Stable performance in turbulent times
Fortum Corporation
Financial statements release 2009
3 February 2010 at 9:00 EET
Stable performance in turbulent times
- Comparable operating profit EUR 1,888 (1,845) million
- Earnings per share EUR 1.48 (1.74)
- Strong cash flow at EUR 2,264 (2,002) million
- 91% (92%) of power generated by Fortum in the EU was CO2-free
- Progress in Russia on track
- Fortum's Board proposes a dividend of EUR 1.00 per share
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| Key figures | IV/09 | IV/08 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Sales, EUR million | 1,563 | 1,602 | 5,435 | 5,636 |
--------------------------------------------------------------------------------
| Operating profit, EUR million | 522 | 611 | 1,782 | 1,963 |
--------------------------------------------------------------------------------
| Comparable operating profit, | 570 | 508 | 1,888 | 1,845 |
| EUR million | | | | |
--------------------------------------------------------------------------------
| Profit before taxes, EUR | 505 | 605 | 1,636 | 1,850 |
| million | | | | |
--------------------------------------------------------------------------------
| Earnings per share, EUR | 0.46 | 0.64 | 1.48 | 1.74 |
--------------------------------------------------------------------------------
| Net cash from operating | 396 | 562 | 2,264 | 2,002 |
| activities, EUR million | | | | |
--------------------------------------------------------------------------------
| Shareholders' equity per | | | 9.04 | 8.96 |
| share, EUR | | | | |
--------------------------------------------------------------------------------
| Interest-bearing net debt | | | 5,969 | 6,179 |
| (at | | | | |
| end of period), EUR million | | | | |
--------------------------------------------------------------------------------
| Average number of shares, | | | 888,230 | 887,256 |
| 1,000s | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Key financial ratios | 2009 | 2008 |
--------------------------------------------------------------------------------
| Return on capital employed, % | 12.1 | 15.0 |
--------------------------------------------------------------------------------
| Return on shareholders' equity, % | 16.0 | 18.7 |
--------------------------------------------------------------------------------
| Net debt/EBITDA | 2.6 | 2.5 |
--------------------------------------------------------------------------------
Fortum's President and CEO Tapio Kuula in connection with the financial
statements release:
“Fortum was, once again, able to weather the turbulent times and deliver good
results. We improved our operational performance from a year ago and Fortum's
comparable operating profit increased clearly in the last quarter of the year.
Thanks to successful and consistent hedging, Fortum's achieved power price in
Power Division clearly exceeded the Nord Pool system average in 2009. However,
there was a disappointment in the Power Division as well: nuclear volumes were
clearly below normal as the planned schedules of upgrade projects were exceeded
at co-owned nuclear plants in Sweden. In total, Fortum lost approximately 4
terawatt-hours (TWh) of nuclear volume in Sweden during 2009 due to the
unplanned outages.
I am especially delighted that the Markets business area has turned positive.
Our restructuring and cost savings actions have proven a success.
The Russia Division is on track to reach the targeted EUR 100 million efficiency
improvements in 2011. This is no small achievement, bearing in mind difficult
economic conditions. Furthermore, the market price for power has been increasing
from quarter to another during 2009, indicating that the worst is likely to be
over also in Russian economy.
Power sector reform in Russia progressed as planned: The share of wholesale
power sold on the competitive market in Russia was increased from 30% to 50% at
the beginning of July 2009. The share increased further to 60% from the
beginning of 2010.
The overall Nordic power consumption decreased about 5% in 2009. The colder than
usual weather and the pick-up in industrial activity improved the power demand
outlook towards the end of the year. We currently expect Nordic demand for power
to recover back to the 2008 level by 2012-2014.
I want to express my gratitude to all Fortum's employees on continued good work.
We all have shown that we can do a lot to improve our performance. I believe
that the ongoing work to improve efficiency, accountability and simplicity in
our operations will create a good platform for the future."
Financial results
October-December
Group sales were EUR 1,563 (1,602) million. Group operating profit totalled EUR
522 (611) million. Comparable operating profit totalled EUR 570 (508) million.
The fourth-quarter reported operating profit was affected by negative
mark-to-market accounting effects (IAS 39) from the decrease in the value of
Fortum's power derivatives portfolio and in the value of the currency
derivatives used for hedging the power derivatives portfolio. The difference
between nonrecurring items, mark-to-market effects and nuclear fund adjustments
between the fourth quarters of 2009 and 2008 was EUR -151 million, explaining
the decline in the fourth quarter reported operating profit.
The fourth-quarter net profit decreased EUR 176 million from a year ago.
Earnings per share were EUR 0.46 (0.64), 28% lower than in the fourth quarter of
last year. The decline stems from lower reported operating profit in 2009 and
from the positive one-time tax effects booked mainly in the fourth-quarter
results in 2008.
Sales by division
--------------------------------------------------------------------------------
| EUR million | IV/09 | IV/08 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Power | 679 | 736 | 2,596 | 2,892 |
--------------------------------------------------------------------------------
| Heat | 457 | 463 | 1,394 | 1,466 |
--------------------------------------------------------------------------------
| Distribution* | 227 | 206 | 800 | 789 |
--------------------------------------------------------------------------------
| Markets* | 410 | 531 | 1,449 | 1,922 |
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| Russia | 194 | 197 | 623 | 489 |
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| Other | 19 | 21 | 74 | 83 |
--------------------------------------------------------------------------------
| Netting of Nord Pool | -325 | -476 | -1,095 | -1,736 |
| transactions | | | | |
--------------------------------------------------------------------------------
| Eliminations | -98 | -76 | -406 | -269 |
--------------------------------------------------------------------------------
| Total | 1,563 | 1,602 | 5,435 | 5,636 |
--------------------------------------------------------------------------------
* Part of the Electricity Solutions and Distribution Division
Comparable operating profit by division
--------------------------------------------------------------------------------
| EUR million | IV/09 | IV/08 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Power | 394 | 378 | 1,469 | 1,528 |
--------------------------------------------------------------------------------
| Heat | 103 | 109 | 227 | 250 |
--------------------------------------------------------------------------------
| Distribution* | 80 | 63 | 262 | 248 |
--------------------------------------------------------------------------------
| Markets* | 11 | 0 | 22 | -33 |
--------------------------------------------------------------------------------
| Russia | 7 | -20 | -26 | -92 |
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| Other | -25 | -22 | -66 | -56 |
--------------------------------------------------------------------------------
| Total | 570 | 508 | 1,888 | 1,845 |
--------------------------------------------------------------------------------
* Part of the Electricity Solutions and Distribution Division
Operating profit by division
--------------------------------------------------------------------------------
| EUR million | IV/09 | IV/08 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Power | 330 | 470 | 1,335 | 1,599 |
--------------------------------------------------------------------------------
| Heat | 108 | 155 | 248 | 307 |
--------------------------------------------------------------------------------
| Distribution* | 81 | 61 | 263 | 248 |
--------------------------------------------------------------------------------
| Markets* | 19 | -29 | 22 | -35 |
--------------------------------------------------------------------------------
| Russia | 7 | -19 | -26 | -91 |
--------------------------------------------------------------------------------
| Other | -23 | -27 | -60 | -65 |
--------------------------------------------------------------------------------
| Total | 522 | 611 | 1,782 | 1,963 |
--------------------------------------------------------------------------------
* Part of the Electricity Solutions and Distribution Division
January-December
Group sales were EUR 5,435 (5,636) million. Group operating profit totalled EUR
1,782 (1,963) million. Comparable operating profit totalled EUR 1,888 (1,845)
million.
The difference in nonrecurring items, mark-to-market effects and nuclear fund
adjustments between 2009 and 2008 was EUR -224 million, explaining the decline
in the reported operating profit.
The average SEK rate in 2009 decreased by approximately 9% compared to 2008. The
translation effect caused by the lower average SEK rate was approximately EUR
-96 million in Fortum's 2009 comparable operating profit compared to last year.
The share of profits/losses of associates and joint ventures was EUR 21 million,
EUR 105 million lower than in the previous year. This was mainly due to the
lower contribution from Hafslund ASA. Hafslund's effect was EUR 52 million of
the decrease.
Fortum's liquidity remained strong. Liquid funds at the end of the year 2009
amounted to EUR 890 million and undrawn committed credit facilities were
approximately EUR 2.9 billion.
The Group's net financial expenses decreased to EUR 167 (239) million. The
decrease is attributable to lower interest expenses. The change in fair value of
financial instruments was EUR -1 (-11) million.
Profit before taxes was EUR 1,636 (1,850) million.
Taxes for the period totalled EUR 285 (254) million. The tax rate according to
the income statement was 17.4% (13.7%).
The profit for the period was EUR 1,351 (1,596) million. Fortum's earnings per
share were EUR 1.48 (1.74). As reported a year ago, the 2008 net earnings
included EUR 184 million from one-time tax effects and non-recurring sales
gains, mostly booked into the fourth-quarter results in 2008.
Non-controlling (minority) interests accounted for EUR 39 (54) 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 12.1% for the year (15.0%), and return on
shareholders' equity was 16.0% (18.7%).
Fortum's net debt to EBITDA for 2009 stood at 2.6 (2.5).
Market conditions
NORDIC COUNTRIES
According to preliminary statistics, the Nordic countries consumed 103 (104) TWh
of electricity in the fourth quarter of 2009, about 1% less than in the previous
year. During 2009, the Nordic countries consumed about 372 (393) TWh. The
decrease is mainly due to the drop in industrial consumption as a result of the
recession. According to Fortum's estimate, Nordic industrial consumption
decreased by close to 15% compared to 2008.
The price of coal remained relatively stable during the fourth quarter of 2009,
continuing on a clearly lower level compared to one year before. The average
market price of coal (ICE Rotterdam) during the fourth quarter was USD 76 (101)
per tonne. The average market price of coal (ICE Rotterdam) during the year 2009
was USD 70 (146) per tonne. During the fourth quarter, the average market price
of CO2 emission allowances (EUA) was EUR 13.8 per tonne CO2. The corresponding
price for CO2 emission allowances for 2009 was EUR 13.4 per tonne CO2.
Year 2009 started with the Nordic water reservoirs 5 TWh below the long-term
average. At the end of the fourth quarter, the Nordic water reservoirs were 7
TWh below the long-term average and 2 TWh below the corresponding level last
year.
During the fourth quarter, the average system spot price for power in Nord Pool
was EUR 36.6 (50.8) per megawatt-hour (MWh). The Finnish and Swedish area prices
were above the system price level, at EUR 40.0 (52.4) per MWh in Finland and EUR
40.0 (52.8) per MWh in Sweden.
In 2009, the average system spot price for power in Nord Pool was EUR 35.0
(44.7) per MWh. The average Finnish area price was EUR 37.0 (51.0), and the
Swedish area price was EUR 37.0 (51.1) per MWh.
In Germany, the average spot price for the fourth quarter of 2009 was higher
than in the Nordic area and was EUR 38.8 (68.0) per MWh. This resulted in a net
export from the Nordic area to Germany. In Germany, the average spot price for
the year 2009 was EUR 38.9 (65.8) per MWh. Market coupling between Denmark and
Germany was relaunched on 9 November 2009.
RUSSIA
According to preliminary statistics, electricity demand in Russia in 2009
decreased by approximately 5.0% compared to 2008.
Russia's overall electricity demand in the fourth quarter of 2009 increased by
approximately 1.3% compared to the corresponding period of the previous year.
OAO Fortum operates in the Tyumen and Chelyabinsk areas, which belong to the
Urals price zone. Electricity consumption in 2009 in the Urals region decreased
by about 6% compared to the previous year. In the Tyumen area, where industrial
production is dominated by oil and gas industries, electricity demand in 2009
was at the same level as in 2008. Electricity demand in the Chelyabinsk area,
which is dominated by the metals industry, is showing signs of picking up: The
year-on-year increase in the fourth quarter was approximately 6% while demand
decreased by approximately 12% in the third quarter.
The average electricity spot price, excluding capacity price, in the European
and Urals part of Russia increased to RUB 728 per MWh from RUB 597 per MWh in
the fourth quarter of 2008. The average electricity spot price, excluding
capacity price, in the European and Urals part of Russia in 2009 was 666 (708)
RUB per MWh. 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 50% to 60%
at the beginning of 2010.
Total power and heat generation figures
Fortum's total power generation during 2009 was 65.3 (64.2) TWh, of which 48.1
(51.6) TWh was in the Nordic countries, representing 13% (13%) of the total
Nordic electricity consumption. Fortum's total heat production during 2009 was
48.8 (40.3) TWh, of which 19.0 (20.8) TWh was in the Nordic countries.
The increase in the total power and heat generation volumes is due to the
inclusion of OAO Fortum, which has been consolidated from the beginning of April
2008.
The decrease in Nordic hydropower generation was mainly due to lower
precipitation and inflows into Nordic water reservoirs during the first half of
2009. Year 2008 was an exceptionally good hydro year. The decrease in Fortum's
Nordic nuclear power generation is mainly due to the long upgrade outage in
Oskarshamn 3 in 2009.
At year end, Fortum's total power generating capacity was 13,940 (13,573)
megawatts (MW), of which 10,981 (10,643) MW was in the Nordic countries. At year
end, Fortum's total heat production capacity was 24,330 (24,263) MW, of which
8,414 (8,448) MW was in the Nordic countries.
Fortum's total power and heat generation figures are presented below. In
addition, the respective figures by division are presented in the division
reviews.
--------------------------------------------------------------------------------
| Fortum's total power and heat | IV/09 | IV/08 | 2009 | 2008 |
| generation in the EU and | | | | |
| Norway, TWh | | | | |
--------------------------------------------------------------------------------
| Power generation | 13.1 | 13.1 | 49.3 | 52.6 |
--------------------------------------------------------------------------------
| Heat generation | 7.4 | 7.4 | 23.2 | 25.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Fortum's total power and heat | IV/09 | IV/08 | 2009 | 2008 |
| generation in Russia, TWh | | | | |
--------------------------------------------------------------------------------
| Power generation | 4.3 | 4.4 | 16.0 | 11.6 |
--------------------------------------------------------------------------------
| Heat generation | 8.4 | 8.1 | 25.6 | 15.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Fortum's own power generation | IV/09 | IV/08 | 2009 | 2008 |
| by source, TWh | | | | |
| total in the | | | | |
| Nordic countries | | | | |
--------------------------------------------------------------------------------
| Hydropower | 5.9 | 6.0 | 22.1 | 22.9 |
--------------------------------------------------------------------------------
| Nuclear power | 5.1 | 5.3 | 21.4 | 23.7 |
--------------------------------------------------------------------------------
| Thermal power | 1.8 | 1.6 | 4.6 | 5.0 |
--------------------------------------------------------------------------------
| Total | 12.8 | 12.9 | 48.1 | 51.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Fortum's own power generation | IV/09 | IV/08 | 2009 | 2008 |
| by source, %, total in the | | | | |
| Nordic countries | | | | |
--------------------------------------------------------------------------------
| Hydropower | 46 | 47 | 46 | 44 |
--------------------------------------------------------------------------------
| Nuclear power | 40 | 41 | 44 | 46 |
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| Thermal power | 14 | 12 | 10 | 10 |
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| Total | 100 | 100 | 100 | 100 |
--------------------------------------------------------------------------------
Total power and heat sales figures
Fortum's total power sales during 2009 were 75.7 (75.0) TWh, of which 54.9
(59.1) TWh were in the Nordic countries. This represents approximately 15% (15%)
of the estimated Nordic electricity consumption during 2009. Fortum's total heat
sales during 2009 were 50.6 (42.2) TWh, of which 18.0 (20.0) TWh were in the
Nordic countries.
--------------------------------------------------------------------------------
| Fortum's total electricity* and | IV/09 | IV/08 | 2009 | 2008 |
| heat sales in the EU and Norway, | | | | |
| EUR million | | | | |
--------------------------------------------------------------------------------
| Electricity sales | 768 | 771 | 2,802 | 2,959 |
--------------------------------------------------------------------------------
| Heat sales | 351 | 365 | 1,095 | 1,157 |
--------------------------------------------------------------------------------
* Nord Pool transactions are calculated as a net amount of hourly sales and
purchases at the Group level.
--------------------------------------------------------------------------------
| Fortum's total electricity and | IV/09 | IV/08 | 2009 | 2008 |
| heat sales in Russia, EUR | | | | |
| million | | | | |
--------------------------------------------------------------------------------
| Electricity sales | 109 | 115 | 390 | 332 |
--------------------------------------------------------------------------------
| Heat sales | 76 | 75 | 219 | 141 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Fortum's total electricity | IV/09 | IV/08 | 2009 | 2008 |
| sales* by area, TWh | | | | |
--------------------------------------------------------------------------------
| Finland | 7.1 | 7.7 | 26.1 | 28.7 |
--------------------------------------------------------------------------------
| Sweden | 6.8 | 6.7 | 26.9 | 28.5 |
--------------------------------------------------------------------------------
| Russia | 5.3 | 5.6 | 19.5 | 14.8 |
--------------------------------------------------------------------------------
| Other countries | 1.0 | 0.8 | 3.2 | 3.0 |
--------------------------------------------------------------------------------
| Total | 20.2 | 20.8 | 75.7 | 75.0 |
--------------------------------------------------------------------------------
* Nord Pool transactions are calculated as a net amount of hourly sales and
purchases at the Group level.
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| Fortum's total heat sales by | IV/09 | IV/08 | 2009 | 2008 |
| area, TWh | | | | |
--------------------------------------------------------------------------------
| Russia | 8.9 | 8.6 | 25.6 | 15.3 |
--------------------------------------------------------------------------------
| Finland | 2.7 | 3.1 | 8.0 | 10.8 |
--------------------------------------------------------------------------------
| Sweden | 3.2 | 3.0 | 9.8 | 9.1 |
--------------------------------------------------------------------------------
| Poland | 1.4 | 1.3 | 3.7 | 3.6 |
--------------------------------------------------------------------------------
| Other countries** | 1.0 | 1.0 | 3.5 | 3.4 |
--------------------------------------------------------------------------------
| Total | 17.2 | 17.0 | 50.6 | 42.2 |
--------------------------------------------------------------------------------
** Including the UK, which is reported in the Power Division, other sales.
Fortum's CO2 emissions
In 2009, approximately 91% (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 2009 amounted to 7.7 (7.2) million tonnes of CO2.
Fortum's total annual CO2 allowance allocation for its power and heat plants is
approximately 5.5 million tonnes per year during 2009-2012.
Fortum's target in the EU countries is to decrease its emissions in power
generation to less than 80 g/kWh by 2020 as a five-year average. In heat
production, Fortum aims at reducing the specific emissions in each country by at
least 10% from 2006 until 2020. Outside the EU, Fortum is committed to
increasing energy efficiency, thus reducing specific emissions.
--------------------------------------------------------------------------------
| Total CO2 emissions of Fortum | IV/09 | IV/08 | 2009 | 2008 |
| (million tonnes) | | | | |
--------------------------------------------------------------------------------
| Total emissions | 6.6 | 6.8 | 22.0 | 17.6 |
--------------------------------------------------------------------------------
| Emissions subject to ETS | 2.7 | 2.7 | 7.7 | 7.2 |
--------------------------------------------------------------------------------
| Free emissions allocation | - | - | 5.5 | 5.9 |
--------------------------------------------------------------------------------
| Emissions in Russia | 3.9 | 4.0 | 13.8 | 9.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Specific CO2 emissions of Fortum | 2009 | 2008 | 2007 |
| (g/kWh) | | | |
--------------------------------------------------------------------------------
| Specific emissions within ETS | 41 | 41 | 64 |
--------------------------------------------------------------------------------
FORTUM'S NEW BUSINESS STRUCTURE
In October 2009 Fortum restructured its organisation into four business
divisions and four staff functions in order to increase the organisation's
efficiency, performance accountability and simplicity.
The new business divisions are Power, Heat, Russia, and Electricity Solutions
and Distribution. The Electricity Solutions and Distribution (ESD) consists of
business areas Distribution and Markets. The reportable segments under IFRS have
been renamed correspondingly.
DIVISION REVIEWS
Power
The Power Division consists of Fortum's power generation, physical operation and
trading, operation, maintenance and development of power plants as well as
expert services for power producers.
--------------------------------------------------------------------------------
| EUR million | IV/09 | IV/08 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Sales | 679 | 736 | 2,596 | 2,892 |
--------------------------------------------------------------------------------
| - power sales | 637 | 638 | 2,414 | 2,566 |
--------------------------------------------------------------------------------
| - other sales | 42 | 98 | 182 | 326 |
--------------------------------------------------------------------------------
| Operating profit | 330 | 470 | 1,335 | 1,599 |
--------------------------------------------------------------------------------
| Comparable operating profit | 394 | 378 | 1,469 | 1,528 |
--------------------------------------------------------------------------------
| Net assets (at period-end) | | | 5,512 | 5,331 |
--------------------------------------------------------------------------------
| Return on net assets, % | | | 23.9 | 29.6 |
--------------------------------------------------------------------------------
| Comparable return on net assets, | | | 26.6 | 28.0 |
| % | | | | |
--------------------------------------------------------------------------------
| Gross investments | 34 | 49 | 154 | 134 |
--------------------------------------------------------------------------------
| Number of employees | | | 3,063 | 3,520 |
--------------------------------------------------------------------------------
The division's power generation during the fourth quarter of 2009 amounted to
11.1 (11.4) TWh in the Nordic countries.
In 2009, the division's power generation in the Nordic countries was 43.7 (46.9)
TWh. Approximately 97% (97%) of that was CO2-free.
The decrease in Nordic hydropower generation was mainly due to lower
precipitation and inflows into Nordic water reservoirs during the first half of
2009.
The decrease in 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 2009 and ended in mid December 2009. Oskarshamn 3's
capacity has increased by ~250 MW, of which Fortum's share is approximately
110 MW. Currently, the increased capacity is only partly available due to the
ongoing testing period.
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| Power generation by source, | IV/09 | IV/08 | 2009 | 2008 |
| TWh | | | | |
--------------------------------------------------------------------------------
| Hydropower, Nordic | 5.9 | 6.0 | 22.1 | 22.9 |
--------------------------------------------------------------------------------
| Nuclear power, Nordic | 5.1 | 5.3 | 21.4 | 23.7 |
--------------------------------------------------------------------------------
| Thermal power, Nordic | 0.1 | 0.1 | 0.2 | 0.3 |
--------------------------------------------------------------------------------
| Total in the Nordic countries | 11.1 | 11.4 | 43.7 | 46.9 |
--------------------------------------------------------------------------------
| Thermal in other countries | 0.3 | 0.3 | 1.2 | 1.0 |
--------------------------------------------------------------------------------
| Total | 11.4 | 11.7 | 44.9 | 47.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Nordic sales volume, TWh | 12.4 | 12.8 | 48.8 | 52.1 |
--------------------------------------------------------------------------------
| of which pass-through sales | 1.0 | 0.8 | 3.6 | 3.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sales price, EUR/MWh | IV/09 | IV/08 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Power's Nordic power price* | 51.5 | 49.1 | 49.8 | 49.3 |
--------------------------------------------------------------------------------
* For the Power Division in the Nordic countries, excluding pass-through sales.
During the fourth quarter of 2009, the average system spot price in Nord Pool
was EUR 36.6 per MWh, while Finnish and Swedish area prices were above the
system price level, at EUR 40.0 per MWh. During the same period, Power's
achieved Nordic power price was EUR 51.5 (49.1) per MWh. The division's Nordic
sales volume without pass-through items was 11.4 (12.0) TWh.
During 2009, the average system spot price in Nord Pool was EUR 35.0 per MWh,
while the Finnish and Swedish area prices were EUR 37.0 per MWh. Power's
achieved Nordic power price was EUR 49.8 per MWh, approximately the same level
as last year.
In the fourth quarter, Power's comparable operating profit was slightly higher
than in the corresponding period last year. Power's achieved Nordic power price
increased. Both hydro and nuclear generation volumes were slightly lower than in
the corresponding period last year.
In 2009, Power's comparable operating profit was lower than in the corresponding
period last year. This was mainly due to the lower hydro and nuclear generation
volumes. The translation effect from the lower SEK was approximately EUR -70
million in the division's 2009 comparable operating profit.
In February 2009, Fortum submitted to the Government of Finland an application
for a decision-in-principle concerning the construction of a new nuclear power
plant unit in Loviisa. Fortum is one of three applicants applying for the
decision-in-principle. The Government is expected to make its proposal to the
Parliament during 2010.
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. Based on the latest progress
report submitted by the plant supplier, AREVA-Siemens, TVO has estimated that
the start-up of the plant may be postponed beyond June 2012, which was the
schedule confirmed by the supplier.
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 Heat Division consists of combined heat and power (CHP) generation, district
heating activities and business-to-business heating solutions in the Nordic
countries and other parts of the Baltic Rim.
--------------------------------------------------------------------------------
| EUR million | IV/09 | IV/08 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Sales | 457 | 463 | 1,394 | 1,466 |
--------------------------------------------------------------------------------
| - heat sales | 340 | 354 | 1,054 | 1,120 |
--------------------------------------------------------------------------------
| - power sales | 84 | 76 | 224 | 228 |
--------------------------------------------------------------------------------
| - other sales | 33 | 33 | 116 | 118 |
--------------------------------------------------------------------------------
| Operating profit | 108 | 155 | 248 | 307 |
--------------------------------------------------------------------------------
| Comparable operating profit | 103 | 109 | 227 | 250 |
--------------------------------------------------------------------------------
| Net assets (at period-end) | | | 3,786 | 3,468 |
--------------------------------------------------------------------------------
| Return on net assets, % | | | 7.8 | 8.9 |
--------------------------------------------------------------------------------
| Comparable return on net assets, | | | 7.2 | 7.3 |
| % | | | | |
--------------------------------------------------------------------------------
| Gross investments | 101 | 144 | 359 | 431 |
--------------------------------------------------------------------------------
| Number of employees | | | 2,246 | 2,318 |
--------------------------------------------------------------------------------
The division's heat sales during 2009 amounted to 22.9 (24.9) TWh, most of which
was generated in the Nordic countries. During the same period, power sales from
CHP production totalled 4.4 (4.7) TWh.
The decrease in the sales volume is mainly due to the sale of a CHP company in
Jyväskylä, Finland, at the end of 2008 and lower demand from industrial
customers.
The Heat Division's fourth-quarter comparable operating profit was EUR 103
million, EUR 6 million lower than the corresponding period last year. The
decrease was mainly due to the lower Nord Pool power price and translation
effects from a weaker SEK. Cold weather increased heating volumes.
In 2009, the division's comparable operating profit was EUR 227 million, EUR 23
million lower than the year before. The decrease was mainly due to the EUR -17
million translation effect from a weaker SEK and PLN, mainly in the first half
of the year.
Fortum started the commercial operation of the new CHP unit in Espoo, Finland,
during the fourth quarter. The construction of the CHP plants in Czestochowa,
Poland, and Pärnu, Estonia, proceeded.
--------------------------------------------------------------------------------
| Heat sales by area, TWh | IV/09 | IV/08 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Finland | 2.7 | 3.1 | 8.0 | 10.8 |
--------------------------------------------------------------------------------
| Sweden | 3.2 | 3.0 | 9.8 | 9.1 |
--------------------------------------------------------------------------------
| Poland | 1.4 | 1.3 | 3.7 | 3.6 |
--------------------------------------------------------------------------------
| Other countries | 0.5 | 0.5 | 1.4 | 1.4 |
--------------------------------------------------------------------------------
| Total | 7.8 | 7.9 | 22.9 | 24.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Power sales, TWh | IV/09 | IV/08 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Total | 1.6 | 1.4 | 4.4 | 4.7 |
--------------------------------------------------------------------------------
Electricity Solutions and Distribution
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 | IV/09 | IV/08 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Sales | 227 | 206 | 800 | 789 |
--------------------------------------------------------------------------------
| - distribution network | 192 | 175 | 685 | 669 |
| transmission | | | | |
--------------------------------------------------------------------------------
| - regional network transmission | 21 | 18 | 75 | 77 |
--------------------------------------------------------------------------------
| - other sales | 14 | 13 | 40 | 43 |
--------------------------------------------------------------------------------
| Operating profit | 81 | 61 | 263 | 248 |
--------------------------------------------------------------------------------
| Comparable operating profit | 80 | 63 | 262 | 248 |
--------------------------------------------------------------------------------
| Net assets (at period-end) | | | 3,299 | 3,032 |
--------------------------------------------------------------------------------
| Return on net assets, % | | | 8.7 | 8.1 |
--------------------------------------------------------------------------------
| Comparable return on net assets, | | | 8.6 | 8.2 |
| % | | | | |
--------------------------------------------------------------------------------
| Gross investments | 63 | 93 | 193 | 296 |
--------------------------------------------------------------------------------
| Number of employees | | | 1,088 | 1,336 |
--------------------------------------------------------------------------------
The volume of distribution and regional network transmission during the fourth
quarter of 2009 totalled 7.5 (7.2) TWh and 4.4 (4.5) TWh, respectively.
In 2009, the volume of distribution and regional network transmission totalled
25.9 (25.8) TWh and 16.4 (17.7) TWh, respectively.
Electricity transmission via the regional distribution network totalled 13.6
(14.8) TWh in Sweden and 2.8 (2.9) TWh in Finland.
The comparable operating profit of the Distribution business area was EUR 80
million in the fourth quarter, EUR 17 million higher than in the corresponding
period of the previous year. In the fourth quarter of 2009 sales were higher due
to colder weather than in the corresponding quarter of 2008. The result in 2008
was burdened by AMM implementation-related costs in the Swedish operations.
The comparable operating profit of the Distribution business area was EUR 262
million in 2009, EUR 14 million higher than the previous year, though the 2009
results were somewhat affected by a negative translation effect from weaker SEK.
The new Swedish legislation on monthly meter reading came into effect on 1 July
2009. In order to meet the new requirements, Fortum has replaced 844,000
electricity meters with new smart meters.
In August 2009, a contract for the automatic meter management in Finland was
signed with service provider Telvent. The total value of the investment is
approximately EUR 170 million over a period of nine years. The investment
includes the purchase of the smart meters, installation, operation and
development of the system as well as the related services. The new Finnish
legislation on meter reading requirements will be effective as of 1 January
2014.
In October 2009, the Swedish Energy Market Inspectorate (EI) delivered an
investigation regarding the handling of capital costs and basic principles of
the new Ex-Ante regulation model, and launched principles for the intermediate
regulation for the period 2008-2011. The formal decision regarding the Ex-Ante
regulation in Sweden starting from 2012 was made by the Swedish Parliament in
June 2009. In the new regulation, network pricing will be determined in advance.
--------------------------------------------------------------------------------
| Volume of distributed | IV/09 | IV/08 | 2009 | 2008 |
| electricity in distribution | | | | |
| network, TWh | | | | |
--------------------------------------------------------------------------------
| Sweden | 3.9 | 3.8 | 14.0 | 14.0 |
--------------------------------------------------------------------------------
| Finland | 2.8 | 2.6 | 9.4 | 9.3 |
--------------------------------------------------------------------------------
| Norway | 0.7 | 0.7 | 2.3 | 2.3 |
--------------------------------------------------------------------------------
| Estonia | 0.1 | 0.1 | 0.2 | 0.2 |
--------------------------------------------------------------------------------
| Total | 7.5 | 7.2 | 25.9 | 25.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Number of electricity distribution | 31 Dec 2009 | 31 Dec 2008 |
| customers by area, thousands | | |
--------------------------------------------------------------------------------
| Sweden | 895 | 877 |
--------------------------------------------------------------------------------
| Finland | 611 | 606 |
--------------------------------------------------------------------------------
| Other countries | 123 | 123 |
--------------------------------------------------------------------------------
| Total | 1,629 | 1,606 |
--------------------------------------------------------------------------------
Markets
Markets business area is responsible for retail sales of electricity to a total
of 1.2 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 | IV/09 | IV/08 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Sales | 410 | 531 | 1,449 | 1,922 |
--------------------------------------------------------------------------------
| - power sales | 400 | 519 | 1,417 | 1,865 |
--------------------------------------------------------------------------------
| - other sales | 10 | 12 | 32 | 57 |
--------------------------------------------------------------------------------
| Operating profit | 19 | -29 | 22 | -35 |
--------------------------------------------------------------------------------
| Comparable operating profit | 11 | 0 | 22 | -33 |
--------------------------------------------------------------------------------
| Net assets (at period-end) | | | 147 | 188 |
--------------------------------------------------------------------------------
| Return on net assets, % | | | 16.8 | -14.0 |
--------------------------------------------------------------------------------
| Comparable return on net assets, % | | | 18.6 | -15.3 |
--------------------------------------------------------------------------------
| Gross investments | 0 | 0 | 1 | 3 |
--------------------------------------------------------------------------------
| Number of employees | | | 611 | 635 |
--------------------------------------------------------------------------------
In the fourth quarter of 2009, Markets' electricity sales totalled 8.3 (9.6)
TWh. In 2009, Markets' sales volume was 30.0 (36.6) TWh.
The decrease in the sales volume continued mainly due to the lower consumption
by business customers and discontinued contracts with some large business
customers.
The customer churn in the consumer market segment increased clearly during 2009.
The improvement in Markets' performance in 2009 was based on Markets' successful
turnaround programme, including the launch of the new pricing model in the
Consumer Market segment, renegotiated sales agreements in the Business Customer
segment, renewed hedging operations and tighter cost controls. Markets'
fourth-quarter comparable operating profit continued to improve from a year ago.
Russia
The Russia Division consists of power and heat generation and sales in Russia.
It includes OAO Fortum and Fortum's over 25% 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 | IV/09 | IV/08 | 2009 | 2008 |
--------------------------------------------------------------------------------
| Sales | 194 | 197 | 623 | 489 |
--------------------------------------------------------------------------------
| - power sales | 109 | 115 | 390 | 332 |
--------------------------------------------------------------------------------
| - heat sales | 76 | 75 | 219 | 141 |
--------------------------------------------------------------------------------
| - other sales | 9 | 7 | 14 | 16 |
--------------------------------------------------------------------------------
| EBITDA | 27 | 3 | 49 | -24 |
--------------------------------------------------------------------------------
| Operating profit | 7 | -19 | -26 | -91 |
--------------------------------------------------------------------------------
| Comparable operating profit | 7 | -20 | -26 | -92 |
--------------------------------------------------------------------------------
| Net assets (at period-end) | | | 2,248 | 2,205 |
--------------------------------------------------------------------------------
| Return on net assets, % | | | -0.3 | -3.7 |
--------------------------------------------------------------------------------
| Comparable return on net assets, % | | | -0.3 | -3.8 |
--------------------------------------------------------------------------------
| Gross investments | 98 | 126 | 218 | 1,748 |
--------------------------------------------------------------------------------
| Number of employees* | | | 4,090 | 7,262 |
--------------------------------------------------------------------------------
* In January 2009, around 1,100 persons working at OAO Fortum were transferred
internally from the Russia Division to the Power Division.
OAO Fortum operates in the well-developed industrial regions of the Urals and in
oil-producing western Siberia.
The division's power sales during the fourth quarter of 2009 amounted to 5.3
(5.6) TWh. During the same period, heat sales totalled 8.9 (8.6) TWh. In 2009,
the power sales were 19.5 TWh (14.8 TWh in Q2-Q4/2008) and the heat sales 25.6
TWh (15.3 TWh in Q2-Q4/2008). The division sold approximately 2/3 of its power
in Tyumen 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.
During the fourth quarter of 2009, OAO Fortum sold 37% of its electricity
production at the liberalised electricity price. For the full year 2009, the
share of electricity sold at the liberalised price was 34%.
--------------------------------------------------------------------------------
| Key electricity, | IV/09 | IV/08 | Change | 2009 | 2008 | Change% |
| capacity and gas prices | | | % | | | |
| for OAO Fortum | | | | | | |
--------------------------------------------------------------------------------
| Electricity spot price | 693 | 540 | 28 | 633 | 672 | -6 |
| (market price), Urals | | | | | | |
| hub, RUB/MWh | | | | | | |
--------------------------------------------------------------------------------
| Average regulated | 536 | 476 | 13 | 533 | 475 | 12 |
| electricity price for | | | | | | |
| OAO FORTUM, RUB/MWh | | | | | | |
--------------------------------------------------------------------------------
| Average regulated | 186 | 160.8 | 16 | 187.3 | 167.8 | 12 |
| capacity price, | | | | | | |
| tRUB/MW/month | | | | | | |
--------------------------------------------------------------------------------
| Average limit gas price | 1,937 | 1,560 | 24 | 1,782 | 1,560 | 14 |
| in | | | | | | |
| Urals region, | | | | | | |
| RUB/1000 m3 | | | | | | |
--------------------------------------------------------------------------------
The division booked a comparable operating profit of EUR 7 (-20) million in the
fourth quarter of 2009. The improvement was due to OAO Fortum's efficiency
improvement programme and a higher electricity sales margin.
In 2009, the Russia Division's comparable operating profit, EUR -26 million, was
an improvement of EUR 66 million over the previous year. The increase mainly
stems from OAO Fortum's efficiency improvement programme and a higher
electricity sales margin.
OAO Fortum figures have been consolidated from the beginning of April 2008.
OAO Fortum's business is typically very seasonal: Its results usually are
strongest during the first and last quarters of the year.
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 and further to 60% from the
beginning of January 2010. The wholesale power market is expected to be fully
liberalised from the beginning of 2011. The rules for the long-term capacity
market are currently under consideration by the Russian government and a
decision is expected before the end of 2010.
OAO Fortum's efficiency improvement programme is proceeding according to plans.
The annual efficiency improvements are expected to be approximately EUR 100
million in 2011.
Capital expenditures, divestments and investments in shares
Capital expenditures and investments in shares in 2009 totalled EUR 929 (2,624)
million. Investments, excluding acquisitions, were EUR 862 (1,108) million.
In 2010, Fortum expects to commission new power/heat capacity as follows:
--------------------------------------------------------------------------------
| | Type | Capacity | Capacity | Available |
| | | electricity, | heat, MW | |
| | | MW | | |
--------------------------------------------------------------------------------
| Heat | | | | |
--------------------------------------------------------------------------------
| Częstochowa, | CHP bio, | 65 | 120 | Q3/2010 |
| Poland | coal | | | |
--------------------------------------------------------------------------------
| Pärnu, Estonia | CHP bio, | 20 | 45 | end of 2010 |
| | peat | | | |
--------------------------------------------------------------------------------
| Power | | | | |
--------------------------------------------------------------------------------
| Hydro | Hydropower | 20-30 | | 2010 |
| refurbishment | | | | |
--------------------------------------------------------------------------------
| Russia | | | | |
--------------------------------------------------------------------------------
| Tyumen 1 | CCGT, gas | 190 | | Q3/2010 |
--------------------------------------------------------------------------------
| Tobolsk | CCGT, gas | 210 | | Q3/2010 |
--------------------------------------------------------------------------------
| Chelyabinsk 3 | CCGT, gas | 220 | | Q4/2010 |
--------------------------------------------------------------------------------
POWER
Fortum and the Norwegian Hafslund Infratek ASA combined their businesses of
construction and operating of infrastructure in Sweden, Finland and Norway as of
15 January 2009.
HEAT
Heat continued its development programme to ensure future competitiveness and an
optimal asset portfolio.
A new CHP plant in Tartu, Estonia, was taken into commercial use in late March
2009 and a new CHP plant in Espoo was taken into use in December 2009. The
construction of the new CHP plants in Czestochowa, Poland and in Pärnu, Estonia,
proceeded.
In August Fortum sold its CHP plant in Kokkola, Finland, to the city of Kokkola.
The transaction price was around EUR 24 million.
In December, Fortum agreed to sell its shares in the Swedish gas transmission
company Swedegas AB. The transaction will take place in early 2010.
DISTRIBUTION
The EU's third energy market package entered into force in early September 2009.
One of the consequences is that Fortum will have to divest its 25% ownership in
the Finnish electricity transmission system operator Fingrid Oyj by early 2012.
Consequently, Fortum is investigating alternatives for the sale of the Fingrid
shares. Currently Fortum expects the sales process of Fingrid shares to take
place during 2010.
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 2009 exchange rates, is estimated to be EUR
1.8 billion from January 2010 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 with a favourable outlook.
Financing
At year end, the interest-bearing net debt stood at EUR 5,969 (year-end 2008:
EUR 6,179) million, resulting in a total decrease in net debt during the year of
EUR 210 million.
Cash flow during the year was strong with net cash from operating activities
amounting to EUR 2,264 (2,002) million. Cash generated was primarily used for
investing activities and dividend payments. Net cash used for investment
activities in 2009 was EUR 974 (2,282) million, and dividend payments amounted
to EUR 888 (1,198) million.
Net debt to EBITDA for the last twelve months was 2.6 (2.5).
The Group's net financial expenses in 2009 were EUR 167 (239) million. The
decrease in financial expenses is mainly attributable to lower average interest
rates in 2009 compared to 2008. Net financial expenses include a fair value loss
on financial instruments of EUR 1 million (2008: fair value loss 11).
The average interest rate on Fortum's interest-bearing debt (including
derivatives) for 2009 was 3.7% (5.3%).
Group liquidity remained strong. Year-end liquid funds totalled EUR 890 (1,321)
million, of which EUR 632 (1,020) million was cash held by OAO Fortum and
earmarked for the company's investment programme. In addition, the Group had a
total of approximately EUR 2.9 (2.3) billion available for drawing under
committed credit facilities.
During the year Fortum raised new long-term financing in excess of EUR 2
billion, through the approximately EUR 1.6 billion bond issuance under Fortum's
Euro Medium Term Note Programme, and bilateral long-term loans in excess of EUR
0.5 billion. The proceeds of these new financings were used to refinance
maturing debt in 2009 as well as to partially repay loan facilities maturing in
2011 and approximately RUB 8 billion (EUR 180 million) of bonds due in 2010 and
2013. Short-term financing (mainly the issuance of commercial paper) decreased
to EUR 308 (520) million at year end.
During the year Fortum Corporation's long-term credit rating from Standard and
Poor's was, following a change in their rating methodology of
“Government-related entities”, increased from “A- to “A” (stable). The
long-term credit rating from Moody's was at year end “A2” (stable).
Shares and share capital
In 2009, a total of 580.9 (628.2) million Fortum Corporation shares, totalling
EUR 9,244 million, were traded on the NASDAQ OMX Helsinki. Fortum's market
capitalisation, calculated using the closing quotation of the last trading day
of the year, was EUR 16,852 million. The highest quotation of Fortum Corporation
shares on the NASDAQ OMX Helsinki in 2009 was EUR 19.20, the lowest EUR 12.60,
and the volume-weighted average EUR 15.95. The closing quotation on the last
trading day of the year was EUR 18.97 (15.23).
In addition to NASDAQ OMX Helsinki, Fortum shares were traded on several
alternative market places, primarily at Chi-X Europe and Turquoise. In 2009, a
total of 49.1 million Fortum Corporation shares were traded at Chi-X Europe and
17.8 million Fortum Corporation shares were traded at Turquoise.
At the end of 2009, Fortum Corporation did not own its own shares.
At the end of 2009, Fortum Corporation's share capital was EUR 3,046,185,953 and
the total number of registered shares was 888,367,045.
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 year end, the Finnish state's holding in Fortum was 50.8%. The proportion of
nominee registrations and direct foreign shareholders was 31.0%.
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 period was 11,613 (2008: 15,579), of
which 11,332 (2008: 15,264) were permanent employees.
The outsourcing of certain infrastructure service functions to Infratek ASA in
January 2009 reduced the number of people in Power and Distribution.
In the first quarter of 2009, around 1,100 persons working at OAO Fortum were
transferred internally from the Russia division to the Power division.
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 has
reduced the number of OAO Fortum employees by approximately 750.
The number of employees in the parent company, Fortum Corporation, at year end
totalled 409 (2008: 434).
--------------------------------------------------------------------------------
| | 2009 | 2008 | 2007 |
--------------------------------------------------------------------------------
| Number of employees, 31 Dec. | 11,613 | 15,579 | 8,303 |
--------------------------------------------------------------------------------
| Average number of employees | 13,278 | 14,077 | 8,304 |
--------------------------------------------------------------------------------
| Total amount of employee costs, EUR | 491 | 587 | 495 |
| million | | | |
--------------------------------------------------------------------------------
Research and development
Fortum's R&D activities are geared towards the company's long-term goal to be
carbon dioxide-free. Activities are based on building networks and partnerships
with leading research organisations, engineering companies, and equipment and
plant suppliers. Fortum also conducts in-house research and development in
strategically significant key areas.
In 2009, Fortum's R&D activities focused strongly on the development of a
nuclear combined heat and power (CHP) plant concept, smart grids and electric
vehicles. Important steps were taken also in carbon capture and storage
activities.
Replacing coal- and natural gas-fired CHP-production in the Helsinki
metropolitan area with district heat produced at the Loviisa 3 nuclear power
plant unit could reduce Finland's CO2 emissions by 4 million tonnes per year.
Fortum worked to develop concepts for steam extraction from the turbines
together with turbine manufacturers, studied options for heat transport,
modelled the district heat transport system and with the Apros simulation
software, analysed safety issues associated with the system.
Smart grids became an important new priority in Fortum's R&D in 2009. A smart
grid is an electricity network that can intelligently integrate the actions of
all users connected to it - electricity generators, consumers and those that do
both - in order to efficiently deliver sustainable, economic and secure
electricity. Fortum started several concrete development projects in the realm
of smart grids and electricity in transportation during the year.
Fortum and TVO announced cooperation with Siemens Energy and with Maersk Oil and
Maersk Tankers in the field of carbon capture and storage. Siemens Energy has
been selected as the capture technology partner for the FINNCAP - Meri-Pori
Carbon Capture and Storage (CCS) project. The partners wish to combine carbon
capture at the Meri-Pori power plant with CO2 transportation by Maersk Tankers'
vessels and Maersk Oil's geological storage.
The group's total R&D expenditure in 2009 was EUR 30 (27) million.
Fortum's R&D expenditure amounts to 0.5% of sales (0.5% in 2008) and 0.9% (0.8%)
of total expenses.
--------------------------------------------------------------------------------
| R&D of Fortum | 2009 | 2008 | 2007 |
--------------------------------------------------------------------------------
| R&D expenditure, EUR million | 30 | 27 | 21 |
--------------------------------------------------------------------------------
| R&D expenditure, % of sales | 0.5 | 0.5 | 0.5 |
--------------------------------------------------------------------------------
| R&D expenditure, % of total expenses | 0.9 | 0.8 | 0.8 |
--------------------------------------------------------------------------------
Events after period under review
In January 2010, Fortum acquired the combined heat and power plant in the city
of Nokia, Finland.
The share of produced wholesale power sold on the competitive market in Russia
was increased from 50% to 60% from the beginning of January 2010.
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
and Fortum's web site. The annual report for 2009 will be published before the
end of week 9.
MARKET DEMAND
The recession has impacted the markets in which Fortum operates. This may
increase Fortum's counterparty risk. The electricity consumption in the Nordic
countries and Russia may continue to be depressed. Fortum currently expects
Nordic power demand to recover back to the 2008 level by 2012-2014. Electricity
will continue to gain a higher share of the total energy consumption.
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 and
from 50% to 60% at the beginning of January 2010. The share is planned to be
increased from 60% to 80% at the beginning of July 2010. The wholesale power
market is expected to be fully liberalised by 2011.
The rules for the long-term capacity market are currently under consideration by
the Russian government and a decision is expected before the end of the year
2010.
The average limit gas price (regulated gas price) for the first quarter of 2010
will increase by 15%. The planned increase for the full year 2010 is 24%. The
regulated electricity price is indexed to the regulated gas price and inflation
on an annual basis.
OAO Fortum is committed and contractually obligated to a significant investment
programme, amounting to approximately EUR 1.8 billion for 2010 and onwards. The
Russian Government is currently reviewing the investment programmes of the
generating companies in light of the decreased power demand stemming from the
current recession. 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 with a favourable outlook.
Annual efficiency improvements are expected to be approximately EUR 100 million
in 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 late January 2010, the electricity forward price in Nord Pool for the rest of
2010 was around EUR 44 per MWh. The electricity forward price for 2011 was
around EUR 42 per MWh and for 2012 around EUR 41 per MWh. At the same time, the
future quotations for coal (ICE Rotterdam) for the rest of 2010 were around USD
84 per tonne and the market price for CO2 emissions allowances (EUA) for 2010
was about EUR 13 per tonne.
In late January 2010, Nordic water reservoirs were about 14 TWh below the
long-term average, and 6 TWh below the corresponding level of 2009.
Fortum Power'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
Power's achieved Nordic sales price results in an approximately EUR 50 million
change in Fortum's annual operating profit.
At the end of December 2009, Fortum had hedged approximately 70% of the Power
Division's estimated Nordic electricity sales volume for the year 2010 at
approximately EUR 44 per MWh. For the calendar year 2011, approximately 40% of
the division'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 2009 were good, despite the challenging economic
environment. The company has a flexible, cost-efficient and climate-benign
generation portfolio. Fortum's financial position and liquidity are strong.
Dividend distribution proposal
The parent company's distributable equity as of 31 December 2009 amounted to EUR
4,052 million. Since the end of the financial period, there have been no
material changes in the financial position of the Company.
The Board of Directors proposes to the Annual General Meeting that Fortum
Corporation pay a cash dividend of EUR 1.00 per share for 2009, totalling EUR
888 million based on the number of registered shares as of 2 February 2010.
Espoo, 2 February 2010
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@fortum.com
The Board of Directors has approved Fortum's 2009 financial statements and
Fortum's auditors have issued their audit report for 2009 on 2 February 2010.
The condensed interim financial statements have been prepared in accordance with
International Accounting Standard (IAS) 34, Interim Financial Reporting, as
adopted by the EU.
Fortum's Annual General Meeting will take place on 25 March 2010 and the
dividend-related dates for 2010 are:
Ex-dividend date 26 March 2010
Record date for dividend payment 30 March 2010
Dividend payment date 8 April 2010
The annual report for 2009 will be published before the end of week 9.
Publication of results in 2010:
Interim Report January-March will be published on 27 April 2010 at approx. 09;00
EET.
Interim Report January-June will be published on 16 July 2010 at approx. 09:00
EET.
Interim Report January-September will be published on 21 October 2010 at approx.
09:00 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-DECEMBER 2009 | | | | | | |
--------------------------------------------------------------------------------
| The Interim Statement is based on the | | | | |
| audited 2009 Financial Statements | | | | |
| approved by the Board on 2 February | | | | |
| 2010. | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONDENSED CONSOLIDATED | | | | | | |
| INCOME STATEMENT | | | | | | |
--------------------------------------------------------------------------------
| MEUR | | Note | Q4 | Q4 | 2009 | 2008 |
| | | | 2009 | 2008 | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sales | | 4 | 1 563 | 1 602 | 5 435 | 5 636 |
--------------------------------------------------------------------------------
| Other income | | | 13 | 155 | 34 | 230 |
--------------------------------------------------------------------------------
| Materials and services | | | -608 | -652 | -2 027 | -2 117 |
--------------------------------------------------------------------------------
| Employee benefit costs | | | -123 | -158 | -491 | -587 |
--------------------------------------------------------------------------------
| Depreciation, amortisation and | 4, | -136 | -132 | -510 | -515 |
| impairment charges | 12 | | | | |
--------------------------------------------------------------------------------
| Other expenses | | | -187 | -204 | -659 | -684 |
--------------------------------------------------------------------------------
| Operating profit | | | 522 | 611 | 1 782 | 1 963 |
--------------------------------------------------------------------------------
| Share of profit/loss of | 4, | 22 | 48 | 21 | 126 |
| associates and joint ventures | 13 | | | | |
--------------------------------------------------------------------------------
| Interest expense | | | -53 | -96 | -241 | -351 |
--------------------------------------------------------------------------------
| Interest income | | | 22 | 66 | 98 | 143 |
--------------------------------------------------------------------------------
| Fair value gains and losses on | -6 | -16 | -1 | -11 |
| financial instruments | | | | |
--------------------------------------------------------------------------------
| Other financial expenses - | | | -2 | -8 | -23 | -20 |
| net | | | | | | |
--------------------------------------------------------------------------------
| Finance costs - net | | | -39 | -54 | -167 | -239 |
--------------------------------------------------------------------------------
| Profit before income tax | | | 505 | 605 | 1 636 | 1 850 |
--------------------------------------------------------------------------------
| Income tax expense | | 9 | -74 | 2 | -285 | -254 |
--------------------------------------------------------------------------------
| Profit for the period | | | 431 | 607 | 1 351 | 1 596 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | | | | |
--------------------------------------------------------------------------------
| Owners of the parent | | | 406 | 563 | 1 312 | 1 542 |
--------------------------------------------------------------------------------
| Non-controlling interests | | | 25 | 44 | 39 | 54 |
--------------------------------------------------------------------------------
| | | | 431 | 607 | 1 351 | 1 596 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share (in € | | 10 | | | | |
| per share) | | | | | | |
--------------------------------------------------------------------------------
| Basic | | | 0.46 | 0.64 | 1.48 | 1.74 |
--------------------------------------------------------------------------------
| Diluted | | | 0.46 | 0.64 | 1.48 | 1.74 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Condensed consolidated statement of comprehensive income | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | | | Q4 | Q4 | 2009 | 2008 | 2007 |
| | | | 2009 | 2008 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit for the | | | 431 | 607 | 1 351 | 1 596 | 1 608 |
| period | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other comprehensive | | | | | | | |
| income: | | | | | | | |
--------------------------------------------------------------------------------
| Cash flow hedges | | | | | | | |
--------------------------------------------------------------------------------
| Fair value | | | -326 | 542 | -195 | 453 | -167 |
| gains/losses in the | | | | | | | |
| period | | | | | | | |
--------------------------------------------------------------------------------
| Transfers to income | | | -64 | 71 | -218 | 160 | -69 |
| statement | | | | | | | |
--------------------------------------------------------------------------------
| Transfers to | | | -2 | -4 | -4 | -4 | - |
| inventory/fixed | | | | | | | |
| assets | | | | | | | |
--------------------------------------------------------------------------------
| Tax effect | | | 100 | -168 | 108 | -168 | 64 |
--------------------------------------------------------------------------------
| Net investment | | | | | | | |
| hedges | | | | | | | |
--------------------------------------------------------------------------------
| Fair value | | | -17 | - | -25 | - | 2 |
| gains/losses in the | | | | | | | |
| period | | | | | | | |
--------------------------------------------------------------------------------
| Tax effect | | | 4 | - | 6 | - | - |
--------------------------------------------------------------------------------
| Available for sale | | | | | | | |
| financial assets | | | | | | | |
--------------------------------------------------------------------------------
| Fair value losses in | | | 0 | -1 | 0 | -1 | - |
| the period | | | | | | | |
--------------------------------------------------------------------------------
| Exchange differences on | 73 | -568 | 21 | -621 | -36 |
| translating foreign operations | | | | | |
--------------------------------------------------------------------------------
| Share of other comprehensive | -38 | -110 | -37 | -628 | 366 |
| income of associates 1) | | | | | |
--------------------------------------------------------------------------------
| Other changes | | | 7 | 1 | 1 | 1 | 6 |
--------------------------------------------------------------------------------
| Other comprehensive income for | -263 | -237 | -343 | -808 | 166 |
| the period, net of tax | | | | | |
--------------------------------------------------------------------------------
| Total comprehensive | | | 168 | 370 | 1 008 | 788 | 1 774 |
| income for the year | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total comprehensive income | | | | | | |
| attributable to: | | | | | | |
--------------------------------------------------------------------------------
| Owners of the parent | | 139 | 375 | 971 | 797 | 1 731 |
--------------------------------------------------------------------------------
| Non-controlling interests | | 29 | -5 | 37 | -9 | 43 |
--------------------------------------------------------------------------------
| | | 168 | 370 | 1 008 | 788 | 1 774 |
--------------------------------------------------------------------------------
| 1) Of which fair value | | | | | | |
| change in Hafslund ASA's | | | | | | |
--------------------------------------------------------------------------------
| shareholding in REC incl. | -41 | -140 | -37 | -667 | 353 |
| translation differences | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONDENSED CONSOLIDATED BALANCE | | | | | |
| SHEET | | | | | |
--------------------------------------------------------------------------------
| MEUR | | Note | | Dec 31 | Dec 31 |
| | | | | 2009 | 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSETS | | | | | |
--------------------------------------------------------------------------------
| Non-current assets | | | | | |
--------------------------------------------------------------------------------
| Intangible assets | | 12 | | 391 | 395 |
--------------------------------------------------------------------------------
| Property, plant and equipment | | 12 | | 12 855 | 12 138 |
--------------------------------------------------------------------------------
| Participations in associates and | | 4, 13 | | 2 188 | 2 112 |
| joint ventures | | | | | |
--------------------------------------------------------------------------------
| Share in State Nuclear Waste | 16 | | 570 | 566 |
| Management Fund | | | | |
--------------------------------------------------------------------------------
| Pension assets | | | | 59 | 59 |
--------------------------------------------------------------------------------
| Other non-current assets | | | | 69 | 58 |
--------------------------------------------------------------------------------
| Deferred tax assets | | | | 47 | 2 |
--------------------------------------------------------------------------------
| Derivative financial instruments | | 6 | | 195 | 445 |
--------------------------------------------------------------------------------
| Long-term interest-bearing | | | | 918 | 742 |
| receivables | | | | | |
--------------------------------------------------------------------------------
| Total non-current assets | | | | 17 292 | 16 517 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | | | | |
--------------------------------------------------------------------------------
| Inventories | | | | 447 | 444 |
--------------------------------------------------------------------------------
| Derivative financial instruments | | 6 | | 182 | 761 |
--------------------------------------------------------------------------------
| Trade and other receivables | | | | 1 030 | 1 235 |
--------------------------------------------------------------------------------
| Bank deposits | | | | 397 | 588 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | | | | 493 | 733 |
--------------------------------------------------------------------------------
| Liquid funds | | 15 | | 890 | 1 321 |
--------------------------------------------------------------------------------
| Total current assets | | | | 2 549 | 3 761 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | | | | 19 841 | 20 278 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY | | | | | |
--------------------------------------------------------------------------------
| Equity attributable to owners of | | | | | |
| the parent | | | | | |
--------------------------------------------------------------------------------
| Share capital | | 14 | | 3 046 | 3 044 |
--------------------------------------------------------------------------------
| Share premium | | | | 73 | 73 |
--------------------------------------------------------------------------------
| Retained earnings | | | | 4 762 | 4 312 |
--------------------------------------------------------------------------------
| Other equity components | | | | 153 | 525 |
--------------------------------------------------------------------------------
| Total | | | | 8 034 | 7 954 |
--------------------------------------------------------------------------------
| Non-controlling interests | | | | 457 | 457 |
--------------------------------------------------------------------------------
| Total equity | | | | 8 491 | 8 411 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| LIABILITIES | | | | | |
--------------------------------------------------------------------------------
| Non-current liabilities | | | | | |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | | 15 | | 6 002 | 6 520 |
--------------------------------------------------------------------------------
| Derivative financial instruments | | 6 | | 191 | 120 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | | | | 1 750 | 1 851 |
--------------------------------------------------------------------------------
| Nuclear provisions | | 16 | | 570 | 566 |
--------------------------------------------------------------------------------
| Other provisions | | | | 209 | 199 |
--------------------------------------------------------------------------------
| Pension obligations | | | | 23 | 51 |
--------------------------------------------------------------------------------
| Other non-current liabilities | | | | 472 | 470 |
--------------------------------------------------------------------------------
| Total non-current liabilities | | | | 9 217 | 9 777 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities | | | | | |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | | 15 | | 857 | 980 |
--------------------------------------------------------------------------------
| Derivative financial instruments | | 6 | | 276 | 126 |
--------------------------------------------------------------------------------
| Trade and other payables | | | | 1 000 | 984 |
--------------------------------------------------------------------------------
| Total current liabilities | | | | 2 133 | 2 090 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | | | | 11 350 | 11 867 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total equity and liabilities | | | | 19 841 | 20 278 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Share | Sha | Retained | Other equity | Owner | Non- | Total |
| | capit | re | earnings | components | s of | cont | equit |
| | al | pre | | | the | roll | y |
| | | miu | | | paren | ing | |
| | | m | | | t | inte | |
| | | | | | | rest | |
| | | | | | | s | |
--------------------------------------------------------------------------------
| MEUR | | | Reta | Tran | Cash | Oth | OCI | |
| | | | ined | slat | flow | er | items | |
| | | | earn | ion | hedg | OCI | assoc | |
| | | | ings | of | es | ite | iated | |
| | | | and | fore | | ms | compa | |
| | | | othe | ign | | | nies | |
| | | | r | oper | | | | |
| | | | fund | atio | | | | |
| | | | s | ns | | | | |
--------------------------------------------------------------------------------
| Tota | 3 044 | 73 | 4 | -576 | 321 | 36 | 168 | 7 954 | 457 | 8 411 |
| l | | | 888 | | | | | | | |
| equi | | | | | | | | | | |
| ty | | | | | | | | | | |
| 31 | | | | | | | | | | |
| Dece | | | | | | | | | | |
| mber | | | | | | | | | | |
| 2008 | | | | | | | | | | |
--------------------------------------------------------------------------------
| Net | | | 1 | | | | | 1 312 | 39 | 1 351 |
| prof | | | 312 | | | | | | | |
| it | | | | | | | | | | |
| for | | | | | | | | | | |
| the | | | | | | | | | | |
| peri | | | | | | | | | | |
| od | | | | | | | | | | |
--------------------------------------------------------------------------------
| Tran | | | | 9 | -4 | | 28 | 33 | 12 | 45 |
| slat | | | | | | | | | | |
| ion | | | | | | | | | | |
| diff | | | | | | | | | | |
| eren | | | | | | | | | | |
| ces | | | | | | | | | | |
--------------------------------------------------------------------------------
| Othe | | | 6 | | -296 | -19 | -65 | -374 | -14 | -388 |
| r | | | | | | | | | | |
| comp | | | | | | | | | | |
| rehe | | | | | | | | | | |
| nsiv | | | | | | | | | | |
| e | | | | | | | | | | |
| inco | | | | | | | | | | |
| me | | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | 1 | 9 | -300 | -19 | -37 | 971 | 37 | 1 008 |
| comprehensive | 318 | | | | | | | |
| income for the | | | | | | | | |
| period | | | | | | | | |
--------------------------------------------------------------------------------
| Cash | | | -888 | | | | | -888 | | -888 |
| divi | | | | | | | | | | |
| dend | | | | | | | | | | |
| 1) | | | | | | | | | | |
--------------------------------------------------------------------------------
| Dividends to | | | | | | | 0 | -19 | -19 |
| non-controll | | | | | | | | | |
| ing | | | | | | | | | |
| interests | | | | | | | | | |
--------------------------------------------------------------------------------
| Changes due | | -5 | | | | | -5 | -18 | -23 |
| to business | | | | | | | | | |
| combinations | | | | | | | | | |
--------------------------------------------------------------------------------
| Stoc | 2 | | 16 | | | -16 | | 2 | | 2 |
| k | | | | | | | | | | |
| opti | | | | | | | | | | |
| ons | | | | | | | | | | |
| exer | | | | | | | | | | |
| cise | | | | | | | | | | |
| d 2) | | | | | | | | | | |
--------------------------------------------------------------------------------
| Tota | 3 046 | 73 | 5 | -567 | 21 | 1 | 131 | 8 034 | 457 | 8 491 |
| l | | | 329 | | | | | | | |
| equi | | | | | | | | | | |
| ty | | | | | | | | | | |
| 31 | | | | | | | | | | |
| Dece | | | | | | | | | | |
| mber | | | | | | | | | | |
| 2009 | | | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Tota | 3 040 | 73 | 4 | -21 | -120 | 35 | 800 | 8 359 | 292 | 8 651 |
| l | | | 552 | | | | | | | |
| equi | | | | | | | | | | |
| ty | | | | | | | | | | |
| 31 | | | | | | | | | | |
| Dece | | | | | | | | | | |
| mber | | | | | | | | | | |
| 2007 | | | | | | | | | | |
--------------------------------------------------------------------------------
| Net | | | 1 | | | | | 1 542 | 54 | 1 596 |
| prof | | | 542 | | | | | | | |
| it | | | | | | | | | | |
| for | | | | | | | | | | |
| the | | | | | | | | | | |
| peri | | | | | | | | | | |
| od | | | | | | | | | | |
--------------------------------------------------------------------------------
| Tran | | | | -555 | | | -148 | -703 | -66 | -769 |
| slat | | | | | | | | | | |
| ion | | | | | | | | | | |
| diff | | | | | | | | | | |
| eren | | | | | | | | | | |
| ces | | | | | | | | | | |
--------------------------------------------------------------------------------
| Othe | | | | | 441 | 1 | -484 | -42 | 3 | -39 |
| r | | | | | | | | | | |
| comp | | | | | | | | | | |
| rehe | | | | | | | | | | |
| nsiv | | | | | | | | | | |
| e | | | | | | | | | | |
| inco | | | | | | | | | | |
| me | | | | | | | | | | |
--------------------------------------------------------------------------------
| Tota | | | 1 | -555 | 441 | 1 | -632 | 797 | -9 | 788 |
| l | | | 542 | | | | | | | |
| comp | | | | | | | | | | |
| rehe | | | | | | | | | | |
| nsiv | | | | | | | | | | |
| e | | | | | | | | | | |
| inco | | | | | | | | | | |
| me | | | | | | | | | | |
--------------------------------------------------------------------------------
| Cash | | | -1 | | | | | -1 | | -1 |
| divi | | | 198 | | | | | 198 | | 198 |
| dend | | | | | | | | | | |
| 1) | | | | | | | | | | |
--------------------------------------------------------------------------------
| Dividends to | | | | | | | 0 | -18 | -18 |
| non-controll | | | | | | | | | |
| ing | | | | | | | | | |
| interests | | | | | | | | | |
--------------------------------------------------------------------------------
| Changes due | | -8 | | | | | -8 | 192 | 184 |
| to business | | | | | | | | | |
| combinations | | | | | | | | | |
--------------------------------------------------------------------------------
| Stoc | 4 | | | | | | | 4 | | 4 |
| k | | | | | | | | | | |
| opti | | | | | | | | | | |
| ons | | | | | | | | | | |
| exer | | | | | | | | | | |
| cise | | | | | | | | | | |
| d | | | | | | | | | | |
--------------------------------------------------------------------------------
| Tota | 3 044 | 73 | 4 | -576 | 321 | 36 | 168 | 7 954 | 457 | 8 411 |
| l | | | 888 | | | | | | | |
| equi | | | | | | | | | | |
| ty | | | | | | | | | | |
| 31 | | | | | | | | | | |
| Dece | | | | | | | | | | |
| mber | | | | | | | | | | |
| 2008 | | | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) See Note 11 | | | | | | | | | | |
| Dividend per | | | | | | | | | | |
| share. | | | | | | | | | | |
--------------------------------------------------------------------------------
| 2) Accounting effect of the last stock option program (2002B) upon | |
| ending of the subscription period on 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 33 million during 2009 (2008: -703) including net effect from
SEK, NOK and RUB amounting to EUR 27 million in 2009 (2008: -680). Part of the
translation differences is arising from the NOK effect in fair valuation of
Hafslund's REC shares, EUR 22 million (2008: -148), 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 from fair valuation of
cash flow hedges, EUR -296 million during 2009 (2008: 441), 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 | | Q4 | Q4 | 2009 | 2008 |
| | | | | | 2009 | 2008 | | |
--------------------------------------------------------------------------------
| Cash flow from | | | | | | | |
| operating activities | | | | | | | |
--------------------------------------------------------------------------------
| Operating profit | | | | 658 | 743 | 2 292 | 2 478 |
| before depreciations | | | | | | | |
| (EBITDA) | | | | | | | |
--------------------------------------------------------------------------------
| Non-cash flow items | | | | | -237 | 46 | -275 |
| and divesting | | | | | | | |
| activities | | | | | | | |
--------------------------------------------------------------------------------
| Financial items and | | -102 | 326 | 146 | 233 |
| realised foreign | | | | | |
| exchange gains and | | | | | |
| losses | | | | | |
--------------------------------------------------------------------------------
| Taxes | | | | -34 | -53 | -239 | -332 |
--------------------------------------------------------------------------------
| Funds from operations | | | | 518 | 779 | 2 245 | 2 104 |
--------------------------------------------------------------------------------
| Change in working | | | | -122 | -217 | 19 | -102 |
| capital | | | | | | | |
--------------------------------------------------------------------------------
| Total net cash from | | | | 396 | 562 | 2 264 | 2 002 |
| operating activities | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from | | | | | | | |
| investing activities | | | | | | | |
--------------------------------------------------------------------------------
| Capital | | 4,12 | | -266 | -338 | -845 | -1 |
| expenditures 1) | | | | | | | 018 |
--------------------------------------------------------------------------------
| Acquisition of | | 7 | | -2 | -4 | -27 | -1 |
| subsidiaries, net | | | | | | | 210 |
| of cash acquired | | | | | | | |
--------------------------------------------------------------------------------
| Acquisition of | | 13 | | -26 | -24 | -58 | -32 |
| associates 2) | | | | | | | |
--------------------------------------------------------------------------------
| Acquisition of | | | | 0 | 0 | -2 | -1 |
| other long-term | | | | | | | |
| investments | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds from | | | | 10 | 28 | 48 | 37 |
| sales of fixed | | | | | | | |
| assets | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds from sales of | 7 | | 1 | 43 | 11 | 44 |
| subsidiaries, net of cash | | | | | | |
| disposed | | | | | | |
--------------------------------------------------------------------------------
| Proceeds from | | 13 | | 1 | 10 | 2 | 34 |
| sales of | | | | | | | |
| associates | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds from | | | | 0 | 0 | 1 | 0 |
| sales of other | | | | | | | |
| non-current | | | | | | | |
| assets | | | | | | | |
--------------------------------------------------------------------------------
| Change in | | | | -39 | -58 | -104 | -136 |
| interest-bearing | | | | | | | |
| receivables | | | | | | | |
--------------------------------------------------------------------------------
| Total net cash | | | | -321 | -343 | -974 | -2 |
| used in investing | | | | | | | 282 |
| activities | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow before financing | | 75 | 219 | 1 290 | -280 |
| activities | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from financing | | | | | |
| activities | | | | | |
--------------------------------------------------------------------------------
| Net change in loans | | -1 | 44 | -758 | 2 622 |
--------------------------------------------------------------------------------
| Dividends paid to the | | - | - | -888 | -1 198 |
| Company's equity holders | | | | | |
--------------------------------------------------------------------------------
| Other financing items | | -13 | 30 | -25 | -104 |
--------------------------------------------------------------------------------
| Total net cash used in | | -14 | 74 | -1 671 | 1 320 |
| financing activities | | | | | |
--------------------------------------------------------------------------------
| Total net increase | | | | | |
| (+)/decrease (-) in | | | | | |
--------------------------------------------------------------------------------
| liquid funds | | 61 | 293 | -381 | 1 040 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Liquid funds at the | | 815 | 1 179 | 1 321 | 427 |
| beginning of the period | | | | | |
--------------------------------------------------------------------------------
| Foreign exchange | | 14 | -151 | -50 | -146 |
| differences in liquid funds | | | | | |
--------------------------------------------------------------------------------
| Liquid funds at the end of | | 890 | 1 321 | 890 | 1 321 |
| the period | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Capital expenditures in cash flow do not include investments not yet | |
| paid. Capitalised borrowing costs are included in interest costs paid. | |
--------------------------------------------------------------------------------
| 2) Acquisition of | | | | | | | | |
| associates include | | | | | | | | |
| share issues. | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in net debt | | Q4 | Q4 2008 | 2009 | 2008 |
| | | 2009 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net debt beginning of the | | 6 041 | 6 520 | 6 179 | 4 466 |
| period | | | | | |
--------------------------------------------------------------------------------
| Foreign exchange rate | | -7 | -109 | 144 | -203 |
| differences | | | | | |
--------------------------------------------------------------------------------
| EBITDA | | 658 | 743 | 2 292 | 2 478 |
--------------------------------------------------------------------------------
| Paid net financial costs, | | | | | |
| taxes | | | | | |
--------------------------------------------------------------------------------
| and adjustments for non-cash and | -140 | 36 | -47 | -374 |
| divestment items | | | | |
--------------------------------------------------------------------------------
| Change in working capital | | -122 | -217 | 19 | -102 |
--------------------------------------------------------------------------------
| Capital expenditures | | -266 | -338 | -845 | -1 018 |
--------------------------------------------------------------------------------
| Acquisitions | | -28 | -28 | -87 | -1 243 |
--------------------------------------------------------------------------------
| Divestments | | 12 | 81 | 62 | 115 |
--------------------------------------------------------------------------------
| Change in interest-bearing | | -39 | -58 | -104 | -136 |
| receivables | | | | | |
--------------------------------------------------------------------------------
| Dividends | | - | - | -888 | -1 198 |
--------------------------------------------------------------------------------
| Other financing activities | | -13 | 31 | -25 | -103 |
--------------------------------------------------------------------------------
| Net cash flow (- increase in | | 62 | 250 | 377 | -1 581 |
| net debt) | | | | | |
--------------------------------------------------------------------------------
| Loans in acquired companies | | - | 0 | - | 272 |
--------------------------------------------------------------------------------
| Fair value change of bonds and | -3 | 18 | 23 | 63 |
| amortised cost valuation | | | | |
--------------------------------------------------------------------------------
| Net debt end of period | | 5 969 | 6 179 | 5 969 | 6 179 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| KEY RATIOS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | Dec | Sept | June | March | Dec | Sept | June | March |
| | 31 | 30 | 30 | 31 | 31 | 30 | 30 | 31 |
| | 2009 | 2009 | 2009 | 2009 | 2008 | 2008 | 2008 | 2008 |
--------------------------------------------------------------------------------
| EBITDA, | 2 | 1 | 1 220 | 721 | 2 478 | 1 735 | 1 203 | 720 |
| MEUR | 292 | 634 | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings | 1.48 | 1.02 | 0.78 | 0.46 | 1.74 | 1.10 | 0.78 | 0.51 |
| per share | | | | | | | | |
| (basic), | | | | | | | | |
| EUR | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital | 15 | 15 | 15 | 17 | 15 | 15 756 | 15 593 | 16 868 |
| employed, | 350 | 184 | 347 | 404 | 911 | | | |
| MEUR | | | | | | | | |
--------------------------------------------------------------------------------
| Interest-b | 5 | 6 | 6 004 | 5 634 | 6 179 | 6 520 | 6 254 | 5 228 |
| earing net | 969 | 041 | | | | | | |
| debt, MEUR | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital | 929 | 634 | 412 | 181 | 2 624 | 2 210 | 1 459 | 1 227 |
| expenditur | | | | | | | | |
| e and | | | | | | | | |
| gross | | | | | | | | |
| investment | | | | | | | | |
| s in | | | | | | | | |
| shares, | | | | | | | | |
| MEUR | | | | | | | | |
--------------------------------------------------------------------------------
| Capital | 862 | 571 | 352 | 150 | 1 108 | 716 | 408 | 175 |
| expenditur | | | | | | | | |
| e, MEUR | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on | 12.1 | 11.4 | 13.1 | 14.5 | 15.0 | 13.7 | 14.6 | 17.3 |
| capital | | | | | | | | |
| employed, | | | | | | | | |
| % 1) | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on | 16.0 | 14.6 | 17.4 | 19.6 | 18.7 | 15.7 | 17.2 | 21.0 |
| shareholde | | | | | | | | |
| rs' | | | | | | | | |
| equity, % | | | | | | | | |
| 1) | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net debt / | 2.6 | 2.8 | 2.5 | 2.0 | 2.5 | 2.8 | 2.6 | 1.8 |
| EBITDA 1) | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest | 12.4 | 11.3 | 12.3 | 16.0 | 9.4 | 7.6 | 8.6 | 14.1 |
| coverage | | | | | | | | |
--------------------------------------------------------------------------------
| Interest | 10.3 | 9.5 | 10.5 | 12.9 | 8.6 | 7.1 | 8.1 | 13.8 |
| coverage | | | | | | | | |
| including | | | | | | | | |
| capitalise | | | | | | | | |
| d | | | | | | | | |
| borrowing | | | | | | | | |
| costs | | | | | | | | |
--------------------------------------------------------------------------------
| Funds from | 37.6 | 35.7 | 38.9 | 45.1 | 34.1 | 27.1 | 30.1 | 42.9 |
| operations | | | | | | | | |
| /interest- | | | | | | | | |
| bearing | | | | | | | | |
| net debt, | | | | | | | | |
| % 1) | | | | | | | | |
--------------------------------------------------------------------------------
| Gearing, % | 70 | 73 | 76 | 65 | 73 | 81 | 77 | 56 |
--------------------------------------------------------------------------------
| Equity per | 9.04 | 8.89 | 8.42 | 9.34 | 8.96 | 8.49 | 8.08 | 9.53 |
| share, EUR | | | | | | | | |
--------------------------------------------------------------------------------
| Equity-to- | 43 | 43 | 41 | 40 | 41 | 39 | 39 | 44 |
| assets | | | | | | | | |
| ratio, % | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Number of | 11 | 12 | 13 | 14 | 15 | 15 785 | 16 069 | 15 689 |
| employees | 613 | 054 | 586 | 267 | 579 | | | |
--------------------------------------------------------------------------------
| Average | 13 | 13 | 14 | 14 | 14 | 13 585 | 12 603 | 8 356 |
| number of | 278 | 737 | 310 | 644 | 077 | | | |
| employees | | | | | | | | |
--------------------------------------------------------------------------------
| Average | 888 | 888 | 888 | 888 | 887 | 887 | 887 | 887 085 |
| number of | 230 | 230 | 230 | 095 | 256 | 241 | 131 | |
| shares, 1 | | | | | | | | |
| 000 shares | | | | | | | | |
--------------------------------------------------------------------------------
| Diluted | 888 | 888 | 888 | 888 | 887 | 887 | 888 | 888 177 |
| adjusted | 230 | 230 | 230 | 250 | 839 | 986 | 165 | |
| average | | | | | | | | |
| number of | | | | | | | | |
| shares, 1 | | | | | | | | |
| 000 shares | | | | | | | | |
--------------------------------------------------------------------------------
| Number of | 888 | 888 | 888 | 888 | 887 | 887 | 887 | 887 123 |
| registered | 367 | 367 | 367 | 166 | 638 | 517 | 191 | |
| 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 Interim Statement is based on the 2009 Financial Statements approved by the
Board and the auditors on 2 February 2010. 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
consolidated financial statements as at and 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 35inalizati 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 35inalization borrowing costs as
previously only borrowings costs meeting determined criteria were 35inalizatio.
Fortum has applied the revised IAS 23 to qualifying assets for which
35inalization35n of borrowing costs commences on or after 1 January 2009. The
change did not have a material effect on the 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 consolidated
financial statements as at and for the year ended 31 December 2008.
--------------------------------------------------------------------------------
| 4. SEGMENT INFORMATION |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SALES | Q4 2009 | Q4 2008 | 2009 | 2008 |
| MEUR | | | | |
--------------------------------------------------------------------------------
| Power sales excluding indirect | 877 | 886 | 3 192 | 3 291 |
| taxes | | | | |
--------------------------------------------------------------------------------
| Heating sales | 427 | 440 | 1 314 | 1 298 |
--------------------------------------------------------------------------------
| Network transmissions | 213 | 193 | 760 | 746 |
--------------------------------------------------------------------------------
| Other sales | 46 | 83 | 169 | 301 |
--------------------------------------------------------------------------------
| Total | 1 563 | 1 602 | 5 435 | 5 636 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SALES BY SEGMENT | Q4 2009 | Q4 2008 | 2009 | 2008 |
| MEUR | | | | |
--------------------------------------------------------------------------------
| Power | 679 | 736 | 2 596 | 2 892 |
--------------------------------------------------------------------------------
| - of which internal | 35 | 5 | 231 | 0 |
--------------------------------------------------------------------------------
| Heat | 457 | 463 | 1 394 | 1 466 |
--------------------------------------------------------------------------------
| - of which internal | 8 | -3 | 22 | 0 |
--------------------------------------------------------------------------------
| Distribution | 227 | 206 | 800 | 789 |
--------------------------------------------------------------------------------
| - of which internal | 7 | 3 | 13 | 10 |
--------------------------------------------------------------------------------
| Markets | 410 | 531 | 1 449 | 1 922 |
--------------------------------------------------------------------------------
| - of which internal | 29 | 50 | 68 | 177 |
--------------------------------------------------------------------------------
| Russia | 194 | 197 | 623 | 489 |
--------------------------------------------------------------------------------
| - of which internal | - | - | - | - |
--------------------------------------------------------------------------------
| Other | 19 | 21 | 74 | 83 |
--------------------------------------------------------------------------------
| - of which internal | 19 | 21 | 72 | 82 |
--------------------------------------------------------------------------------
| Netting of Nord Pool | -325 | -476 | -1 095 | -1 736 |
| transactions 1) | | | | |
--------------------------------------------------------------------------------
| Eliminations | -98 | -76 | -406 | -269 |
--------------------------------------------------------------------------------
| Total | 1 563 | 1 602 | 5 435 | 5 636 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 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 SEGMENT | Q4 2009 | Q4 2008 | 2009 | 2008 |
| MEUR | | | | |
--------------------------------------------------------------------------------
| Power | 330 | 470 | 1 335 | 1 599 |
--------------------------------------------------------------------------------
| Heat | 108 | 155 | 248 | 307 |
--------------------------------------------------------------------------------
| Distribution | 81 | 61 | 263 | 248 |
--------------------------------------------------------------------------------
| Markets | 19 | -29 | 22 | -35 |
--------------------------------------------------------------------------------
| Russia | 7 | -19 | -26 | -91 |
--------------------------------------------------------------------------------
| Other | -23 | -27 | -60 | -65 |
--------------------------------------------------------------------------------
| Total | 522 | 611 | 1 782 | 1 963 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| COMPARABLE OPERATING PROFIT BY | Q4 2009 | Q4 2008 | 2009 | 2008 |
| SEGMENT | | | | |
| MEUR | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Power | 394 | 378 | 1 469 | 1 528 |
--------------------------------------------------------------------------------
| Heat | 103 | 109 | 227 | 250 |
--------------------------------------------------------------------------------
| Distribution | 80 | 63 | 262 | 248 |
--------------------------------------------------------------------------------
| Markets | 11 | 0 | 22 | -33 |
--------------------------------------------------------------------------------
| Russia | 7 | -20 | -26 | -92 |
--------------------------------------------------------------------------------
| Other | -25 | -22 | -66 | -56 |
--------------------------------------------------------------------------------
| Comparable operating profit | 570 | 508 | 1 888 | 1 845 |
--------------------------------------------------------------------------------
| Non-recurring items | 8 | 68 | 29 | 85 |
--------------------------------------------------------------------------------
| Other items effecting | -56 | 35 | -135 | 33 |
| comparability | | | | |
--------------------------------------------------------------------------------
| Operating profit | 522 | 611 | 1 782 | 1 963 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NON-RECURRING ITEMS BY SEGMENT | Q4 2009 | Q4 2008 | 2009 | 2008 |
| MEUR | | | | |
--------------------------------------------------------------------------------
| Power | 0 | 7 | 6 | 18 |
--------------------------------------------------------------------------------
| Heat | 6 | 60 | 21 | 64 |
--------------------------------------------------------------------------------
| Distribution | 1 | 0 | 1 | 2 |
--------------------------------------------------------------------------------
| Markets | 0 | - | 0 | - |
--------------------------------------------------------------------------------
| Russia | 0 | 1 | 0 | 1 |
--------------------------------------------------------------------------------
| Other | 1 | 0 | 1 | 0 |
--------------------------------------------------------------------------------
| Total | 8 | 68 | 29 | 85 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OTHER ITEMS EFFECTING | Q4 2009 | Q4 2008 | 2009 | 2008 |
| COMPARABILITY BY SEGMENT | | | | |
| MEUR | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Power 1) | -64 | 85 | -140 | 53 |
--------------------------------------------------------------------------------
| Heat | -1 | -14 | 0 | -7 |
--------------------------------------------------------------------------------
| Distribution | 0 | -2 | 0 | -2 |
--------------------------------------------------------------------------------
| Markets | 8 | -29 | 0 | -2 |
--------------------------------------------------------------------------------
| Russia | - | - | - | - |
--------------------------------------------------------------------------------
| Other | 1 | -5 | 5 | -9 |
--------------------------------------------------------------------------------
| Total | -56 | 35 | -135 | 33 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Including effects from the | | | | |
| accounting of Fortum's part of | | | | |
--------------------------------------------------------------------------------
| the Finnish State Nuclear Waste | -33 | -12 | -59 | -19 |
| 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 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, AMORTISATION AND | Q4 2009 | Q4 2008 | 2009 | 2008 |
| IMPAIRMENT CHARGES BY SEGMENT | | | | |
| MEUR | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Power | 24 | 24 | 93 | 97 |
--------------------------------------------------------------------------------
| Heat | 45 | 41 | 162 | 169 |
--------------------------------------------------------------------------------
| Distribution | 42 | 41 | 164 | 165 |
--------------------------------------------------------------------------------
| Markets | 2 | 1 | 6 | 7 |
--------------------------------------------------------------------------------
| Russia | 20 | 22 | 75 | 67 |
--------------------------------------------------------------------------------
| Other | 3 | 3 | 10 | 10 |
--------------------------------------------------------------------------------
| Total | 136 | 132 | 510 | 515 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SHARE OF PROFIT/LOSS IN | Q4 2009 | Q4 2008 | 2009 | 2008 |
| ASSOCIATES AND JOINT VENTURES BY | | | | |
| SEGMENT | | | | |
| MEUR | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Power 1), 2) | -15 | 39 | -35 | 26 |
--------------------------------------------------------------------------------
| Heat | 12 | 4 | 30 | 12 |
--------------------------------------------------------------------------------
| Distribution | 2 | 3 | 10 | 16 |
--------------------------------------------------------------------------------
| Markets | -1 | 0 | 0 | 5 |
--------------------------------------------------------------------------------
| Russia | 14 | 0 | 20 | 19 |
--------------------------------------------------------------------------------
| Other | 10 | 2 | -4 | 48 |
--------------------------------------------------------------------------------
| Total | 22 | 48 | 21 | 126 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Including effects from the accounting of Fortum's associates part of |
| Finnish |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| and Swedish Nuclear Waste | 0 | 14 | -5 | 9 |
| Management Funds with (EUR | | | | |
| million): | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 2) The main part of the associated companies in Power are power production |
| companies from which Fortum purchases |
--------------------------------------------------------------------------------
| produced electricity at production costs including interest costs, |
| production taxes and income taxes. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PARTICIPATIONS IN ASSOCIATES AND JOINT | Dec 31 | Dec 31 |
| VENTURES BY SEGMENT | 2009 | 2008 |
| MEUR | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Power | 863 | 818 |
--------------------------------------------------------------------------------
| Heat | 178 | 160 |
--------------------------------------------------------------------------------
| Distribution | 230 | 210 |
--------------------------------------------------------------------------------
| Markets | 12 | 12 |
--------------------------------------------------------------------------------
| Russia | 425 | 429 |
--------------------------------------------------------------------------------
| Other | 480 | 483 |
--------------------------------------------------------------------------------
| Total | 2 188 | 2 112 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CAPITAL EXPENDITURE BY | Q4 2009 | Q4 2008 | 2009 | 2008 |
| SEGMENT | | | | |
| MEUR | | | | |
--------------------------------------------------------------------------------
| Power | 33 | 49 | 97 | 134 |
--------------------------------------------------------------------------------
| Heat | 100 | 144 | 358 | 408 |
--------------------------------------------------------------------------------
| Distribution 1) | 61 | 93 | 188 | 296 |
--------------------------------------------------------------------------------
| Markets | 0 | 0 | 1 | 3 |
--------------------------------------------------------------------------------
| Russia | 98 | 104 | 215 | 256 |
--------------------------------------------------------------------------------
| Other | -1 | 2 | 3 | 11 |
--------------------------------------------------------------------------------
| Total | 291 | 392 | 862 | 1 108 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Of which 35inalizatio | 9 | 8 | 30 | 21 |
| borrowing costs | | | | |
--------------------------------------------------------------------------------
1) Decrease is mainly due to the 35inalization of installation of new
meters in Fortum's network areas in Sweden (Automatic Meter Management, AMM).
--------------------------------------------------------------------------------
| GROSS INVESTMENTS IN SHARES BY | Q4 2009 | Q4 2008 | 2009 | 2008 |
| SEGMENT | | | | |
| MEUR | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Power | 1 | 0 | 57 | 0 |
--------------------------------------------------------------------------------
| Heat | 1 | 0 | 1 | 23 |
--------------------------------------------------------------------------------
| Distribution | 2 | - | 5 | - |
--------------------------------------------------------------------------------
| Markets | - | 0 | - | 0 |
--------------------------------------------------------------------------------
| Russia | 0 | 22 | 3 | 1 492 |
--------------------------------------------------------------------------------
| Other | 0 | 0 | 1 | 1 |
--------------------------------------------------------------------------------
| Total | 4 | 22 | 67 | 1 516 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gross investments in shares during 2009 comprise mainly of Hafslund Infratek |
| ASA shares acquired in January 2009 and additional |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| share capital paid to Teollisuuden Voima Oyj. See Note 13. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NET ASSETS BY SEGMENT | Dec 31 | Dec 31 |
| MEUR | 2009 | 2008 |
--------------------------------------------------------------------------------
| Power | 5 512 | 5 331 |
--------------------------------------------------------------------------------
| Heat | 3 786 | 3 468 |
--------------------------------------------------------------------------------
| Distribution | 3 299 | 3 032 |
--------------------------------------------------------------------------------
| Markets | 147 | 188 |
--------------------------------------------------------------------------------
| Russia | 2 248 | 2 205 |
--------------------------------------------------------------------------------
| Other | 355 | 796 |
--------------------------------------------------------------------------------
| Total | 15 347 | 15 020 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| RETURN ON NET ASSETS BY SEGMENT | Dec 31 | Dec 31 |
| % | 2009 | 2008 |
--------------------------------------------------------------------------------
| Power | 23.9 | 29.6 |
--------------------------------------------------------------------------------
| Heat | 7.8 | 8.9 |
--------------------------------------------------------------------------------
| Distribution | 8.7 | 8.1 |
--------------------------------------------------------------------------------
| Markets | 16.8 | -14.0 |
--------------------------------------------------------------------------------
| Russia | -0.3 | -3.7 |
--------------------------------------------------------------------------------
| Other | -12.2 | -1.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| COMPARABLE RETURN ON NET ASSETS BY SEGMENT | Dec 31 | Dec 31 |
| % | 2009 | 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Power | 26.6 | 28.0 |
--------------------------------------------------------------------------------
| Heat | 7.2 | 7.3 |
--------------------------------------------------------------------------------
| Distribution | 8.6 | 8.2 |
--------------------------------------------------------------------------------
| Markets | 18.6 | -15.3 |
--------------------------------------------------------------------------------
| Russia | -0.3 | -3.8 |
--------------------------------------------------------------------------------
| Other | -18.7 | -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 | Dec 31 | Dec 31 |
| MEUR | 2009 | 2008 |
--------------------------------------------------------------------------------
| Power | 5 976 | 5 732 |
--------------------------------------------------------------------------------
| Heat | 4 240 | 3 923 |
--------------------------------------------------------------------------------
| Distribution | 3 765 | 3 546 |
--------------------------------------------------------------------------------
| Markets | 497 | 663 |
--------------------------------------------------------------------------------
| Russia | 2 529 | 2 476 |
--------------------------------------------------------------------------------
| Other | 607 | 997 |
--------------------------------------------------------------------------------
| Assets included in Net assets | 17 614 | 17 337 |
--------------------------------------------------------------------------------
| Interest-bearing receivables | 943 | 799 |
--------------------------------------------------------------------------------
| Deferred taxes | 47 | 2 |
--------------------------------------------------------------------------------
| Other assets | 347 | 819 |
--------------------------------------------------------------------------------
| Liquid funds | 890 | 1 321 |
--------------------------------------------------------------------------------
| Total assets | 19 841 | 20 278 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| LIABILITIES BY SEGMENTS | Dec 31 | Dec 31 |
| MEUR | 2009 | 2008 |
--------------------------------------------------------------------------------
| Power | 464 | 401 |
--------------------------------------------------------------------------------
| Heat | 454 | 455 |
--------------------------------------------------------------------------------
| Distribution | 466 | 514 |
--------------------------------------------------------------------------------
| Markets | 350 | 475 |
--------------------------------------------------------------------------------
| Russia | 281 | 271 |
--------------------------------------------------------------------------------
| Other | 252 | 201 |
--------------------------------------------------------------------------------
| Liabilities included in Net assets | 2 267 | 2 317 |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 1 750 | 1 851 |
--------------------------------------------------------------------------------
| Other liabilities | 474 | 199 |
--------------------------------------------------------------------------------
| Total liabilities included in Capital employed | 4 491 | 4 367 |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | 6 859 | 7 500 |
--------------------------------------------------------------------------------
| Total equity | 8 491 | 8 411 |
--------------------------------------------------------------------------------
| Total equity and liabilities | 19 841 | 20 278 |
--------------------------------------------------------------------------------
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 | Dec 31 | Dec 31 |
| | 2009 | 2008 |
--------------------------------------------------------------------------------
| Power | 3 063 | 3 520 |
--------------------------------------------------------------------------------
| Heat | 2 246 | 2 318 |
--------------------------------------------------------------------------------
| Distribution | 1 088 | 1 336 |
--------------------------------------------------------------------------------
| Markets | 611 | 635 |
--------------------------------------------------------------------------------
| Russia | 4 090 | 7 262 |
--------------------------------------------------------------------------------
| Other | 515 | 508 |
--------------------------------------------------------------------------------
| Total | 11 613 | 15 579 |
--------------------------------------------------------------------------------
Number of employees in Fortum decreased during 2009 mainly due to
outsourcing of certain infrastructure functions from Power segment'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 (former TGC-10) were
transferred to Power segment's Service Business unit in Q1 2009.
--------------------------------------------------------------------------------
| AVERAGE NUMBER OF EMPLOYEES | 2009 | 2008 |
--------------------------------------------------------------------------------
| Power | 3 373 | 3 591 |
--------------------------------------------------------------------------------
| Heat | 2 208 | 2 422 |
--------------------------------------------------------------------------------
| Distribution | 1 166 | 1 222 |
--------------------------------------------------------------------------------
| Markets | 629 | 766 |
--------------------------------------------------------------------------------
| Russia | 5 380 | 5 566 |
--------------------------------------------------------------------------------
| Other | 522 | 510 |
--------------------------------------------------------------------------------
| Total | 13 278 | 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 (about Fortum/investors/financial | | |
| information). | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUART | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| ERLY | 20 | 2009 | 2009 | 2009 | 2008 | 2008 | 2008 | 2008 |
| SALES | 09 | | | | | | | |
| BY | | | | | | | | |
| SEGME | | | | | | | | |
| NTS | | | | | | | | |
| MEUR | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Power | 679 | 587 | 625 | 705 | 736 | 718 | 721 | 717 | |
--------------------------------------------------------------------------------
| - of | 35 | 53 | 64 | 79 | 5 | -79 | 21 | 53 | |
| which | | | | | | | | | |
| internal | | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | 457 | 176 | 248 | 513 | 463 | 226 | 284 | 493 | |
--------------------------------------------------------------------------------
| - of | 8 | 2 | 3 | 9 | -3 | -4 | 0 | 7 | |
| which | | | | | | | | | |
| internal | | | | | | | | | |
--------------------------------------------------------------------------------
| Distribut | 227 | 168 | 176 | 229 | 206 | 171 | 180 | 232 | |
| ion | | | | | | | | | |
--------------------------------------------------------------------------------
| - of | 7 | 2 | 3 | 1 | 3 | 2 | 2 | 3 | |
| which | | | | | | | | | |
| internal | | | | | | | | | |
--------------------------------------------------------------------------------
| Markets | 410 | 272 | 298 | 469 | 531 | 461 | 411 | 519 | |
--------------------------------------------------------------------------------
| - of | 29 | 9 | 8 | 22 | 50 | 61 | 34 | 32 | |
| which | | | | | | | | | |
| internal | | | | | | | | | |
--------------------------------------------------------------------------------
| Russia | 194 | 109 | 136 | 184 | 197 | 140 | 152 | - | |
| | | | | | | | | | |
--------------------------------------------------------------------------------
| - of | - | - | - | - | - | - | - | - | |
| which | | | | | | | | | |
| internal | | | | | | | | | |
--------------------------------------------------------------------------------
| Other | 19 | 18 | 19 | 18 | 21 | 21 | 21 | 20 | |
--------------------------------------------------------------------------------
| - of | 19 | 18 | 18 | 17 | 21 | 20 | 21 | 20 | |
| which | | | | | | | | | |
| internal | | | | | | | | | |
--------------------------------------------------------------------------------
| Netting | -325 | -200 | -212 | -358 | -476 | -465 | -369 | -426 | |
| of Nord | | | | | | | | | |
| Pool | | | | | | | | | |
| transacti | | | | | | | | | |
| ons | | | | | | | | | |
--------------------------------------------------------------------------------
| Eliminati | -98 | -84 | -96 | -128 | -76 | 0 | -78 | -115 | |
| ons | | | | | | | | | |
--------------------------------------------------------------------------------
| Total | 1 563 | 1 | 1 | 1 | 1 602 | 1 272 | 1 322 | 1 440 |
| | | 046 | 194 | 632 | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUART | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |
| ERLY | 20 | 2009 | 2009 | 2009 | 2008 | 2008 | 2008 | 20 | |
| OPERA | 09 | | | | | | | 08 | |
| TING | | | | | | | | | |
| PROFI | | | | | | | | | |
| T BY | | | | | | | | | |
| SEGME | | | | | | | | | |
| NTS | | | | | | | | | |
| MEUR | | | | | | | | | |
--------------------------------------------------------------------------------
| Power | 33 | 278 | 304 | 423 | 470 | 438 | 260 | 43 | |
| | 0 | | | | | | | 1 | |
--------------------------------------------------------------------------------
| Heat | 10 | -12 | 39 | 113 | 155 | -15 | 37 | 13 | |
| | 8 | | | | | | | 0 | |
--------------------------------------------------------------------------------
| Distr | 81 | 47 | 54 | 81 | 61 | 50 | 51 | 86 | |
| ibuti | | | | | | | | | |
| on | | | | | | | | | |
--------------------------------------------------------------------------------
| Marke | 19 | 7 | 7 | -11 | -29 | -17 | 31 | -2 | |
| ts | | | | | | | | 0 | |
--------------------------------------------------------------------------------
| Russi | 7 | -22 | -16 | 5 | -19 | -39 | -33 | - | |
| a | | | | | | | | | |
--------------------------------------------------------------------------------
| Other | -2 | -12 | -13 | -12 | -27 | -22 | 2 | -1 | |
| | 3 | | | | | | | 8 | |
--------------------------------------------------------------------------------
| Total | 52 | 286 | 375 | 599 | 611 | 395 | 348 | 60 | |
| | 2 | | | | | | | 9 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| COMPARABLE | 2009 | 2009 | 2009 | 2009 | 2008 | 2008 | 2008 | 2008 |
| OPERATING | | | | | | | | |
| PROFIT BY | | | | | | | | |
| SEGMENTS | | | | | | | | |
| MEUR | | | | | | | | |
--------------------------------------------------------------------------------
| Power | 394 | 310 | 346 | 419 | 378 | 371 | 384 | 395 |
--------------------------------------------------------------------------------
| Heat | 103 | -14 | 26 | 112 | 109 | -7 | 27 | 121 |
--------------------------------------------------------------------------------
| Distributi | 80 | 47 | 54 | 81 | 63 | 49 | 49 | 87 |
| on | | | | | | | | |
--------------------------------------------------------------------------------
| Markets | 11 | 7 | 6 | -2 | 0 | -8 | -15 | -10 |
--------------------------------------------------------------------------------
| Russia | 7 | -22 | -16 | 5 | -20 | -39 | -33 | - |
--------------------------------------------------------------------------------
| Other | -25 | -12 | -16 | -13 | -22 | -13 | -9 | -12 |
--------------------------------------------------------------------------------
| Total | 570 | 316 | 400 | 602 | 508 | 353 | 403 | 581 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| NON-RECURRI | 2009 | 2009 | 2009 | 2009 | 2008 | 2008 | 2008 | 2008 |
| NG ITEMS BY | | | | | | | | |
| SEGMENT | | | | | | | | |
| MEUR | | | | | | | | |
--------------------------------------------------------------------------------
| Power | 0 | 1 | 1 | 4 | 7 | 11 | 0 | 0 |
--------------------------------------------------------------------------------
| Heat | 6 | 6 | 9 | 0 | 60 | 2 | 0 | 2 |
--------------------------------------------------------------------------------
| Distributio | 1 | 0 | 0 | 0 | 0 | 2 | 0 | 0 |
| n | | | | | | | | |
--------------------------------------------------------------------------------
| Markets | 0 | 0 | 0 | 0 | - | - | - | - |
--------------------------------------------------------------------------------
| Russia | 0 | 0 | 0 | 0 | 1 | 0 | - | - |
--------------------------------------------------------------------------------
| Other | 1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
--------------------------------------------------------------------------------
| Total | 8 | 7 | 10 | 4 | 68 | 15 | 0 | 2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| OTHER ITEMS | 2009 | 2009 | 2009 | 2009 | 2008 | 2008 | 2008 | 2008 |
| EFFECTING | | | | | | | | |
| COMPARABILIT | | | | | | | | |
| Y | | | | | | | | |
| MEUR | | | | | | | | |
--------------------------------------------------------------------------------
| Power 1) | -64 | -33 | -43 | 0 | 85 | 56 | -124 | 36 |
--------------------------------------------------------------------------------
| Heat | -1 | -4 | 4 | 1 | -14 | -10 | 10 | 7 |
--------------------------------------------------------------------------------
| Distribution | 0 | 0 | 0 | 0 | -2 | -1 | 2 | -1 |
--------------------------------------------------------------------------------
| Markets | 8 | 0 | 1 | -9 | -29 | -9 | 46 | -10 |
--------------------------------------------------------------------------------
| Russia | - | - | - | - | - | - | - | - |
--------------------------------------------------------------------------------
| Other | 1 | 0 | 3 | 1 | -5 | -9 | 11 | -6 |
--------------------------------------------------------------------------------
| Total | -56 | -37 | -35 | -7 | 35 | 27 | -55 | 26 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Including effects from the accounting of Fortum's part of the Finnish |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| State Nuclear Waste Management Fund with |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| (EUR million): | -33 | -5 | -10 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 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 | | Dec 31 | Dec 31 |
| | | 2009 | 2008 |
--------------------------------------------------------------------------------
| Interest and currency | Notional | Net fair | Notional | Net fair |
| derivatives | value | value | value | value |
--------------------------------------------------------------------------------
| | MEUR | MEUR | MEUR | MEUR |
--------------------------------------------------------------------------------
| Interest rate swaps | 3 995 | 41 | 2 993 | -12 |
--------------------------------------------------------------------------------
| Forward foreign exchange | 6 334 | -123 | 4 521 | 370 |
| contracts | | | | |
--------------------------------------------------------------------------------
| Forward rate agreements | - | - | 230 | 0 |
--------------------------------------------------------------------------------
| Interest rate and currency swaps | 1 454 | 65 | 2 240 | 218 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Electricity derivatives | Volume | Net fair | Volume | Net fair |
| | | value | | value |
--------------------------------------------------------------------------------
| | TWh | MEUR | TWh | MEUR |
--------------------------------------------------------------------------------
| Sales swaps | 157 | 9 | 165 | 2 102 |
--------------------------------------------------------------------------------
| Purchase swaps | 102 | -79 | 123 | -1 692 |
--------------------------------------------------------------------------------
| Purchased options | 1 | -1 | 2 | 0 |
--------------------------------------------------------------------------------
| Written options | 3 | 1 | 4 | -14 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Oil derivatives | Volume | Net fair | Volume | Net fair |
| | | value | | value |
--------------------------------------------------------------------------------
| | 1000 bbl | MEUR | 1000 bbl | MEUR |
--------------------------------------------------------------------------------
| Sales swaps and futures | 1 555 | -4 | 1 047 | -14 |
--------------------------------------------------------------------------------
| Purchase swaps and futures | 1 450 | 4 | 1 230 | 11 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Coal derivatives | Volume | Net fair | Volume | Net fair |
| | | value | | value |
--------------------------------------------------------------------------------
| | kt | MEUR | kt | MEUR |
--------------------------------------------------------------------------------
| Sold | 1 259 | -3 | 276 | 7 |
--------------------------------------------------------------------------------
| Bought | 1 762 | -1 | 641 | -16 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CO2 emission allowance | Volume | Net fair | Volume | Net fair |
| derivatives | | value | | value |
--------------------------------------------------------------------------------
| | ktCO2 | MEUR | ktCO2 | MEUR |
--------------------------------------------------------------------------------
| Sold | 366 | 1 | 592 | 4 |
--------------------------------------------------------------------------------
| Bought | 686 | -2 | 592 | -4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share derivatives | Notional | Net fair | Notional | Net fair |
| | value | value | value | value |
--------------------------------------------------------------------------------
| | MEUR | MEUR | MEUR | MEUR |
--------------------------------------------------------------------------------
| Share forwards 1) | 24 | 21 | 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 2009 amounted to EUR 8 million
(2008: 1,506). In June 2009 OAO Fortum has redeemed additional shares,
approximately 0.2%. At the end of December 2009, Fortum's ownership in OAO
Fortum was 94.51% including treasury shares and shares held by OAO Fortum's 100%
owned subsidiary. During last half of 2009 Fortum has acquired the remaining
non-controlling interest in Ekerö Energy Group.
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 Russian roubles has been translated into euros by using
the exchange rate from the acquisition date. The shares redeemed in June 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 the | | | 8 |
| acquisition | | | |
--------------------------------------------------------------------------------
| Total purchase consideration | | | 2 541 |
--------------------------------------------------------------------------------
| Fair value of the acquired assets | | | 2 211 |
--------------------------------------------------------------------------------
| Translation differences | | | -9 |
--------------------------------------------------------------------------------
| Goodwill | | | 339 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Acquired | Allocated | Total |
--------------------------------------------------------------------------------
| Fair value of the acquired net | Book | Fair | Value |
| identifiable assets: | Values | Values | |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 1 321 | | 1 321 |
--------------------------------------------------------------------------------
| Property, plant and equipment | 625 | 1 005 | 1 630 |
--------------------------------------------------------------------------------
| Other assets | 182 | | 182 |
--------------------------------------------------------------------------------
| Non-interest-bearing liabilities | -107 | -388 | -495 |
--------------------------------------------------------------------------------
| Interest-bearing liabilities | -272 | | -272 |
--------------------------------------------------------------------------------
| 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 settled in cash | | | 2 541 |
--------------------------------------------------------------------------------
| Cash and cash equivalents in | | | 1 321 |
| subsidiaries acquired | | | |
--------------------------------------------------------------------------------
| Cash outflow on acquisition | | | 1 220 |
--------------------------------------------------------------------------------
| Interest-bearing debt in subsidiaries | | | 272 |
| 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.
In the end of December 2008 Fortum sold its 60% ownership in Jyväskylän
Energiantuotanto Oy to Jyväskylän Energia. The transaction included both
subsidiary shares, land on which the power plant is located on and assets
related to business operations. In July 2008 Fortum sold its 100% ownership in
Recotech AB to Tellestate AB.
--------------------------------------------------------------------------------
| 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:
--------------------------------------------------------------------------------
| Avera | Jan-D | Jan-Se | Jan-Ju | Jan-Ma | Jan-De | Jan-Se | Jan-Ju | Jan-Ma |
| ge | ec | pt | ne | rch | c | pt | ne | rch |
| rate | 2009 | 2009 | 2009 | 2009 | 2008 | 2008 | 2008 | 2008 |
--------------------------------------------------------------------------------
| Swede | 10.60 | 10.683 | 10.863 | 10.967 | 9.6647 | 9.4559 | 9.4088 | 9.4265 |
| n | 92 | 0 | 3 | 9 | | | | |
| (SEK) | | | | | | | | |
--------------------------------------------------------------------------------
| Norwa | 8.770 | 8.8817 | 9.0049 | 9.1034 | 8.2605 | 8.0187 | 7.9843 | 7.9998 |
| y | 8 | | | | | | | |
| (NOK) | | | | | | | | |
--------------------------------------------------------------------------------
| Polan | 4.332 | 4.3827 | 4.4764 | 4.5018 | 3.5328 | 3.4402 | 3.4926 | 3.5676 |
| d | 1 | | | | | | | |
| (PLN) | | | | | | | | |
--------------------------------------------------------------------------------
| Russi | 44.06 | 44.274 | 44.108 | 44.392 | 36.690 | 36.567 | 36.634 | 36.466 |
| a | 84 | 5 | 7 | 8 | 5 | 0 | 8 | 0 |
| (RUB) | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Balan | Dec | Sept | June | March | Dec 31 | Sept | June | March |
| ce | 31 | 30 | 30 | 31 | 2008 | 30 | 30 | 31 |
| sheet | 2009 | 2009 | 2009 | 2009 | | 2008 | 2008 | 2008 |
| date | | | | | | | | |
| rate | | | | | | | | |
--------------------------------------------------------------------------------
| Swede | 10.25 | 10.232 | 10.812 | 10.940 | 10.870 | 9.7943 | 9.4703 | 9.3970 |
| n | 20 | 0 | 5 | 0 | 0 | | | |
| (SEK) | | | | | | | | |
--------------------------------------------------------------------------------
| Norwa | 8.300 | 8.4600 | 9.0180 | 8.8900 | 9.7500 | 8.3330 | 8.0090 | 8.0510 |
| y | 0 | | | | | | | |
| (NOK) | | | | | | | | |
--------------------------------------------------------------------------------
| Polan | 4.104 | 4.2295 | 4.4520 | 4.6885 | 4.1535 | 3.3967 | 3.3513 | 3.5220 |
| d | 5 | | | | | | | |
| (PLN) | | | | | | | | |
--------------------------------------------------------------------------------
| Russi | 43.15 | 43.980 | 43.881 | 45.032 | 41.283 | 36.409 | 36.947 | 37.113 |
| a | 40 | 0 | 0 | 0 | 0 | 5 | 7 | 0 |
| (RUB) | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 9. INCOME TAX EXPENSE |
--------------------------------------------------------------------------------
Tax rate according to the income statement for 2009 was 17.4% (2008: 13.7%). The
tax rate for the year is higher than in 2008 mainly due to the impact of the
positive one time-effect of EUR 113 million in 2008 from revaluating the
deferred taxes due to the decreased tax rates in Sweden and Russia.
The tax rate for the full year 2009, excluding the impact of share of profits of
associated companies and joint ventures, non- taxable capital gains and other
one-time items was 18.5% (2008: 22.1%). The tax rate used in the income
statement is always impacted by the fact that share of profits of associates and
joint ventures is recorded based on Fortum's share of profits after tax.
--------------------------------------------------------------------------------
| 10. EARNINGS | | | | | | | | |
| PER SHARE | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The calculation of basic and diluted earnings per | | | |
| share is based on the following data: | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | | | | 2009 | 2008 |
--------------------------------------------------------------------------------
| Earnings (MEUR): | | | | | | |
--------------------------------------------------------------------------------
| Profit attributable to the owners | | | 1 312 | 1 542 |
| of the parent | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Number of shares | | | | | |
| (thousands): | | | | | |
--------------------------------------------------------------------------------
| Weighted average number of shares for the purpose of | | |
--------------------------------------------------------------------------------
| basic earnings per | | | | | 888 230 | 887 256 |
| share | | | | | | |
--------------------------------------------------------------------------------
| Effect of dilutive share | | | | - | 583 |
| options | | | | | |
--------------------------------------------------------------------------------
| Weighted average number of shares for the purpose of | | |
--------------------------------------------------------------------------------
| diluted earnings | | | | | 888 230 | 887 839 |
| per share | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 11. DIVIDEND | | | | | | | | |
| PER SHARE | | | | | | | | |
--------------------------------------------------------------------------------
A dividend in respect of 2009 of EUR 1.00 per share, amounting to a total
dividend of EUR 888 million based on the number of shares registered as of 2
February 2010, is to be proposed at the Annual General Meeting on 25 March 2010.
These financial statements do not reflect this dividend.
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 | | | | Dec 31 | Dec 31 |
| | | | | 2009 | 2008 |
--------------------------------------------------------------------------------
| Opening balance | | | | 12 533 | 11 428 |
--------------------------------------------------------------------------------
| Increase through acquisition of subsidiary companies | 2 | 1 980 |
--------------------------------------------------------------------------------
| Capital expenditures | | | | 862 | 1 108 |
--------------------------------------------------------------------------------
| Changes of nuclear asset retirement cost | | -7 | 22 |
--------------------------------------------------------------------------------
| Changes of emission | | | | 0 | 14 |
| rights | | | | | |
--------------------------------------------------------------------------------
| Disposals | | | | -26 | -14 |
--------------------------------------------------------------------------------
| Depreciation, amortisation and impairment | | -510 | -515 |
--------------------------------------------------------------------------------
| Sale of subsidiary | | | | -5 | -31 |
| companies | | | | | |
--------------------------------------------------------------------------------
| Translation differences and other | | 397 | -1 459 |
| adjustments | | | |
--------------------------------------------------------------------------------
| Closing balance | | | | 13 246 | 12 533 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Goodwill included in Closing | | | 285 | 298 |
| balance | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Change in goodwill during the period due to | -13 | -41 |
| translation differences | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 13. CHANGES IN PARTICIPATIONS IN ASSOCIATES AND JOINT VENTURES |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | | | | Dec 31 | Dec 31 |
| | | | | 2009 | 2008 |
--------------------------------------------------------------------------------
| Opening balance | | | | 2 112 | 2 853 |
--------------------------------------------------------------------------------
| Share of profits of associates and joint ventures | 21 | 126 |
--------------------------------------------------------------------------------
| Investments | | | | 33 | 7 |
--------------------------------------------------------------------------------
| Share issues and shareholders' contributions | | 25 | 1 |
--------------------------------------------------------------------------------
| Increase through acquisition of subsidiary companies | - | 36 |
--------------------------------------------------------------------------------
| Reclassifications | | | | -7 | -3 |
--------------------------------------------------------------------------------
| Divestments | | | | -1 | -13 |
--------------------------------------------------------------------------------
| Dividend income received | | | | -32 | -51 |
--------------------------------------------------------------------------------
| OCI items associated companies | | | -36 | -628 |
--------------------------------------------------------------------------------
| Translation differences | | | | 73 | -216 |
--------------------------------------------------------------------------------
| Closing balance | | | | 2 188 | 2 112 |
--------------------------------------------------------------------------------
Share of profits from associates and joint ventures
Share of profits from associates in Q4 2009 was EUR 22 million (2008: 48) of
which Fortum's share of profits in Hafslund ASA was EUR 10 million (2008: 2).
Hafslund sold 18 million shares in REC in November 2009. In accordance with the
accounting policy Fortum recognised EUR 13 million in relation to Hafslund's
divestment of REC shares as a part of the share of profit from associates and
joint ventures in Q4 2009. Fortum's share of profits for the full year 2009
amounted to EUR 21 million (2008: 126), of which Hafslund represented EUR -4
million (2008: 48). 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.
Share of profits in Q4 includes EUR 14 million (2008: 0) regarding TGC-1. Total
share of profits booked in 2009 for TGC-1 is EUR 19 million (2008: 17). The
company published it's IFRS financial statements for 2008 in July 2009 and
half-year IFRS financial statements for Q1-Q2/2009 in October 2009. Fortum
accounted for it's share of profits for 2008 in Q3 and for first half of 2009 in
Q4. According to Fortum's accounting policy the share of TGC-1's profits is
recognised based on most recently publised IFRS financial statements.
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 resulting in 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.
Divestments
Fortum has agreed to divest its shares in Swedegas AB in the first quarter of
2010.
Dividends received
During 2009 Fortum has received EUR 32 million (2008: 51) in dividends from
associates of which EUR 17 million (2008: 24) 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 Q4 the fair value change of the remaining REC
shares was EUR -17 million (2008: -140) and the fair value change since year-end
was EUR -17 million (2008: -667). The cumulative fair value change in Fortum's
equity, based on the remaining number of shares reported by Hafslund, was EUR 89
million at 31 December 2009.
--------------------------------------------------------------------------------
| 14. SHARE CAPITAL | | | | | |
--------------------------------------------------------------------------------
| MEUR | | Number | Share | Number of | Share |
| | | of | capital | shares | capital |
| | | shares | Dec 31 | Dec 31 | Dec 31 |
| | | Dec 31 | 2009 | 2008 | 2008 |
| | | 2009 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Registered shares at | | 887 638 | 3 044 | 886 683 | 3 040 |
| 1 January | | 080 | | 058 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Shares subscribed with | 728 965 | 2 | 955 022 | 4 |
| options and registered at the | | | | |
| end of the period | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Registered shares at the end | 888 367 | 3 046 | 887 638 | 3 044 |
| of the period | 045 | | 080 | |
--------------------------------------------------------------------------------
| Unregistered shares | | - | | 56 000 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| There are no unexercised stock options remaining on 31 December 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 was repaid.
OAO Fortum repaid almost fully the RUB 5,000 million bond (EUR 112 million).
During the second quarter Fortum completed three major long-term financing
transactions, of which one was a dual-tranche Private Placement of NOK 500
million due 2014 and NOK 500 million due 2017 (totally EUR 110 million). Fortum
Oyj also raised a 10 year loan of EUR 250 million from the European Investment
Bank to finance investment projects in Sweden and Poland. In addition, Fortum
Oyj with its Finnish subsidiaries (mainly Fortum Power and Heat Oy) agreed a 10
year loan of EUR 240 million from Varma Mutual Insurance Company.
During the second quarter Fortum Oyj repaid maturing bonds issued in 2006 of SEK
2,500 million (EUR 231 million) as well as amortised 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.
During the third quarter Fortum Oyj amortised twice on the 3 year EUR 2,000
million Term-loan. Amortisations were EUR 400 million and EUR 250 million. The
outstanding amount on the Term loan after all amortisations is 350 million.
No major new financing transactions were made in the Group during the last
quarter.
Fortum Oyj also uses short term financing by issuing Commercial Papers (CPs) in
the Finnish and Swedish markets. At 31 December 2009 the amount of short term
CPs outstanding was EUR 250 million.
The reported interest-bearing debt increased during the last quarter by EUR 3
million from EUR 6,856 million to EUR 6,859 million. Total liquid funds
increased by EUR 75 million from EUR 815 million to EUR 890 million. Liquid
funds, including deposits and cash held by OAO Fortum, amounted to EUR 632
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.
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 | | | | Dec 31 | Dec 31 |
| | | | | 2009 | 2008 |
--------------------------------------------------------------------------------
| Carrying values in the balance | | | | |
| sheet: | | | | |
--------------------------------------------------------------------------------
| Nuclear provisions | | | | 570 | 566 |
--------------------------------------------------------------------------------
| Share in the State Nuclear Waste Management Fund | 570 | 566 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Legal liability and actual share of the State | | |
| Nuclear Waste Management Fund: | | |
--------------------------------------------------------------------------------
| Liability for nuclear waste management according to | 913 | 895 |
| the Nuclear Energy Act | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Funding obligation target | 830 | 767 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Fortum's share of the State Nuclear Waste | 786 | 728 |
| Management Fund | | |
--------------------------------------------------------------------------------
Nuclear related provisions
Fortum submitted the yearly proposal for the nuclear waste management liability
regarding the Loviisa nuclear power plant to the Ministry of Employment and the
Economy in September. 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 2010. 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. Following the annual update, the discounted liability
decreased due to updated cost estimate and timing for the disposal of the spent
fuel. The technical plan was updated last time in 2007, and the new technical
plan with updated cost estimates is expected in 2010.
The legal liability at the end of 2009, decided by the Ministry of Employment
and the Economy is EUR 913 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, has increased by EUR 4 million
compared to 31 December 2008, totalling EUR 570 million as of 31 December 2009.
The nuclear provision decreased by EUR 18 million during the last quarter 2009
due to the updated cost estimate. 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 830 million. The
Fund is from an IFRS perspective overfunded with EUR 216 million, since Fortum's
share of the Fund as of 31 December 2009 is EUR 786 million and the carrying
value in the balance sheet is EUR 570 million.
Effects to comparable operating profit and operating profit
Following the updated cost estimate, Fortum had in Q4 2009 a one-time effect to
Comparable operating profit of EUR 7 million in the Power segment mainly due to
lower nuclear waste management costs related to already spent fuel. In Q4 2008 a
one-time effect of EUR - 3 million was reported following the updated cost
estimate. Any cost increase which is related to already spent fuel is always
recognised immediately in Comparable operating profit.
Operating profit in Power 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 Q4 2009 of EUR -33 million, compared to EUR -12
million in Q4 2008. The cumulative effect 2009 was EUR -59 million compared to
EUR -19 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.
Fortum has received at year-end updated cash flow information for its nuclear
associated companies, Teollisuuden Voima Oyj, OKG AB and Forsmarks Kraftgrupp
AB. Based on the updated cost estimates, the effect in share of profits was EUR
-13 million in 2009 which included EUR -5 million due to decrease of the
carrying value of the Finnish Nuclear Waste Fund. In 2008, the effect in share
of profits was EUR 42 million which included EUR +9 million due to the change of
the carrying values of the Finnish (EUR -7 million) and Swedish Nuclear Waste
Funds (EUR +16 million). The Finnish Nuclear Waste Fund is overfunded whereas
the value of the Swedish Nuclear Fund is estimated to be slightly below the
value of provisions at year-end 2009.
--------------------------------------------------------------------------------
| 17. PLEDGED ASSETS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | | | | Dec 31 | Dec 31 |
| | | | | 2009 | 2008 |
--------------------------------------------------------------------------------
| On own behalf | | | | | |
--------------------------------------------------------------------------------
| For debt | | | | | |
--------------------------------------------------------------------------------
| Pledges | | | | 293 | 229 |
--------------------------------------------------------------------------------
| Real estate mortgages | | | | 137 | 137 |
--------------------------------------------------------------------------------
| For other commitments | | | | | |
--------------------------------------------------------------------------------
| Real estate mortgages | | | | 220 | 206 |
--------------------------------------------------------------------------------
| On behalf of associated companies and joint ventures | | |
--------------------------------------------------------------------------------
| Pledges and real estate mortgages | | | 2 | 2 |
--------------------------------------------------------------------------------
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 value of the pledged shares amount to EUR 263 million (2008: 208
million) as of 31 December 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 220 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 | | | Dec 31 | Dec 31 |
| | | | 2009 | 2008 |
--------------------------------------------------------------------------------
| Due within a year | | | 23 | 28 |
--------------------------------------------------------------------------------
| Due after one year and within five years | 35 | 47 |
--------------------------------------------------------------------------------
| Due after five years | | | 93 | 86 |
--------------------------------------------------------------------------------
| Total | | | 151 | 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 | | | Dec 31 | Dec 31 |
| | | | 2009 | 2008 |
--------------------------------------------------------------------------------
| Property, plant and equipment | | 1 326 | 1 321 |
--------------------------------------------------------------------------------
| Intangible assets | | | 5 | 7 |
--------------------------------------------------------------------------------
| Total | | | 1 331 | 1 328 |
--------------------------------------------------------------------------------
The capital commitments have increased from 31 December 2008 due to the
automatic meter reading investments in Distribution Finland as well as the
progressing of OAO Fortum's investment program. On the other hand finalisation
of the automatic meter reading investment in Distribution Sweden, decline of the
Russian rouble and progressing of the CHP plant investments in the Heat business
in Finland, Estonia and Poland have decreased the capital commitments since 31
December 2008.
--------------------------------------------------------------------------------
| 20. CONTINGENT | | | | | |
| LIABILITIES | | | | | |
--------------------------------------------------------------------------------
| MEUR | | | | Dec 31 | Dec 31 |
| | | | | 2009 | 2008 |
--------------------------------------------------------------------------------
| On own behalf | | | | | |
--------------------------------------------------------------------------------
| Other contingent | | | | 321 | 362 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
| On behalf of associated companies and joint ventures | | |
--------------------------------------------------------------------------------
| Guarantees | | | | 592 | 565 |
--------------------------------------------------------------------------------
| Other contingent | | | | 125 | 125 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
| On behalf of others | | | | | |
--------------------------------------------------------------------------------
| Guarantees | | | | 12 | 10 |
--------------------------------------------------------------------------------
| Other contingent | | | | 1 | 1 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
Guarantees on own behalf
Other contingent liabilities on own behalf amounts to EUR 321 million. The
decrease of EUR 41 million from 31 December 2008 refers mainly to changes in
contractual obligations relating to Russia and Fortum's 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 at 31
December 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
Two subsidiaries of Fortum, Grangemouth CHP Limited and Fortum O&M (UK) Limited,
are defendants in a court case regarding CO2 emission allowances in the High
Court of Justice in London. Grangemouth CHP Limited is a party to an Electricity
Supply Agreement with Ineos Manufacturing Scotland Limited, pursuant to which
Grangemouth CHP Limited provides electricity from its CHP plant to the
Grangemouth site in Scotland until April 2016. Ineos Manufacturing Scotland
Limited claims that it is entitled to all of the emissions allowances allocated
under the EU ETS scheme for CO2 emission allowance trading with respect to the
CHP plant. Grangemouth CHP Limited denies this claim. The case was stayed in
2008, but the stay was lifted in late 2009. The court decision is likely to be
rendered in late 2010 or early 2011.
The Finnish Competition Authority gave on 2 June 2006 its conditional approval
to the transaction by which Fortum acquired control in E.ON Finland Oyj. On 3
July 2006 Fortum appealed against the decision to the Market Court. In March
2008 the Finnish Market Court decision overruled the conditional decision given
by the Finnish Competition Authority in June 2006 on the acquisition of E.ON
Finland. In their ruling, the Market Court stated that the Finnish Competition
Authority had no grounds for setting conditions, because Fortum cannot be
considered to have a dominant position in the power generation and wholesale
market. According to the Market Court, the relevant geographical market area in
power generation and wholesale consist of at least Finland and Sweden. The
Finnish Competition authority has appealed the decision to the Supreme
Administrative Court.
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 June 2012. In October 2009 TVO informed that
the start-up of the plant may be postponed even beyond June 2012. TVO has
requested a re-analysis of the time schedule from AREVA-Siemens. In June 2009,
TVO informed that the arbitration filed in December 2008 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 31 December 2009.
--------------------------------------------------------------------------------
| ASSOCIATED COMPANY | | | | | | | |
| TRANSACTIONS | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | | | | 2009 | 2008 |
--------------------------------------------------------------------------------
| Sales to associated companies | | | 86 | 113 |
--------------------------------------------------------------------------------
| Interest on associated company loan receivables | 37 | 34 |
--------------------------------------------------------------------------------
| Purchases from associated companies | | 555 | 563 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSOCIATED COMPANY BALANCES | | | |
--------------------------------------------------------------------------------
| MEUR | | | Dec 31 | Dec 31 |
| | | | 2009 | 2008 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Long-term interest-bearing loan receivables | 852 | 659 |
--------------------------------------------------------------------------------
| Trade receivables | | | 14 | 24 |
--------------------------------------------------------------------------------
| Other receivables | | | 5 | 5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Long-term loan payables | | | 199 | 184 |
--------------------------------------------------------------------------------
| Trade payables | | | 23 | 26 |
--------------------------------------------------------------------------------
| Other payables | | | 22 | 18 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TRANSACTIONS AND BALANCES WITH JOINT | | | | |
| VENTURES | | | | |
--------------------------------------------------------------------------------
| Transactions and balances with joint ventures as at and for the period ended |
| 31 December 2009 are not material |
--------------------------------------------------------------------------------
| for the group. | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 23. EVENTS AFTER THE | | | | | | |
| BALANCE SHEET DATE | | | | | | |
--------------------------------------------------------------------------------
In December 2009, Fortum agreed to sell its shares in the Swedish gas
transmission company Swedegas AB. The transaction will take place in early 2010.
In January 2010, Fortum acquired the combined heat and power plant in the city
of Nokia, Finland from Nokian Lämpövoima Oy. At the same time Fortum sold its
shares in Nokian Lämpövoima Oy to PVO Oy.
In February 2010, Fortum signed an agreement to sell its 49% shareholding in
Karlskoga Energi & Miljö AB to the Karlskoga municipality in Sweden for SEK 435
million (EUR 42 million).
--------------------------------------------------------------------------------
| 24. DEFINITION | | | | | | | | | | | | | |
| OF KEY FIGURES | | | | | | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EBITDA | = | Operating profit + Depreciation, | | |
| (Earnings | | amortisation | | |
| before | | | | |
| interest, | | | | |
| taxes, | | | | |
| depreciation | | | | |
--------------------------------------------------------------------------------
| and | | and impairment charges | | | | | | |
| amortisation) | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Comparable | = | Operating profit - non-recurring items - other items |
| operating | | effecting comparability |
| profit | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-recurring | = | Mainly capital gains and | | | | | |
| items | | losses | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other items | = | Includes effects from financial derivatives hedging |
| effecting | | 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 |
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| | | related liabilities according to IFRIC | |
| | | interpretation 5. | |
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| Funds from | = | Net cash from operating activities before change in |
| operations | | working capital |
| (FFO) | | |
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| Capital | = | Capitalised investments in property, plant and |
| expenditure | | equipment and intangible assets |
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| | | including maintenance, productivity, growth and |
| | | investments required by legislation |
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| | | including borrowing costs capitalised during the |
| | | construction period. Maintenance |
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| | | investments expand the lifetime of an existing asset, |
| | | maintain useage/availability and/or |
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| | | maintains reliability. Productivity improves |
| | | productivity in an existing asset. Growth |
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| | | investments' purpose is to build new assets and/or to |
| | | increase customer base within |
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| | | existing businesses. Legislation investments are done |
| | | at certain point of time due to |
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| | | legal requirements. | | | | | | | |
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| Gross | = | Investments in subsidiary shares, shares in associated |
| investments in | | companies and other shares in |
| shares | | |
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| | | available for sale financial assets. Investments in |
| | | subsidiary shares are net of cash and |
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| | | grossed with interest-bearing liabilities in the |
| | | acquired company. |
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| Return on | = | Profit for the | | | | | | | x | |
| shareholders' | | year | | | | | | | 100 | |
| equity, % | | | | | | | | | | |
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| | | Total equity | | | | | | | |
| | | average | | | | | | | |
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| Return on | = | Profit before taxes + interest and other | x | |
| capital | | financial expenses | 100 | |
| employed, % | | | | |
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| | | Capital employed average | | | | | | |
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| Return on net | = | Operating profit + Share of profit (loss) in | x | |
| assets, % | | associated companies and joint ventures | 100 | |
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| | | Net assets average | | | | | | | |
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| Comparable | = | Comparable operating profit + Share of | x | |
| return on net | | profit (loss) in associated companies and | 100 | |
| assets, % | | joint ventures (adjusted for IAS 39 effects | | |
| | | and major sales gains or losses) | | |
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| | | Comparable net assets average | | | | | |
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| Capital | = | Total assets - non-interest bearing liabilities - |
| employed | | deferred tax liabilities - provisions |
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| Net assets | = | Non-interest bearing assets + interest-bearing assets |
| | | related to the Nuclear Waste Fund - |
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| | | non-interest bearing liabilities - provisions |
| | | (non-interest bearing assets and liabilities do not |
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| | | include finance related items, tax and deferred tax and |
| | | assets and liabilities from fair |
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| | | valuations of derivatives where hedge accounting is |
| | | applied) |
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| Comparable net | = | Net assets adjusted for non-interest bearing assets and |
| assets | | liabilities arising from financial |
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| | | derivatives hedging future cash flows where hedge |
| | | accounting is not applied according |
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| | | to | | | | | | | | | | |
| | | IAS | | | | | | | | | | |
| | | 39 | | | | | | | | | | |
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| Interest-beari | = | Interest-bearing liabilities - liquid | | | |
| ng net debt | | funds | | | |
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| Gearing, % | = | Interest-bearing net | | | | | x | |
| | | debt | | | | | 100 | |
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| | | Total | | | | | | | | | |
| | | equity | | | | | | | | | |
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| Equity-to-asse | = | Total equity including non-controlling | x | |
| ts ratio, % | | interest | 100 | |
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| | | Total | | | | | | | | | |
| | | assets | | | | | | | | | |
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| Net debt / | = | Interest-bearing net | | | | | | |
| EBITDA | | debt | | | | | | |
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| | | Operating profit + Depreciation, amortisation and |
| | | impairment charges |
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| Interest | = | Operating | | | | | | | | |
| coverage | | profit | | | | | | | | |
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| | | Net interest | | | | | | | |
| | | expenses | | | | | | | |
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| Interest | = | Operating | | | | | | | | |
| coverage | | profit | | | | | | | | |
| including | | | | | | | | | | |
| capitalised | | | | | | | | | | |
| borrowing | | | | | | | | | | |
| costs | | | | | | | | | | |
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| | | Net interest expenses-capitalised borrowing costs | |
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| Earnings per | = | Profit for the period - non-controlling | | |
| share (EPS) | | interest | | |
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| | | Average number of shares during the period | | |
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| Equity per | = | Shareholder's | | | | | | | |
| share | | equity | | | | | | | |
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| | | Number of shares excluding treasury shares at the end |
| | | of the period |
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| Last twelve | = | Twelve months preceding the reporting date | | |
| months | | | | |
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