 9 | | 9 | 8 | | | -------------------------------------------------------------------------------- | Sales | 248 | 284 | 761 | 777 | 1,466 | 1,450 | -------------------------------------------------------------------------------- | - heat sales | 185 | 215 | 582 | 601 | 1,120 | 1,101 | -------------------------------------------------------------------------------- | - power sales | 37 | 42 | 121 | 119 | 228 | 230 | -------------------------------------------------------------------------------- | - other sales | 26 | 27 | 58 | 57 | 118 | 119 | -------------------------------------------------------------------------------- | Operating profit | 39 | 37 | 152 | 167 | 307 | 292 | -------------------------------------------------------------------------------- | Comparable operating | 26 | 27 | 138 | 148 | 250 | 240 | | profit | | | | | | | -------------------------------------------------------------------------------- | Net assets (at | | | 3,503 | 3,599 | 3,468 | | | period-end) | | | | | | | -------------------------------------------------------------------------------- | Return on net assets, % | | | | | 8.9 | 8.7 | -------------------------------------------------------------------------------- | Comparable return on net | | | | | 7.3 | 7.3 | | assets, % | | | | | | | -------------------------------------------------------------------------------- | Gross investments | 97 | 79 | 167 | 191 | 431 | 407 | -------------------------------------------------------------------------------- | Number of employees | | | 2,197 | 2,517 | 2,318 | | -------------------------------------------------------------------------------- The segment's heat sales during January-June 2009 amounted to 13.1 (13.9) TWh, most of which was generated in the Nordic countries. During the same period, power sales from CHP production totalled 2.4 (2.6) TWh. The Heat segment's second-quarter comparable operating profit was on the same level as in the previous year. In January-June 2009, the segment's comparable operating profit was EUR 10 million lower than in the previous year. The operating profit was affected by a translation effect of EUR -15 million from weakened currencies, mainly SEK and PLN. The decline in the sales volume in Finland is mainly due to the sale of a CHP company in Jyväskylä at the end of 2008 and lower industrial customer demand. In May, Fortum sold its peat production in central Finland to Vapo Oy. In June, Fortum decided to sell its CHP plant in the city of Kokkola, Finland, to the city. The construction of three new CHP plants in Espoo, Finland, in Czestochowa, Poland, and in Pärnu, Estonia, proceeded as planned. -------------------------------------------------------------------------------- | Heat sales by area, | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | TWh | | | 9 | 8 | | | -------------------------------------------------------------------------------- | Finland | 1.4 | 2.3 | 4.5 | 6.0 | 10.8 | 9.3 | -------------------------------------------------------------------------------- | Sweden | 1.7 | 1.6 | 5.7 | 5.0 | 9.1 | 9.8 | -------------------------------------------------------------------------------- | Poland | 0.4 | 0.6 | 2.2 | 2.1 | 3.6 | 3.7 | -------------------------------------------------------------------------------- | Other countries | 0.2 | 0.2 | 0.7 | 0.8 | 1.4 | 1.3 | -------------------------------------------------------------------------------- | Total | 3.7 | 4.7 | 13.1 | 13.9 | 24.9 | 24.1 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Power sales, TWh | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | | | | 9 | 8 | | | -------------------------------------------------------------------------------- | Total | 0.8 | 0.9 | 2.4 | 2.6 | 4.7 | 4.5 | -------------------------------------------------------------------------------- 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 | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | | | | 9 | 8 | | | -------------------------------------------------------------------------------- | Sales | 176 | 180 | 405 | 412 | 789 | 782 | -------------------------------------------------------------------------------- | - distribution network | 152 | 151 | 351 | 350 | 669 | 670 | | transmission | | | | | | | -------------------------------------------------------------------------------- | - regional network | 18 | 18 | 39 | 41 | 77 | 75 | | transmission | | | | | | | -------------------------------------------------------------------------------- | - other sales | 6 | 11 | 15 | 21 | 43 | 37 | -------------------------------------------------------------------------------- | Operating profit | 54 | 51 | 135 | 137 | 248 | 246 | -------------------------------------------------------------------------------- | Comparable operating | 54 | 49 | 135 | 136 | 248 | 247 | | profit | | | | | | | -------------------------------------------------------------------------------- | Net assets (at | | | 3,106 | 3,330 | 3,032 | | | period-end) | | | | | | | -------------------------------------------------------------------------------- | Return on net assets, % | | | | | 8.1 | 8.2 | -------------------------------------------------------------------------------- | Comparable return on net | | | | | 8.2 | 8.2 | | assets, % | | | | | | | -------------------------------------------------------------------------------- | Gross investments | 43 | 72 | 79 | 133 | 296 | 242 | -------------------------------------------------------------------------------- | Number of employees | | | 1,169 | 1,221 | 1,336 | | -------------------------------------------------------------------------------- The volume of distribution and regional network transmission during the second quarter of 2009 totalled 5.4 (5.6) TWh and 3.7 (4.0) TWh, respectively. In the first half of 2009, the volume of distribution and regional network transmission totalled 13.6 (13.5) TWh and 8.5 (9.0) TWh, respectively. Electricity transmission via the regional distribution network totalled 7.1 (7.5) TWh in Sweden and 1.4 (1.5) TWh in Finland. The comparable operating profit of the Distribution segment was EUR 54 million in the second quarter, EUR 5 million higher than in the previous year. Cost savings from organisational streamlining contributed positively. The weaker average SEK led to a translation effect of approximately EUR -5 million in the comparable operating profit. In January-June 2009, the Distribution segment's comparable operating profit was EUR 1 million lower than in the previous year. The decline was due to the weaker average SEK that led to a translation effect of approximately EUR -12 million. The legislation for monthly meter reading in Sweden took effect on 1 July 2009. Fortum has completed the main Automatic Meter Management (AMM) roll-out and is presently discussing with the AMM service provider how to structure the operations phase. -------------------------------------------------------------------------------- | Volume of distributed | II/09 | II/08 | I-II/0 | I-II/0 | 2008 | LTM | | electricity in | | | 9 | 8 | | | | distribution network, | | | | | | | | TWh | | | | | | | -------------------------------------------------------------------------------- | Sweden | 3.0 | 3.1 | 7.4 | 7.4 | 14.0 | 14.0 | -------------------------------------------------------------------------------- | Finland | 2.0 | 2.0 | 4.9 | 4.8 | 9.3 | 9.4 | -------------------------------------------------------------------------------- | Norway | 0.4 | 0.5 | 1.2 | 1.2 | 2.3 | 2.3 | -------------------------------------------------------------------------------- | Estonia | 0.0 | 0.0 | 0.1 | 0.1 | 0.2 | 0.2 | -------------------------------------------------------------------------------- | Total | 5.4 | 5.6 | 13.6 | 13.5 | 25.8 | 25.9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Number of electricity | 30 Jun 2009 | 30 Jun 2008 | 31 Dec 2008 | | distribution customers by | | | | | area, thousands | | | | -------------------------------------------------------------------------------- | Sweden | 880 | 874 | 877 | -------------------------------------------------------------------------------- | Finland | 607 | 602 | 606 | -------------------------------------------------------------------------------- | Other countries | 124 | 123 | 123 | -------------------------------------------------------------------------------- | Total | 1,611 | 1,599 | 1,606 | -------------------------------------------------------------------------------- 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. Markets sells approximately 70% of its volumes to business customers and 30% to retail consumers. -------------------------------------------------------------------------------- | EUR million | II/09 | II/08 | I-II/ | I-II/ | 2008 | LTM | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- | Sales | 298 | 411 | 767 | 930 | 1,922 | 1,759 | -------------------------------------------------------------------------------- | - power sales | 289 | 397 | 751 | 898 | 1,865 | 1,718 | -------------------------------------------------------------------------------- | - other sales | 9 | 14 | 16 | 32 | 57 | 41 | -------------------------------------------------------------------------------- | Operating profit | 7 | 31 | -4 | 11 | -35 | -50 | -------------------------------------------------------------------------------- | Comparable operating | 6 | -15 | 4 | -25 | -33 | -4 | | profit | | | | | | | -------------------------------------------------------------------------------- | Net assets (at period-end) | | | 106 | 236 | 188 | | -------------------------------------------------------------------------------- | Return on net assets, % | | | | | -14.0 | -25.4 | -------------------------------------------------------------------------------- | Comparable return on net | | | | | -15.3 | 0.7 | | assets, % | | | | | | | -------------------------------------------------------------------------------- | Gross investments | 0 | 2 | 1 | 3 | 3 | 1 | -------------------------------------------------------------------------------- | Number of employees | | | 637 | 817 | 635 | | -------------------------------------------------------------------------------- In the second quarter of 2009, Markets' electricity sales totalled 6.3 (8.3) TWh. For the first half of the year, Markets sales volume was 16.0 (19.5) TWh. The decrease in the sales volume was mainly due to the business customers' lower consumption as a result of the economic recession and some discontinued contracts with business customers. Markets' second-quarter and first-half-year comparable operating profit improved strongly from a year ago. The improvement is thanks to Markets' turnaround programme, including the launch of the new Kesto-product pricing model in Finland, re-negotiated sales agreements, renewed hedging operations and cost saving actions. Russia The segment comprises power and heat generation and sales in Russia. The segment includes OAO Fortum and Fortum's holding in TGC-1. OAO Fortum is accounted for as a subsidiary and fully consolidated from 1 April 2008. TGC-1 is an associated company and accounted for using the equity method. -------------------------------------------------------------------------------- | EUR million | II/09 | II/08 | I-II/ | I-II/ | 2008 | LTM | | | | | 09 | 08 | | | -------------------------------------------------------------------------------- | Sales | 136 | 152 | 320 | 152 | 489 | 657 | -------------------------------------------------------------------------------- | - power sales | 91 | 105 | 194 | 105 | 332 | 421 | -------------------------------------------------------------------------------- | - heat sales | 44 | 43 | 125 | 43 | 141 | 223 | -------------------------------------------------------------------------------- | - other sales | 1 | 4 | 1 | 4 | 16 | 13 | -------------------------------------------------------------------------------- | EBITDA | 2 | -11 | 26 | -11 | -24 | 13 | -------------------------------------------------------------------------------- | Operating profit | -16 | -33 | -11 | -33 | -91 | -69 | -------------------------------------------------------------------------------- | Comparable operating | -16 | -33 | -11 | -33 | -92 | -70 | | profit | | | | | | | -------------------------------------------------------------------------------- | Net assets (at period-end) | | | 2,049 | 2,329 | 2,205 | | -------------------------------------------------------------------------------- | Return on net assets, % | | | | | -3.7 | -2.8 | -------------------------------------------------------------------------------- | Comparable return on net | | | | | -3.8 | -2.9 | | assets, % | | | | | | | -------------------------------------------------------------------------------- | Gross investments | 41 | 43 | 62 | 1,074 | 1,748 | 736 | -------------------------------------------------------------------------------- | Number of employees | | | 5,619 | 7,188 | 7,262 | | -------------------------------------------------------------------------------- OAO Fortum operates in the well-developed industrial regions of the Urals and western Siberia. The segment's power sales during the second quarter of 2009 amounted to 4.6 (4.8) TWh. During the same period, heat sales of the segment totalled 4.2 (4.3) TWh. The segment sold approximately 2/3 of its power in Tuymen and other oil- and gas-producing areas in the OAO Fortum region. The remaining 1/3 of its volumes were sold in the Chelyabinsk region where the metals industry dominates wholesale electricity demand. In the second quarter of 2009, the average electricity spot price in the Urals hub was 5% lower than a year ago, RUB 603 (634) per MWh. During the second quarter of 2009, OAO Fortum sold 27% of its electricity production at the liberalised electricity price. OAO Fortum's average regulated electricity price was 12% higher than a year ago at 525 (469) RUB/MWh. The average regulated capacity price in the second quarter of 2009 was 17% higher than a year ago at RUB 186,600 per MW per month. In the corresponding period of 2008, the price was RUB 159,200 per MW per month. During the second quarter of 2009, the average limit gas price in the Urals region was 1,730 RUB/1000 m3, 11% higher than in the corresponding period of 2008. -------------------------------------------------------------------------------- | Key electricity, | II/09 | II/08 | Change% | I-II/09 | I-II/08 | | capacity and gas prices | | | | | | | for OAO Fortum | | | | | | -------------------------------------------------------------------------------- | Electricity spot price | 603 | 634 | -5 | 569 | 669 | | (market price), | | | | | | | Urals hub, RUB/MWh | | | | | | -------------------------------------------------------------------------------- | Average regulated | 525 | 469 | 12 | 534 | 475 | | electricity price | | | | | | | for | | | | | | | OAO FORTUM, RUB/MWh | | | | | | -------------------------------------------------------------------------------- | Average regulated | 186,600 | 159,200 | 17 | 188,100 | 158,500 | | capacity price, | | | | | | | RUB/MW/month | | | | | | -------------------------------------------------------------------------------- | Average limit gas price | 1,730 | 1,560 | 11 | 1,679 | 1,560 | | in | | | | | | | Urals region, | | | | | | | RUB/1000 m3 | | | | | | -------------------------------------------------------------------------------- The segment booked a comparable operating loss of EUR -16 (-33) million in the second quarter of 2009. The improvement mainly stems from OAO Fortum's efficiency improvement programme and a higher electricity sales margin. In January-June 2009, the Russia segment's comparable operating result, EUR -11 million, was EUR 22 million better than in the previous year. OAO Fortum's business is typically very seasonal: Its results usually are strongest during the first and last quarters of the year. OAO Fortum figures have been consolidated starting from the beginning of April 2008. The Russian power sector reform is proceeding. Starting 1 January 2009, 30% of all produced power in Russia was sold on the competitive market. The share increased to 50% at the beginning of July 2009. The wholesale power market is expected to be fully liberalised by 2011. Fortum is focusing on the integration of OAO Fortum. The integration process started in April 2008. The new organisational structure and Fortum's management model have been in place since the beginning of September 2008. The integration has proceeded well and several targets for efficiency improvements have been identified. Consequently, the annual efficiency improvements are expected to be approximately EUR 100 million by 2011. OAO Fortum discontinued its operation and maintenance contract with the city of Tyumen for the operation of municipal heat networks as of 1 July 2009. This will reduce the number of OAO Fortum employees by approximately 750. Capital expenditures, divestments and investments in shares Capital expenditures and investments in shares in January-June 2009 totalled EUR 412 (1,459) million. Investments, excluding acquisitions, were EUR 352 (408) million. HEAT A new CHP plant in Estonia (Tartu) was taken into commercial use in late March. The construction of the new CHP plants in Espoo, Finland, in Czestochowa, Poland, and in Pärnu, Estonia, proceeded. Fortum and the city of Kokkola in Finland signed a letter of intent according to which Fortum will sell its CHP plant in Kokkola to the city. Fortum will sell the plant for approximately EUR 24 million. The final agreement is to be signed by the end of July and the transaction is to take effect as of 1 August 2009. In May, Fortum sold its peat production in central Finland to Vapo Oy. At the same time, Fortum and Vapo made a long-term contract on delivering peat to Fortum's Joensuu power plant. These divestments are part of the Heat segment's business development programme aiming to ensure long-term profitability of the segment. DISTRIBUTION In April, the EU Parliament voted in favour of the third energy market package. If the package enters into force in its current form, one of the consequences will be that Fortum will have to sell its 25% ownership in the Finnish electricity transmission system operator Fingrid Oyj by early 2012. Consequently, Fortum has started preparations for the sale of the Fingrid shares. RUSSIA OAO Fortum's ongoing investment programme will increase its power capacity from the current ~3,000 MW to 5,300 MW. The value for the remaining part of the programme, calculated at year-end 2008 exchange rates, is estimated to be EUR 2.0 billion from January 2009 onwards. The Russian Government is currently reviewing the investment programmes of the generating companies in light of the decreased power demand. Fortum has confirmed its commitment to fulfil OAO Fortum's investment programme. However, the potential postponement of some projects by 1-3 years is currently under review. Financing Net debt increased during the second quarter by EUR 370 million to EUR 6,004 million (year-end 2008: EUR 6,179 million). The increase in net debt is mainly due to the EUR 888 million dividend payment made in April. The liquidity position continued to be strong, and, at the end of June 2009, the Groups liquid funds totalled EUR 1,440 million (year-end 2008: EUR 1,321 million). The liquid funds include cash and bank deposits held by OAO Fortum amounting to EUR 753 million (year-end 2008: 1,020 million). In addition, Fortum had access to approximately EUR 2.9 billion of undrawn committed credit facilities. In January-June 2009, the Group's net financial expenses were EUR 81 (119) million. The decrease is mainly attributable to lower average interest rates during the first half of 2009 compared to the corresponding period last year. Net financial expenses include fair value gains on financial instruments amounting to EUR 13 (-3) million. During the second quarter Fortum Corporation completed three long-term financing transactions, raising a total of approximately EUR 600 million. The tenor of these new financings varies from 5 to 10 years. Net debt to EBITDA for the last twelve months was 2.4 (2.5 at year-end 2008). On 29 June 2009, Standard and Poor's placed Fortum's long-term credit rating A- (stable) on CreditWatch with positive implications following a change in their methodology for rating of “government-related entities”. Fortum Corporation's long-term credit rating from Moody's was A2 (stable). Shares and share capital In January-June 2009, a total of 344.1 (299.7) million Fortum Corporation shares, totalling EUR 5,195 million, were traded. Fortum's market capitalisation, calculated using the closing quotation of the last trading day of the quarter, was EUR 14,409 million. The highest quotation of Fortum Corporation shares on the NASDAQ OMX Helsinki in the first half of the year was EUR 18.01, the lowest EUR 12.60, and the volume-weighted average quotation EUR 15.11. The closing quotation on the last trading day of the period was EUR 16.22 (32.26). A total of 200,878 shares subscribed on the basis of share option schemes were entered into the trade register in the second quarter of 2009. At the end of the quarter, Fortum Corporation did not own its own shares. After registrations, Fortum Corporation's share capital was EUR 3,046,185,953 and the total number of registered shares was 888,367,045 at the end of the quarter. The share capital of Fortum Corporation increased by a total of EUR 682,985.20. The subscription period for the last remaining option scheme ended on 1 May 2009 and thus no further shares can be subscribed for and registered under the share option schemes. At the end June 2009, the Finnish state's holding in Fortum was 50.8%. The proportion of nominee registrations and direct foreign shareholders was 33.6%. 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. Group personnel The number of employees at the end of the quarter was 13,586 (16,069). The average number of employees in the Group in January-June was 14,310 (12,603). The increase in the number of employees compared to the same period last year is due to the acquisition of OAO Fortum. The outsourcing of certain infrastructure service functions to Infratek ASA reduced the number of people in the Power Generation and Distribution segments. Outlook KEY DRIVERS AND RISKS The key factor influencing Fortum's business performance is the wholesale price of electricity. Key drivers behind wholesale price development are the supply-demand balance, fuel and CO2 emissions allowance prices as well as the hydrological situation. The exchange rates of the Swedish krona and Russian rouble also affect Fortum's financials. The balance sheet translation effects from potential changes in currency exchange rates are booked in Fortum's equity. 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 for 2008. MARKET DEMAND The recession impacts the markets in which Fortum operates. This may increase Fortum's counterparty risk. The recession may continue to depress electricity consumption in the Nordic countries and Russia. Fortum expects the electricity consumption to return to a growth path after the recession. RUSSIA In Russia, one of the key assumptions in the OAO Fortum acquisition is the continuation of the Russian power sector reform. As planned, the share of power sold at a competitive price was increased from 30% to 50% on 1 July 2009. The share is planned to be increased from 50% to 60% at the beginning of January 2010. The rules for the long-term capacity market, taking place from 2011 onwards, are under preparation. The wholesale power market is expected to be fully liberalised in 2011. The average limit gas price (regulated gas price) for the third and fourth quarter of 2009 will increase by 7% and 6.2%, respectively. The regulated electricity price is indexed to the regulated gas price and inflation on annual basis. OAO Fortum is committed and contractually obligated to a significant investment programme, amounting to approximately EUR 2.0 billion for 2009 and onwards. However, the recession is likely to further affect the Russian power demand-supply balance. The Russian Government is currently reviewing the investment programmes of the generating companies in light of the decreased power demand. Fortum has confirmed its commitment to fulfil OAO Fortum's investment programme. However, the potential postponement of some projects by 1-3 years is currently under review. The acquisition of OAO Fortum is expected to marginally dilute Fortum's EPS during 2009. Annual efficiency improvements are expected to be approximately EUR 100 million by 2011. CAPITAL EXPENDITURE Fortum expects its annual capital expenditure in the next 4-5 years to be within a range of EUR 0.8-1.2 billion. HEDGING In mid-July, the electricity forward price in Nord Pool for the rest of 2009 was around EUR 37 per MWh. The electricity forward price for 2010 was around EUR 37-38 per MWh and for 2011 around EUR 38-39 per MWh. At the same time, the future quotations for coal (ICE Rotterdam) for the rest of 2009 were around USD 72 per tonne and the market price for emissions allowances (EUA) for 2009 was about EUR 14 per tonne CO2. In mid-July, Nordic water reservoirs were about 13 TWh below the long-term average and 17 TWh below the corresponding level of 2008. Fortum Power Generation's achieved Nordic power price typically depends on e.g. the hedge ratio, hedge price, spot prices, availability and utilisation of Fortum's flexible production portfolio and currency fluctuations. Excluding the potential effects from the changes in the power generation mix, a 1 EUR/MWh change in Generation's achieved Nordic sales price results in an approximately EUR 50 million change in Fortum's annual operating profit. At the end of June 2009, Fortum had hedged approximately 80% of the Power Generation segment's estimated Nordic electricity sales volume for the rest of 2009 at approximately EUR 50 per MWh. For the calendar year 2010, approximately 65% of the segment's estimated Nordic electricity sales volume was hedged at approximately EUR 43 per MWh. For the calendar year 2011, approximately 30% of the Power Generation segment's estimated Nordic electricity sales volume was hedged at approximately EUR 42 per MWh. The reported hedge ratios may vary significantly, depending on Fortum's actions on the electricity derivatives markets. Hedges are mainly financial contracts, most of them Nord Pool forwards or standardised futures, consisting of several types of products and maturities. The first and last quarters of the year are usually the strongest quarters for the power and heat businesses. Fortum's results in the first half of the year were solid, despite the recession. A flexible, low-cost and climate-benign generation portfolio accompanied by a strong financial position and liquidity enable Fortum to meet current challenges and to be ready for new opportunities. Espoo, 17 July 2009 Fortum Corporation Board of Directors Further information: Tapio Kuula, President and CEO, tel. +358 10 452 4112 Juha Laaksonen, CFO, tel. +358 10 452 4519 Fortum's Investor Relations, tel. +358 10 452 4138 / investors [at] Fortum [dot] com 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 interim financials have not been audited. Publication of results in 2009: Interim Report January-September will be published on 22 October 2009 at approx. 9:00 EET. Distribution: NASDAQ OMX Helsinki Key media www.Fortum.com Information on the full-year report, including detailed quarterly information, is available on Fortum's website at www.Fortum.com/investors. -------------------------------------------------------------------------------- | FORTUM GROUP | -------------------------------------------------------------------------------- | JANUARY-JUNE 2009 | -------------------------------------------------------------------------------- | Interim Financial Statements are unaudited | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONDENSED CONSOLIDATED INCOME STATEMENT | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | | Note | Q2 2009 | Q2 2008 | Q1-Q2 | Q1-Q2 | 2008 | Last | | | | | | | 2009 | 2008 | | twelve | | | | | | | | | | months | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Sales | | 4 | 1 194 | 1 322 | 2 826 | 2 762 | 5 636 | 5 700 | -------------------------------------------------------------------------------- | Other | | | 4 | -42 | 31 | 19 | 230 | 242 | | income | | | | | | | | | -------------------------------------------------------------------------------- | Materials | | | -411 | -465 | -1 067 | -986 | -2 | -2 198 | | and | | | | | | | 117 | | | services | | | | | | | | | -------------------------------------------------------------------------------- | Employee | | | -127 | -137 | -255 | -273 | -587 | -569 | | benefit | | | | | | | | | | costs | | | | | | | | | -------------------------------------------------------------------------------- | Depreciation, | 4, 12 | -124 | -135 | -246 | -246 | -515 | -515 | | amortisation | | | | | | | | | and | | | | | | | | | impairment | | | | | | | | | charges | | | | | | | | -------------------------------------------------------------------------------- | Other | | | -161 | -195 | -315 | -319 | -684 | -680 | | expenses | | | | | | | | | -------------------------------------------------------------------------------- | Operating | | | 375 | 348 | 974 | 957 | 1 963 | 1 980 | | profit | | | | | | | | | -------------------------------------------------------------------------------- | Share of | 4, 13 | 29 | 36 | -4 | 70 | 126 | 52 | | profit/loss | | | | | | | | | of associates | | | | | | | | | and joint | | | | | | | | | ventures | | | | | | | | -------------------------------------------------------------------------------- | Interest | | | -64 | -95 | -132 | -155 | -351 | -328 | | expense | | | | | | | | | -------------------------------------------------------------------------------- | Interest | | | 22 | 27 | 53 | 44 | 143 | 152 | | income | | | | | | | | | -------------------------------------------------------------------------------- | Fair value gains and | 2 | -1 | 13 | -3 | -11 | 5 | | losses on financial | | | | | | | | instruments | | | | | | | -------------------------------------------------------------------------------- | Other | | | -9 | -5 | -15 | -5 | -20 | -30 | | financial | | | | | | | | | | expenses | | | | | | | | | | - net | | | | | | | | | -------------------------------------------------------------------------------- | Finance | | | -49 | -74 | -81 | -119 | -239 | -201 | | costs - | | | | | | | | | | net | | | | | | | | | -------------------------------------------------------------------------------- | Profit | | | 355 | 310 | 889 | 908 | 1 850 | 1 831 | | before | | | | | | | | | | income | | | | | | | | | | tax | | | | | | | | | -------------------------------------------------------------------------------- | Income | | 9 | -61 | -65 | -172 | -187 | -254 | -239 | | tax | | | | | | | | | | expense | | | | | | | | | -------------------------------------------------------------------------------- | Profit | | | 294 | 245 | 717 | 721 | 1 596 | 1 592 | | for the | | | | | | | | | | period | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Attributa | | | | | | | | | | ble to: | | | | | | | | | -------------------------------------------------------------------------------- | Owners of | | | 289 | 243 | 695 | 695 | 1 542 | 1 542 | | the | | | | | | | | | | parent | | | | | | | | | | company | | | | | | | | | -------------------------------------------------------------------------------- | Non-contr | | | 5 | 2 | 22 | 26 | 54 | 50 | | olling | | | | | | | | | | interests | | | | | | | | | -------------------------------------------------------------------------------- | | | | 294 | 245 | 717 | 721 | 1 596 | 1 592 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings | | 10 | | | | | | | | per share | | | | | | | | | | (in € per | | | | | | | | | | share) | | | | | | | | | -------------------------------------------------------------------------------- | Basic | | | 0.32 | 0.27 | 0.78 | 0.78 | 1.74 | 1.74 | -------------------------------------------------------------------------------- | Diluted | | | 0.32 | 0.27 | 0.78 | 0.78 | 1.74 | 1.74 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Condensed consolidated statement of comprehensive income | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | | | Q2 | Q2 | Q1-Q2 | Q1-Q2 | 2008 | 2007 | | | | | 2009 | 2008 | 2009 | 2008 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Profit for the | | | 294 | 245 | 717 | 721 | 1 596 | 1 608 | | period | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other | | | | | | | | | | comprehensive | | | | | | | | | | income: | | | | | | | | | -------------------------------------------------------------------------------- | Cash flow hedges | | | | | | | | | -------------------------------------------------------------------------------- | Fair value | | | -282 | -446 | -90 | -354 | 453 | -167 | | gains/losses in | | | | | | | | | | the period | | | | | | | | | -------------------------------------------------------------------------------- | Transfers to | | | -60 | 20 | -83 | 66 | 160 | -69 | | income statement | | | | | | | | | -------------------------------------------------------------------------------- | Transfers to | | | -6 | 1 | -1 | 1 | -4 | - | | inventory/fixed | | | | | | | | | | assets | | | | | | | | | -------------------------------------------------------------------------------- | Tax effect | | | 90 | 114 | 47 | 76 | -168 | 64 | -------------------------------------------------------------------------------- | Net investment | | | | | | | | | | hedges | | | | | | | | | -------------------------------------------------------------------------------- | Fair value | | | -1 | - | -2 | - | - | 2 | | gains/losses in | | | | | | | | | | the period | | | | | | | | | -------------------------------------------------------------------------------- | Available for sale | | | | | | | | | | financial assets | | | | | | | | | -------------------------------------------------------------------------------- | Fair value losses | | | 0 | - | 0 | - | -1 | - | | in the period | | | | | | | | | -------------------------------------------------------------------------------- | Exchange differences on | 87 | 6 | -127 | -56 | -621 | -36 | | translating foreign operations | | | | | | | -------------------------------------------------------------------------------- | Share of other comprehensive | -36 | -18 | -39 | -429 | -628 | 366 | | income of associates 1) | | | | | | | -------------------------------------------------------------------------------- | Other changes | | | -3 | - | -7 | - | 1 | 6 | -------------------------------------------------------------------------------- | Other comprehensive income for | -211 | -323 | -302 | -696 | -808 | 166 | | the period, net of tax | | | | | | | -------------------------------------------------------------------------------- | Total | | | 83 | -78 | 415 | 25 | 788 | 1 774 | | comprehensive | | | | | | | | | | income for the | | | | | | | | | | year | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total comprehensive | | | | | | | | | income attributable to: | | | | | | | | -------------------------------------------------------------------------------- | Owners of the | | | 70 | -90 | 412 | 0 | 797 | 1 731 | | parent | | | | | | | | | -------------------------------------------------------------------------------- | Non-controlling | | | 13 | 12 | 3 | 25 | -9 | 43 | | interests | | | | | | | | | -------------------------------------------------------------------------------- | | | | 83 | -78 | 415 | 25 | 788 | 1 774 | -------------------------------------------------------------------------------- | 1) Of which fair value | | | | | | | | | change in Hafslund ASAs | | | | | | | | -------------------------------------------------------------------------------- | shareholding in REC | | -24 | -28 | -28 | -437 | -667 | 353 | | incl. translation | | | | | | | | | differences | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONDENSED CONSOLIDATED BALANCE SHEET | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | | Note | June 30 | June 30 | Dec 31 | | | | | 2009 | 2008 | 2008 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ASSETS | | | | | | -------------------------------------------------------------------------------- | Non-current assets | | | | | | -------------------------------------------------------------------------------- | Intangible assets | | 12 | 363 | 426 | 395 | -------------------------------------------------------------------------------- | Property, plant and | | 12 | 12 172 | 13 118 | 12 138 | | equipment | | | | | | -------------------------------------------------------------------------------- | Participations in associates | 4, 13 | 2 105 | 2 461 | 2 112 | | and joint ventures | | | | | -------------------------------------------------------------------------------- | Share in State Nuclear Waste | 16 | 577 | 528 | 566 | | Management Fund | | | | | -------------------------------------------------------------------------------- | Other non-current | | | 120 | 86 | 117 | | assets | | | | | | -------------------------------------------------------------------------------- | Deferred tax assets | | | 4 | 42 | 2 | -------------------------------------------------------------------------------- | Derivative financial | | 6 | 275 | 221 | 445 | | instruments | | | | | | -------------------------------------------------------------------------------- | Long-term | | | 809 | 811 | 742 | | interest-bearing | | | | | | | receivables | | | | | | -------------------------------------------------------------------------------- | Total non-current | | | 16 425 | 17 693 | 16 517 | | assets | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current assets | | | | | | -------------------------------------------------------------------------------- | Inventories | | | 431 | 316 | 444 | -------------------------------------------------------------------------------- | Derivative financial | | 6 | 371 | 260 | 761 | | instruments | | | | | | -------------------------------------------------------------------------------- | Trade and other | | | 806 | 1 015 | 1 235 | | receivables | | | | | | -------------------------------------------------------------------------------- | Bank deposits | | | 432 | - | 588 | -------------------------------------------------------------------------------- | Cash and cash | | | 1 008 | 1 247 | 733 | | equivalents | | | | | | -------------------------------------------------------------------------------- | Liquid funds | | 15 | 1 440 | 1 247 | 1 321 | -------------------------------------------------------------------------------- | Total current assets | | | 3 048 | 2 838 | 3 761 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total assets | | | 19 473 | 20 531 | 20 278 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EQUITY | | | | | | -------------------------------------------------------------------------------- | Equity attributable to | | | | | | | owners of the parent | | | | | | -------------------------------------------------------------------------------- | Share capital | | 14 | 3 046 | 3 042 | 3 044 | -------------------------------------------------------------------------------- | Share premium | | | 73 | 73 | 73 | -------------------------------------------------------------------------------- | Retained earnings | | | 4 009 | 3 970 | 4 312 | -------------------------------------------------------------------------------- | Other equity components | | | 348 | 82 | 525 | -------------------------------------------------------------------------------- | Total | | | 7 476 | 7 167 | 7 954 | -------------------------------------------------------------------------------- | Non-controlling | | | 427 | 925 | 457 | | interests | | | | | | -------------------------------------------------------------------------------- | Total equity | | | 7 903 | 8 092 | 8 411 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | LIABILITIES | | | | | | -------------------------------------------------------------------------------- | Non-current liabilities | | | | | | -------------------------------------------------------------------------------- | Interest-bearing | | 15 | 7 061 | 6 543 | 6 520 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Derivative financial | | 6 | 174 | 373 | 120 | | instruments | | | | | | -------------------------------------------------------------------------------- | Deferred tax | | | 1 762 | 1 808 | 1 851 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Nuclear provisions | | 16 | 577 | 528 | 566 | -------------------------------------------------------------------------------- | Pension and other | | | 249 | 270 | 250 | | provisions | | | | | | -------------------------------------------------------------------------------- | Other non-current | | | 460 | 464 | 470 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Total non-current | | | 10 283 | 9 986 | 9 777 | | liabilities | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Current liabilities | | | | | | -------------------------------------------------------------------------------- | Interest-bearing | | 15 | 383 | 958 | 980 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Derivative financial | | 6 | 125 | 509 | 126 | | instruments | | | | | | -------------------------------------------------------------------------------- | Trade and other | | | 779 | 986 | 984 | | payables | | | | | | -------------------------------------------------------------------------------- | Total current | | | 1 287 | 2 453 | 2 090 | | liabilities | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total liabilities | | | 11 570 | 12 439 | 11 867 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total equity and | | | 19 473 | 20 531 | 20 278 | | liabilities | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | Shar | Shar | Reta | Tran | Cash | Oth | OCI | Owne | Non-c | Total | | | e | e | ined | slat | flow | er | item | rs | ontro | equit | | | capi | prem | earn | ion | hedg | OCI | s | of | lling | y | | | tal | ium | ings | of | es | ite | asso | the | inter | | | | | | and | fore | | ms | ciat | pare | ests | | | | | | othe | ign | | | ed | nt | | | | | | | r | oper | | | comp | comp | | | | | | | fund | atio | | | anie | any | | | | | | | s | ns | | | s | | | | -------------------------------------------------------------------------------- | Total | 3 | 73 | 4 | -576 | 321 | 36 | 168 | 7 | 457 | 8 411 | | equit | 044 | | 888 | | | | | 954 | | | | y at | | | | | | | | | | | | 31.12 | | | | | | | | | | | | .2008 | | | | | | | | | | | -------------------------------------------------------------------------------- | Net | | | 695 | | | | | 695 | 22 | 717 | | profi | | | | | | | | | | | | t for | | | | | | | | | | | | the | | | | | | | | | | | | perio | | | | | | | | | | | | d | | | | | | | | | | | -------------------------------------------------------------------------------- | Trans | | | | -120 | -4 | | 12 | -112 | -7 | -119 | | latio | | | | | | | | | | | | n | | | | | | | | | | | | diffe | | | | | | | | | | | | rence | | | | | | | | | | | | s | | | | | | | | | | | -------------------------------------------------------------------------------- | Other | | | -2 | | -116 | -2 | -51 | -171 | -12 | -183 | | compr | | | | | | | | | | | | ehens | | | | | | | | | | | | ive | | | | | | | | | | | | incom | | | | | | | | | | | | e | | | | | | | | | | | -------------------------------------------------------------------------------- | Total | | 693 | -120 | -120 | -2 | -39 | 412 | 3 | 415 | | comprehensiv | | | | | | | | | | | e income for | | | | | | | | | | | the period | | | | | | | | | | -------------------------------------------------------------------------------- | Cash | | | -888 | | | | | -888 | | -888 | | divid | | | | | | | | | | | | end | | | | | | | | | | | | 1) | | | | | | | | | | | -------------------------------------------------------------------------------- | Divid | | | | | | | | 0 | -19 | -19 | | ends | | | | | | | | | | | | to | | | | | | | | | | | | non-c | | | | | | | | | | | | ontro | | | | | | | | | | | | lling | | | | | | | | | | | | inter | | | | | | | | | | | | ests | | | | | | | | | | | -------------------------------------------------------------------------------- | Chang | | | -4 | | | | | -4 | -14 | -18 | | es | | | | | | | | | | | | due | | | | | | | | | | | | to | | | | | | | | | | | | busin | | | | | | | | | | | | ess | | | | | | | | | | | | combi | | | | | | | | | | | | natio | | | | | | | | | | | | ns | | | | | | | | | | | -------------------------------------------------------------------------------- | Stock | 2 | | 16 | | | -16 | | 2 | | 2 | | optio | | | | | | | | | | | | ns | | | | | | | | | | | | exerc | | | | | | | | | | | | ised | | | | | | | | | | | | 2) | | | | | | | | | | | -------------------------------------------------------------------------------- | Total | 3 | 73 | 4 | -696 | 201 | 18 | 129 | 7 | 427 | 7 903 | | equit | 046 | | 705 | | | | | 476 | | | | y at | | | | | | | | | | | | 30.6. | | | | | | | | | | | | 2009 | | | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total | 3 | 73 | 4 | -21 | -120 | 35 | 800 | 8 | 292 | 8 651 | | equit | 040 | | 552 | | | | | 359 | | | | y at | | | | | | | | | | | | 31.12 | | | | | | | | | | | | .2007 | | | | | | | | | | | -------------------------------------------------------------------------------- | Net | | | 695 | | | | | 695 | 26 | 721 | | profi | | | | | | | | | | | | t for | | | | | | | | | | | | the | | | | | | | | | | | | perio | | | | | | | | | | | | d | | | | | | | | | | | -------------------------------------------------------------------------------- | Trans | | | | -58 | | | -5 | -63 | 2 | -61 | | latio | | | | | | | | | | | | n | | | | | | | | | | | | diffe | | | | | | | | | | | | rence | | | | | | | | | | | | s | | | | | | | | | | | -------------------------------------------------------------------------------- | Other | | | | | -208 | | -424 | -632 | -3 | -635 | | compr | | | | | | | | | | | | ehens | | | | | | | | | | | | ive | | | | | | | | | | | | incom | | | | | | | | | | | | e | | | | | | | | | | | -------------------------------------------------------------------------------- | Total | | 695 | -58 | -208 | | -429 | 0 | 25 | 25 | | comprehensiv | | | | | | | | | | | e income for | | | | | | | | | | | the period | | | | | | | | | | -------------------------------------------------------------------------------- | Cash | | | -1 | | | | | -1 | | -1 | | divid | | | 198 | | | | | 198 | | 198 | | end | | | | | | | | | | | | 1) | | | | | | | | | | | -------------------------------------------------------------------------------- | Divid | | | | | | | | 0 | -21 | -21 | | ends | | | | | | | | | | | | to | | | | | | | | | | | | non-c | | | | | | | | | | | | ontro | | | | | | | | | | | | lling | | | | | | | | | | | | inter | | | | | | | | | | | | ests | | | | | | | | | | | -------------------------------------------------------------------------------- | Chang | | | | | | 4 | | 4 | 629 | 633 | | es | | | | | | | | | | | | due | | | | | | | | | | | | to | | | | | | | | | | | | busin | | | | | | | | | | | | ess | | | | | | | | | | | | combi | | | | | | | | | | | | natio | | | | | | | | | | | | ns | | | | | | | | | | | -------------------------------------------------------------------------------- | Stock | 2 | | | | | | | 2 | | 2 | | optio | | | | | | | | | | | | ns | | | | | | | | | | | | exerc | | | | | | | | | | | | ised | | | | | | | | | | | -------------------------------------------------------------------------------- | Total | 3 | 73 | 4 | -79 | -328 | 39 | 371 | 7 | 925 | 8 092 | | equit | 042 | | 049 | | | | | 167 | | | | y at | | | | | | | | | | | | 30.6. | | | | | | | | | | | | 2008 | | | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Total | 3 | 73 | 4 | -21 | -120 | 35 | 800 | 8 | 292 | 8 651 | | equit | 040 | | 552 | | | | | 359 | | | | y at | | | | | | | | | | | | 31.12 | | | | | | | | | | | | .2007 | | | | | | | | | | | -------------------------------------------------------------------------------- | Net | | | 1 | | | | | 1 | 54 | 1 596 | | profi | | | 542 | | | | | 542 | | | | t for | | | | | | | | | | | | the | | | | | | | | | | | | perio | | | | | | | | | | | | d | | | | | | | | | | | -------------------------------------------------------------------------------- | Trans | | | | -555 | | | -148 | -703 | -66 | -769 | | latio | | | | | | | | | | | | n | | | | | | | | | | | | diffe | | | | | | | | | | | | rence | | | | | | | | | | | | s | | | | | | | | | | | -------------------------------------------------------------------------------- | Other | | | | | 441 | 1 | -484 | -42 | 3 | -39 | | compr | | | | | | | | | | | | ehens | | | | | | | | | | | | ive | | | | | | | | | | | | incom | | | | | | | | | | | | e | | | | | | | | | | | -------------------------------------------------------------------------------- | Total | | | 1 | -555 | 441 | 1 | -632 | 797 | -9 | 788 | | compr | | | 542 | | | | | | | | | ehens | | | | | | | | | | | | ive | | | | | | | | | | | | incom | | | | | | | | | | | | e | | | | | | | | | | | -------------------------------------------------------------------------------- | Cash | | | -1 | | | | | -1 | | -1 | | divid | | | 198 | | | | | 198 | | 198 | | end | | | | | | | | | | | | 1) | | | | | | | | | | | -------------------------------------------------------------------------------- | Divid | | | | | | | | 0 | -18 | -18 | | ends | | | | | | | | | | | | to | | | | | | | | | | | | non-c | | | | | | | | | | | | ontro | | | | | | | | | | | | lling | | | | | | | | | | | | inter | | | | | | | | | | | | ests | | | | | | | | | | | -------------------------------------------------------------------------------- | Chang | | | -8 | | | | | -8 | 192 | 184 | | es | | | | | | | | | | | | due | | | | | | | | | | | | to | | | | | | | | | | | | busin | | | | | | | | | | | | ess | | | | | | | | | | | | combi | | | | | | | | | | | | natio | | | | | | | | | | | | ns | | | | | | | | | | | -------------------------------------------------------------------------------- | Stock | 4 | | | | | | | 4 | | 4 | | optio | | | | | | | | | | | | ns | | | | | | | | | | | | exerc | | | | | | | | | | | | ised | | | | | | | | | | | -------------------------------------------------------------------------------- | Total | 3 | 73 | 4 | -576 | 321 | 36 | 168 | 7 | 457 | 8 411 | | equit | 044 | | 888 | | | | | 954 | | | | y at | | | | | | | | | | | | 31.12 | | | | | | | | | | | | .2008 | | | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) See Note 11 | | | | | | | | | | Dividends. | | | | | | | | | -------------------------------------------------------------------------------- | 2) Accounting effect of the last stock option program (2002B) when the | | subscription period ended 1 May 2009. | -------------------------------------------------------------------------------- Starting from Q1 2009 Fortum has implemented IAS 1 (revised) Presentation of financial statements, see Note 2 Accounting policies. The consolidated statement of changes in total equity has changed format. Comparison numbers have been reclassified to be in line with the new format. Translation differences*) Translation differences impacted equity attributable to owners of the parent company with EUR -112 million in Q1-Q2 2009, mainly due to the weakening RUB. Part of the translation differences is arising from the NOK effect in fair valuation of Hafslund's REC shares, EUR +10 million, which is shown together with the change in fair value in OCI items associated companies. Cash flow hedges The impact on equity attributable to owners of the parent company from fair valuation of cash flow hedges, EUR -120 million in Q1-Q2 2009, mainly relates to cash flow hedges hedging electricity price for future transactions. When electricity price is higher than the hedging price, the impact on equity is negative. *) Translation of financial information from subsidiaries in foreign currency is done using average rate for the income statement and end rate for the balance sheet. The exchange rate differences occurring from translation to EUR are booked to equity. For information regarding exchange rates used, see Note 8 Exchange rates. -------------------------------------------------------------------------------- | CONDENSED CONSOLIDATED CASH FLOW STATEMENT | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | | Note | Q2 | Q2 | Q1-Q2 | Q1-Q2 | 2008 | Last | | | | | 2009 | 2008 | 2009 | 2008 | | twelv | | | | | | | | | | e | | | | | | | | | | month | | | | | | | | | | s | -------------------------------------------------------------------------------- | Cash | | | | | | | | | | flow | | | | | | | | | | from | | | | | | | | | | operati | | | | | | | | | | ng | | | | | | | | | | activit | | | | | | | | | | ies | | | | | | | | | -------------------------------------------------------------------------------- | Operati | | | 499 | 483 | 1 220 | 1 203 | 2 478 | 2 495 | | ng | | | | | | | | | | profit | | | | | | | | | | before | | | | | | | | | | depreci | | | | | | | | | | ations | | | | | | | | | | (EBITDA | | | | | | | | | | ) | | | | | | | | | -------------------------------------------------------------------------------- | Non-cas | | | 18 | 55 | 19 | 18 | -275 | -274 | | h flow | | | | | | | | | | items | | | | | | | | | | and | | | | | | | | | | divesti | | | | | | | | | | ng | | | | | | | | | | activit | | | | | | | | | | ies | | | | | | | | | -------------------------------------------------------------------------------- | Financial items | 160 | -35 | 299 | -80 | 233 | 612 | | and realised | | | | | | | | foreign exchange | | | | | | | | gains and losses | | | | | | | -------------------------------------------------------------------------------- | Taxes | | | -117 | -123 | -131 | -200 | -332 | -263 | -------------------------------------------------------------------------------- | Funds | | | 560 | 380 | 1 407 | 941 | 2 104 | 2 570 | | from | | | | | | | | | | operati | | | | | | | | | | ons | | | | | | | | | -------------------------------------------------------------------------------- | Change | | | 144 | 117 | 119 | 98 | -102 | -81 | | in | | | | | | | | | | working | | | | | | | | | | capital | | | | | | | | | -------------------------------------------------------------------------------- | Total | | | 704 | 497 | 1 526 | 1 039 | 2 002 | 2 489 | | net | | | | | | | | | | cash | | | | | | | | | | from | | | | | | | | | | operati | | | | | | | | | | ng | | | | | | | | | | activit | | | | | | | | | | ies | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash | | | | | | | | | | flow | | | | | | | | | | from | | | | | | | | | | investi | | | | | | | | | | ng | | | | | | | | | | activit | | | | | | | | | | ies | | | | | | | | | -------------------------------------------------------------------------------- | Capital | | 4, | -171 | -215 | -351 | -379 | -1 018 | -990 | | expendi | | 12 | | | | | | | | tures | | | | | | | | | | 1) | | | | | | | | | -------------------------------------------------------------------------------- | Acquisition | 7 | -3 | 0 | -22 | -764 | -1 210 | -468 | | of | | | | | | | | | subsidiarie | | | | | | | | | s, net of | | | | | | | | | cash | | | | | | | | | acquired | | | | | | | | -------------------------------------------------------------------------------- | Acquisi | | 13 | 0 | 0 | -31 | -8 | -32 | -55 | | tion of | | | | | | | | | | associa | | | | | | | | | | tes 2) | | | | | | | | | -------------------------------------------------------------------------------- | Acquisi | | | -1 | -1 | -1 | -1 | -1 | -1 | | tion of | | | | | | | | | | other | | | | | | | | | | long-te | | | | | | | | | | rm | | | | | | | | | | investm | | | | | | | | | | ents | | | | | | | | | -------------------------------------------------------------------------------- | Proceed | | | 10 | 1 | 11 | 5 | 37 | 43 | | s from | | | | | | | | | | sales | | | | | | | | | | of | | | | | | | | | | fixed | | | | | | | | | | assets | | | | | | | | | -------------------------------------------------------------------------------- | Proceeds | 7 | 0 | 0 | 11 | 0 | 44 | 55 | | from sales | | | | | | | | | of | | | | | | | | | subsidiarie | | | | | | | | | s, net of | | | | | | | | | cash | | | | | | | | | disposed | | | | | | | | -------------------------------------------------------------------------------- | Proceed | | 13 | 0 | 0 | 0 | 0 | 34 | 34 | | s from | | | | | | | | | | sales | | | | | | | | | | of | | | | | | | | | | associa | | | | | | | | | | tes | | | | | | | | | -------------------------------------------------------------------------------- | Proceeds | | 1 | 0 | 1 | 0 | 0 | 1 | | from sales | | | | | | | | | of other | | | | | | | | | non-current | | | | | | | | | assets | | | | | | | | -------------------------------------------------------------------------------- | Change | | | -13 | -20 | -32 | -50 | -136 | -118 | | in | | | | | | | | | | interes | | | | | | | | | | t-beari | | | | | | | | | | ng | | | | | | | | | | receiva | | | | | | | | | | bles | | | | | | | | | -------------------------------------------------------------------------------- | Total | | | -177 | -235 | -414 | -1 197 | -2 282 | -1 | | net | | | | | | | | 499 | | cash | | | | | | | | | | used in | | | | | | | | | | investi | | | | | | | | | | ng | | | | | | | | | | activit | | | | | | | | | | ies | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash | | | 527 | 262 | 1 112 | -158 | -280 | 990 | | flow | | | | | | | | | | before | | | | | | | | | | financi | | | | | | | | | | ng | | | | | | | | | | activit | | | | | | | | | | ies | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash | | | | | | | | | | flow | | | | | | | | | | from | | | | | | | | | | financi | | | | | | | | | | ng | | | | | | | | | | activit | | | | | | | | | | ies | | | | | | | | | -------------------------------------------------------------------------------- | Net | | | -1 242 | 64 | -35 | 2 321 | 2 621 | 265 | | change | | | | | | | | | | in | | | | | | | | | | loans | | | | | | | | | -------------------------------------------------------------------------------- | Dividends | | -888 | -1 198 | -888 | -1 198 | -1 198 | -888 | | paid to the | | | | | | | | | Company's | | | | | | | | | equity | | | | | | | | | holders | | | | | | | | -------------------------------------------------------------------------------- | Other | | | -21 | -125 | -8 | -124 | -103 | 13 | | financi | | | | | | | | | | ng | | | | | | | | | | items | | | | | | | | | -------------------------------------------------------------------------------- | Total | | | -2 151 | -1 259 | -931 | 999 | 1 320 | -610 | | net | | | | | | | | | | cash | | | | | | | | | | used in | | | | | | | | | | financi | | | | | | | | | | ng | | | | | | | | | | activit | | | | | | | | | | ies | | | | | | | | | -------------------------------------------------------------------------------- | Total | | | | | | | | | | net | | | | | | | | | | increas | | | | | | | | | | e | | | | | | | | | | (+)/dec | | | | | | | | | | rease | | | | | | | | | | (-) in | | | | | | | | | -------------------------------------------------------------------------------- | liquid | | | -1 624 | -997 | 181 | 841 | 1 040 | 380 | | funds | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liquid | | | 3 041 | 2 237 | 1 321 | 427 | 427 | 1 247 | | funds | | | | | | | | | | at the | | | | | | | | | | beginni | | | | | | | | | | ng of | | | | | | | | | | the | | | | | | | | | | period | | | | | | | | | -------------------------------------------------------------------------------- | Foreign | | | 23 | 7 | -62 | -21 | -146 | -187 | | exchang | | | | | | | | | | e | | | | | | | | | | differe | | | | | | | | | | nces in | | | | | | | | | | liquid | | | | | | | | | | funds | | | | | | | | | -------------------------------------------------------------------------------- | Liquid | | | 1 440 | 1 247 | 1 440 | 1 247 | 1 321 | 1 440 | | funds | | | | | | | | | | at the | | | | | | | | | | end of | | | | | | | | | | the | | | | | | | | | | period | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 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. | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Change in net | | | Q2 | Q2 | Q1-Q2 | Q1-Q2 | 2008 | Last | | debt | | | 2009 | 2008 | 2009 | 2008 | | twelve | | | | | | | | | | months | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net debt | | | 5 634 | 5 228 | 6 179 | 4 466 | 4 466 | 6 254 | | beginning of | | | | | | | | | | the period | | | | | | | | | -------------------------------------------------------------------------------- | Foreign | | | 7 | -40 | 44 | -2 | -203 | -157 | | exchange rate | | | | | | | | | | differences | | | | | | | | | -------------------------------------------------------------------------------- | EBITDA | | | 499 | 483 | 1 220 | 1 203 | 2 478 | 2 495 | -------------------------------------------------------------------------------- | Paid net | | | | | | | | | | financial | | | | | | | | | | costs, taxes | | | | | | | | | -------------------------------------------------------------------------------- | and adjustments for | 61 | -103 | 187 | -262 | -374 | 75 | | non-cash and | | | | | | | | divestment items | | | | | | | -------------------------------------------------------------------------------- | Change in | | | 144 | 117 | 119 | 98 | -102 | -81 | | working | | | | | | | | | | capital | | | | | | | | | -------------------------------------------------------------------------------- | Capital | | | -171 | -215 | -351 | -379 | -1 | -990 | | expenditures | | | | | | | 018 | | -------------------------------------------------------------------------------- | Acquisitions | | | -4 | -1 | -54 | -773 | -1 | -524 | | | | | | | | | 243 | | -------------------------------------------------------------------------------- | Divestments | | | 11 | 1 | 23 | 5 | 115 | 133 | -------------------------------------------------------------------------------- | Change in | | | -13 | -20 | -32 | -50 | -136 | -118 | | interest-beari | | | | | | | | | | ng receivables | | | | | | | | | -------------------------------------------------------------------------------- | Dividends | | | -888 | -1 198 | -888 | -1 198 | -1 | -888 | | | | | | | | | 198 | | -------------------------------------------------------------------------------- | Other | | | -21 | -125 | -8 | -124 | -103 | 13 | | financing | | | | | | | | | | activities | | | | | | | | | -------------------------------------------------------------------------------- | Net cash flow | | | -382 | -1 061 | 216 | -1 480 | -1 | 115 | | (- increase in | | | | | | | 581 | | | net debt) | | | | | | | | | -------------------------------------------------------------------------------- | Loans in | | | - | -4 | - | 272 | 272 | 0 | | acquired | | | | | | | | | | companies | | | | | | | | | -------------------------------------------------------------------------------- | Fair value change of | -19 | 9 | -3 | 38 | 63 | 22 | | bonds and amortised | | | | | | | | cost valuation | | | | | | | -------------------------------------------------------------------------------- | Net debt end | | | 6 004 | 6 254 | 6 004 | 6 254 | 6 179 | 6 004 | | of period | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | KEY RATIOS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | | June | March | Dec 31 | Sept | June | March | Last | | | | 30 | 31 | 2008 | 30 | 30 | 31 | twelve | | | | 2009 | 2009 | | 2008 | 2008 | 2008 | months | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EBITDA, | | 1 220 | 721 | 2 478 | 1 735 | 1 203 | 720 | 2 495 | | MEUR | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings | | 0.78 | 0.46 | 1.74 | 1.10 | 0.78 | 0.51 | 1.74 | | per share | | | | | | | | | | (basic), | | | | | | | | | | EUR | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital | | 15 | 17 404 | 15 911 | 15 756 | 15 593 | 16 868 | 15 347 | | employed, | | 347 | | | | | | | | MEUR | | | | | | | | | -------------------------------------------------------------------------------- | Interest-b | | 6 004 | 5 634 | 6 179 | 6 520 | 6 254 | 5 228 | N/A | | earing net | | | | | | | | | | debt, MEUR | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Capital | 412 | 181 | 2 624 | 2 210 | 1 459 | 1 227 | 1 577 | | expenditure | | | | | | | | | and gross | | | | | | | | | investments in | | | | | | | | | shares, MEUR | | | | | | | | -------------------------------------------------------------------------------- | Capital | | 352 | 150 | 1 108 | 716 | 408 | 175 | 1 052 | | expenditur | | | | | | | | | | e, MEUR | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on | | 13.1 | 14.5 | 15.0 | 13.7 | 14.6 | 17.3 | 14.1 | | capital | | | | | | | | | | employed, | | | | | | | | | | % 1) | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on | | 17.4 | 19.6 | 18.7 | 15.7 | 17.2 | 21.0 | 19.9 | | shareholde | | | | | | | | | | rs' | | | | | | | | | | equity, % | | | | | | | | | | 1) | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net debt / | | 2.5 | 2.0 | 2.5 | 2.8 | 2.6 | 1.8 | 2.4 | | EBITDA 1) | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest | | 12.3 | 16.0 | 9.4 | 7.6 | 8.6 | 14.1 | 11.2 | | coverage | | | | | | | | | -------------------------------------------------------------------------------- | Interest | 10.5 | 12.9 | 8.6 | 7.1 | 8.1 | 13.8 | 9.7 | | coverage | | | | | | | | | including | | | | | | | | | capitalised | | | | | | | | | borrowing | | | | | | | | | costs | | | | | | | | -------------------------------------------------------------------------------- | Funds from | 38.9 | 45.1 | 34.1 | 27.1 | 30.1 | 42.9 | 42.8 | | operations/int | | | | | | | | | erest-bearing | | | | | | | | | net debt, % | | | | | | | | | 1) | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gearing, % | | 76 | 65 | 73 | 81 | 77 | 56 | N/A | -------------------------------------------------------------------------------- | Equity per | | 8.42 | 9.34 | 8.96 | 8.49 | 8.08 | 9.53 | N/A | | share, EUR | | | | | | | | | -------------------------------------------------------------------------------- | Equity-to- | | 41 | 40 | 41 | 39 | 39 | 44 | N/A | | assets | | | | | | | | | | ratio, % | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Average | | 14 | 14 644 | 14 077 | 13 585 | 12 603 | 8 356 | N/A | | number of | | 310 | | | | | | | | employees | | | | | | | | | -------------------------------------------------------------------------------- | Number of | | 13 | 14 267 | 15 579 | 15 785 | 16 069 | 15 689 | N/A | | employees | | 586 | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Average | | 888 | 888 | 887 | 887 | 887 | 887 | 887 | | number of | | 230 | 095 | 256 | 241 | 131 | 085 | 760 | | shares, 1 | | | | | | | | | | 000 shares | | | | | | | | | -------------------------------------------------------------------------------- | Diluted | 888 | 888 | 887 | 887 | 888 | 888 | 887 | | adjusted | 230 | 250 | 839 | 986 | 165 | 177 | 760 | | average number | | | | | | | | | of shares, 1 | | | | | | | | | 000 shares | | | | | | | | -------------------------------------------------------------------------------- | Number of | | 888 | 888 | 887 | 887 | 887 | 887 | N/A | | registered | | 367 | 166 | 638 | 517 | 191 | 123 | | | shares, 1 | | | | | | | | | | 000 shares | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Quarterly figures are annualised. | -------------------------------------------------------------------------------- | For definitions, see Note 24. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NOTES TO THE CONDENSED 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 2008. -------------------------------------------------------------------------------- | 2. ACCOUNTING POLICIES | -------------------------------------------------------------------------------- The same accounting policies and presentation have been followed in these condensed interim financial statements as were applied in the preparation of the Group's annual financial statements for the year ended 31 December 2008, except for the effects of the adoption of the standards described below: • IAS 23 (amendment) Borrowing costs The revised standard requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The option of immediately expensing those borrowing costs is removed. The adoption of the revised IAS 23 changed slightly Fortum's accounting policy for capitalising borrowing costs as previously only borrowings costs meeting determined criteria were capitalised. Fortum has applied the revised IAS 23 to qualifying assets for which capitalisation of borrowing costs commences on or after 1 January 2009. The change did not have a material effect on Q1-Q2 2009 reported results or financial position. • IAS 1 (revised) Presentation of financial statements IAS 1 (revised) changed the terminology and presentation of the income statement and the statement of changes in equity. The standard requires to separate changes in equity of an entity arising from transactions with owners from other changes in equity. The adoption of the standard had no impact on Fortum's reported results or financial position. -------------------------------------------------------------------------------- | 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 2008. -------------------------------------------------------------------------------- | 4. SEGMENT INFORMATION | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SALES | Q2 | Q2 | Q1-Q2 | Q1-Q2 | 2008 | Last | | MEUR | 2009 | 2008 | 2009 | 2008 | | twelve | | | | | | | | months | -------------------------------------------------------------------------------- | Power sales excluding | 711 | 809 | 1 598 | 1 568 | 3 291 | 3 321 | | indirect taxes | | | | | | | -------------------------------------------------------------------------------- | Heating sales | 239 | 267 | 727 | 662 | 1 298 | 1 363 | -------------------------------------------------------------------------------- | Network transmissions | 170 | 169 | 390 | 391 | 746 | 745 | -------------------------------------------------------------------------------- | Other sales | 74 | 77 | 111 | 141 | 301 | 271 | -------------------------------------------------------------------------------- | Total | 1 194 | 1 322 | 2 826 | 2 762 | 5 636 | 5 700 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SALES BY SEGMENT | Q2 | Q2 | Q1-Q2 | Q1-Q2 | 2008 | Last | | MEUR | 2009 | 2008 | 2009 | 2008 | | twelve | | | | | | | | months | -------------------------------------------------------------------------------- | Power Generation | 625 | 721 | 1 330 | 1 438 | 2 892 | 2 784 | -------------------------------------------------------------------------------- | - of which internal | 64 | 21 | 143 | 74 | 0 | 69 | -------------------------------------------------------------------------------- | Heat | 248 | 284 | 761 | 777 | 1 466 | 1 450 | -------------------------------------------------------------------------------- | - of which internal | 3 | 0 | 12 | 7 | 0 | 5 | -------------------------------------------------------------------------------- | Distribution | 176 | 180 | 405 | 412 | 789 | 782 | -------------------------------------------------------------------------------- | - of which internal | 3 | 2 | 4 | 5 | 10 | 9 | -------------------------------------------------------------------------------- | Markets | 298 | 411 | 767 | 930 | 1 922 | 1 759 | -------------------------------------------------------------------------------- | - of which internal | 8 | 34 | 30 | 66 | 177 | 141 | -------------------------------------------------------------------------------- | Russia | 136 | 152 | 320 | 152 | 489 | 657 | -------------------------------------------------------------------------------- | - of which internal | 0 | - | 0 | - | 0 | 0 | -------------------------------------------------------------------------------- | Other | 19 | 21 | 37 | 41 | 83 | 79 | -------------------------------------------------------------------------------- | - of which internal | 18 | 21 | 35 | 41 | 82 | 76 | -------------------------------------------------------------------------------- | Netting of Nord Pool | -212 | -369 | -570 | -795 | -1 736 | -1 511 | | transactions 1) | | | | | | | -------------------------------------------------------------------------------- | Eliminations | -96 | -78 | -224 | -193 | -269 | -300 | -------------------------------------------------------------------------------- | Total | 1 194 | 1 322 | 2 826 | 2 762 | 5 636 | 5 700 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Sales and purchases with Nord Pool 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 | Q2 | Q2 | Q1-Q2 | Q1-Q2 | 2008 | Last | | SEGMENT | 2009 | 2008 | 2009 | 2008 | | twelve | | MEUR | | | | | | months | -------------------------------------------------------------------------------- | Power Generation | 304 | 260 | 727 | 691 | 1 599 | 1 635 | -------------------------------------------------------------------------------- | Heat | 39 | 37 | 152 | 167 | 307 | 292 | -------------------------------------------------------------------------------- | Distribution | 54 | 51 | 135 | 137 | 248 | 246 | -------------------------------------------------------------------------------- | Markets | 7 | 31 | -4 | 11 | -35 | -50 | -------------------------------------------------------------------------------- | Russia | -16 | -33 | -11 | -33 | -91 | -69 | -------------------------------------------------------------------------------- | Other | -13 | 2 | -25 | -16 | -65 | -74 | -------------------------------------------------------------------------------- | Total | 375 | 348 | 974 | 957 | 1 963 | 1 980 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | COMPARABLE | | Q2 | Q2 | Q1-Q2 | Q1-Q2 | 2008 | Last | | OPERATING PROFIT | | 2009 | 2008 | 2009 | 2008 | | twelve | | BY SEGMENT | | | | | | | months | | MEUR | | | | | | | | -------------------------------------------------------------------------------- | Power | | | 346 | 384 | 765 | 779 | 1 528 | 1 514 | | Generation | | | | | | | | | -------------------------------------------------------------------------------- | Heat | | | 26 | 27 | 138 | 148 | 250 | 240 | -------------------------------------------------------------------------------- | Distribution | | | 54 | 49 | 135 | 136 | 248 | 247 | -------------------------------------------------------------------------------- | Markets | | | 6 | -15 | 4 | -25 | -33 | -4 | -------------------------------------------------------------------------------- | Russia | | | -16 | -33 | -11 | -33 | -92 | -70 | -------------------------------------------------------------------------------- | Other | | | -16 | -9 | -29 | -21 | -56 | -64 | -------------------------------------------------------------------------------- | Comparable | | | 400 | 403 | 1 002 | 984 | 1 845 | 1 863 | | operating | | | | | | | | | | profit | | | | | | | | | -------------------------------------------------------------------------------- | Non-recurring | | | 10 | 0 | 14 | 2 | 85 | 97 | | items | | | | | | | | | -------------------------------------------------------------------------------- | Other items | | | -35 | -55 | -42 | -29 | 33 | 20 | | effecting | | | | | | | | | | comparability | | | | | | | | | -------------------------------------------------------------------------------- | Operating | | | 375 | 348 | 974 | 957 | 1 963 | 1 980 | | profit | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NON-RECURRING ITEMS | Q2 | Q2 | Q1-Q2 | Q1-Q2 | 2008 | Last | | BY SEGMENT | 2009 | 2008 | 2009 | 2008 | | twelve | | MEUR | | | | | | months | -------------------------------------------------------------------------------- | Power Generation | 1 | 0 | 5 | 0 | 18 | 23 | -------------------------------------------------------------------------------- | Heat | 9 | 0 | 9 | 2 | 64 | 71 | -------------------------------------------------------------------------------- | Distribution | 0 | 0 | 0 | 0 | 2 | 2 | -------------------------------------------------------------------------------- | Markets | 0 | 0 | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Russia | 0 | 0 | 0 | 0 | 1 | 1 | -------------------------------------------------------------------------------- | Other | 0 | 0 | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Total | 10 | 0 | 14 | 2 | 85 | 97 | -------------------------------------------------------------------------------- Non-recurring items mainly include capital gains and losses. -------------------------------------------------------------------------------- | OTHER ITEMS EFFECTING | Q2 | Q2 | Q1-Q2 | Q1-Q2 | 2008 | Last | | COMPARABILITY BY SEGMENT | 2009 | 2008 | 2009 | 2008 | | twelve | | MEUR | | | | | | months | -------------------------------------------------------------------------------- | Power | | | -43 | -124 | -43 | -88 | 53 | 98 | | Generation 1) | | | | | | | | | -------------------------------------------------------------------------------- | Heat | | | 4 | 10 | 5 | 17 | -7 | -19 | -------------------------------------------------------------------------------- | Distribution | | | 0 | 2 | 0 | 1 | -2 | -3 | -------------------------------------------------------------------------------- | Markets | | | 1 | 46 | -8 | 36 | -2 | -46 | -------------------------------------------------------------------------------- | Russia | | | 0 | 0 | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Other | | | 3 | 11 | 4 | 5 | -9 | -10 | -------------------------------------------------------------------------------- | Total | | | -35 | -55 | -42 | -29 | 33 | 20 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Including effects | -10 | -8 | -21 | -17 | -19 | -23 | | from the accounting of | | | | | | | | Fortum's part of the | | | | | | | | Finnish State Nuclear | | | | | | | | Waste Management Fund | | | | | | | | with (EUR million): | | | | | | | -------------------------------------------------------------------------------- Other items effecting comparability mainly include effects from financial derivatives hedging future cash-flows where hedge accounting is not applied according to IAS 39. In Power Generation segment there are also effects from the accounting of Fortum's part of the Finnish State Nuclear Waste Management Fund where the asset in the balance sheet cannot exceed the related liabilities according to IFRIC interpretation 5. -------------------------------------------------------------------------------- | DEPRECIATION, | Q2 2009 | Q2 | Q1-Q2 | Q1-Q2 | 2008 | Last | | AMORTISATION AND | | 2008 | 2009 | 2008 | | twelve | | IMPAIRMENT CHARGES BY | | | | | | months | | SEGMENT | | | | | | | | MEUR | | | | | | | -------------------------------------------------------------------------------- | Power | | | 22 | 25 | 45 | 49 | 97 | 93 | | Generation | | | | | | | | | -------------------------------------------------------------------------------- | Heat | | | 38 | 41 | 76 | 83 | 169 | 162 | -------------------------------------------------------------------------------- | Distribution | | | 41 | 42 | 80 | 83 | 165 | 162 | -------------------------------------------------------------------------------- | Markets | | | 2 | 2 | 3 | 4 | 7 | 6 | -------------------------------------------------------------------------------- | Russia | | | 18 | 22 | 37 | 22 | 67 | 82 | -------------------------------------------------------------------------------- | Other | | | 3 | 3 | 5 | 5 | 10 | 10 | -------------------------------------------------------------------------------- | Total | | | 124 | 135 | 246 | 246 | 515 | 515 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHARE OF PROFIT/LOSS IN | Q2 | Q2 | Q1-Q2 | Q1-Q2 | 2008 | Last | | ASSOCIATES AND JOINT | 2009 | 2008 | 2009 | 2008 | | twelv | | VENTURES BY SEGMENT | | | | | | e | | MEUR | | | | | | month | | | | | | | | s | -------------------------------------------------------------------------------- | Power Generation | | | -5 | 1 | -11 | -7 | 26 | 22 | | 1), 2) | | | | | | | | | -------------------------------------------------------------------------------- | Heat | | | 7 | 1 | 12 | 8 | 12 | 16 | -------------------------------------------------------------------------------- | Distribution | | | 5 | 1 | 9 | 11 | 16 | 14 | -------------------------------------------------------------------------------- | Markets | | | 1 | 1 | 1 | 1 | 5 | 5 | -------------------------------------------------------------------------------- | Russia | | | 5 | 18 | 5 | 18 | 19 | 6 | -------------------------------------------------------------------------------- | Other | | | 16 | 14 | -20 | 39 | 48 | -11 | -------------------------------------------------------------------------------- | Total | | | 29 | 36 | -4 | 70 | 126 | 52 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Including effects | -3 | -4 | -6 | -7 | 9 | 10 | | from the accounting of | | | | | | | | Fortum's associates part | | | | | | | | of Finnish and Swedish | | | | | | | | Nuclear Waste Management | | | | | | | | Funds with (EUR | | | | | | | | million): | | | | | | | -------------------------------------------------------------------------------- | 2) 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 | June 30 | June 30 | Dec 31 | | VENTURES BY SEGMENT | 2009 | 2008 | 2008 | | MEUR | | | | -------------------------------------------------------------------------------- | Power Generation | | | | 864 | 802 | 818 | -------------------------------------------------------------------------------- | Heat | | | | 166 | 157 | 160 | -------------------------------------------------------------------------------- | Distribution | | | | 218 | 242 | 210 | -------------------------------------------------------------------------------- | Markets | | | | 12 | 8 | 12 | -------------------------------------------------------------------------------- | Russia | | | | 405 | 481 | 429 | -------------------------------------------------------------------------------- | Other | | | | 440 | 771 | 483 | -------------------------------------------------------------------------------- | Total | | | | 2 105 | 2 461 | 2 112 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CAPITAL EXPENDITURE | Q2 | Q2 | Q1-Q2 | Q1-Q2 | 2008 | Last | | BY SEGMENT | 2009 | 2008 | 2009 | 2008 | | twelve | | MEUR | | | | | | months | -------------------------------------------------------------------------------- | Power Generation | 23 | 32 | 44 | 50 | 134 | 128 | -------------------------------------------------------------------------------- | Heat | 97 | 78 | 167 | 169 | 408 | 406 | -------------------------------------------------------------------------------- | Distribution 1) | 43 | 72 | 79 | 133 | 296 | 242 | -------------------------------------------------------------------------------- | Markets | 0 | 2 | 1 | 3 | 3 | 1 | -------------------------------------------------------------------------------- | Russia | 38 | 45 | 59 | 45 | 256 | 270 | -------------------------------------------------------------------------------- | Other | 1 | 4 | 2 | 8 | 11 | 5 | -------------------------------------------------------------------------------- | Total | 202 | 233 | 352 | 408 | 1 108 | 1 052 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Of which capitalised | 5 | 6 | 14 | 7 | 21 | 28 | | borrowing costs | | | | | | | -------------------------------------------------------------------------------- 1) Decrease is mainly due to the finalisation of installation of new meters in Fortum's network areas in Sweden (Automatic Meter Management, AMM). -------------------------------------------------------------------------------- | GROSS | | Q2 | Q2 2008 | Q1-Q2 | Q1-Q2 | 2008 | Last | | INVESTMENTS | | 2009 | | 2009 | 2008 | | twelve | | IN SHARES BY | | | | | | | months | | SEGMENT | | | | | | | | | MEUR | | | | | | | | -------------------------------------------------------------------------------- | Power | | | 25 | 0 | 56 | 0 | 0 | 56 | | Generation | | | | | | | | | -------------------------------------------------------------------------------- | Heat | | | 0 | 1 | 0 | 22 | 23 | 1 | -------------------------------------------------------------------------------- | Distribution | | | 0 | 0 | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Markets | | | 0 | 0 | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Russia | | | 3 | -2 | 3 | 1 029 | 1 492 | 466 | -------------------------------------------------------------------------------- | Other | | | 1 | 0 | 1 | 0 | 1 | 2 | -------------------------------------------------------------------------------- | Total | | | 29 | -1 | 60 | 1 051 | 1 516 | 525 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gross investments in shares in Q1-Q2 2009 comprise mainly of Hafslund | | Infratek ASA shares acquired in January 2009 and additional share capital to | | be paid to Teollisuuden Voima Oyj. See Note 13. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NET ASSETS BY SEGMENT | June 30 | June 30 | Dec 31 | | MEUR | 2009 | 2008 | 2008 | -------------------------------------------------------------------------------- | Power Generation | 5 384 | 5 524 | 5 331 | -------------------------------------------------------------------------------- | Heat | 3 503 | 3 599 | 3 468 | -------------------------------------------------------------------------------- | Distribution | 3 106 | 3 330 | 3 032 | -------------------------------------------------------------------------------- | Markets | 106 | 236 | 188 | -------------------------------------------------------------------------------- | Russia | 2 049 | 2 329 | 2 205 | -------------------------------------------------------------------------------- | Other | 433 | 825 | 796 | -------------------------------------------------------------------------------- | Total | 14 581 | 15 843 | 15 020 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | RETURN ON NET ASSETS BY SEGMENT | Last | Dec 31 | | % | twelve | 2008 | | | months | | -------------------------------------------------------------------------------- | Power Generation | 30.7 | 29.6 | -------------------------------------------------------------------------------- | Heat | 8.7 | 8.9 | -------------------------------------------------------------------------------- | Distribution | 8.2 | 8.1 | -------------------------------------------------------------------------------- | Markets | -25.4 | -14.0 | -------------------------------------------------------------------------------- | Russia | -2.8 | -3.7 | -------------------------------------------------------------------------------- | Other | -12.0 | -1.8 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | COMPARABLE RETURN ON NET ASSETS BY | Last | Dec 31 | | SEGMENT | twelve | 2008 | | % | months | | -------------------------------------------------------------------------------- | Power Generation | | 28.3 | 28.0 | -------------------------------------------------------------------------------- | Heat | | 7.3 | 7.3 | -------------------------------------------------------------------------------- | Distribution | | 8.2 | 8.2 | -------------------------------------------------------------------------------- | Markets | | 0.7 | -15.3 | -------------------------------------------------------------------------------- | Russia | | -2.9 | -3.8 | -------------------------------------------------------------------------------- | Other | | -19.5 | -1.7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 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 | June 30 | June 30 | Dec 31 | | MEUR | 2009 | 2008 | 2008 | -------------------------------------------------------------------------------- | Power Generation | 5 927 | 6 026 | 5 732 | -------------------------------------------------------------------------------- | Heat | 3 838 | 3 976 | 3 923 | -------------------------------------------------------------------------------- | Distribution | 3 553 | 3 815 | 3 546 | -------------------------------------------------------------------------------- | Markets | 474 | 794 | 663 | -------------------------------------------------------------------------------- | Russia | 2 313 | 2 589 | 2 476 | -------------------------------------------------------------------------------- | Other | 602 | 920 | 997 | -------------------------------------------------------------------------------- | Assets included in Net | 16 707 | 18 120 | 17 337 | | assets | | | | -------------------------------------------------------------------------------- | Interest-bearing | 837 | 823 | 799 | | receivables | | | | -------------------------------------------------------------------------------- | Deferred taxes | 4 | 42 | 2 | -------------------------------------------------------------------------------- | Other assets | 485 | 299 | 819 | -------------------------------------------------------------------------------- | Liquid funds | 1 440 | 1 247 | 1 321 | -------------------------------------------------------------------------------- | Total assets | 19 473 | 20 531 | 20 278 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | LIABILITIES BY SEGMENTS | June 30 | June 30 | Dec 31 | | MEUR | 2009 | 2008 | 2008 | -------------------------------------------------------------------------------- | Power Generation | 543 | 502 | 401 | -------------------------------------------------------------------------------- | Heat | 335 | 377 | 455 | -------------------------------------------------------------------------------- | Distribution | 447 | 485 | 514 | -------------------------------------------------------------------------------- | Markets | 368 | 558 | 475 | -------------------------------------------------------------------------------- | Russia | 264 | 260 | 271 | -------------------------------------------------------------------------------- | Other | 169 | 95 | 201 | -------------------------------------------------------------------------------- | Liabilities included in | 2 126 | 2 277 | 2 317 | | Net assets | | | | -------------------------------------------------------------------------------- | Deferred tax liabilities | 1 762 | 1 808 | 1 851 | -------------------------------------------------------------------------------- | Other liabilities | 238 | 853 | 199 | -------------------------------------------------------------------------------- | Total liabilities | 4 126 | 4 938 | 4 367 | | included in Capital | | | | | employed | | | | -------------------------------------------------------------------------------- | Interest-bearing | 7 444 | 7 501 | 7 500 | | liabilities | | | | -------------------------------------------------------------------------------- | Total equity | 7 903 | 8 092 | 8 411 | -------------------------------------------------------------------------------- | Total equity and | 19 473 | 20 531 | 20 278 | | liabilities | | | | -------------------------------------------------------------------------------- Other assets and Other liabilities not included in segment's Net assets consists mainly of income tax receivables and liabilities, accrued interest expenses, derivative receivables and liabilities qualifying as hedges and receivables and liabilities for interest rate derivatives. -------------------------------------------------------------------------------- | NUMBER OF EMPLOYEES | June 30 | June 30 | Dec 31 | | | 2009 | 2008 | 2008 | -------------------------------------------------------------------------------- | Power Generation | 3 435 | 3 790 | 3 520 | -------------------------------------------------------------------------------- | Heat | 2 197 | 2 517 | 2 318 | -------------------------------------------------------------------------------- | Distribution | 1 169 | 1 221 | 1 336 | -------------------------------------------------------------------------------- | Markets | 637 | 817 | 635 | -------------------------------------------------------------------------------- | Russia | 5 619 | 7 188 | 7 262 | -------------------------------------------------------------------------------- | Other | 529 | 536 | 508 | -------------------------------------------------------------------------------- | Total | 13 586 | 16 069 | 15 579 | -------------------------------------------------------------------------------- Number of employees in Fortum decreased during the first half of 2009 mainly due to outsourcing of certain infrastructure functions from Power Generation's Service Business unit and Distribution segment to Hafslund Infratek ASA in Q1 2009 as well as restructuring in Russia segment. Within the Group, a number of people working in OAO Fortum were transferred to Power Generation's Service Business unit in Q1 2009. -------------------------------------------------------------------------------- | AVERAGE NUMBER OF | Q1-Q2 | Q1-Q2 | 2008 | | EMPLOYEES | 2009 | 2008 | | -------------------------------------------------------------------------------- | Power Generation | 3 488 | 3 585 | 3 591 | -------------------------------------------------------------------------------- | Heat | 2 232 | 2 390 | 2 422 | -------------------------------------------------------------------------------- | Distribution | 1 202 | 1 166 | 1 222 | -------------------------------------------------------------------------------- | Markets | 632 | 831 | 766 | -------------------------------------------------------------------------------- | Russia | 6 232 | 4 110 | 5 566 | -------------------------------------------------------------------------------- | Other | 524 | 521 | 510 | -------------------------------------------------------------------------------- | Total | 14 310 | 12 603 | 14 077 | -------------------------------------------------------------------------------- Average number of employees is based on a monthly average for the whole period in question. -------------------------------------------------------------------------------- | 5. QUARTERLY SEGMENT INFORMATION | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Extended quarterly information is available on Fortum's website | | www.fortum.com/investors/financial information. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | QUARTERLY SALES BY | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | | SEGMENTS | 2009 | 2009 | 2008 | 2008 | 2008 | 2008 | | MEUR | | | | | | | -------------------------------------------------------------------------------- | Power Generation | 625 | 705 | 736 | 718 | 721 | 717 | -------------------------------------------------------------------------------- | - of which internal | 64 | 79 | 5 | -79 | 21 | 53 | -------------------------------------------------------------------------------- | Heat | 248 | 513 | 463 | 226 | 284 | 493 | -------------------------------------------------------------------------------- | - of which internal | 3 | 9 | -3 | -4 | - | 7 | -------------------------------------------------------------------------------- | Distribution | 176 | 229 | 206 | 171 | 180 | 232 | -------------------------------------------------------------------------------- | - of which internal | 3 | 1 | 3 | 2 | 2 | 3 | -------------------------------------------------------------------------------- | Markets | 298 | 469 | 531 | 461 | 411 | 519 | -------------------------------------------------------------------------------- | - of which internal | 8 | 22 | 50 | 61 | 34 | 32 | -------------------------------------------------------------------------------- | Russia | 136 | 184 | 197 | 140 | 152 | - | -------------------------------------------------------------------------------- | - of which internal | 0 | 0 | - | - | - | - | -------------------------------------------------------------------------------- | Other | 19 | 18 | 21 | 21 | 21 | 20 | -------------------------------------------------------------------------------- | - of which internal | 18 | 17 | 21 | 20 | 21 | 20 | -------------------------------------------------------------------------------- | Netting of Nord Pool | -212 | -358 | -476 | -465 | -369 | -426 | | transactions | | | | | | | -------------------------------------------------------------------------------- | Eliminations | -96 | -128 | -76 | 0 | -78 | -115 | -------------------------------------------------------------------------------- | Total | 1 194 | 1 632 | 1 602 | 1 272 | 1 322 | 1 440 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | QUARTERLY OPERATING | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | | PROFIT BY SEGMENTS | 2009 | 2009 | 2008 | 2008 | 2008 | 2008 | | MEUR | | | | | | | -------------------------------------------------------------------------------- | Power | | 304 | 423 | 470 | 438 | 260 | 431 | | Generation | | | | | | | | -------------------------------------------------------------------------------- | Heat | | 39 | 113 | 155 | -15 | 37 | 130 | -------------------------------------------------------------------------------- | Distribution | | 54 | 81 | 61 | 50 | 51 | 86 | -------------------------------------------------------------------------------- | Markets | | 7 | -11 | -29 | -17 | 31 | -20 | -------------------------------------------------------------------------------- | Russia | | -16 | 5 | -19 | -39 | -33 | - | -------------------------------------------------------------------------------- | Other | | -13 | -12 | -27 | -22 | 2 | -18 | -------------------------------------------------------------------------------- | Total | | 375 | 599 | 611 | 395 | 348 | 609 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | QUARTERLY COMPARABLE | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | | OPERATING PROFIT BY | 2009 | 2009 | 2008 | 2008 | 2008 | 2008 | | SEGMENTS | | | | | | | | MEUR | | | | | | | -------------------------------------------------------------------------------- | Power | | | 346 | 419 | 378 | 371 | 384 | 395 | | Generation | | | | | | | | | -------------------------------------------------------------------------------- | Heat | | | 26 | 112 | 109 | -7 | 27 | 121 | -------------------------------------------------------------------------------- | Distribution | | | 54 | 81 | 63 | 49 | 49 | 87 | -------------------------------------------------------------------------------- | Markets | | | 6 | -2 | 0 | -8 | -15 | -10 | -------------------------------------------------------------------------------- | Russia | | | -16 | 5 | -20 | -39 | -33 | - | -------------------------------------------------------------------------------- | Other | | | -16 | -13 | -22 | -13 | -9 | -12 | -------------------------------------------------------------------------------- | Total | | | 400 | 602 | 508 | 353 | 403 | 581 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | QUARTERLY | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | | NON-RECURRING ITEMS BY | 2009 | 2009 | 2008 | 2008 | 2008 | 2008 | | SEGMENT | | | | | | | | MEUR | | | | | | | -------------------------------------------------------------------------------- | Power Generation | | 1 | 4 | 7 | 11 | 0 | 0 | -------------------------------------------------------------------------------- | Heat | | 9 | 0 | 60 | 2 | 0 | 2 | -------------------------------------------------------------------------------- | Distribution | | 0 | 0 | 0 | 2 | 0 | 0 | -------------------------------------------------------------------------------- | Markets | | 0 | 0 | - | 0 | 0 | - | -------------------------------------------------------------------------------- | Russia | | 0 | 0 | 1 | 0 | - | - | -------------------------------------------------------------------------------- | Other | | 0 | 0 | 0 | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Total | | 10 | 4 | 68 | 15 | 0 | 2 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | QUARTERLY OTHER ITEMS | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | | EFFECTING COMPARABILITY | 2009 | 2009 | 2008 | 2008 | 2008 | 2008 | | MEUR | | | | | | | -------------------------------------------------------------------------------- | Power | | | -43 | 0 | 85 | 56 | -124 | 36 | | Generation 1) | | | | | | | | | -------------------------------------------------------------------------------- | Heat | | | 4 | 1 | -14 | -10 | 10 | 7 | -------------------------------------------------------------------------------- | Distribution | | | 0 | 0 | -2 | -1 | 2 | -1 | -------------------------------------------------------------------------------- | Markets | | | 1 | -9 | -29 | -9 | 46 | -10 | -------------------------------------------------------------------------------- | Russia | | | 0 | - | - | - | - | - | -------------------------------------------------------------------------------- | Other | | | 3 | 1 | -5 | -9 | 11 | -6 | -------------------------------------------------------------------------------- | Total | | | -35 | -7 | 35 | 27 | -55 | 26 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Including effects | -10 | -11 | -12 | 10 | -8 | -9 | | from the accounting of | | | | | | | | Fortum's part of the | | | | | | | | Finnish State Nuclear | | | | | | | | Waste 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 those disclosed in the consolidated financial statements as at and for the year ended 31 December 2008. 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 | | June 30 | June 30 | Dec 31 | | | | 2009 | 2008 | 2008 | -------------------------------------------------------------------------------- | Interest and currency | Notion | Net | Notiona | Net | Notion | Net | | derivatives | al | fair | l value | fair | al | fair | | | value | value | | value | value | value | -------------------------------------------------------------------------------- | Interest rate swaps | 3 406 | -15 | 2 726 | -11 | 2 993 | -12 | -------------------------------------------------------------------------------- | Forward foreign | 5 111 | 23 | 4 509 | 20 | 4 521 | 370 | | exchange contracts | | | | | | | -------------------------------------------------------------------------------- | Forward rate | 139 | 0 | 686 | 0 | 230 | 0 | | agreements | | | | | | | -------------------------------------------------------------------------------- | Interest rate and | 1 669 | 164 | 2 898 | 69 | 2 240 | 218 | | currency swaps | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Electricity | Volume | Net | Volume | Net | Volume | Net | | derivatives | | fair | | fair | | fair | | | | value | | value | | value | -------------------------------------------------------------------------------- | | TWh | MEUR | TWh | MEUR | TWh | MEUR | -------------------------------------------------------------------------------- | Sales swaps | 176 | 1 107 | 138 | -2 270 | 165 | 2 102 | -------------------------------------------------------------------------------- | Purchase swaps | 118 | -911 | 107 | 1 782 | 123 | -1 692 | -------------------------------------------------------------------------------- | Purchased options | 11 | -12 | 2 | 13 | 2 | 0 | -------------------------------------------------------------------------------- | Written options | 13 | 2 | 6 | -30 | 4 | -14 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Oil derivatives | Volume | Net | Volume | Net | Volume | Net | | | | fair | | fair | | fair | | | | value | | value | | value | -------------------------------------------------------------------------------- | | 1000 | MEUR | 1000 | MEUR | 1000 | MEUR | | | bbl | | bbl | | bbl | | -------------------------------------------------------------------------------- | Sales swaps and | 1 274 | -5 | 657 | -21 | 1 047 | -14 | | futures | | | | | | | -------------------------------------------------------------------------------- | Purchase swaps and | 1 437 | 0 | 857 | 28 | 1 230 | 11 | | futures | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Coal derivatives | Volume | Net | Volume | Net | Volume | Net | | | | fair | | fair | | fair | | | | value | | value | | value | -------------------------------------------------------------------------------- | | kt | MEUR | kt | MEUR | kt | MEUR | -------------------------------------------------------------------------------- | Sold | 795 | 2 | 330 | -16 | 276 | 7 | -------------------------------------------------------------------------------- | Bought | 1 108 | -10 | 635 | 33 | 641 | -16 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CO2 emission allowance | Volume | Net | Volume | Net | Volume | Net | | derivatives | | fair | | fair | | fair | | | | value | | value | | value | -------------------------------------------------------------------------------- | | ktCO2 | MEUR | ktCO2 | MEUR | ktCO2 | MEUR | -------------------------------------------------------------------------------- | Sold | 1 620 | 5 | 4 507 | -40 | 592 | 4 | -------------------------------------------------------------------------------- | Bought | 1 886 | -5 | 4 502 | 41 | 592 | -4 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Share derivatives | Notion | Net | Notiona | Net | Notion | Net | | | al | fair | l value | fair | al | fair | | | value | value | | value | value | value | -------------------------------------------------------------------------------- | | MEUR | MEUR | MEUR | MEUR | MEUR | MEUR | -------------------------------------------------------------------------------- | Share forwards 1) | 24 | 16 | 35 | 53 | 37 | 24 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 1) Cash-settled share forwards are used as a hedging instrument for Fortum | | Group's performance share arrangement. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 7. ACQUISITIONS AND DISPOSALS | -------------------------------------------------------------------------------- Gross investments in subsidiary shares during January to June 2009 amounted to EUR 4 million (2008: 1,051). During June 2009 OAO Fortum (former TGC-10) has redeemed additional shares, approximately 0.2 %. At the end of June 2009, Fortum's ownership in OAO Fortum was 94.4% including treasury shares and shares held by OAO Fortum's 100% owned subsidiary. Final purchase price allocation for the acquisition of OAO Fortum The initial purchase price allocation as of 31 March 2008 has been finalised during Q1 2009 as permitted by International Financial Reporting Standards. No material changes have been made compared to the information disclosed in the Consolidated Financial statements for 2008. The initial purchase price allocation calculated in roubles have been translated into euros by using the exchange rate from the acquisition date. The redeemed shares in 2009 are not included in the purchase consideration disclosed in the table below. -------------------------------------------------------------------------------- | MEUR | | | | OAO Fortum | -------------------------------------------------------------------------------- | Purchase consideration | | | | | -------------------------------------------------------------------------------- | Cash paid | | | | 2 533 | -------------------------------------------------------------------------------- | Direct costs relating to | | | | 8 | | the acquisition | | | | | -------------------------------------------------------------------------------- | Total purchase | | | | 2 541 | | consideration | | | | | -------------------------------------------------------------------------------- | Fair value of the | | | | 2 211 | | acquired assets | | | | | -------------------------------------------------------------------------------- | Translation differences | | | | -9 | -------------------------------------------------------------------------------- | Goodwill | | | | 339 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | Acquired | Allocated | Total | -------------------------------------------------------------------------------- | Fair value of the | | Book Values | Fair Values | Value | | acquired net | | | | | | identifiable assets: | | | | | -------------------------------------------------------------------------------- | Cash and cash | | 1 321 | | 1 321 | | equivalents | | | | | -------------------------------------------------------------------------------- | Property, plant and | | 625 | 1 005 | 1 630 | | equipment | | | | | -------------------------------------------------------------------------------- | Other assets | | 182 | | 182 | -------------------------------------------------------------------------------- | Non-interest-bearing | | -107 | -388 | -495 | | liabilities | | | | | -------------------------------------------------------------------------------- | Interest-bearing | | -272 | | -272 | | liabilities | | | | | -------------------------------------------------------------------------------- | Net identifiable assets | | 1 749 | 617 | 2 366 | -------------------------------------------------------------------------------- | Minority interests | | -117 | -38 | -155 | -------------------------------------------------------------------------------- | Total | | 1 632 | 579 | 2 211 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gross investment in OAO | | | | | | Fortum: | | | | | -------------------------------------------------------------------------------- | Purchase consideration | | | | 2 541 | | settled in cash | | | | | -------------------------------------------------------------------------------- | Cash and cash | | | | 1 321 | | equivalents in | | | | | | subsidiaries acquired | | | | | -------------------------------------------------------------------------------- | Cash outflow on | | | | 1 220 | | acquisition | | | | | -------------------------------------------------------------------------------- | Interest-bearing debt in | | | | 272 | | subsidiaries acquired | | | | | -------------------------------------------------------------------------------- | Total | | | | 1 492 | -------------------------------------------------------------------------------- Disposals In January 2009 Fortum and (Norwegian) Hafslund Infratek ASA combined their businesses of construction and operating of infrastructure in Sweden, Finland and Norway. In the transaction Fortum received 33% ownership in the new combined company. For more information see Note 13. -------------------------------------------------------------------------------- | 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 | Jan-June | Jan-Mar | Jan-De | Jan-Sep | Jan-Jun | Jan-Mar | | | 2009 | ch | c | t | e | ch | | | | 2009 | 2008 | 2008 | 2008 | 2008 | -------------------------------------------------------------------------------- | Sweden (SEK) | 10.8633 | 10.9679 | 9.6647 | 9.4559 | 9.4088 | 9.4265 | -------------------------------------------------------------------------------- | Norway (NOK) | 9.0049 | 9.1034 | 8.2605 | 8.0187 | 7.9843 | 7.9998 | -------------------------------------------------------------------------------- | Poland (PLN) | 4.4764 | 4.5018 | 3.5328 | 3.4402 | 3.4926 | 3.5676 | -------------------------------------------------------------------------------- | Russia (RUB) | 44.1087 | 44.3928 | 36.690 | 36.5670 | 36.6348 | 36.4660 | | | | | 5 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Balance sheet | June 30 | March | Dec 31 | Sept 30 | June 30 | March | | date rate | 2009 | 31 | 2008 | 2008 | 2008 | 31 | | | | 2009 | | | | 2008 | -------------------------------------------------------------------------------- | Sweden (SEK) | 10.8125 | 10.9400 | 10.870 | 9.7943 | 9.4703 | 9.3970 | | | | | 0 | | | | -------------------------------------------------------------------------------- | Norway (NOK) | 9.0180 | 8.8900 | 9.7500 | 8.3330 | 8.0090 | 8.0510 | -------------------------------------------------------------------------------- | Poland (PLN) | 4.4520 | 4.6885 | 4.1535 | 3.3967 | 3.3513 | 3.5220 | -------------------------------------------------------------------------------- | Russia (RUB) | 43.8810 | 45.0320 | 41.283 | 36.4095 | 36.9477 | 37.1130 | | | | | 0 | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 9. INCOME TAX EXPENSE | -------------------------------------------------------------------------------- Tax rate according to the income statement for the period January to June 2009 was 19.3% (20.6%). The tax rate for the period is lower than in the comparable period 2008 mainly due to the impact of the lower tax rates in Sweden and Russia. 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 Fortums share of profits after tax. The tax rate for the period calculated excluding the share of profits from associates and joint ventures was 19.3% (22.3%). The tax rate is impacted by the lowering of corporate tax rates in Sweden and Russia. The tax rate for the full year 2008, excluding the impact of tax rate changes, non taxable capital gains and share of profits of associated companies was 22.1%. -------------------------------------------------------------------------------- | 10. EARNINGS PER SHARE | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | The calculation of basic and diluted earnings per share is based on the | | following data: | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | | | Q1-Q2 | Q1-Q2 | 2008 | | | | 2009 | 2008 | | -------------------------------------------------------------------------------- | Earnings (MEUR): | | | | | -------------------------------------------------------------------------------- | Profit attributable to | | 695 | 695 | 1 542 | | the owners of the parent | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Number of shares | | | | | | (thousands): | | | | | -------------------------------------------------------------------------------- | Weighted average number of shares | | | | | for the purpose of | | | | -------------------------------------------------------------------------------- | basic earnings per share | | 888 230 | 887 131 | 887 256 | -------------------------------------------------------------------------------- | Effect of dilutive share | | - | 1 034 | 583 | | options | | | | | -------------------------------------------------------------------------------- | Weighted average number of shares | | | | | for the purpose of | | | | -------------------------------------------------------------------------------- | diluted earnings per | | 888 230 | 888 165 | 887 839 | | share | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 11. DIVIDEND PER SHARE | -------------------------------------------------------------------------------- A dividend in respect of 2008 of EUR 1.00 per share, amounting to EUR 888 million based on the number of shares registered as of 14 April 2009, was decided at the Annual General Meeting on 7 April 2009. The dividend was paid on 21 April 2009. The Annual General Meeting on 1 April 2008 decided to distribute a dividend in respect of 2007 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 was EUR 1,198 million based on the amount of shares registered as of 4 April 2008. The dividend was paid out 11 April 2008. -------------------------------------------------------------------------------- | 12. CHANGES IN INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | | | June 30 | June 30 | Dec 31 | | | | | 2009 | 2008 | 2008 | -------------------------------------------------------------------------------- | Opening balance | | | 12 533 | 11 428 | 11 428 | -------------------------------------------------------------------------------- | Increase through acquisition | | - | 1 999 | 1 980 | | of subsidiary companies | | | | | -------------------------------------------------------------------------------- | Capital expenditures | | | 352 | 408 | 1 108 | -------------------------------------------------------------------------------- | Changes of nuclear | | | -1 | - | 22 | | asset retirement cost | | | | | | -------------------------------------------------------------------------------- | Changes of emission | | | -13 | - | 14 | | rights | | | | | | -------------------------------------------------------------------------------- | Disposals | | | -3 | -3 | -14 | -------------------------------------------------------------------------------- | Depreciation, | | | -246 | -246 | -515 | | amortisation and | | | | | | | impairment | | | | | | -------------------------------------------------------------------------------- | Sale of subsidiary | | | -5 | - | -31 | | companies | | | | | | -------------------------------------------------------------------------------- | Translation | | | -82 | -42 | -1 459 | | differences and other | | | | | | | adjustments | | | | | | -------------------------------------------------------------------------------- | Closing balance | | | 12 535 | 13 544 | 12 533 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Goodwill included in | | | 280 | 333 | 298 | | Closing balance | | | | | | -------------------------------------------------------------------------------- | Change in goodwill during the period | -18 | -9 | -43 | | due to translation differences | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 13. CHANGES IN PARTICIPATIONS IN ASSOCIATES AND JOINT VENTURES | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | | | | | | June | June | Dec | | | | | | | | 30 | 30 | 31 | | | | | | | | 2009 | 2008 | 2008 | -------------------------------------------------------------------------------- | Opening balance | | | | | | 2 112 | 2 853 | 2 853 | -------------------------------------------------------------------------------- | Share of profits | | | | | | -4 | 70 | 126 | | of associates and | | | | | | | | | | joint ventures | | | | | | | | | -------------------------------------------------------------------------------- | Investments | | | | | | 31 | 7 | 7 | -------------------------------------------------------------------------------- | Share issues and | | | | | | 25 | 1 | 1 | | shareholders' | | | | | | | | | | contributions | | | | | | | | | -------------------------------------------------------------------------------- | Increase through | | | | | - | 35 | 36 | | acquisition of | | | | | | | | | subsidiary companies | | | | | | | | -------------------------------------------------------------------------------- | Reclassifications | | | | | | -5 | -1 | -3 | -------------------------------------------------------------------------------- | Divestments | | | | | | - | - | -13 | -------------------------------------------------------------------------------- | Dividend income | | | | | | -22 | -46 | -51 | | received | | | | | | | | | -------------------------------------------------------------------------------- | OCI items | | | | | | -39 | -429 | -628 | | associated | | | | | | | | | | companies | | | | | | | | | -------------------------------------------------------------------------------- | Translation | | | | | | 7 | -29 | -216 | | differences | | | | | | | | | -------------------------------------------------------------------------------- | Closing balance | | | | | | 2 105 | 2 461 | 2 112 | -------------------------------------------------------------------------------- Share of profits from associates and joint ventures Share of profits from associates in Q2 2009 was EUR 29 million (2008: 36) of which Fortum's share of profits in Hafslund ASA was EUR 18 million (2008: 14). For the period from January to June 2009 Fortum's share of profits from associates was -4 million (2008: 70). Fortum's share of profits for the full year 2008 amounted to EUR 126 million, of which Hafslund represented EUR 48 million. 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 updated interim information is not normally available. Hafslund published their interim report for Q2 2009 on 16 July 2009. The effect of Hafslund's Q2 is not included in Fortum's Q2 results. Share of profits in Q2 includes EUR 5 million (2008: 18) regarding TGC-1. Fortum accounts for the share of profits once a year in Q2 based on the published IFRS Financial Statements for the previous year. Investments and share issues Fortum and (Norwegian) Hafslund Infratek ASA combined their businesses of construction and operating of infrastructure in Sweden, Finland and Norway at the beginning of 2009. Fortum received newly issued shares in Hafslund Infratek ASA and 33% ownership in the new combined company. Teollisuuden Voima Oyj's (TVO) Annual General meeting decided to raise company's share capital by EUR 100 million of which Fortum's share is EUR 25 million. Increase in Fortum's participation in TVO was booked in Q2 2009. Dividends received During Q2 2009 Fortum has received EUR 20 million (2008: 40) in dividends from associates of which EUR 17 million (2008: 25) was received from Hafslund. OCI items in associated companies OCI items in associated companies mainly represents the fair value change in Hafslund's shareholding in REC. In Q2 the fair value change of the REC shares was EUR -24 million (2008: -28) and the fair value change since year-end was EUR -28 million (2008: -437). The cumulative fair value change in Fortum's equity, based on the remaining number of shares reported by Hafslund, was EUR 98 million at 30 June 2009 which represents a decrease with EUR 24 million during Q2 2009. -------------------------------------------------------------------------------- | 14. SHARE CAPITAL | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | | | Numbe | Share | Number | Share | Number | Share | | | | | r of | capita | of | capital | of | capita | | | | | share | l | shares | June 30 | shares | l | | | | | s | June | June 30 | 2008 | Dec 31 | Dec 31 | | | | | June | 30 | 2008 | | 2008 | 2008 | | | | | 30 | 2009 | | | | | | | | | 2009 | | | | | | -------------------------------------------------------------------------------- | Registered | | | 887 | 3 044 | 886 683 | 3 040 | 886 | 3 040 | | shares at 1 | | | 638 | | 058 | | 683 | | | January | | | 080 | | | | 058 | | -------------------------------------------------------------------------------- | Shares subscribed | 728 | 2 | 508 385 | 2 | 955 | 4 | | with options and | 965 | | | | 022 | | | registered at the end | | | | | | | | of the period | | | | | | | -------------------------------------------------------------------------------- | Registered | | | 888 | 3 046 | 887 191 | 3 042 | 887 | 3 044 | | shares at the | | | 367 | | 443 | | 638 | | | end of the | | | 045 | | | | 080 | | | period | | | | | | | | | -------------------------------------------------------------------------------- | Unregistered | | | - | | - | | 56 000 | | | shares | | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | There are no unexercised stock options remaining on June 30 2009. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 15. INTEREST-BEARING LIABILITIES | -------------------------------------------------------------------------------- During the first quarter Fortum Oyj issued a dual-tranche Euro Bond of EUR 750 million due 2014 and EUR 750 million due 2019 under Fortum's Euro Medium-Term Note Program. The amount of re-borrowing from the Finnish nuclear waste fund was increased by EUR 66 million to EUR 774 million. During the first quarter EUR 300 million under the EUR 1.5 billion 5 year revolving Credit Facility and a OAO Fortum (former TGC-10) RUB 5,000 million bond (EUR 112 million) were repaid. During the second quarter Fortum completed three major long term financing transactions, a dual-tranche Private Placement of NOK 500 million due 2014 and NOK 500 million due 2017 (totally EUR 110 million) as well as two bilateral loan transactions; a 10 year loan of EUR 240 million from Varma Mutual Insurance Company and a 10 year loan of EUR 250 million from the European Investment Bank. The proceeds for these new financing arrangements will be used for financing of Fortum's investment program as well as for general corporate purposes. During the quarter Fortum Oyj repaid maturing bonds issued in 2006 of SEK 2,500 million (EUR 231 million) as well as amortized EUR 1,000 million of a 3 year EUR 2,000 million Term-loan and all drawn amounts (EUR 300 million) under the EUR 1,500 million 5 year Revolving Credit Facility. Both facilities raised in March 2008 in connection with the acquisition of OAO Fortum (TGC-10). In June OAO Fortum repaid RUB 2,937 million (EUR 67 million) of local bond financing. Fortum Oyj also uses 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 314 million. Fortum is a shareholder in Teollisuuden Voima Oyj (TVO), a nuclear generation company operating two reactors in Olkiluoto, Finland. TVO is in the process of building a third reactor, Olkiluoto 3, which is planned to start operating in 2012. In late March, TVO's shareholders signed a EUR 300 million subordinated shareholder's loan commitment to TVO. The facility will be available until the end of 2013. Fortum's share of this commitment is maximum EUR 75 million. The reported interest-bearing debt decreased during the quarter by EUR 1,231 million from EUR 8,675 million to EUR 7,444 million. Total liquid funds decreased by EUR 1,601 million from EUR 3,041 million to EUR 1,440 million. Liquid funds included deposits and cash held by OAO Fortum amounting to EUR 753 million. Dividends both in 2009, EUR 888 million, and in 2008, EUR 1,198 million, were paid in Q2 the respective year. -------------------------------------------------------------------------------- | 16. NUCLEAR RELATED | | | | | | | | ASSETS AND LIABILITIES | | | | | | | -------------------------------------------------------------------------------- | MEUR | | | | June 30 | June | Dec 31 | | | | | | 2009 | 30 | 2008 | | | | | | | 2008 | | -------------------------------------------------------------------------------- | Carrying values in the | | | | | | | | balance sheet: | | | | | | | -------------------------------------------------------------------------------- | Nuclear provisions | | | | 577 | 528 | 566 | -------------------------------------------------------------------------------- | Share in the State Nuclear | | | 577 | 528 | 566 | | Waste Management Fund | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Legal liability and actual share of the | | | | | State Nuclear Waste Management Fund: | | | | -------------------------------------------------------------------------------- | Liability for nuclear waste management | 895 | 816 | 895 | | according to the Nuclear Energy Act | | | | -------------------------------------------------------------------------------- | Funding obligation | | | | 767 | 698 | 767 | | target | | | | | | | -------------------------------------------------------------------------------- | Fortum's share of the State | | | 767 | 698 | 728 | | Nuclear Waste Management Fund | | | | | | -------------------------------------------------------------------------------- Nuclear related provisions The liability regarding the Loviisa nuclear power plant is calculated according to the Nuclear Energy Act and was decided by Ministry of Employment and the Economy in January 2009. The liability is based on an updated cost estimate, which is done every year, and on a technical plan, which is made every third year and was updated last time in 2007. The legal liability at 30 June 2009, based on the decision by the Ministry of Employment and the Economy and calculated according to the Nuclear Energy Act, amounted to EUR 895 million. The provision in the balance sheet related to nuclear waste management is based on cash flows for future costs which uses the same basis as the legal liability. The carrying value of the nuclear provision, calculated according to IAS37, have increased by EUR 11 million compared to 31 December 2008, totaling EUR 577 million as of 30 June 2009. The main reason for the difference between the carrying value of the provision and the legal liability is the fact that the legal liability is not discounted to net present value. 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 funding obligation target based on the decided legal liability and approved periodising of the payments to the Fund is EUR 767 million. The Fund is from an IFRS perspective overfunded with EUR 190 million, since Fortum's share of the Fund as of 30 June 2009 is EUR 767 million and the carrying value in the balance sheet is EUR 577 million. Effects to comparable operating profit and 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 in 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. Fortum had an effect from this adjustment in Q2 2009 of EUR -10 million, compared to EUR -9 million in Q2 2008 . The cumulative effect 2009 was EUR -21 million compared to EUR -17 million in 2008. Associated companies Fortum has minority shareholdings in associated Finnish and Swedish nuclear production companies. Fortum has for these companies accounted for its share of the effects from nuclear related assets and provisions according to Fortum accounting principles. -------------------------------------------------------------------------------- | 17. PLEDGED ASSETS | | | | | -------------------------------------------------------------------------------- | MEUR | | June 30 | June 30 | Dec 31 | | | | 2009 | 2008 | 2008 | -------------------------------------------------------------------------------- | On own behalf | | | | | -------------------------------------------------------------------------------- | For debt | | | | | -------------------------------------------------------------------------------- | Pledges | | 292 | 228 | 229 | -------------------------------------------------------------------------------- | Real estate mortgages | | 137 | 138 | 137 | -------------------------------------------------------------------------------- | For other commitments | | | | | -------------------------------------------------------------------------------- | Real estate mortgages | | 220 | 206 | 206 | -------------------------------------------------------------------------------- | On behalf of associated | | | | | companies and joint ventures | | | | -------------------------------------------------------------------------------- | Pledges and real estate | | 2 | 3 | 2 | | mortgages | | | | | -------------------------------------------------------------------------------- Pledged assets for debt Finnish participants in the State Nuclear Waste Management Fund are allowed to borrow from the Fund. During Q1 2009 Fortum increased its borrowing from the Fund (see Note 15) and has therefore pledged additional Kemijoki shares as security. The carrying value of the pledged shares amount to EUR 263 million (208 million) as of 30 June 2009 (and 31 December 2008 respectively). Pledged assets for other commitments Fortum has given real estate mortgages in Naantali and Inkoo power plants in Finland, total value of EUR 219 million, as a security to the State Nuclear Waste Management Fund for the uncovered part of the legal liability and unexpected events relating to future costs. -------------------------------------------------------------------------------- | 18. OPERATING LEASE COMMITMENTS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | June 30 | June 30 | Dec 31 | | | 2009 | 2008 | 2008 | -------------------------------------------------------------------------------- | Due within a year | 22 | 25 | 28 | -------------------------------------------------------------------------------- | Due after one year and | 40 | 39 | 47 | | within five years | | | | -------------------------------------------------------------------------------- | Due after five years | 81 | 93 | 86 | -------------------------------------------------------------------------------- | Total | 143 | 157 | 161 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | The decrease in operating lease commitments from the end of 2008 is mainly | | due to the sale of infrastructure companies and exchange rate differences. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 19. CAPITAL COMMITMENTS | | | | -------------------------------------------------------------------------------- | MEUR | June 30 | June 30 | Dec 31 | | | 2009 | 2008 | 2008 | -------------------------------------------------------------------------------- | Property, plant and | 1 120 | 483 | 1 321 | | equipment | | | | -------------------------------------------------------------------------------- | Intangible assets | 7 | 9 | 7 | -------------------------------------------------------------------------------- | Total | 1 127 | 492 | 1 328 | -------------------------------------------------------------------------------- The decrease in capital commitments from 31 December 2008 is mainly due to the finalisation of the automatic meter reading investment in Distribution Sweden, the decline of the Russian rouble and that the investments regarding the CHP plants being built in the Heat business in Finland, Estonia and Poland are proceeding. -------------------------------------------------------------------------------- | 20. CONTINGENT | | | | | | LIABILITIES | | | | | -------------------------------------------------------------------------------- | MEUR | | June 30 | June 30 | Dec 31 | | | | 2009 | 2008 | 2008 | -------------------------------------------------------------------------------- | On own behalf | | | | | -------------------------------------------------------------------------------- | Other contingent | | 340 | 849 | 362 | | liabilities | | | | | -------------------------------------------------------------------------------- | On behalf of associated | | | | | companies and joint ventures | | | | -------------------------------------------------------------------------------- | Guarantees | | 565 | 638 | 565 | -------------------------------------------------------------------------------- | Other contingent | | 125 | 125 | 125 | | liabilities | | | | | -------------------------------------------------------------------------------- | On behalf of others | | | | | -------------------------------------------------------------------------------- | Guarantees | | 13 | 10 | 10 | -------------------------------------------------------------------------------- | Other contingent | | 1 | 1 | 1 | | liabilities | | | | | -------------------------------------------------------------------------------- Guarantees on own behalf Other contingent liabilities on own behalf amounts to EUR 340 million. The decrease of EUR 22 million from 31 December 2008 refers mainly to changes in contractual obligations relating to Fortum's Service business in the UK and exchange rate changes. 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. The guarantee given on behalf of Teollisuuden Voima Oyj (TVO) to the Finnish fund has decreased from EUR 70 million at year-end 2008 to EUR 67 million during Q2 2009. 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. -------------------------------------------------------------------------------- | 21. LEGAL ACTIONS AND OFFICIAL PROCEEDINGS | -------------------------------------------------------------------------------- Group companies No material changes in legal actions and official proceedings has occurred during the reporting period. Associated companies In Finland, Fortum is participating in the country's fifth nuclear power plant unit, Olkiluoto 3, through the shareholding in Teollisuuden Voima Oyj (TVO) with an approximately 25% share representing some 400 MW in capacity. In January 2009 the constructor TVO disclosed information, confirmed by the plant supplier, consortium AREVA-Siemens, that the construction of the unit is delayed and the unit is estimated to start up in summer 2012. In June 2009, TVO informed that the arbitration filed in December by AREVA-Siemens, concerning Olkiluoto 3 delay and related costs amounted to EUR 1.0 billion. In response, TVO has filed in April 2009 a counter-claim for costs and losses that TVO is incurring due to the delay and other defaults on the part of the supplier. The value of TVO's counterclaim is currently approximately EUR 1.4 billion. -------------------------------------------------------------------------------- | 22. RELATED PARTY TRANSACTIONS | -------------------------------------------------------------------------------- Related party transactions are described in the annual financial statements as of the year ended 31 December 2008. No material changes have occurred during the period. The Finnish State owned 50.80% of the shares in Fortum 31 December 2008. After the changes in amount of shares during 2009 due to the share subscriptions under the last option scheme 2002B, the Finnish state owned 50.76% of the Company's shares at 30 June 2009. -------------------------------------------------------------------------------- | ASSOCIATED COMPANY TRANSACTIONS | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | MEUR | Q2 2009 | Q2 2008 | 2008 | -------------------------------------------------------------------------------- | Sales to associated | 48 | 65 | 113 | | companies | | | | -------------------------------------------------------------------------------- | Interest on associated | 17 | 17 | 34 | | company loan receivables | | | | -------------------------------------------------------------------------------- | Purchases from associated | 275 | 272 | 563 | | companies | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ASSOCIATED COMPANY | | | | | BALANCES | | | | -------------------------------------------------------------------------------- | MEUR | Q2 2009 | Q2 2008 | Dec 31 | | | | | 2008 | -------------------------------------------------------------------------------- | Long-term | 736 | 682 | 659 | | interest-bearing loan | | | | | receivables | | | | -------------------------------------------------------------------------------- | Trade receivables | 6 | 15 | 24 | -------------------------------------------------------------------------------- | Other receivables | 6 | 7 | 5 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Long-term loan payables | 199 | 184 | 184 | -------------------------------------------------------------------------------- | Trade payables | 31 | 10 | 26 | -------------------------------------------------------------------------------- | Other payables | 4 | 38 | 18 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TRANSACTIONS AND BALANCES WITH JOINT VENTURES | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Transactions and balances with joint ventures as at and for the period ended | | 30 June 2009 are not material for the Group. | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 23. EVENTS AFTER THE BALANCE SHEET DATE | -------------------------------------------------------------------------------- OAO Fortum discontinued its operation and maintenance contract with the city of Tyumen for operation of municipal heat networks as of 1 July 2009. This will reduce the number of OAO Fortum employees by approximately 750. -------------------------------------------------------------------------------- | 24. DEFINITION OF KEY FIGURES | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | EBITDA (Earnings | = | Operating profit + | | | | | before interest, | | Depreciation, amortisation | | | | | taxes, | | | | | | | depreciation | | | | | | -------------------------------------------------------------------------------- | and amortisation) | | and impairment | | | | | | | | charges | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Comparable | = | Operating profit - non-recurring items - | | | operating profit | | other items effecting comparability | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Non-recurring | = | Mainly capital gains | | | | | | items | | and losses | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Other items | = | Includes effects from financial derivatives | | effecting | | hedging future cash-flows where hedge accounting | | comparability | | 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 in 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 | | | | | | | | | requirements | | | | | | | | | . | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gross investments | = | Investments in subsidiary shares, shares in | | in shares | | associated companies and other shares in | | | | 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 for | | | | | x | | shareholders' | | the year | | | | | 10 | | equity, % | | | | | | | 0 | -------------------------------------------------------------------------------- | | | Total equity | | | | | | | | | average | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on capital | = | Profit before taxes + interest and | | x | | employed, % | | other financial expenses | | 10 | | | | | | 0 | -------------------------------------------------------------------------------- | | | Capital employed | | | | | | | | average | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Return on net | = | Operating profit + Share of profit (loss) in | x | | assets, % | | associated companies and joint ventures | 10 | | | | | 0 | -------------------------------------------------------------------------------- | | | Net assets | | | | | | | | | average | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Comparable return | = | Comparable operating profit + Share of | x | | on net assets, % | | profit (loss) in associated companies | 10 | | | | | 0 | -------------------------------------------------------------------------------- | | | 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 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | 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 | | - liquid funds | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Gearing, % | = | Interest-bearing net | | | | x | | | | debt | | | | 10 | | | | | | | | 0 | -------------------------------------------------------------------------------- | | | Total equity | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity-to-assets | = | Total equity including | | | x | | ratio, % | | minority interest | | | 10 | | | | | | | 0 | -------------------------------------------------------------------------------- | | | Total assets | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Net debt / EBITDA | = | Interest-bearing net | | | | | | | | debt | | | | | -------------------------------------------------------------------------------- | | | Operating profit + Depreciation, | | | | | amortisation and impairment charges | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest coverage | = | Operating | | | | | | | | | profit | | | | | | -------------------------------------------------------------------------------- | | | Net interest | | | | | | | | | expenses | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest coverage | = | Operating | | | | | | | including | | profit | | | | | | | capitalised | | | | | | | | | borrowing costs | | | | | | | | -------------------------------------------------------------------------------- | | | Net interest expenses-capitalised | | | | | | borrowing costs | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share | = | Profit for the period - | | | | | (EPS) | | minority interest | | | | -------------------------------------------------------------------------------- | | | Average number of shares | | | | | | | during the period | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Equity per share | = | Shareholder' | | | | | | | | | s equity | | | | | | -------------------------------------------------------------------------------- | | | Number of shares excluding treasury shares | | | | | at the end of the period | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Last twelve months | = | Twelve months preceding the | | | | | | | reporting date | | | | --------------------------------------------------------------------------------