Fortum: Interim Report January - March 2008
FORTUM CORPORATION
INTERIM REPORT
24.4.2008, 09:00 EET
A major strategic step in Russia - Fortum acquired TGC-10
Clear improvement in operational performance
- Comparable operating profit EUR 581 (512) million, +13%
- Earnings per share EUR 0.51 (0.59), -14%. EPS in the first quarter 2007
included a non-recurring gain of EUR 0.20 per share.
- Strong cash flow from operating activities EUR 542 (497) million
- Fortum delivers on its strategy - acquires TGC-10 in Russia
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| Key figures | I/08 | I/07 | 2007 | LTM |
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| Sales, EUR million | 1,440 | 1,340 | 4,479 | 4,579 |
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| Operating profit, EUR million | 609 | 490 | 1,847 | 1,966 |
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| Comparable operating profit, EUR | 581 | 512 | 1,564 | 1,633 |
| million | | | | |
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| Profit before taxes, EUR million | 598 | 661 | 1,934 | 1,871 |
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| Earnings per share, EUR | 0.51 | 0.59 | 1.74 | 1.67 |
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| Net cash from operating | 542 | 497 | 1,670 | 1,715 |
| activities, EUR million | | | | |
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| Shareholders' equity per share, | 9.53 | 8.22 | 9.43 | |
| EUR | | | | |
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| Interest-bearing net debt | 5,228 | 3,932 | 4,466 | |
| (at | | | | |
| end of period), EUR million | | | | |
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| Average number of shares, 1,000s | 887,085 | 890,263 | 889,997 | 889,485 |
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| Key financial ratios | 2007 | LTM | 2007* | LTM* |
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| Return on capital employed, % | 16.5 | 14.4 | 14.0 | 13.1 |
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| Return on shareholders' | 19.1 | 18,0 | 15.8 | 16.4 |
| equity, % | | | | |
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| Net debt/EBITDA | 1.9 | 2.2 | 2.2 | 2.4 |
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*Adjusted for REC and Lenenergo gains
Fortum's operating profit improved significantly from a year ago, mainly driven
by better results in the Power Generation segment. Fortum's successful hedging,
higher average Nord Pool spot price and higher nuclear volumes contributed to
the improvement.
Fortum's profit before taxes and earnings per share were lower than a year ago.
This is due to the non-recurring gain of EUR 180 million from Hafslund ASA's
sale of shares in Renewable Energy Corporation (REC), which was booked in
Fortum's first-quarter results last year. The gain corresponds to EUR 0.20 per
share in Fortum's first-quarter results last year.
Electricity market conditions were challenging in the first quarter of 2008. The
weather in the Nordic countries was very mild with even higher precipitation
than in the first quarter of 2007. This lowered electricity and heat demand and
led to lower sales volumes in Fortum's Heat and Distribution segments.
Despite the warm weather, the Nord Pool spot price was higher than the previous
year, mainly due to higher CO2 and coal prices. However, the high precipitation
and mild winter temperatures resulted in decreasing prices towards the end of
the period.
Fortum's net cash from operating activities improved to EUR 542 (497) million.
In the first quarter 2008, Fortum acquired a controlling stake in the Russian
territorial generating company TGC-10. At the end of the first quarter, Fortum's
holding in TGC-10 was 76.49%. Of this holding, 29.07 percentage points were
acquired from United Energy Systems of Russia (RAO UES) for approximately EUR
0.8 billion, and 47.42 percentage points through a share issue for approximately
EUR 1.3 billion. This capital increase of EUR 1.3 billion will remain in TGC-10
and will be used to finance its committed capacity investment programme planned
at EUR 2.2 billion. Fortum will also make a mandatory offer to purchase the
remaining 23.51% of the shares held by minority shareholders. The total value of
the mandatory offer is approximately EUR 0.6 billion. If Fortum reaches a 100%
holding in TGC-10, the total value of the transaction will be around EUR 2.7
billion.
In March, the Finnish Market Court decision overruled the conditional decision
given by the Finnish Competition Authority in June 2006 on the acquisition of
E.ON Finland. In their ruling, the Market Court stated that the Finnish
Competition Authority had no grounds for setting conditions, because Fortum
cannot be considered to have a dominant position in the power generation and
wholesale market. According to the Market Court, the relevant geographical
market area in power generation and wholesale consists of at least Finland and
Sweden. The Finnish Competition authority has appealed the decision to the
Supreme Administrative Court.
In the first quarter, the Power Generation segment's achieved Nordic power price
was EUR 44.6 (39.2) per megawatt-hour (MWh), up by 14% from the previous year
and clearly higher than the average spot price of electricity in Nord Pool, the
Nordic power exchange. The average spot price of electricity in Nord Pool was
EUR 38.0 (26.7) per MWh, approximately 42% higher than the same period the
previous year.
Changes in reported segments
Following the acquisition of TGC-10, Fortum has made adjustments to its
reporting structure.
A new Russia segment is created, including
- TGC-10, which is consolidated in the balance sheet. TGC-10's income statement
will be consolidated from the beginning of the second quarter 2008.
- The TGC-1 shareholding, which is transferred from the Power Generation
segment.
- Minor assets from shareholdings in Lenenergo spin-off companies, transferred
from the Distribution, Markets and Other segments.
- The 2007 non-recurring gain on the sale of Lenenergo shares (EUR 232 million),
transferred from the Distribution segment.
- The 2007 gain on the sale of WGC-5 shares (EUR 12 million), transferred from
the Power Generation segment.
Profit from the associated company Hafslund ASA is now reported in the Other
segment, including the REC gain accounted for in 2007 (EUR 180 million). In
Fortum's earlier reporting, share of profit from Hafslund ASA was included in
the Power Generation segment.
Financial results
January - March
Group sales were EUR 1,440 (1,340) million.
Group operating profit totalled EUR 609 (490) million. Comparable operating
profit increased to EUR 581 (512) million. The Power Generation, Distribution
and Markets segments improved from a year ago, while the Heat segment performed
worse.
Sales by segment
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| EUR million | I/08 | I/07 | 2007 | LTM |
--------------------------------------------------------------------------------
| Power Generation | 717 | 641 | 2,350 | 2,426 |
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| Heat | 493 | 479 | 1,356 | 1,370 |
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| Distribution | 232 | 225 | 769 | 776 |
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| Markets | 519 | 519 | 1,683 | 1,683 |
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| Russia | - | - | - | - |
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| Other | 20 | 19 | 81 | 82 |
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| Eliminations | -541 | -543 | -1,760 | -1,758 |
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| Total | 1,440 | 1,340 | 4,479 | 4,579 |
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Comparable operating profit by segment
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| EUR million | I/08 | I/07 | 2007 | LTM |
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| Power Generation | 395 | 330 | 1,095 | 1,160 |
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| Heat | 121 | 137 | 290 | 274 |
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| Distribution | 87 | 78 | 231 | 240 |
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| Markets | -10 | -14 | -1 | 3 |
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| Russia | - | - | - | - |
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| Other | -12 | -19 | -51 | -44 |
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| Total | 581 | 512 | 1,564 | 1,633 |
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Operating profit by segment
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| EUR million | I/08 | I/07 | 2007 | LTM |
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| Power Generation | 431 | 300 | 1,115 | 1,246 |
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| Heat | 130 | 142 | 294 | 282 |
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| Distribution | 86 | 79 | 233 | 240 |
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| Markets | -20 | -12 | 12 | 4 |
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| Russia | - | - | 244 | 244 |
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| Other | -18 | -19 | -51 | -50 |
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| Total | 609 | 490 | 1,847 | 1,966 |
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Profit before taxes was EUR 598 (661) million.
The Group's net financial expenses increased to EUR 45 (31) million. The
increase is attributable to a higher average level of debt, higher short-term
interest rates and lower, EUR -2 (2) million, change in the fair value of
derivatives.
Hafslund ASA is showing the fair value change in the REC shareholding through
the income statement, while Fortum is showing the fair value change in equity.
The cumulative fair value change booked in Fortum's equity and based on the
remaining number of shares reported by Hafslund ASA was approximately EUR 380
million at the end of March 2008 (EUR 790 million at the end of December 2007).
Minority interests accounted for EUR 24 (30) million. The minority interests are
mainly attributable to Fortum Värme Holding AB, in which the City of Stockholm
has a 50% economic interest.
Taxes for the period totalled EUR 122 (109) million. The tax rate according to
the income statement was 20.4% (16.5%). The tax rate in the first quarter of
2007 was lowered by the non-taxable gain of EUR 180 million from Hafslund's sale
of REC shares.
The profit for the period was EUR 452 (522) million. Fortum's earnings per share
were EUR 0.51 (0.59).
Return on capital employed was 14.4% for the last twelve months (16.5% at
year-end 2007), and return on shareholders' equity was 18.0% for the last twelve
months (19.1% at year-end 2007). The adjusted return on capital employed and
return on shareholders' equity, excluding the REC and Lenenergo gains, were
13.1% and 16.4%, respectively for the last twelve months (at year-end 2007 14.0%
and15.8%, respectively.)
Market conditions
According to preliminary statistics, the Nordic countries consumed 114 (116)
terawatt-hours (TWh) of electricity in the first quarter of 2008, a decrease of
about 2% from previous year. The decrease was mainly due to mild winter
temperatures.
Year 2008 started with the Nordic water reservoirs being 9 TWh above the
long-term average. At the end of March, they were 9 TWh above the long-term
average and 7 TWh above the corresponding level at the end of March 2007.
During the first quarter, the average spot price for power in Nord Pool was EUR
38.0 (26.7) per MWh or 42% higher than in the corresponding period in 2007. The
higher price was due to higher CO2 and coal prices. The high precipitation and
mild winter temperatures resulted in decreasing prices towards the end of the
period.
The second EU emission trading period 2008-2012, with new national emission
allocations, started at the beginning of 2008. During the first quarter, the
average market price of CO2 emission allowances (EUA) for 2008 was EUR 21.4 per
tonne CO2. In 2007, the corresponding price for CO2 emission allowances for 2007
was EUR 2.1 per tonne CO2.
Coal and oil prices increased dramatically in 2007. During the first quarter of
2008, coal prices remained at these high levels and oil prices continued to
increase.
In Germany, the average spot price for the first quarter was EUR 56.2 (29.7) per
MWh, significantly higher than in the Nordic area. This resulted in a net export
from the Nordic area to Germany.
Total power and heat generation figures
Fortum's total power generation during the first quarter of 2008 was 15.2 (15.2)
TWh, of which 14.9 (14.9) TWh was in the Nordic countries, representing 13%
(13%) of the total Nordic electricity consumption. Fortum's total heat
generation during the first quarter of 2008 was 9.0 (9.8) TWh, of which 7.6
(8.4) TWh was in the Nordic countries.
During the first quarter of 2008, approximately 90% (89%) of the power generated
by Fortum within the EU countries was CO2-free.
Fortum's total power and heat generation figures are presented below. In
addition, the segment reviews include the respective figures by segment.
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| Fortum's total power and heat | I/08 | I/07 | 2007 | LTM |
| generation, TWh | | | | |
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| Power generation | 15.2 | 15.2 | 52.2 | 52.2 |
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| Heat generation | 9.0 | 9.8 | 26.1 | 25.3 |
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| Fortum's own power generation | I/08 | I/07 | 2007 | LTM |
| by source, TWh, | | | | |
| total in the | | | | |
| Nordic countries | | | | |
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| Hydropower | 6.3 | 6.4 | 20.0 | 19.9 |
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| Nuclear power | 6.9 | 6.5 | 24.9 | 25.3 |
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| Thermal power | 1.7 | 2.0 | 6.2 | 5.9 |
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| Total | 14.9 | 14.9 | 51.1 | 51.1 |
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| Fortum's own power generation | I/08 | I/07 | 2007 | LTM |
| by source, %, total in the | | | | |
| Nordic countries | | | | |
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| Hydropower | 42 | 43 | 39 | 39 |
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| Nuclear power | 46 | 44 | 49 | 49 |
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| Thermal power | 12 | 13 | 12 | 12 |
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| Total | 100 | 100 | 100 | 100 |
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Total power and heat sales figures
Fortum's total power sales were 17.1 (17.5) TWh, of which 16.8 (17.2) TWh were
in the Nordic countries. This represents approximately 15% (15%) of Nordic
electricity consumption during January-March 2008. Fortum's total heat sales
were 9.7 (10.0) TWh, of which 7.2 (7.6) TWh were in the Nordic countries.
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| Fortum's total electricity *) | I/08 | I/07 | 2007 | LTM |
| and heat sales, EUR million | | | | |
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| Electricity sales | 759 | 675 | 2,370 | 2,454 |
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| Heat sales | 395 | 388 | 1,096 | 1,103 |
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*) 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 electricity | I/08 | I/07 | 2007 | LTM |
| sales *) by area, TWh | | | | |
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| Sweden | 8.4 | 8.4 | 27.6 | 27.6 |
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| Finland | 7.8 | 8.2 | 29.0 | 28.6 |
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| Other countries | 0.9 | 0.9 | 3.1 | 3.1 |
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| Total | 17.1 | 17.5 | 59.7 | 59.3 |
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*) 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 | I/08 | I/07 | 2007 | LTM |
| area, TWh | | | | |
--------------------------------------------------------------------------------
| Sweden | 3.4 | 3.5 | 9.2 | 9.1 |
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| Finland | 3.7 | 4.0 | 11.1 | 10.8 |
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| Other countries** | 2.6 | 2.5 | 6.8 | 6.9 |
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| Total | 9.7 | 10.0 | 27.1 | 26.8 |
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**) Including the UK, which is reported in the Power Generation segment, other
sales.
SEGMENT REVIEWS
Power Generation
The business area comprises power generation and sales in the Nordic countries
and the provision of operation and maintenance services in the Nordic area and
selected international markets. The Power Generation segment sells its
production to Nord Pool. The segment includes the business units Generation,
Portfolio Management and Trading (PMT), and Service.
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| EUR million | I/08 | I/07 | 2007 | LTM |
--------------------------------------------------------------------------------
| Sales | 717 | 641 | 2,350 | 2,426 |
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| - power sales | 646 | 566 | 2,019 | 2,099 |
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| - other sales | 71 | 75 | 331 | 327 |
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| Operating profit | 431 | 300 | 1,115 | 1,246 |
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| Comparable operating profit | 395 | 330 | 1,095 | 1,160 |
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| Net assets (at period-end) | 5,633 | 5,636 | 5,599 | |
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| Return on net assets, % | | | 19.2 | 21.7 |
--------------------------------------------------------------------------------
| Comparable return on net assets, | | | 18.9 | 20.2 |
| % | | | | |
--------------------------------------------------------------------------------
| Gross investments | 18 | 16 | 145 | 147 |
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| Number of employees | 3,544 | 3,371 | 3,511 | |
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In January-March, the segment's power generation in the Nordic countries was
13.2 (13.1) TWh. The availability of the Swedish nuclear power plants increased
after the unplanned shutdowns in 2007. In January-March, approximately 97% (96%)
of the segment's power generation was CO2-free.
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| Nordic power generation by | I/08 | I/07 | 2007 | LTM |
| source, TWh | | | | |
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| Hydropower | 6.3 | 6.4 | 20.0 | 19.9 |
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| Nuclear power | 6.9 | 6.5 | 24.9 | 25.3 |
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| Thermal power | 0.0 | 0.2 | 1.2 | 1.0 |
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| Total | 13.2 | 13.1 | 46.1 | 46.2 |
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| Power generation by area, TWh | I/08 | I/07 | 2007 | LTM |
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| Sweden | 7.9 | 7.9 | 26.0 | 26.0 |
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| Finland | 5.3 | 5.2 | 20.1 | 20.2 |
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| Other countries | 0.4 | 0.3 | 1.1 | 1.2 |
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| Total | 13.6 | 13.4 | 47.2 | 47.4 |
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| Nordic sales volume, TWh | 14.6 | 14.6 | 51.8 | 51.8 |
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| of which pass-through sales | 1.1 | 1.4 | 5.2 | 4.9 |
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| Sales price, EUR/MWh | I/08 | I/07 | 2007 | LTM |
--------------------------------------------------------------------------------
| Generation's Nordic power | 44.6 | 39.2 | 39.7 | 41.2 |
| price* | | | | |
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*) For the Power Generation segment in the Nordic countries, excluding
pass-through sales.
During the first quarter, the average spot price in Nord Pool was EUR 38.0 per
MWh, while Generation's achieved Nordic power price was EUR 44.6 per MWh, up by
14% from a year ago. This was thanks to consistent hedging strategy.
Generation's sales volume was 13.5 (13.2) TWh in the first quarter.
In the first quarter, the comparable operating profit of the Power Generation
segment was higher than in the corresponding period in the previous year. The
higher achieved Nordic power price and better availability of nuclear generation
contributed positively. This was partly offset by higher taxation in Sweden.
On 20 February 2008, Fortum, the Russian territorial generating company TGC-1
and ECF Project Ltd signed an agreement according to which Fortum will purchase
approximately 5 million tonnes of emission reduction units (ERU) from TGC-1. The
ERUs will come from Joint Implementation projects conducted at TGC-1's
production facilities during the Kyoto Period (2008-2012) of the European
Emissions Trading Scheme. The projects TGC-1 will implement include
reconstruction of hydro power plants, expansion and reconstruction of combined
heat and power generation facilities as well as energy efficiency improvements
within the district heating network.
The purchase agreement is based on the Memorandum of Understanding between
Fortum and RAO UES in 2006, and it is the biggest of its kind ever made in
Russia. The ERUs purchased cover approximately half of Fortum's annual CO2
emissions; their value is approximately EUR 70 million based on the current
market price of certified emission reductions (CER) originating from developing
countries.
Heat
The business area comprises heat generation and sales in the Nordic countries
and other parts of the Baltic Rim. Fortum is a leading heat producer in the
Nordic region. The segment also generates power in combined heat and power
plants (CHP) and sells it to end-customers mainly through long-term contracts,
as well as to Nord Pool. The segment includes the business units Värme,
operating in Sweden, and Heat, operating in mainly other markets.
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| EUR million | I/08 | I/07 | 2007 | LTM |
--------------------------------------------------------------------------------
| Sales | 493 | 479 | 1,356 | 1,370 |
--------------------------------------------------------------------------------
| - heat sales | 386 | 377 | 1,053 | 1,062 |
--------------------------------------------------------------------------------
| - power sales | 77 | 75 | 202 | 204 |
--------------------------------------------------------------------------------
| - other sales | 30 | 27 | 101 | 104 |
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| Operating profit | 130 | 142 | 294 | 282 |
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| Comparable operating profit | 121 | 137 | 290 | 274 |
--------------------------------------------------------------------------------
| Net assets (at period-end) | 3,617 | 3,444 | 3,507 | |
--------------------------------------------------------------------------------
| Return on net assets, % | | | 9.3 | 8.8 |
--------------------------------------------------------------------------------
| Comparable return on net assets, | | | 9.2 | 8.6 |
| % | | | | |
--------------------------------------------------------------------------------
| Gross investments | 112 | 59 | 327 | 380 |
--------------------------------------------------------------------------------
| Number of employees | 2,445 | 2,304 | 2,279 | |
--------------------------------------------------------------------------------
The segment's heat sales during the first quarter amounted to 9.2 (9.5) TWh,
most of which was generated in the Nordic countries. During the same period,
power sales from CHP production totalled 1.7 (1.7) TWh.
The Heat segment's comparable operating profit during the first quarter was EUR
16 million lower than the previous year. The decrease in the result was mainly
due to higher fuel prices, higher CO2 costs and lower electricity and heat
volumes.
The large CHP plant projects in Espoo, Finland, Tarto, Estonia and Czestochowa,
Poland proceeded. The preparations continued for the CHP plants in Järvenpää,
Finland and Värtan and Brista, Sweden.
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| Heat sales by area, TWh | I/08 | I/07 | 2007 | LTM |
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| Sweden | 3.4 | 3.5 | 9.2 | 9.1 |
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| Finland | 3.7 | 4.0 | 11.1 | 10.8 |
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| Other countries | 2.1 | 2.0 | 4.8 | 4.9 |
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| Total | 9.2 | 9.5 | 25.1 | 24.8 |
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| Power sales, TWh | I/08 | I/07 | 2007 | LTM |
--------------------------------------------------------------------------------
| Total | 1.7 | 1.7 | 5.0 | 5.0 |
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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.
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| EUR million | I/08 | I/07 | 2007 | LTM |
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| Sales | 232 | 225 | 769 | 776 |
--------------------------------------------------------------------------------
| - distribution network | 199 | 192 | 648 | 655 |
| transmission | | | | |
--------------------------------------------------------------------------------
| - regional network transmission | 23 | 24 | 81 | 80 |
--------------------------------------------------------------------------------
| - other sales | 10 | 9 | 40 | 41 |
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| Operating profit | 86 | 79 | 233 | 240 |
--------------------------------------------------------------------------------
| Comparable operating profit | 87 | 78 | 231 | 240 |
--------------------------------------------------------------------------------
| Net assets (at period-end) | 3,332 | 3,245 | 3,239 | |
--------------------------------------------------------------------------------
| Return on net assets, % | | | 7.7 | 8.0 |
--------------------------------------------------------------------------------
| Comparable return on net assets, | | | 7.6 | 8.0 |
| % | | | | |
--------------------------------------------------------------------------------
| Gross investments | 61 | 36 | 237 | 262 |
--------------------------------------------------------------------------------
| Number of employees | 1,175 | 1,039 | 1,063 | |
--------------------------------------------------------------------------------
In the first quarter of 2008, the volume of distribution and regional network
transmissions totalled 7.9 (8.0) TWh and 5.0 (5.2) TWh, respectively. Warm
weather had a negative impact on transmission volumes compared to last year.
Electricity transmissions via the regional distribution network totalled 4.1
(4.3) TWh in Sweden and 0.9 (0.9) TWh in Finland.
The comparable operating profit of the Distribution segment was EUR 87 million
in the first quarter, EUR 9 million higher than the previous year. The
improvement is mainly attributable to the heavy impact of the winter storms in
Sweden during the first quarter of last year.
In Sweden, the installation of automatic meters in Fortum's network areas
continues. By the end of March, approximately 441,000 customers had the new
meter. The main part of the installation work will be completed during 2008.
Two investigations that may have a significant impact on the regulation of the
network business have been presented to the Swedish government. The Energy
Network Inquiry has published a report with a proposal of an advanced review of
network company revenue effective 1 January 2012. The proposed regulation has
similarities to the current Finnish regulation, with e.g. the repurchase value
of the actual grid forming the regulatory capital base. In addition, the Grid
Connection Inquiry has given its report with the objective to promote the
development of renewable electricity production.
In April 2008, the Finnish Energy Market Authority published the interim check
of the allowed return for Finnish network companies in 2005 and 2006. The final
decision regarding the 2005-2007 regulation period will be announced in late
autumn 2008.
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| Volume of distributed | I/08 | I/07 | 2007 | LTM |
| electricity in distribution | | | | |
| network, TWh | | | | |
--------------------------------------------------------------------------------
| Sweden | 4.3 | 4.3 | 14.3 | 14.2 |
--------------------------------------------------------------------------------
| Finland | 2.8 | 2.9 | 9.2 | 9.2 |
--------------------------------------------------------------------------------
| Norway | 0.7 | 0.7 | 2.3 | 2.3 |
--------------------------------------------------------------------------------
| Estonia | 0.1 | 0.1 | 0.2 | 0.2 |
--------------------------------------------------------------------------------
| Total | 7.9 | 8.0 | 26.0 | 25.9 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Number of electricity distribution | 31 Mar 2008 | 31 Dec 2007 |
| customers by area, thousands | | |
--------------------------------------------------------------------------------
| Sweden | 873 | 871 |
--------------------------------------------------------------------------------
| Finland | 599 | 591 |
--------------------------------------------------------------------------------
| Other countries | 123 | 122 |
--------------------------------------------------------------------------------
| Total | 1,595 | 1,584 |
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Markets
Markets is responsible for retail sales of electricity to a total of 1.3 million
private and business customers as well as to other electricity retailers in
Sweden, Finland and Norway. Markets buys its electricity through Nord Pool.
--------------------------------------------------------------------------------
| EUR million | I/08 | I/07 | 2007 | LTM |
--------------------------------------------------------------------------------
| Sales | 519 | 519 | 1,683 | 1,683 |
--------------------------------------------------------------------------------
| - power sales | 501 | 496 | 1,582 | 1,587 |
--------------------------------------------------------------------------------
| - other sales | 18 | 23 | 101 | 96 |
--------------------------------------------------------------------------------
| Operating profit | -20 | -12 | 12 | 4 |
--------------------------------------------------------------------------------
| Comparable operating profit | -10 | -14 | -1 | 3 |
--------------------------------------------------------------------------------
| Net assets (at period-end) | 169 | 140 | 247 | |
--------------------------------------------------------------------------------
| Return on net assets, % | | | 6.9 | 1.7 |
--------------------------------------------------------------------------------
| Comparable return on net assets, % | | | -0.6 | 1.2 |
--------------------------------------------------------------------------------
| Gross investments | 1 | 1 | 3 | 3 |
--------------------------------------------------------------------------------
| Number of employees | 814 | 942 | 935 | |
--------------------------------------------------------------------------------
During the first quarter, Markets' electricity sales totalled 11.2 (11.9) TWh.
The sales volume was lower than at the same time last year, mainly due to some
expired long-term contracts in Finland and warm weather causing lower
consumption in the consumer segment. Markets' power sales were slightly higher
than in the same period last year.
Markets' first-quarter comparable operating profit improved from a year ago but
was still clearly negative. The segment typically procures its electricity
according to its procurement strategy months in advance from the Nord Pool
forward markets. As a result of the tight market situation, especially in
Finland, Markets was unable to fully transfer its increased procurement costs to
retail sales prices.
Markets raised its retail electricity prices in Sweden and Finland in the
beginning of February. The Finnish electricity heating sales price was raised by
10% and the Swedish current-price product sales price by 9%.
Despite the tight Nordic market situation, Markets has been able to increase the
number of customers. The customer net flow was positive in Sweden while the
number of customers decreased slightly in Finland.
Fortum is the leading retailer of eco-labelled electricity on the Nordic market.
The sale of eco-labelled Norppasähkö and Bra Miljöval electricity has continued
to increase in the first quarter of 2008. In January 2008, Markets introduced
two new eco-labels for the Finnish and Swedish market - electricity produced
without CO2 emissions and electricity produced entirely from renewable energy
sources.
Russia
The segment comprises power and heat generation and sales in Russia. The segment
includes the listed company TGC-10 and Fortum's holding in TGC-1.
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| EUR million | I/08 | I/07 | 2007 | LTM |
--------------------------------------------------------------------------------
| Sales | - | - | - | - |
--------------------------------------------------------------------------------
| - power sales | - | - | - | - |
--------------------------------------------------------------------------------
| - heat sales | - | - | - | - |
--------------------------------------------------------------------------------
| - other sales | - | - | - | - |
--------------------------------------------------------------------------------
| Operating profit | - | - | 244 | 244 |
--------------------------------------------------------------------------------
| Comparable operating profit | - | - | 0 | 0 |
--------------------------------------------------------------------------------
| Net assets (at period-end) | 2,264 | 302 | 456 | |
--------------------------------------------------------------------------------
| Return on net assets, % | | | 66.3 | 32.1 |
--------------------------------------------------------------------------------
| Comparable return on net assets, | | | 0.0 | 0.0 |
| % | | | | |
--------------------------------------------------------------------------------
| Gross investments | 1,031 | - | 245 | 1,276 |
--------------------------------------------------------------------------------
| Number of employees | 7,187 | - | - | |
--------------------------------------------------------------------------------
The segment Russia comprises TGC-10, Fortum's 25.7% holding in TGC-1 and some
minor assets from shareholdings in companies spun-off from Lenenergo. TGC-10 is
fully consolidated in the ending balance sheet of the quarter. TGC-10's income
statement will be consolidated from the beginning of the second quarter of 2008.
Fortum's other holdings in the segment are accounted for as associated
companies.
The segment also includes two non-recurring gains booked in 2007: the sale of
Lenenergo shares for EUR 232 million, previously booked in the Distribution
segment's operating profit (non-recurring items) in the third quarter of 2007,
and the gain on the sale of WGC-5 shares, EUR 12 million, previously booked in
the Power Generation segment's operating profit (non-recurring items) in the
fourth quarter of 2007.
Fortum participated in a share auction conducted on 28 February 2008 to acquire
a controlling stake in the listed Russian company TGC-10. Fortum acquired a
29.07% stake of the company from RAO UES for EUR 0.8 billion. In addition,
Fortum acquired a further 47.42% stake in TGC-10 through a share issue for EUR
1.3 billion. This capital increase of EUR 1.3 billion will remain in TGC-10 and
will be used to finance its committed capacity investment programme planned at
EUR 2.2 billion.
TGC-10 is a territorial generating company founded in 2006 and operating in the
Urals and West Siberia region. The total installed capacity is 3,000 MW power
and 15,800 MW heat with an annual production of 18 TWh power and 27 TWh heat.
The company has an extensive investment plan to further increase its power
production capacity by 2,300 MW by 2013. The generation assets are located in an
area with a significant oil and gas industry. The number of employees is 7,187.
In the last twelve months as of the end of the third quarter 2007, TGC-10's
sales were EUR 590 million and its operating profit EUR 26 million.
Capital expenditures, divestments and investments in shares
Capital expenditures and investments in shares in January-March totalled EUR
1,227 (115) million. Investments, excluding acquisitions, were EUR 175 (100)
million.
In Lithuania, Fortum acquired a 14.73% share in UAB Klaipedos Energija from
Stadtwerke Leipzig GmbH on 29 February 2008. Fortum now owns a 19.63% share of
the company. UAB Klaipedos Energija generates and distributes district heat to
the residents and industries in the cities of Klaipeda and Gargzdai. The net
sales of the company are around EUR 27 million, annual heat sales 1 TWh and
power sales 20 gigawatthours (GWh).
In Latvia, Fortum acquired 100% of the shares in Jelgavas Kogeneracija SIA at
the end of March. The acquired company provides district heating to the city of
Jelgava. The annual heat sales are 200 GWh, the sales EUR 10 million, and the
number of employees 170.
Financing
During the first quarter, Fortum's net debt increased by EUR 762 million. At the
end of the quarter, the interest-bearing net debt stood at EUR 5,228 (4,466 at
year end 2007) million. The interest bearing net debt at the quarter end
includes interest-bearing liabilities of EUR 271 million and cash of EUR 1,293
million in the recently acquired TGC-10.
Net debt to EBITDA for the last twelve months was 2.2 (1.9 at year end 2007).
The increase in net debt is mainly due to the acquisition of 76.49% of TGC-10.
Net debt to EBITDA excluding REC and Lenenergo sales gains for the last twelve
months was 2.4 (2.2 at the end of 2007).
The Group's net financial expenses for the first quarter were EUR 45 (31)
million. The increase is attributable to higher average net debt and higher
average interest rates in 2008. Net financial expenses include fair value
loss/gain on financial instruments of EUR -2 (2) million.
Group liquidity remained good. At the end of the first quarter, cash and
marketable securities totalled EUR 2,237 million (including EUR 1,293 million in
TGC-10). The Group also had access to approximately EUR 2.8 billion of undrawn
committed credit facilities. The reason for the high cash position at the end of
the quarter was the preparation for the Group dividend payment of EUR 1,198
million in early April.
During the first quarter, Fortum raised a syndicated loan facility of EUR 3,500
million. The loan facility is structured as a 3-year term loan of EUR 2,000
million to be used for acquisition financing of TGC-10, and as a 5-year
revolving credit facility of EUR 1,500 million to be used for general corporate
purposes. At the end of the first quarter, EUR 2,100 million of the new facility
had been drawn.
Following the announcement of the acquisition of TGC-10, Moody's Investor
service confirmed Fortum Corporation's long-term credit rating "A2" (stable).
Standard & Poor's has placed its "A-" long-term corporate credit rating on
Fortum on CreditWatch with negative implications.
Shares and share capital
During the first quarter 2008, a total of 159.4 (281.0) million Fortum
Corporation shares, totalling EUR 4,422 million, were traded. Fortum's market
capitalisation, calculated using the closing quotation of the last trading day
of the quarter, was EUR 22,897 million. The highest quotation of Fortum
Corporation shares on the OMX Nordic Exchange Helsinki in the first quarter of
2008 was EUR 33.00, the lowest EUR 23.27, and the volume weighted average
quotation EUR 27.77. The closing quotation on the last trading day of the
quarter was EUR 25.81 (21.83).
Relating to the 2002B share option scheme, a total of 0.2 million options for a
total of EUR 6.2 million were traded during the first quarter of 2008.
A total of 439,535 shares subscribed on the basis of share option schemes were
entered into the trade register in the first quarter of 2008. At the end of the
first quarter 2008, Fortum Corporation did not own its own shares.
After registrations, Fortum Corporation's share capital is EUR 3,041,954,816.20
and the total number of registered shares is 887,122,593 at the end of the first
quarter of 2008. The share capital of Fortum Corporation increased by a total of
EUR 1,494,419.
At quarter-end, the amount of shares that can still be subscribed for and
registered under the share option schemes is a maximum of 0.1% (1,244,452
shares) of Fortum's quarter-end share capital and voting rights.
At quarter-end, the Finnish state's holding in Fortum was 50.8%. The proportion
of nominee registrations and direct foreign shareholders was 35.6%.
Currently, the Board of Directors has no unused authorisations from the Annual
General Meeting of Shareholders to issue convertible loans or bonds with
warrants or to issue new shares. The Board of Directors has an authorisation
from the Annual General Meeting of Shareholders on 1 April 2008 to buy Fortum
Corporation's own shares. The authorisation, amounting to EUR 300 million or 15
million shares, is valid until the next Annual General Meeting.
Group personnel
The average number of employees in the Group during the period from January to
March was 8,356 (8,165). The number of employees at the end of the period was
15,689 (8,190). The increase in the number employees is due to the acquisition
of TGC-10.
Events after the period under review
In the beginning of April, Fortum submitted the Environmental Impact Assessment
(EIA) report of the third nuclear power plant unit in Loviisa to the Finnish
Ministry of Employment and the Economy. The EIA indicates that a 1,000 - 1,800
MW nuclear power plant unit (Loviisa 3) can be built on the Hästholmen island in
Loviisa. After the Ministry issues its statement, Fortum will make decisions
regarding further measures.
Annual General Meeting
Fortum Corporation's Annual General Meeting, which was held in Helsinki on 1
April 2008, adopted the financial statements of the parent company and the Group
for 2007, discharged Fortum's Supervisory Board, Board of Directors and the
President and CEO from liability for 2007, and decided to pay a dividend of EUR
1.35 per share for 2007. Of this total dividend, EUR 0.77 per share was in
accordance with the Group's dividend policy and EUR 0.58 per share was
additional dividend proposed in order to steer Fortum's capital structure
towards the agreed target level. The dividend payment date was 11 April 2008.
The Annual General Meeting authorised the Board of Directors to repurchase the
company's own shares by using non-restricted equity. The authorisation is valid
until the next Annual General Meeting. The shares will be repurchased in order
to steer Fortum's capital structure towards the target. The maximum amount of
shares to be repurchased is 15 million shares. In addition, the amount of funds
used for the repurchases may not exceed EUR 300 million. The shares will be
repurchased through public trading of the securities on OMX Nordic Exchange
Helsinki Oy, which means that they will not be purchased in proportion to the
holdings of the shareholders. The repurchase price of the shares shall be based
on the public trading price of Fortum shares. Shares repurchased by the company
shall be cancelled by a separate decision of the Board of Directors.
Outlook
The key market driver influencing Fortum's business performance is the Nordic
wholesale price of electricity. Key drivers behind the wholesale price
development are the Nordic hydrological situation and supply-demand balance, CO2
emissions allowance prices and fuel prices.
The Swedish krona and Russian rouble exchange rates also affect Fortum's
reported results, as results generated by Fortum in Sweden and Russia are
translated into euros.
Fortum's financial results are exposed to a number of strategic, financial and
operational risks. For further details on Fortum's risks and risk management,
see Fortum's Operating and Financial Review and Financial Statements.
In Russia, one of the key assumptions in the TGC-10 acquisition is the
continuation of the Russian power reform. The Russian wholesale power market is
expected to be fully liberalised in 2011. TGC-10 is committed and contractually
obligated to a significant investment programme, amounting to approximately EUR
2.2 billion. The programme is estimated to be completed by the end of 2013. The
completion of the investment programme depends on e.g. the power sector reform
and the availability of key components. The contractual obligations of TGC-10's
investment programme include penalty clauses tied to the availability of the new
generating capacity.
According to general market information, electricity consumption in the Nordic
countries is predicted to increase by about 1% a year over the next few years.
In mid-April 2008, the Nordic water reservoirs were about 8 TWh above the
long-term average and 5 TWh above the corresponding level of 2007. In late
April, the market price for emission allowances (EUA) for 2008 was about EUR
24-25 per tonne CO2. At the same time, the electricity forward price for the
rest of 2008 was around EUR 42-44 per MWh and for 2009 around EUR 52-53 per MWh.
The first and last quarters of the year are usually the strongest quarters for
the power and heat businesses.
Fortum Power Generation's achieved Nordic power price typically depends on e.g.
the hedge ratio, hedge price, spot price, utilisation and optimisation of
Fortum's flexible production portfolio - even on an hourly basis - and currency
fluctuations. If Fortum would not hedge any of its production volumes, a 1
EUR/MWh change in the spot price would result in approximately a EUR 50 million
change in Fortum's annual operating profit.
At the beginning of April 2008, Fortum had hedged approximately 60% of the Power
Generation segment's estimated Nordic electricity sales volume for the year 2008
at approximately EUR 45 per MWh. For the calendar year 2009, approximately 35%
of the Power Generation segment's estimated Nordic electricity sales volume was
hedged at approximately EUR 48 per MWh. These hedge ratios may vary
significantly depending on Fortum's actions on the electricity derivatives
markets. Hedge prices are also influenced by changes in the SEK/EUR exchange
rates, as part of the hedges are conducted in SEK.
The acquisition of TGC-10 is expected to marginally dilute Fortum's EPS during
2008 and 2009. Fortum expects the full benefits of its targeted annual
efficiency improvements in TGC-10 to reach at least EUR 30 million.
Fortum's results in the first quarter of 2008 were good, despite challenging
market conditions. The Group's financial position is strong. With its flexible
and climate-benign production portfolio, Fortum continues to be well positioned
for the future.
Espoo, 23 April 2008
Fortum Corporation
Board of Directors
Further information:
Mikael Lilius, President and CEO, tel. +358 10 452 9100
Juha Laaksonen, CFO,
tel. +358 10 452 4519
The financial statements have been prepared in accordance with International
Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted by the EU.
The interim financials have not been audited.
Publication of results in 2008:
Interim Report January-June will be published on 17 July 2008
Interim Report January-September will be published on 22 October 2008
Distribution:
OMX Nordic Exchange Helsinki
Key media
www.fortum.com
Information on the financial statements release, including detailed quarterly
information, is available on Fortum's website at: www.fortum.com/investors
--------------------------------------------------------------------------------
| FORTUM GROUP |
--------------------------------------------------------------------------------
| JANUARY-MARCH 2008 |
--------------------------------------------------------------------------------
| Interim Financial Statements are unaudited |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONSOLIDATED INCOME STATEMENT |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | | Note | Q1 2008 | Q1 2007 | 2007 | Last |
| | | | | | | twelve |
| | | | | | | months |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Sales | | 4 | 1 440 | 1 340 | 4 479 | 4 579 |
--------------------------------------------------------------------------------
| Other income | | | 61 | 5 | 393 | 449 |
--------------------------------------------------------------------------------
| Materials and services | | | -521 | -486 | -1 572 | -1 607 |
--------------------------------------------------------------------------------
| Employee benefit costs | | | -136 | -126 | -495 | -505 |
--------------------------------------------------------------------------------
| Depreciation, amortisation | 4, 12 | -111 | -112 | -451 | -450 |
| and impairment charges | | | | | |
--------------------------------------------------------------------------------
| Other expenses | | | -124 | -131 | -507 | -500 |
--------------------------------------------------------------------------------
| Operating profit | | | 609 | 490 | 1 847 | 1 966 |
--------------------------------------------------------------------------------
| Share of profit of | 4, 13 | 34 | 202 | 241 | 73 |
| associates and joint | | | | | |
| ventures | | | | | |
--------------------------------------------------------------------------------
| Interest expense | | | -60 | -44 | -220 | -236 |
--------------------------------------------------------------------------------
| Interest income | | | 17 | 12 | 76 | 81 |
--------------------------------------------------------------------------------
| Fair value gains and | | -2 | 2 | 7 | 3 |
| losses on financial | | | | | |
| instruments | | | | | |
--------------------------------------------------------------------------------
| Other financial | | | 0 | -1 | -17 | -16 |
| expenses - net | | | | | | |
--------------------------------------------------------------------------------
| Finance costs - net | | | -45 | -31 | -154 | -168 |
--------------------------------------------------------------------------------
| Profit before income | | | 598 | 661 | 1 934 | 1 871 |
| tax | | | | | | |
--------------------------------------------------------------------------------
| Income tax expense | | 9 | -122 | -109 | -326 | -339 |
--------------------------------------------------------------------------------
| Profit for the period | | | 476 | 552 | 1 608 | 1 532 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | | | | |
--------------------------------------------------------------------------------
| Equity holders of the | | | 452 | 522 | 1 552 | 1 482 |
| Company | | | | | | |
--------------------------------------------------------------------------------
| Minority interest | | | 24 | 30 | 56 | 50 |
--------------------------------------------------------------------------------
| | | | 476 | 552 | 1 608 | 1 532 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share for | | | | | |
| profit attributable to the | | | | | |
| equity | | | | | |
--------------------------------------------------------------------------------
| holders of the company | 10 | | | | |
| during the year (in € per | | | | | |
| share) | | | | | |
--------------------------------------------------------------------------------
| Basic | | | 0.51 | 0.59 | 1.74 | 1.67 |
--------------------------------------------------------------------------------
| Diluted | | | 0.51 | 0.58 | 1.74 | 1.66 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONSOLIDATED BALANCE | | | | | |
| SHEET | | | | | |
--------------------------------------------------------------------------------
| MEUR | | Note | March 31 | March 31 | Dec 31 |
| | | | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSETS | | | | | |
--------------------------------------------------------------------------------
| Non-current assets | | | | | |
--------------------------------------------------------------------------------
| Intangible assets | | 12 | 416 | 89 | 85 |
--------------------------------------------------------------------------------
| Property, plant and | | 12 | 12 970 | 11 192 | 11 343 |
| equipment | | | | | |
--------------------------------------------------------------------------------
| Participations in associates | 4, 13 | 2 511 | 2 318 | 2 853 |
| and joint ventures | | | | |
--------------------------------------------------------------------------------
| Share in State Nuclear Waste | 16 | 522 | 453 | 516 |
| Management Fund | | | | |
--------------------------------------------------------------------------------
| Other long-term | | | 73 | 102 | 99 |
| investments | | | | | |
--------------------------------------------------------------------------------
| Deferred tax assets | | | 1 | 7 | 3 |
--------------------------------------------------------------------------------
| Derivative financial | | 6 | 172 | 123 | 153 |
| instruments | | | | | |
--------------------------------------------------------------------------------
| Long-term | | | 767 | 674 | 736 |
| interest-bearing | | | | | |
| receivables | | | | | |
--------------------------------------------------------------------------------
| Total non-current assets | | | 17 432 | 14 958 | 15 788 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | | | | |
--------------------------------------------------------------------------------
| Inventories | | | 297 | 286 | 285 |
--------------------------------------------------------------------------------
| Derivative financial | | 6 | 185 | 329 | 140 |
| instruments | | | | | |
--------------------------------------------------------------------------------
| Trade and other | | | 1 340 | 1 099 | 1 034 |
| receivables | | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents | | | 2 237 | 1 067 | 427 |
--------------------------------------------------------------------------------
| Total current assets | | | 4 059 | 2 781 | 1 886 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | | | 21 491 | 17 739 | 17 674 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY | | | | | |
--------------------------------------------------------------------------------
| Capital and reserves | | | | | |
| attributable to the | | | | | |
--------------------------------------------------------------------------------
| Company's equity holders | | | | | |
--------------------------------------------------------------------------------
| Share capital | | 14 | 3 042 | 3 034 | 3 040 |
--------------------------------------------------------------------------------
| Other restricted funds | | | 83 | 73 | 78 |
--------------------------------------------------------------------------------
| Fair value and other | | | 407 | 542 | 715 |
| reserves | | | | | |
--------------------------------------------------------------------------------
| Retained earnings | | | 4 923 | 3 674 | 4 526 |
--------------------------------------------------------------------------------
| Total | | | 8 455 | 7 323 | 8 359 |
--------------------------------------------------------------------------------
| Minority interest | | | 948 | 271 | 292 |
--------------------------------------------------------------------------------
| Total equity | | | 9 403 | 7 594 | 8 651 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| LIABILITIES | | | | | |
--------------------------------------------------------------------------------
| Non-current liabilities | | | | | |
--------------------------------------------------------------------------------
| Interest-bearing | | 15 | 6 633 | 3 516 | 4 288 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
| Derivative financial | | 6 | 119 | 91 | 139 |
| instruments | | | | | |
--------------------------------------------------------------------------------
| Deferred tax liabilities | | | 1 899 | 1 826 | 1 687 |
--------------------------------------------------------------------------------
| Nuclear provisions | | 16 | 522 | 453 | 516 |
--------------------------------------------------------------------------------
| Pension and other | | | 343 | 155 | 144 |
| provisions | | | | | |
--------------------------------------------------------------------------------
| Other liabilities | | | 459 | 485 | 486 |
--------------------------------------------------------------------------------
| Total non-current | | | 9 975 | 6 526 | 7 260 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities | | | | | |
--------------------------------------------------------------------------------
| Interest-bearing | | 15 | 832 | 1 483 | 605 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
| Derivative financial | | 6 | 165 | 92 | 260 |
| instruments | | | | | |
--------------------------------------------------------------------------------
| Trade and other payables | | | 1 116 | 2 044 | 898 |
| 1) | | | | | |
--------------------------------------------------------------------------------
| Total current liabilities | | | 2 113 | 3 619 | 1 763 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | | | 12 088 | 10 145 | 9 023 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total equity and | | | 21 491 | 17 739 | 17 674 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Dividend of EUR 1,122 million decided by the Annual General Meeting on 28 |
| March 2007 is included in Trade and other payables 31 March 2007, see Note |
| 11. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | Shar | Other | Fair | Trea | Reta | Attrib | Minor | Total |
| | e | restr | value | sury | ined | utable | ity | |
| | capi | icted | and | shar | earn | to the | | |
| | tal | funds | other | es | ings | equity | | |
| | | | reser | | | holder | | |
| | | | ves | | | s | | |
--------------------------------------------------------------------------------
| Total equity | 3 | 78 | 715 | - | 4 | 8 359 | 292 | 8 651 |
| at 31.12.2007 | 040 | | | | 526 | | | |
--------------------------------------------------------------------------------
| Translation | | | | | -50 | -50 | -12 | -62 |
| and other | | | | | | | | |
| differences | | | | | | | | |
--------------------------------------------------------------------------------
| Cash flow | | | 99 | | | 99 | 1 | 100 |
| hedges | | | | | | | | |
--------------------------------------------------------------------------------
| Other fair | | | -411 | | | -411 | | -411 |
| value | | | | | | | | |
| adjustments 1) | | | | | | | | |
--------------------------------------------------------------------------------
| Total gains | - | - | -312 | - | -50 | -362 | -11 | -373 |
| and losses not | | | | | | | | |
| recognised in | | | | | | | | |
| Income | | | | | | | | |
| statement | | | | | | | | |
--------------------------------------------------------------------------------
| Net profit for | | | | | 452 | 452 | 24 | 476 |
| the period | | | | | | | | |
--------------------------------------------------------------------------------
| Total | - | - | -312 | - | 402 | 90 | 13 | 103 |
| recognised | | | | | | | | |
| income for the | | | | | | | | |
| period | | | | | | | | |
--------------------------------------------------------------------------------
| Stock options | 2 | | | | | 2 | | 2 |
| exercised | | | | | | | | |
--------------------------------------------------------------------------------
| Changes due to | | | 4 | | | 4 | 643 | 647 |
| business | | | | | | | | |
| combinations | | | | | | | | |
--------------------------------------------------------------------------------
| Changes | | 5 | | | -5 | 0 | | 0 |
| between | | | | | | | | |
| restricted and | | | | | | | | |
| unrestricted | | | | | | | | |
| equity | | | | | | | | |
--------------------------------------------------------------------------------
| Total equity | 3 | 83 | 407 | - | 4 | 8 455 | 948 | 9 403 |
| at 31.03.2008 | 042 | | | | 923 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total equity | 3 | 74 | 511 | - | 4 | 7 908 | 253 | 8 161 |
| at 31.12.2006 | 023 | | | | 300 | | | |
--------------------------------------------------------------------------------
| Translation | | | | | -25 | -25 | -11 | -36 |
| and other | | | | | | | | |
| differences | | | | | | | | |
--------------------------------------------------------------------------------
| Cash flow | | | -168 | | | -168 | -2 | -170 |
| hedges | | | | | | | | |
--------------------------------------------------------------------------------
| Other fair | | | 372 | | | 372 | | 372 |
| value | | | | | | | | |
| adjustments 1) | | | | | | | | |
--------------------------------------------------------------------------------
| Total gains | - | - | 204 | - | -25 | 179 | -13 | 166 |
| and losses not | | | | | | | | |
| recognised in | | | | | | | | |
| Income | | | | | | | | |
| statement | | | | | | | | |
--------------------------------------------------------------------------------
| Net profit for | | | | | 1 | 1 552 | 56 | 1 608 |
| the period | | | | | 552 | | | |
--------------------------------------------------------------------------------
| Total | - | - | 204 | - | 1 | 1 731 | 43 | 1 774 |
| recognised | | | | | 527 | | | |
| income for the | | | | | | | | |
| period | | | | | | | | |
--------------------------------------------------------------------------------
| Stock options | 17 | | | | | 17 | | 17 |
| exercised | | | | | | | | |
--------------------------------------------------------------------------------
| Cash dividend | | | | | -1 | -1 122 | | -1 |
| 2) | | | | | 122 | | | 122 |
--------------------------------------------------------------------------------
| Repurchase of | | | | -175 | | -175 | | -175 |
| own shares | | | | | | | | |
--------------------------------------------------------------------------------
| Cancellation | | | | 175 | -175 | 0 | | 0 |
| of own shares | | | | | | | | |
--------------------------------------------------------------------------------
| Changes | | 4 | | | -4 | 0 | | 0 |
| between | | | | | | | | |
| restricted and | | | | | | | | |
| unrestricted | | | | | | | | |
| equity | | | | | | | | |
--------------------------------------------------------------------------------
| Changes in | | | | | | 0 | -4 | -4 |
| minority | | | | | | | | |
| through | | | | | | | | |
| business | | | | | | | | |
| combinations | | | | | | | | |
--------------------------------------------------------------------------------
| Total equity | 3 | 78 | 715 | - | 4 | 8 359 | 292 | 8 651 |
| at 31.12.2007 | 040 | | | | 526 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Includes the fair value change of Renewable Energy Corporation (REC) |
| shareholding in Hafslund and the effect of Hafslund's sale of REC shares. |
--------------------------------------------------------------------------------
| See Note 13 Changes in | | | | | | |
| participations in associates | | | | | | |
| and joint ventures. | | | | | | |
--------------------------------------------------------------------------------
| 2) See Note 11 | | | | | | | | |
| Dividends. | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONDENSED CONSOLIDATED CASH FLOW STATEMENT |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | | Note | | Q1 2008 | Q1 2007 | 2007 | Last |
| | | | | | | | twelve |
| | | | | | | | months |
--------------------------------------------------------------------------------
| Cash flow from | | | | | | | |
| operating | | | | | | | |
| activities | | | | | | | |
--------------------------------------------------------------------------------
| Operating profit | | | | 720 | 602 | 2 298 | 2 416 |
| before | | | | | | | |
| depreciations | | | | | | | |
--------------------------------------------------------------------------------
| Non-cash flow items | | | | -37 | 1 | -286 | -324 |
| and divesting | | | | | | | |
| activities | | | | | | | |
--------------------------------------------------------------------------------
| Financial items and realised | -45 | -38 | -10 | -17 |
| foreign exchange gains and losses | | | | |
--------------------------------------------------------------------------------
| Taxes | | | | -77 | -118 | -383 | -342 |
--------------------------------------------------------------------------------
| Funds from | | | | 561 | 447 | 1 619 | 1 733 |
| operations | | | | | | | |
--------------------------------------------------------------------------------
| Change in working | | | | -19 | 50 | 51 | -18 |
| capital | | | | | | | |
--------------------------------------------------------------------------------
| Total net cash from | | | | 542 | 497 | 1 670 | 1 715 |
| operating | | | | | | | |
| activities | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from | | | | | | | |
| investing | | | | | | | |
| activities | | | | | | | |
--------------------------------------------------------------------------------
| Capital | | 4, | | -164 | -100 | -592 | -656 |
| expenditures 1) | | 12 | | | | | |
--------------------------------------------------------------------------------
| Acquisition of | 7 | | -764 | -8 | -10 | -766 |
| subsidiaries, net of | | | | | | |
| cash acquired | | | | | | |
--------------------------------------------------------------------------------
| Acquisition of | | 13 | | -8 | | -271 | -279 |
| associates 2) | | | | | | | |
--------------------------------------------------------------------------------
| Acquisition of | | | | 0 | | -4 | -4 |
| other long-term | | | | | | | |
| investments | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds from sales | | | | 4 | 7 | 14 | 11 |
| of fixed assets | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds from sales of | 7 | | 0 | | 0 | 0 |
| subsidiaries, net of | | | | | | |
| cash disposed | | | | | | |
--------------------------------------------------------------------------------
| Proceeds from sales | | 13 | | | | 304 | 304 |
| of associates | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds from sales of | | | 0 | | 29 | 29 |
| other long-term | | | | | | |
| investments | | | | | | |
--------------------------------------------------------------------------------
| Change in | | | | -30 | -36 | -79 | -73 |
| interest-bearing | | | | | | | |
| receivables | | | | | | | |
--------------------------------------------------------------------------------
| Total net cash used | | | | -962 | -137 | -609 | -1 434 |
| in investing | | | | | | | |
| activities | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow before | | | | -420 | 360 | 1 061 | 281 |
| financing | | | | | | | |
| activities | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash flow from | | | | | | | |
| financing | | | | | | | |
| activities | | | | | | | |
--------------------------------------------------------------------------------
| Net change in loans | | | | 2 257 | 540 | 488 | 2 205 |
--------------------------------------------------------------------------------
| Dividends paid to the | | | | | -1 122 | -1 122 |
| Company's equity | | | | | | |
| holders | | | | | | |
--------------------------------------------------------------------------------
| Repurchase of own | | | | | | -175 | -175 |
| shares | | | | | | | |
--------------------------------------------------------------------------------
| Other financing | | | | 1 | 10 | 18 | 9 |
| items | | | | | | | |
--------------------------------------------------------------------------------
| Total net cash used | | | | 2 258 | 550 | -791 | 917 |
| in financing | | | | | | | |
| activities | | | | | | | |
--------------------------------------------------------------------------------
| Total net increase | | | | | | | |
| (+)/decrease (-) in | | | | | | | |
| cash | | | | | | | |
--------------------------------------------------------------------------------
| and marketable | | | | 1 838 | 910 | 270 | 1 198 |
| securities | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Capital expenditures in cash-flow do not include not yet paid | |
| investments. Capitalised borrowing costs are included in interest costs | |
| paid. | |
--------------------------------------------------------------------------------
| 2) Acquisition of | | | | | | | | |
| associates include | | | | | | | | |
| share issues. | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| KEY RATIOS | | | | | | | | |
--------------------------------------------------------------------------------
| MEUR | | | March | Dec | Sept | June | March | Last |
| | | | 31 | 31 | 30 | 30 | 31 | twelv |
| | | | 2008 | 2007 | 2007 | 2007 | 2007 | e |
| | | | | | | | | month |
| | | | | | | | | s |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EBITDA, MEUR | | | 720 | 2 298 | 1 663 | 1 040 | 602 | 2 416 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per | | | 0.51 | 1.74 | 1.33 | 0.85 | 0.59 | 1.67 |
| share (basic), | | | | | | | | |
| EUR | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital | | | 16 868 | 13 | 13 | 13 503 | 12 | 16 |
| employed, MEUR | | | | 544 | 764 | | 593 | 868 |
--------------------------------------------------------------------------------
| Interest-bearing | | | 5 228 | 4 466 | 4 456 | 4 610 | 3 932 | N/A |
| net debt, MEUR | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital expenditure and | 1 227 | 972 | 646 | 253 | 115 | 2 084 |
| gross investments in | | | | | | |
| shares, MEUR | | | | | | |
--------------------------------------------------------------------------------
| Capital | | | 175 | 655 | 382 | 236 | 100 | 730 |
| expenditure, | | | | | | | | |
| MEUR | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on | | | 17.3 | 16.5 | 15.1 | 14.8 | 18.0 | 14.4 |
| capital | | | | | | | | |
| employed, % 1) | | | | | | | | |
--------------------------------------------------------------------------------
| Adjusted return | | | | 14.0 | | | | 13.1 |
| on capital | | | | | | | | |
| employed, % 2) | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on | | | 21.0 | 19.1 | 17.8 | 17.2 | 21.1 | 18.0 |
| shareholders' | | | | | | | | |
| equity, % 1) | | | | | | | | |
--------------------------------------------------------------------------------
| Adjusted return | | | | 15.8 | | | | 16.4 |
| on shareholders' | | | | | | | | |
| equity, % 2) | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net debt / | | | 1.8 | 1.9 | 2.1 | 2.2 | 1.6 | 2.2 |
| EBITDA 1) | | | | | | | | |
--------------------------------------------------------------------------------
| Adjusted Net | | | | 2.2 | 2.3 | | | 2.4 |
| debt / EBITDA 3) | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest | | | 14.1 | 12.8 | 12.4 | 11.5 | 15.3 | 12.7 |
| coverage | | | | | | | | |
--------------------------------------------------------------------------------
| Funds from | | 42.9 | 36.3 | 33.9 | 36.1 | 45.5 | 33.2 |
| operations/interest-b | | | | | | | |
| earing net debt, % | | | | | | | |
| 1) | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gearing, % | | | 56 | 52 | 52 | 58 | 52 | N/A |
--------------------------------------------------------------------------------
| Equity per | | | 9.53 | 9.43 | 9.21 | 8.68 | 8.22 | N/A |
| share, EUR | | | | | | | | |
--------------------------------------------------------------------------------
| Equity-to-assets | | | 44 | 49 | 48 | 46 | 43 | N/A |
| ratio, % | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number | | | 8 356 | 8 304 | 8 305 | 8 257 | 8 165 | N/A |
| of employees | | | | | | | | |
--------------------------------------------------------------------------------
| Number of | | | 15 689 | 8 303 | 8 306 | 8 541 | 8 190 | N/A |
| employees | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Average number | | | 887 | 889 | 890 | 890 | 890 | 889 |
| of shares, 1 000 | | | 085 | 997 | 984 | 770 | 263 | 485 |
| shares | | | | | | | | |
--------------------------------------------------------------------------------
| Diluted adjusted | | 888 | 891 | 892 | 893 | 893 | 890 |
| average number of | | 177 | 395 | 815 | 140 | 252 | 564 |
| shares, 1 000 shares | | | | | | | |
--------------------------------------------------------------------------------
| Number of | | | 887 | 886 | 892 | 891 | 890 | N/A |
| registered | | | 123 | 683 | 119 | 472 | 685 | |
| shares, 1 000 | | | | | | | | |
| shares | | | | | | | | |
--------------------------------------------------------------------------------
| Number of shares | | N/A | N/A | N/A | N/A | N/A | N/A |
| excluding treasury | | | | | | | |
| shares, 1000 shares | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Quarterly figures are | | | | | | |
| annualised. | | | | | | |
--------------------------------------------------------------------------------
| 2) Adjusted for REC and | | | | | | |
| Lenenergo gains in 2007. | | | | | | |
--------------------------------------------------------------------------------
| 3) Based on EBITDA excluding capital gain from the sale of Fortum's holding |
| in Lenenergo amounting to EUR 232 million. |
--------------------------------------------------------------------------------
| For definitions, see Note | | | | | | |
| 23. | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1. BASIS OF | | | | | | | | |
| PREPARATION | | | | | | | | |
--------------------------------------------------------------------------------
The condensed interim financial statements have been prepared in accordance with
International Accounting Standard (IAS) 34, Interim Financial Reporting, as
adopted by the EU. The condensed interim financial report should be read in
conjunction with the annual financial statements for the year ended 31 December
2007.
--------------------------------------------------------------------------------
| 2. ACCOUNTING | | | | | | | | |
| POLICIES | | | | | | | | |
--------------------------------------------------------------------------------
The accounting policies adopted are consistent with those of the Group's annual
financial statements for the year ended 31 December 2007, except for changes
listed below.
Early adoption of IFRS 8 Operating Segments
Following the acquisition of the Russian company TGC-10, Fortum has changed its
segment reporting during Q1 2008. A new Russia segment is introduced, which then
means that the future segment structure will have one segment based on
geographical area, combined with segments based on type of business operations.
Due to the change in segments structure, Fortum is early adopting IFRS 8
Operating segments.
The new Russia segment includes:
- TGC-10, which is consolidated from 31 March 2008 (see Note 7)
- the TGC-1 shareholding, which is transferred from the Power Generation segment
- minor assets from shareholdings in Lenenergo spin-off companies, transferred
from Distribution, Markets and Other segments
In addition to introducing a new segment, assets and profits from the associated
company Hafslund has been transferred from Power Generation segment to Other
segment.
Segments Power Generation, Heat, Distribution and Markets as well as Other will
remain as previously reported with exception from the items stated above. Power
Generation consists of the business units Generation, Portfolio Management and
Trading (PMT) aswell as Service. The business units Generation and PMT have from
a financial reporting perspective one common set of financial measures. No
separate pricing mechanism is in use between the business units. Service
business unit provides services both internal and external, but its core
activities refers to Generation business. The two business units Heat and Värme
are aggregated to the Heat segment based on the similarity in the nature of
business, customers etc.
Financial target setting, follow up and allocation of resources in the Group's
performance management process is based on the business units' comparable
operating profit including share of profit from associated companies and
comparable return on net assets.
Consolidation by segment is based on the same principles as for the Group as a
whole. Inter-segment transactions are based on commercial terms. Due to the
large number of customers and the variety of its business activities, there are
no individual customer whose business volume is material compared with Fortum's
total business volume. Power Generation segment is selling the produced
electricity mainly through Nordpool. For further information regarding the
segments business activities and geographical areas, see the Financial
statements 2007 Note 5 Primary Segment information.
Comparison numbers for 2007 have been restated, resulting in the following
effects in operating profit and non-recurring items:
- the 2007 non-recurring gain on the sale of Lenenergo shares (EUR 232 miilion),
transferred from Distribution segment to the new Russia segment
- the gain on the sale of WGC-5 shares (EUR 12 million), transferred from Power
Generation segment to the new Russia segment
- share of profits from associates regarding Hafslund during 2007, including the
gain from Hafslund's divestment of shares in REC in Q 1 2007, has been
transferred from Power Generation segment to Other segment.
In attachment, the segment numbers are disclosed prior and after the change in
segment structure.
New interpretations
The following new interpretations are mandatory for the financial year ending 31
December 2008:
- IFRIC 11 IFRS 2: Group and treasury share transactions The share-based payment
arrangements established within Fortum Group are not subject to IFRIC 11
because they are cash-settled.
- IFRIC 14 IAS 19 - The limit on a defined benefit asset, minimum funding
requirements and their interaction provides guidance how to assess the limit in
IAS 19 on the amount of the surplus that can be recognised as an asset in
particular when there is a minimum funding requirement. IFRIC 14 is not
expected to have a significant impact on Group's accounts. The interpretation
has not yet been endorsed in the EU.
- IFRIC 12 Service concession arrangements is not relevant to Fortum as no
member of the Group is a service concession operator providing for public sector
services. The interpretation has not yet been endorsed in the EU.
These new interpretations have not had any effect on the reported income
statement, balance sheet or disclosures.
For further information on accounting of associates, see Note 13 below.
--------------------------------------------------------------------------------
| 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS |
--------------------------------------------------------------------------------
The preparation of Interim financial statements requires management to make
judgements, estimates and assumptions that affect the reported amounts of assets
and liabilities, income and expense. Annual results may differ from these
estimates.
In preparing these interim financial statements, the significant judgements made
by management in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the annual
financial statements as at and for the year ended 31 December 2007.
--------------------------------------------------------------------------------
| 4. SEGMENT INFORMATION |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SALES BY SEGMENT | Q1 2008 | Q1 2007 | 2007 | Last |
| MEUR | | | | twelve |
| | | | | months |
--------------------------------------------------------------------------------
| Power Generation | 717 | 641 | 2 350 | 2 426 |
--------------------------------------------------------------------------------
| - of which internal | 53 | 156 | 323 | 220 |
--------------------------------------------------------------------------------
| Heat | 493 | 479 | 1 356 | 1 370 |
--------------------------------------------------------------------------------
| - of which internal | 7 | 24 | 38 | 21 |
--------------------------------------------------------------------------------
| Distribution | 232 | 225 | 769 | 776 |
--------------------------------------------------------------------------------
| - of which internal | 3 | 2 | 9 | 10 |
--------------------------------------------------------------------------------
| Markets | 519 | 519 | 1 683 | 1 683 |
--------------------------------------------------------------------------------
| - of which internal | 32 | 44 | 155 | 143 |
--------------------------------------------------------------------------------
| Russia | - | - | - | - |
--------------------------------------------------------------------------------
| - of which internal | - | - | - | - |
--------------------------------------------------------------------------------
| Other | 20 | 19 | 81 | 82 |
--------------------------------------------------------------------------------
| - of which internal | 20 | 16 | 72 | 76 |
--------------------------------------------------------------------------------
| Eliminations 1) | -541 | -543 | -1 760 | -1 758 |
--------------------------------------------------------------------------------
| Total | 1 440 | 1 340 | 4 479 | 4 579 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Eliminations include sales and purchases with Nordpool that is netted on |
| Group level on an hourly basis and posted either as revenue or cost |
| depending on if Fortum is a net seller or net buyer during any particular |
| hour. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OPERATING PROFIT BY | Q1 2008 | Q1 2007 | 2007 | Last |
| SEGMENTS | | | | twelve |
| MEUR | | | | months |
--------------------------------------------------------------------------------
| Power Generation | 431 | 300 | 1 115 | 1 246 |
--------------------------------------------------------------------------------
| Heat | 130 | 142 | 294 | 282 |
--------------------------------------------------------------------------------
| Distribution | 86 | 79 | 233 | 240 |
--------------------------------------------------------------------------------
| Markets | -20 | -12 | 12 | 4 |
--------------------------------------------------------------------------------
| Russia | - | - | 244 | 244 |
--------------------------------------------------------------------------------
| Other | -18 | -19 | -51 | -50 |
--------------------------------------------------------------------------------
| Total | 609 | 490 | 1 847 | 1 966 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| COMPARABLE OPERATING PROFIT | | Q1 2008 | Q1 2007 | 2007 | Last |
| BY SEGMENTS | | | | | twelve |
| MEUR | | | | | months |
--------------------------------------------------------------------------------
| Power Generation | | | 395 | 330 | 1 095 | 1 160 |
--------------------------------------------------------------------------------
| Heat | | | 121 | 137 | 290 | 274 |
--------------------------------------------------------------------------------
| Distribution | | | 87 | 78 | 231 | 240 |
--------------------------------------------------------------------------------
| Markets | | | -10 | -14 | -1 | 3 |
--------------------------------------------------------------------------------
| Russia | | | - | - | - | - |
--------------------------------------------------------------------------------
| Other | | | -12 | -19 | -51 | -44 |
--------------------------------------------------------------------------------
| Comparable operating | | | 581 | 512 | 1 564 | 1 633 |
| profit | | | | | | |
--------------------------------------------------------------------------------
| Non-recurring items | | | 2 | 1 | 250 | 251 |
--------------------------------------------------------------------------------
| Other items effecting | | | 26 | -23 | 33 | 82 |
| comparability | | | | | | |
--------------------------------------------------------------------------------
| Operating profit | | | 609 | 490 | 1 847 | 1 966 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NON-RECURRING ITEMS BY | | | Q1 2008 | Q1 2007 | 2007 | Last |
| SEGMENTS | | | | | | twelve |
| MEUR | | | | | | months |
--------------------------------------------------------------------------------
| Power Generation | | | 0 | 0 | 2 | 2 |
--------------------------------------------------------------------------------
| Heat | | | 2 | 0 | 2 | 4 |
--------------------------------------------------------------------------------
| Distribution | | | 0 | 1 | 0 | -1 |
--------------------------------------------------------------------------------
| Markets | | | | 0 | 0 | 0 |
--------------------------------------------------------------------------------
| Russia | | | | | 244 | 244 |
--------------------------------------------------------------------------------
| Other | | | 0 | 0 | 2 | 2 |
--------------------------------------------------------------------------------
| Total | | | 2 | 1 | 250 | 251 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OTHER ITEMS EFFECTING | Q1 2008 | Q1 2007 | 2007 | Last |
| COMPARABILITY BY SEGMENTS | | | | twelve |
| MEUR | | | | months |
--------------------------------------------------------------------------------
| Power Generation 1) | | | 36 | -30 | 18 | 84 |
--------------------------------------------------------------------------------
| Heat | | | 7 | 5 | 2 | 4 |
--------------------------------------------------------------------------------
| Distribution | | | -1 | 0 | 2 | 1 |
--------------------------------------------------------------------------------
| Markets | | | -10 | 2 | 13 | 1 |
--------------------------------------------------------------------------------
| Russia | | | - | - | - | - |
--------------------------------------------------------------------------------
| Other | | | -6 | 0 | -2 | -8 |
--------------------------------------------------------------------------------
| Total | | | 26 | -23 | 33 | 82 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Including effects from the | | | | | |
| accounting of Fortum's part | | | | | |
| of | | | | | |
--------------------------------------------------------------------------------
| the Finnish State Nuclear Waste | -9 | -5 | 17 | 13 |
| Management Fund with (EUR | | | | |
| million): | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| DEPRECIATION, AMORTISATION AND | Q1 2008 | Q1 | 2007 | Last |
| IMPAIRMENT CHARGES BY SEGMENTS | | 2007 | | twelv |
| MEUR | | | | e |
| | | | | month |
| | | | | s |
--------------------------------------------------------------------------------
| Power Generation | | | | | 24 | 26 | 103 | 101 |
--------------------------------------------------------------------------------
| Heat | | | | | 42 | 40 | 163 | 165 |
--------------------------------------------------------------------------------
| Distribution | | | | | 41 | 39 | 162 | 164 |
--------------------------------------------------------------------------------
| Markets | | | | | 2 | 4 | 11 | 9 |
--------------------------------------------------------------------------------
| Russia | | | | | - | - | - | - |
--------------------------------------------------------------------------------
| Other | | | | | 2 | 3 | 12 | 11 |
--------------------------------------------------------------------------------
| Total | | | | | 111 | 112 | 451 | 450 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SHARE OF PROFITS IN | | Q1 2008 | Q1 | 2007 | Last |
| ASSOCIATES AND JOINT VENTURES | | | 2007 | | twelve |
| BY SEGMENTS | | | | | months |
| MEUR | | | | | |
--------------------------------------------------------------------------------
| Power | | | | | -8 | -6 | -23 | -25 |
| Generation 1) | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | | | | | 7 | 7 | 24 | 24 |
--------------------------------------------------------------------------------
| Distribution | | | | | 10 | 6 | 18 | 22 |
--------------------------------------------------------------------------------
| Markets | | | | | 0 | 1 | 0 | -1 |
--------------------------------------------------------------------------------
| Russia | | | | | - | - | - | - |
--------------------------------------------------------------------------------
| Other | | | | | 25 | 194 | 222 | 53 |
--------------------------------------------------------------------------------
| Total | | | | | 34 | 202 | 241 | 73 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) The main part of the associated companies in Power Generation are power |
| production companies from which Fortum purchases produced electricity at |
| production costs including interest costs and income taxes. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PARTICIPATIONS IN ASSOCIATES AND JOINT | March 31 | March 31 | Dec 31 |
| VENTURES BY SEGMENTS | 2008 | 2007 | 2007 |
| MEUR | | | |
--------------------------------------------------------------------------------
| Power Generation | | | | 800 | 783 | 806 |
--------------------------------------------------------------------------------
| Heat | | | | 172 | 157 | 158 |
--------------------------------------------------------------------------------
| Distribution | | | | 233 | 221 | 229 |
--------------------------------------------------------------------------------
| Markets | | | | 8 | 9 | 8 |
--------------------------------------------------------------------------------
| Russia | | | | 490 | 277 | 455 |
--------------------------------------------------------------------------------
| Other | | | | 808 | 871 | 1 197 |
--------------------------------------------------------------------------------
| Total | | | | 2 511 | 2 318 | 2 853 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CAPITAL EXPENDITURE BY | Q1 2008 | Q1 2007 | 2007 | Last |
| SEGMENTS | | | | twelve |
| MEUR | | | | months |
--------------------------------------------------------------------------------
| Power Generation | 18 | 16 | 93 | 95 |
--------------------------------------------------------------------------------
| Heat 1) | 91 | 44 | 309 | 356 |
--------------------------------------------------------------------------------
| Distribution 2) | 61 | 36 | 236 | 261 |
--------------------------------------------------------------------------------
| Markets | 1 | 1 | 3 | 3 |
--------------------------------------------------------------------------------
| Russia | - | | | |
--------------------------------------------------------------------------------
| Other | 4 | 3 | 14 | 15 |
--------------------------------------------------------------------------------
| Total | 175 | 100 | 655 | 730 |
--------------------------------------------------------------------------------
1) Increase is mainly due to ongoing large CHP-plant construction projects in
Espoo in Finland, Tarto in Estonia and Czestochowa in Poland.
2) Increase is mainly due to installation of new meters in Fortum's network
areas in Sweden (Automatic Meter Management, AMM)
--------------------------------------------------------------------------------
| GROSS INVESTMENTS IN | Q1 2008 | Q1 2007 | 2007 | Last |
| SHARES BY SEGMENTS | | | | twelve |
| MEUR | | | | months |
--------------------------------------------------------------------------------
| Power Generation | | | | 52 | 52 |
--------------------------------------------------------------------------------
| Heat | | 21 | 15 | 18 | 24 |
--------------------------------------------------------------------------------
| Distribution | | | | 1 | 1 |
--------------------------------------------------------------------------------
| Markets | | 0 | | 0 | 0 |
--------------------------------------------------------------------------------
| Russia 1) | | 1 031 | | 245 | 1 276 |
--------------------------------------------------------------------------------
| Other | | 0 | | 1 | 1 |
--------------------------------------------------------------------------------
| Total | | 1 052 | 15 | 317 | 1 354 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) See Note 7 | | | | | |
| Acquisitions and | | | | | |
| disposals. | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NET ASSETS BY SEGMENTS | March 31 | March 31 | Dec 31 |
| MEUR | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| Power Generation | 5 633 | 5 636 | 5 599 |
--------------------------------------------------------------------------------
| Heat | 3 617 | 3 444 | 3 507 |
--------------------------------------------------------------------------------
| Distribution | 3 332 | 3 245 | 3 239 |
--------------------------------------------------------------------------------
| Markets | 169 | 140 | 247 |
--------------------------------------------------------------------------------
| Russia | 2 264 | 302 | 456 |
--------------------------------------------------------------------------------
| Other and Eliminations | 822 | 937 | 1 237 |
--------------------------------------------------------------------------------
| Total | 15 837 | 13 704 | 14 285 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| RETURN ON NET ASSETS BY | Last | Dec 31 |
| SEGMENTS | twelve | 2007 |
| % | months | |
--------------------------------------------------------------------------------
| Power Generation | 21.7 | 19.2 |
--------------------------------------------------------------------------------
| Heat | 8.8 | 9.3 |
--------------------------------------------------------------------------------
| Distribution | 8.0 | 7.7 |
--------------------------------------------------------------------------------
| Markets | 1.7 | 6.9 |
--------------------------------------------------------------------------------
| Russia | 32.1 | 66.3 |
--------------------------------------------------------------------------------
| Other | 0.4 | 17.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| COMPARABLE RETURN ON NET ASSETS | Last | Dec 31 |
| BY SEGMENTS | twelve | 2007 |
| % | months | |
--------------------------------------------------------------------------------
| Power Generation | | 20.2 | 18.9 |
--------------------------------------------------------------------------------
| Heat | | 8.6 | 9.2 |
--------------------------------------------------------------------------------
| Distribution | | 8.0 | 7.6 |
--------------------------------------------------------------------------------
| Markets | | 1.2 | -0.6 |
--------------------------------------------------------------------------------
| Russia | | 0.0 | 0.0 |
--------------------------------------------------------------------------------
| Other 1) | | 2.8 | -2.1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Excluding approximately EUR 180 million gain in relation to | |
| Hafslund's divestment of REC-shares Q1 2007 included in the share of | |
| profits of associates and joint ventures. | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on net assets is calculated by dividing the sum of operating | |
| profit and share of profit of associated companies and joint ventures | |
| with average net assets. Average net assets are calculated using the | |
| opening balance and end of each quarter values. | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSETS BY SEGMENTS | March 31 | March 31 | Dec 31 |
| MEUR | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| Power Generation | 6 155 | 6 037 | 6 154 |
--------------------------------------------------------------------------------
| Heat | 4 033 | 3 830 | 3 928 |
--------------------------------------------------------------------------------
| Distribution | 3 874 | 3 735 | 3 778 |
--------------------------------------------------------------------------------
| Markets | 612 | 617 | 630 |
--------------------------------------------------------------------------------
| Russia | 2 541 | 302 | 456 |
--------------------------------------------------------------------------------
| Other and Eliminations | 934 | 1 057 | 1 392 |
--------------------------------------------------------------------------------
| Assets included in Net | 18 149 | 15 578 | 16 338 |
| assets | | | |
--------------------------------------------------------------------------------
| Interest-bearing | 792 | 710 | 747 |
| receivables | | | |
--------------------------------------------------------------------------------
| Deferred taxes | 1 | 7 | 3 |
--------------------------------------------------------------------------------
| Other assets | 312 | 377 | 159 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 2 237 | 1 067 | 427 |
--------------------------------------------------------------------------------
| Total assets | 21 491 | 17 739 | 17 674 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| LIABILITIES BY SEGMENTS | March 31 | March 31 | Dec 31 |
| MEUR | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| Power Generation | 522 | 401 | 555 |
--------------------------------------------------------------------------------
| Heat | 416 | 386 | 421 |
--------------------------------------------------------------------------------
| Distribution | 542 | 490 | 539 |
--------------------------------------------------------------------------------
| Markets | 443 | 477 | 383 |
--------------------------------------------------------------------------------
| Russia | 277 | - | - |
--------------------------------------------------------------------------------
| Other and Eliminations | 112 | 120 | 155 |
--------------------------------------------------------------------------------
| Liabilities included in | 2 312 | 1 874 | 2 053 |
| Net assets | | | |
--------------------------------------------------------------------------------
| Deferred tax liabilities | 1 899 | 1 826 | 1 687 |
--------------------------------------------------------------------------------
| Other | 412 | 1 446 | 390 |
--------------------------------------------------------------------------------
| Total liabilities | 4 623 | 5 146 | 4 130 |
| included in Capital | | | |
| employed | | | |
--------------------------------------------------------------------------------
| Interest-bearing | 7 465 | 4 999 | 4 893 |
| liabilities | | | |
--------------------------------------------------------------------------------
| Total equity | 9 403 | 7 594 | 8 651 |
--------------------------------------------------------------------------------
| Total equity and | 21 491 | 17 739 | 17 674 |
| liabilities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| AVERAGE NUMBER OF | Q1 2008 | Q1 2007 | 2007 |
| EMPLOYEES | | | |
--------------------------------------------------------------------------------
| Power Generation | 3 523 | 3 350 | 3 475 |
--------------------------------------------------------------------------------
| Heat | 2 324 | 2 311 | 2 302 |
--------------------------------------------------------------------------------
| Distribution | 1 144 | 1 037 | 1 060 |
--------------------------------------------------------------------------------
| Markets | 846 | 914 | 936 |
--------------------------------------------------------------------------------
| Russia | - | - | - |
--------------------------------------------------------------------------------
| Other | 519 | 553 | 531 |
--------------------------------------------------------------------------------
| Total | 8 356 | 8 165 | 8 304 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NUMBER OF EMPLOYEES | March 31 | March 31 | Dec 31 |
| | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| Power Generation | 3 544 | 3 371 | 3 511 |
--------------------------------------------------------------------------------
| Heat | 2 445 | 2 304 | 2 279 |
--------------------------------------------------------------------------------
| Distribution | 1 175 | 1 039 | 1 063 |
--------------------------------------------------------------------------------
| Markets | 814 | 942 | 935 |
--------------------------------------------------------------------------------
| Russia | 7 187 | - | - |
--------------------------------------------------------------------------------
| Other | 524 | 534 | 515 |
--------------------------------------------------------------------------------
| Total | 15 689 | 8 190 | 8 303 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 5. QUARTERLY SEGMENT INFORMATION |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Extended quarterly information is available on Fortum's website | | |
| www.fortum.com/investors/financial information. | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY SALES BY | Q1 | Q4 | Q3 | Q2 | Q1 |
| SEGMENTS | 2008 | 2007 | 2007 | 2007 | 2007 |
| MEUR | | | | | |
--------------------------------------------------------------------------------
| Power Generation | 717 | 685 | 502 | 522 | 641 |
--------------------------------------------------------------------------------
| - of which internal | 53 | 5 | 70 | 92 | 156 |
--------------------------------------------------------------------------------
| Heat | 493 | 439 | 186 | 252 | 479 |
--------------------------------------------------------------------------------
| - of which internal | 7 | -1 | 4 | 11 | 24 |
--------------------------------------------------------------------------------
| Distribution | 232 | 206 | 166 | 172 | 225 |
--------------------------------------------------------------------------------
| - of which internal | 3 | 3 | 2 | 2 | 2 |
--------------------------------------------------------------------------------
| Markets | 519 | 482 | 331 | 351 | 519 |
--------------------------------------------------------------------------------
| - of which internal | 32 | 49 | 30 | 32 | 44 |
--------------------------------------------------------------------------------
| Russia | - | - | - | - | - |
--------------------------------------------------------------------------------
| - of which internal | - | - | - | - | - |
--------------------------------------------------------------------------------
| Other | 20 | 21 | 19 | 22 | 19 |
--------------------------------------------------------------------------------
| - of which internal | 20 | 20 | 17 | 19 | 16 |
--------------------------------------------------------------------------------
| Eliminations | -541 | -513 | -344 | -360 | -543 |
--------------------------------------------------------------------------------
| Total | 1 440 | 1 320 | 860 | 959 | 1 340 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY OPERATING PROFIT | Q1 | Q4 | Q3 | Q2 | Q1 |
| BY SEGMENTS | 2008 | 2007 | 2007 | 2007 | 2007 |
| MEUR | | | | | |
--------------------------------------------------------------------------------
| Power Generation | | 431 | 351 | 221 | 243 | 300 |
--------------------------------------------------------------------------------
| Heat | | 130 | 121 | -2 | 33 | 142 |
--------------------------------------------------------------------------------
| Distribution | | 86 | 51 | 50 | 53 | 79 |
--------------------------------------------------------------------------------
| Markets | | -20 | 2 | 15 | 7 | -12 |
--------------------------------------------------------------------------------
| Russia | | 0 | 12 | 232 | - | - |
--------------------------------------------------------------------------------
| Other | | -18 | -17 | -6 | -9 | -19 |
--------------------------------------------------------------------------------
| Total | | 609 | 520 | 510 | 327 | 490 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY COMPARABLE | Q1 | Q4 | Q3 | Q2 | Q1 |
| OPERATING PROFIT BY | 2008 | 2007 | 2007 | 2007 | 2007 |
| SEGMENTS | | | | | |
| MEUR | | | | | |
--------------------------------------------------------------------------------
| Power | | | | 395 | 363 | 185 | 217 | 330 |
| Generation | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | | | | 121 | 120 | -3 | 36 | 137 |
--------------------------------------------------------------------------------
| Distribution | | | | 87 | 50 | 51 | 52 | 78 |
--------------------------------------------------------------------------------
| Markets | | | | -10 | -1 | 11 | 3 | -14 |
--------------------------------------------------------------------------------
| Russia | | | | 0 | - | - | - | - |
--------------------------------------------------------------------------------
| Other | | | | -12 | -16 | -6 | -10 | -19 |
--------------------------------------------------------------------------------
| Total | | | | 581 | 516 | 238 | 298 | 512 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY NON-RECURRING ITEMS | Q1 | Q4 | Q3 | Q2 | Q1 |
| BY SEGMENTS | 2008 | 2007 | 2007 | 2007 | 2007 |
| MEUR | | | | | |
--------------------------------------------------------------------------------
| Power Generation | | 0 | 0 | 0 | 2 | 0 |
--------------------------------------------------------------------------------
| Heat | | 2 | 1 | 0 | 1 | 0 |
--------------------------------------------------------------------------------
| Distribution | | 0 | 0 | -1 | 0 | 1 |
--------------------------------------------------------------------------------
| Markets | | - | -1 | 1 | 0 | 0 |
--------------------------------------------------------------------------------
| Russia | | - | 12 | 232 | - | - |
--------------------------------------------------------------------------------
| Other | | 0 | 1 | 0 | 1 | 0 |
--------------------------------------------------------------------------------
| Total | | 2 | 13 | 232 | 4 | 1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY OTHER ITEMS | | Q1 | Q4 | Q3 | Q2 | Q1 |
| EFFECTING COMPARABILITY | | 2008 | 2007 | 2007 | 2007 | 2007 |
| MEUR | | | | | | |
--------------------------------------------------------------------------------
| Power | | | | 36 | -12 | 36 | 24 | -30 |
| Generation | | | | | | | | |
| 1) | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | | | | 7 | 0 | 1 | -4 | 5 |
--------------------------------------------------------------------------------
| Distribution | | | | -1 | 1 | 0 | 1 | 0 |
--------------------------------------------------------------------------------
| Markets | | | | -10 | 4 | 3 | 4 | 2 |
--------------------------------------------------------------------------------
| Russia | | | | - | - | - | - | - |
--------------------------------------------------------------------------------
| Other | | | | -6 | -2 | 0 | 0 | 0 |
--------------------------------------------------------------------------------
| Total | | | | 26 | -9 | 40 | 25 | -23 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Including effects from | | | | | |
| the accounting of Fortum's | | | | | |
| part of the Finnish | | | | | |
--------------------------------------------------------------------------------
| State Nuclear Waste | | -9 | -7 | 33 | -4 | -5 |
| Management Fund with | | | | | | |
| (EUR million): | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 6. FINANCIAL RISK MANAGEMENT |
--------------------------------------------------------------------------------
The Group has not made any significant change in policies regarding risk
management during the period. Aspects of the Group's financial risk management
objectives and policies are consistent with that disclosed in the consolidated
financial statements as at and for the year ended 31 December 2007.
The tables below disclose the notional values or volumes and net fair values for
the Group's derivatives used in different areas mainly for hedging purposes.
--------------------------------------------------------------------------------
| DERIVATIVES | | | | | | |
--------------------------------------------------------------------------------
| MEUR | | March 31 | March 31 | Dec 31 |
| | | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| Interest and | Notiona | Net | Notio | Net | Notional | Net fair |
| currency | l value | fair | nal | fair | value | value |
| derivatives | | value | value | value | | |
--------------------------------------------------------------------------------
| Interest rate | 2 856 | 20 | 3 092 | 2 | 3 500 | -16 |
| swaps | | | | | | |
--------------------------------------------------------------------------------
| Forward foreign | 5 020 | -5 | 6 923 | 71 | 4 452 | 30 |
| exchange | | | | | | |
| contracts | | | | | | |
--------------------------------------------------------------------------------
| Forward rate | 745 | - | - | - | 741 | 0 |
| agreements | | | | | | |
--------------------------------------------------------------------------------
| Interest rate and | 3 131 | 49 | 3 014 | 17 | 3 293 | 66 |
| currency swaps | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Electricity | Volume | Net | Volum | Net | Volume | Net fair |
| derivatives | | fair | e | fair | | value |
| | | value | | value | | |
--------------------------------------------------------------------------------
| | TWh | MEUR | TWh | MEUR | TWh | MEUR |
--------------------------------------------------------------------------------
| Sales swaps | 121 | 61 | 121 | 730 | 119 | -651 |
--------------------------------------------------------------------------------
| Purchase swaps | 96 | -61 | 90 | -567 | 88 | 461 |
--------------------------------------------------------------------------------
| Purchased options | 0 | 0 | 6 | 1 | 0 | 0 |
--------------------------------------------------------------------------------
| Written options | 4 | 2 | 9 | 0 | 2 | -1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Oil derivatives | Volume | Net | Volum | Net | Volume | Net fair |
| | | fair | e | fair | | value |
| | | value | | value | | |
--------------------------------------------------------------------------------
| | 1000 | MEUR | 1000 | MEUR | 1000 bbl | MEUR |
| | bbl | | bbl | | | |
--------------------------------------------------------------------------------
| Sales swaps and | 464 | -4 | 545 | -2 | 460 | -4 |
| futures | | | | | | |
--------------------------------------------------------------------------------
| Purchase swaps | 692 | 9 | 1 003 | 4 | 795 | 9 |
| and futures | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Coal derivatives | Volume | Net | Volum | Net | Volume | Net fair |
| | | fair | e | fair | | value |
| | | value | | value | | |
--------------------------------------------------------------------------------
| | kt | MEUR | kt | MEUR | kt | MEUR |
--------------------------------------------------------------------------------
| Sold | 105 | -1 | - | - | 150 | -1 |
--------------------------------------------------------------------------------
| Bought | 330 | 4 | - | - | 375 | 1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CO2 emission | Volume | Net | Volum | Net | Volume | Net fair |
| allowance | | fair | e | fair | | value |
| derivatives | | value | | value | | |
--------------------------------------------------------------------------------
| | ktCO2 | MEUR | ktCO2 | MEUR | ktCO2 | MEUR |
--------------------------------------------------------------------------------
| Sold | 3 951 | -13 | 405 | 0 | 3 101 | -13 |
--------------------------------------------------------------------------------
| Bought | 3 896 | 14 | 415 | 0 | 3 121 | 13 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share derivatives | Notiona | Net | Notio | Net | Notional | Net fair |
| | l value | fair | nal | fair | value | value |
| | | value | value | value | | |
--------------------------------------------------------------------------------
| | MEUR | MEUR | MEUR | MEUR | MEUR | MEUR |
--------------------------------------------------------------------------------
| Share forwards 1) | 35 | 40 | 36 | 48 | 36 | 66 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Cash-settled share forwards are used as a hedging | | |
| instrument for Fortum Group's performance share arrangement. | | |
--------------------------------------------------------------------------------
On 20 February 2008, Fortum, the Russian Territorial Generating Company No. 1
(TGC-1) and ECF Project Ltd signed an agreement according to which Fortum will
purchase approximately 5 million tonnes of emission reduction units (ERU) from
TGC-1. The ERUs will come from Joint Implementation projects conducted at
TGC-1's production facilities during the Kyoto Period (2008-2012) of the
European Emissions Trading Scheme.
Depending on the timing of the volumes, the agreement will fully be classified
as an own use contract and valued at cost. Since the timing, volumes (and also
the market price for the ERUs) are uncertain, the agreement is treated as an own
use contract until more information is available, i.e. with no impact to income
statement or balance sheet. The ERUs purchased cover approximately half of
Fortum's annual CO2 emissions and their value is approximately EUR 70 million
based on the current market price of Certified Emission Reductions originating
from developing countries.
--------------------------------------------------------------------------------
| 7. ACQUISITIONS AND | | | | | | | | |
| DISPOSALS | | | | | | | | |
--------------------------------------------------------------------------------
Total Gross investment in subsidiary shares (see definition of key figures)
amounted to EUR 1,045 (18) million of which EUR 1,031 million represents the
acquisition of TGC-10.
In Latvia, Fortum acquired 100% of the shares in Jelgavas Kogeneracija SIA at
the end of March. The acquired company provides district heating to the city of
Jelgava. The annual heat sales are 200 GWh, the sales EUR 10 million, and the
number of employees 170. The gross investment was EUR 10 million.
In Sweden, Fortum acquired additional 11,22% shares in Hofors Energi AB. After
this acquisition Fortum's total ownership of the shares in Hofors Energi AB is
60%. The acquired company provides district heating to the Hofors area. The
annual heat sales are 130 GWh, the sales EUR 7 million, and Fortum has alraedy
earlier taken care of operations in the company. The gross investment was EUR 3
million.
No divestments of shares in subsidiaries have taken place during the period.
Acquisition of TGC-10
In March Fortum acquired 76.49% of TGC-10 which is a Russian territorial
generating company founded in 2006 and operating in the Urals and West Siberia
region. The total installed capacity is 3,000 MW electricity and 15,800 MW heat
with an annual production of 18 TWh electricity and 27 TWh heat. The company is
committed and contractually obligated to an extensive investment plan to further
increase its electricity capacity with 2,300 MW by 2013. The contractual
obligations of TGC-10's investment programme include penalty clauses tied to the
availability of the new generating capacity. Total sales for last twelve months
in TGC-10 were EUR 590 million and operating profit was EUR 26 million based on
Q3 2007 published Interim Financial statements.
The acquisition was made through an acquisition of shares and through
participation in a share issue. On 20 March 2008 Fortum paid for 47.42% of the
shares in TGC-10 through a share issue for approximately EUR 1.3 billion. The
capital received by TGC-10 will remain in the company and will be used to
finance its committed capacity investment programme planned at EUR 2.2 billion.
On 26 March Fortum paid for an additional 29.07% of the shares in TGC-10 from
United Energy Systems of Russia (RAO UES). Fortum will make a mandatory offer to
purchase the remaining shares held by the minority shareholders.
The gross investment for the total transaction was EUR 1,031 million, excluding
cash in TGC-10 (mainly coming from the share issue) and including
interest-bearing liabilities in the company. The purchase price allocation is
based on a preliminary balance sheet as of 31 March 2008 of TGC-10. The latest
IFRS interim financial statements published from
TGC-10 is Q3 2007. The fair value adjustments are highly preliminary, since all
valuation effects have not been finalised, in particular regarding potential
obligations. The Fortum Q1 2008 Interim report does not include any income
statement effect from TGC-10.
--------------------------------------------------------------------------------
| MEUR | | | | | TGC-10 |
--------------------------------------------------------------------------------
| Purchase consideration | | | | | |
--------------------------------------------------------------------------------
| Cash paid | | | | | 2 069 |
--------------------------------------------------------------------------------
| Direct costs relating | | | | | 7 |
| to the acquisition | | | | | |
--------------------------------------------------------------------------------
| Total purchase | | | | | 2 076 |
| consideration | | | | | |
--------------------------------------------------------------------------------
| Fair value of the | | | | | 1 737 |
| acquired assets | | | | | |
--------------------------------------------------------------------------------
| Goodwill | | | | | 339 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | | Acquired | Allocate | Total |
| | | | | d | |
--------------------------------------------------------------------------------
| Fair value of the | | | Book | Fair | Value |
| acquired net | | | Values | Values | |
| identifiable assets: | | | | | |
--------------------------------------------------------------------------------
| Cash and cash | | | 1 321 | | 1 321 |
| equivalents | | | | | |
--------------------------------------------------------------------------------
| Property, plant and | | | 539 | 988 | 1 527 |
| equipment | | | | | |
--------------------------------------------------------------------------------
| Other assets | | | 282 | | 282 |
--------------------------------------------------------------------------------
| Non-interest-bearing | | | -93 | -388 | -481 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
| Interest-bearing | | | -276 | | -276 |
| liabilities | | | | | |
--------------------------------------------------------------------------------
| Net identifiable assets | | | 1 773 | 600 | 2 373 |
--------------------------------------------------------------------------------
| Minority interests | | | -417 | -219 | -636 |
--------------------------------------------------------------------------------
| Total | | | 1 356 | 381 | 1 737 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gross investment in | | | | | |
| TGC-10: | | | | | |
--------------------------------------------------------------------------------
| Purchase consideration | | | | | 2 076 |
| settled in cash | | | | | |
--------------------------------------------------------------------------------
| Cash and cash | | | | | 1 321 |
| equivalents in | | | | | |
| subsidiaries acquired | | | | | |
--------------------------------------------------------------------------------
| Cash outflow on | | | | | 755 |
| acquisition | | | | | |
--------------------------------------------------------------------------------
| Interest-bearing debt | | | | | 276 |
| in subsidiaries | | | | | |
| acquired | | | | | |
--------------------------------------------------------------------------------
| Total | | | | | 1 031 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 8. EXCHANGE RATES |
--------------------------------------------------------------------------------
The balance sheet date rate is based on exchange rate published by the European
Central Bank for the closing date. The average exchange rate is calculated as an
average of each months ending rate from the European Central Bank during the
year and ending rate previous year.
Key exchange rates for Fortum Group applied in the accounts:
--------------------------------------------------------------------------------
| Average rate | March 31 | Dec 31 | Sept 30 | June 30 | March 31 |
| | 2008 | 2007 | 2007 | 2007 | 2007 |
--------------------------------------------------------------------------------
| Sweden (SEK) | 9.4265 | 9.2475 | 9.2185 | 9.2020 | 9.1787 |
--------------------------------------------------------------------------------
| Norway (NOK) | 7.9998 | 8.0253 | 8.0466 | 8.1205 | 8.1563 |
--------------------------------------------------------------------------------
| Poland (PLN) | 3.5676 | 3.7792 | 3.8285 | 3.8439 | 3.8858 |
--------------------------------------------------------------------------------
| Russia (RUB) | 36.4660 | 35.0759 | 34.8320 | 34.6997 | 34.5633 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Balance sheet | March 31 | Dec 31 | Sept 30 | June 30 | March 31 |
| date rate | 2008 | 2007 | 2007 | 2007 | 2007 |
--------------------------------------------------------------------------------
| Sweden (SEK) | 9.3970 | 9.4415 | 9.2147 | 9.2525 | 9.3462 |
--------------------------------------------------------------------------------
| Norway (NOK) | 8.0510 | 7.9580 | 7.7185 | 7.9725 | 8.1190 |
--------------------------------------------------------------------------------
| Poland (PLN) | 3.5220 | 3.5935 | 3.7730 | 3.7677 | 3.8668 |
--------------------------------------------------------------------------------
| Russia (RUB) | 37.1130 | 35.9860 | 35.3490 | 34.8070 | 34.6580 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 9. INCOME TAX | | | | | | | | |
| EXPENSE | | | | | | | | |
--------------------------------------------------------------------------------
Tax rate according to the income statement for the period January to March 2008
was 20.4% (16.5%). The tax rate for the period is higher than in the comparable
period 2007 mainly due to the impact of Hafslund´s sale of REC shares in March
2007, which impacted the share of profits from associates for the period with
approximately EUR 180 million.
The tax rate used in the income statement is always impacted by the fact that
share of profits of associates and joint ventures is recorded based on Fortum's
share of profits after tax. The tax rate for the period calculated excluding the
share of profits from associates and joint ventures was 21.6% (23.7%).
The tax rate for the full year 2007, excluding the share of profits from
associates and Lenenergo sales gain was 22.3%.
--------------------------------------------------------------------------------
| 10. EARNINGS PER SHARE | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| The calculation of basic and diluted earnings per share is based on the |
| following data: |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | | Q1 2008 | Q1 2007 | 2007 |
--------------------------------------------------------------------------------
| Earnings (MEUR): | | | | | |
--------------------------------------------------------------------------------
| Profit attributable to the | | 452 | 522 | 1 552 |
| equity holders of the Company | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Number of shares | | | | | |
| (thousands): | | | | | |
--------------------------------------------------------------------------------
| Weighted average number of | | | | |
| shares for the purpose of | | | | |
--------------------------------------------------------------------------------
| basic earnings per | | | 887 085 | 890 263 | 889 997 |
| share | | | | | |
--------------------------------------------------------------------------------
| Effect of dilutive | | | 1 092 | 2 989 | 1 398 |
| share options | | | | | |
--------------------------------------------------------------------------------
| Weighted average number of | | | | |
| shares for the purpose of | | | | |
--------------------------------------------------------------------------------
| diluted earnings per | | | 888 177 | 893 252 | 891 395 |
| share | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 11. DIVIDEND PER | | | | | | | | |
| SHARE | | | | | | | | |
--------------------------------------------------------------------------------
The Annual General Meeting on 1 April 2008 decided to distribute a dividend of
EUR 1.35 per share to the shareholders of which EUR 0.77 per share was paid from
Fortum's recurring earnings and EUR 0.58 per share as additional dividend in
order to steer the company's capital structure towards the target. The total
dividend amounts to EUR 1,198 million based on the amount of shares registered
as of 4 April 2008. The dividend was paid out 11 April 2008. These financial
statements do not reflect this dividend.
The Annual General Meeting on 28 March 2007 decided to distribute a dividend of
EUR 1.26 per share to the shareholders of which EUR 0.73 per share is in
accordance with the Group´s dividend policy. An additional dividend of EUR 0.53
per share was decided to steer Fortum´s capital structure towards agreed target.
The total dividend was EUR 1,122 million based on the amount of shares
registered as of 2 April 2007. The dividend was paid on 11 April 2007.
In Q1 2007 the total dividend was included in trade and other payables.
--------------------------------------------------------------------------------
| 12. CHANGES IN INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | | | March 31 | March 31 | Dec 31 |
| | | | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| Opening balance | | | 11 428 | 11 567 | 11 567 |
--------------------------------------------------------------------------------
| Increase through | | | 1 857 | 13 | 16 |
| acquisition of | | | | | |
| subsidiary companies | | | | | |
--------------------------------------------------------------------------------
| Capital expenditures | | | 175 | 100 | 655 |
--------------------------------------------------------------------------------
| Changes of nuclear | | | - | - | 25 |
| asset retirement cost | | | | | |
--------------------------------------------------------------------------------
| Changes of emission | | | 0 | 0 | -9 |
| rights | | | | | |
--------------------------------------------------------------------------------
| Disposals | | | -2 | -6 | -11 |
--------------------------------------------------------------------------------
| Depreciation, | | | -111 | -112 | -451 |
| amortisation and | | | | | |
| impairment | | | | | |
--------------------------------------------------------------------------------
| Translation differences | | | 39 | -281 | -364 |
--------------------------------------------------------------------------------
| Closing balance | | | 13 386 | 11 281 | 11 428 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 13. CHANGES IN PARTICIPATIONS IN ASSOCIATES AND JOINT VENTURES | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | | March 31 | March 31 | Dec 31 |
| | | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| Opening balance | | 2 853 | 2 197 | 2 197 |
--------------------------------------------------------------------------------
| Share of profits of | | 34 | 202 | 241 |
| associates and joint | | | | |
| ventures | | | | |
--------------------------------------------------------------------------------
| Investments | | 7 | - | 1 |
--------------------------------------------------------------------------------
| Share issues and | | 1 | - | 294 |
| shareholders' | | | | |
| contributions | | | | |
--------------------------------------------------------------------------------
| Increase through | | 35 | - | - |
| acquisition of | | | | |
| subsidiaries | | | | |
--------------------------------------------------------------------------------
| Reclassifications | | -1 | - | - |
--------------------------------------------------------------------------------
| Divestments | | - | | -68 |
--------------------------------------------------------------------------------
| Dividend income received | | -2 | -2 | -178 |
--------------------------------------------------------------------------------
| Fair value and other | | -416 | -79 | 366 |
| changes in equity | | | | |
--------------------------------------------------------------------------------
| Closing balance | | 2 511 | 2 318 | 2 853 |
--------------------------------------------------------------------------------
In Lithuania, Fortum acquired a 14.73% share in UAB Klaipedos Energija from
Stadtwerke Leipzig GmbH on 29 February 2008. Fortum now owns a 19.63% share of
the company. UAB Klaipedos Energija generates and distributes district heat to
the residents and industries in the cities of Klaipeda and Gargzdai. The net
sales of the company are around EUR 27 million, annual heat sales 1 terawatthour
(TWh) and power sales 20 gigawatthours (GWh). The investment was EUR 7 million.
Accounting for the share of profits from Hafslund ASA
According to Fortum Group accounting policies the share of profits from Hafslund
has been included in Fortum Group figures based on the previous quarter
information since Hafslund's interim reports are published later than Fortum's
interim reports. Hafslund will publish January-March 2008 results on 6 May 2008.
When calculating the share of profits in Hafslund, Fortum has in accordance with
Fortum's accounting policies reclassified Hafslund's accounting treatment for
the shareholding in Renewable Energy Corporation (REC). Hafslund has classified
the shareholding in REC as financial assets at fair value through profit and
loss while Fortum has classified the REC shareholding as available for sale
financial assets with fair value changes recorded directly through equity, only
when Hafslund divests shares in REC, the cumulative fair value change effects
Fortum's income statement.
Since REC has been listed on the Oslo stock exchange as of 9 May 2006, Fortum is
accounting for the fair value change in REC based on the closing price on the
Oslo stock exchange at each closing date. The amount of shares is based on the
amount published by Hafslund in the previous quarter if other information is not
available.
Hafslund sold 35 million shares in REC in March 2007. In accordance with the
accounting policy Fortum recognised approximately EUR 180 million in relation to
Hafslund's divestment of REC shares as a part of the share of profits from
associates and joint ventures in Q1 2007. The cumulative fair value change in
Fortum's equity, based on the remaining number of shares reported by Hafslund,
was approximately EUR 380 million at 31 March 2008, which represents a decrease
with EUR 410 milion from 31 December 2007.
--------------------------------------------------------------------------------
| 14. SHARE CAPITAL | | | | |
--------------------------------------------------------------------------------
| MEUR | | | Number of shares | Share |
| | | | | capital |
--------------------------------------------------------------------------------
| Registered shares at 1 | | | 886 683 058 | 3 040 |
| January 2008 | | | | |
--------------------------------------------------------------------------------
| Shares subscribed with options and | 439 535 | 2 |
| registered by 31 March 2008 | | |
--------------------------------------------------------------------------------
| Registered shares at 31 | | | 887 122 593 | 3 042 |
| March 2008 | | | | |
--------------------------------------------------------------------------------
| Unregistered shares | | | - | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | | | Number of shares | Share |
| | | | | capital |
--------------------------------------------------------------------------------
| Registered shares at 1 | | | 887 393 646 | 3 023 |
| January 2007 | | | | |
--------------------------------------------------------------------------------
| Shares subscribed with options | | 5 199 412 | 17 |
| and registered by 31 Dec 2007 | | | |
--------------------------------------------------------------------------------
| Cancellation of own | | | -5 910 000 | - |
| shares | | | | |
--------------------------------------------------------------------------------
| Registered shares at 31 | | | 886 683 058 | 3 040 |
| Dec 2007 | | | | |
--------------------------------------------------------------------------------
| Unregistered shares | | | 50 000 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 15. | | | | | | | | |
| INTEREST-BEARING | | | | | | | | |
| LIABILITIES | | | | | | | | |
--------------------------------------------------------------------------------
During the first quarter Fortum raised a syndicated loan facility of EUR 3,500
million. The loan facility is structured as a 3 year term loan of EUR 2,000
million to be used for acquisition financing of TGC-10, and as a 5 year
revolving credit facility of EUR 1,500 million to be used for general corporate
purposes. As per the end of the first quarter EUR 2,100 million of the new
facility was drawn.
The amount of re-borrowing from the Finnish nuclear waste fund was increased by
EUR 50 million to EUR 708 million. Fortum also increased the amount of short
term financing by issuing Commercial Papers (CPs) in the Finnish and Swedish
markets. Per quarter end the amount of short term CPs outstanding was EUR 617
million. During the quarter a long term Eurobond (originally issued in 2001) of
EUR 500 million was repaid. The reported interest-bearing debt increased during
the quarter by EUR 2,572 million from EUR 4,893 million to EUR 7,465 million.
Cash increased by EUR 1,810 million from EUR 427 million to EUR 2,237 million
including cash held by TGC-10 amounting to EUR 1,293 million. The dividends both
in 2007 and 2008 were paid after the reporting date.
--------------------------------------------------------------------------------
| 16. NUCLEAR RELATED | | | | | | |
| ASSETS AND LIABILITIES | | | | | | |
--------------------------------------------------------------------------------
| MEUR | | | | March 31 | March 31 | Dec 31 |
| | | | | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| Carrying values in the | | | | | | |
| balance sheet: | | | | | | |
--------------------------------------------------------------------------------
| Nuclear provisions | | | | 522 | 453 | 516 |
--------------------------------------------------------------------------------
| Share in the State | | | | 522 | 453 | 516 |
| Nuclear Waste | | | | | | |
| Management Fund | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Legal liability and actual share of | | | |
| the State Nuclear Waste Management | | | |
| Fund: | | | |
--------------------------------------------------------------------------------
| Liability for nuclear waste | 816 | 685 | 816 |
| management according to the Nuclear | | | |
| Energy Act | | | |
--------------------------------------------------------------------------------
| Funding obligation | | | | 698 | 649 | 698 |
| target | | | | | | |
--------------------------------------------------------------------------------
| Fortum's share of the | | | 698 | 649 | 673 |
| State Nuclear Waste | | | | | |
| Management Fund | | | | | |
--------------------------------------------------------------------------------
Nuclear related provisions
The provisions related to nuclear waste management, i.e. decommissioning of the
power plant and spent fuel, are based on cash-flows for future costs which are
also the basis for the legal liability. An updated cost estimate is done every
year and an updated technical plan is made every third year. The legal liability
decided by the government in January 2008 was based on an updated technical plan
and Fortum accounted for the effects based on the submitted proposal in Q3 2007.
Fortum's share in the State Nuclear Waste Management Fund
Fortum contributes funds to the State Nuclear Waste Management Fund based on the
yearly funding obligation target decided by the governmental authorities in
January each year in connection with the decision of size of the legal
liability. The fund is from an IFRS perspective overfunded with EUR 176 million,
since Fortum's share of the Fund as of 31 March 2008 is EUR 698 million and the
carrying value in the balance sheet is EUR 522 million.
Effects to comparable operating profit and operating profit
Following the updated technical plan, Fortum had in Q3 2007 a one-time effect to
Comparable operating profit of EUR -13 million in the Power Generation segment
mainly due to changes in estimated cash-flows for disposal of spent fuel. Any
costs increase which is related to already spent fuel is always recognised
immediately in Comparable operating profit.
Operating profit in Power Generation segment is affected by the accounting
principle for Fortum's share of the Finnish Nuclear Waste Management Fund, since
the carrying value of the Fund in Fortum's balance sheet can maximum be equal to
the amount of the provisions according to IFRS. As long as the Fund is
overfunded from an IFRS perspective, the effects to operating profit from this
adjustment will be positive if the provisions increase more than the Fund and
negative if actual value of the fund increases more than the provisions. This
accounting effect is not included in Comparable operating profit in Fortum
financial reporting, see Other items effecting comparability in Note 4 and 5.
Fortum had an effect from this adjustment in Q3 2007 of EUR +33 million and the
cumulative effect for the full year 2007 was EUR +17 million. The effect in Q1
2008 was EUR -9 million compared to EUR -5 million in Q1 2007.
Associated companies
As disclosed in the Financial Statement 2007, Fortum has not been able to
account for the nuclear related assets and provisions according to Fortum
accounting principles for its Swedish nuclear associated companies, since the
separate cash-flow information for the provisions is not available.
--------------------------------------------------------------------------------
| 17. PLEDGED ASSETS | | | | |
--------------------------------------------------------------------------------
| MEUR | | March 31 | March 31 | Dec 31 |
| | | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| On own behalf | | | | |
--------------------------------------------------------------------------------
| For debt | | | | |
--------------------------------------------------------------------------------
| Pledges | | 230 | 216 | 170 |
--------------------------------------------------------------------------------
| Real estate mortgages | | 138 | 49 | 138 |
--------------------------------------------------------------------------------
| For other commitments | | | | |
--------------------------------------------------------------------------------
| Real estate mortgages | | 102 | 56 | 103 |
--------------------------------------------------------------------------------
| On behalf of associated | | | |
| companies and joint ventures | | | |
--------------------------------------------------------------------------------
| Pledges and real estate | | 3 | 3 | 3 |
| mortgages | | | | |
--------------------------------------------------------------------------------
Pledged assets for debt
Finnish participants in the State Nuclear Waste Management Fund are allowed to
borrow from the Fund. In Q1 2008 Fortum increased the reborrowing from the Fund
(see Note 15) and therefore pledged additional Kemijoki shares as a security.
The total amount of shares pledged, have a carrying value of EUR 208 million
(145 million) as of 31 March 2008 (and 31 December 2007 respectively).
Pledged assets for other commitments
Fortum has given real estate mortgages in Naantali and Inkoo power plants in
Finland, total value of EUR 102 million, as a security to the State Nuclear
Waste Management Fund for the uncovered part of the legal liability,
uncertainties and unexpected events.
The size of the securities given is updated yearly in Q2 based on the decisions
regarding the legal liabilities and the funding target which takes place around
year-end every year. Fortum estimates the amount of real estate mortgages given
as a security to increase with approximately EUR 100 million during Q2 2008.
--------------------------------------------------------------------------------
| 18. COMMITMENTS | | | | |
--------------------------------------------------------------------------------
| MEUR | | March 31 | March 31 | Dec 31 |
| | | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| Operating lease | | | | |
| commitments | | | | |
--------------------------------------------------------------------------------
| Due within a year | | 24 | 19 | 21 |
--------------------------------------------------------------------------------
| Due after one year and | | 44 | 31 | 31 |
| within five years | | | | |
--------------------------------------------------------------------------------
| Due after five years | | 92 | 75 | 69 |
--------------------------------------------------------------------------------
| Total | | 160 | 125 | 121 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital commitments for the purchase of property, plant and equipment and |
| intangible assets amounts to EUR 467 million as at 31 March 2008 (EUR 436 |
| million at year end 2007). |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 19. CONTINGENT | | | | |
| LIABILITIES | | | | |
--------------------------------------------------------------------------------
| MEUR | | March 31 | March 31 | Dec 31 |
| | | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| On own behalf | | | | |
--------------------------------------------------------------------------------
| Other contingent | | 213 | 146 | 224 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| On behalf of associated | | | |
| companies and joint ventures | | | |
--------------------------------------------------------------------------------
| Guarantees | | 235 | 207 | 235 |
--------------------------------------------------------------------------------
| Other contingent | | 125 | 125 | 125 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| On behalf of others | | | | |
--------------------------------------------------------------------------------
| Guarantees | | 10 | 14 | 10 |
--------------------------------------------------------------------------------
| Other contingent | | 1 | 2 | 1 |
| liabilities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other contingent liabilities on own behalf, EUR 213 million, have decreased |
| with EUR 11 million since 31 December 2007. The main reason for the decrease |
| is effects due exchange rate changes for the guarantees issued for the |
| fulfillment of various cantractual obligations relating to Fortum's Service |
| business in the UK. |
--------------------------------------------------------------------------------
Guarantees on behalf of associated companies
According to law, nuclear companies operating in Finland and Sweden shall give
securities to the Finnish State Nuclear Waste Management Fund and the Swedish
Nuclear Waste Fund respectively, to guarantee that sufficient funds exist to
cover future expenses of decommissioning of power plant and disposal of spent
fuel.
Fortum estimates that the guarantee given on behalf of Teollisuuden Voima Oy
(TVO) to the Finnish fund will increase from currently EUR 32 million to EUR 70
million during Q2 2008. The size of the guarantee is updated yearly in Q2, based
on the decisions regarding legal liability and the funding target which takes
place around year-end.
In Sweden, Fortum has given guarantees on behalf of Forsmarks Kraftgrupp AB and
OKG AB to the Swedish fund. Starting on 1 January 2008, a new law applies for
financing of future fees to the fund for spent nuclear fuel and decommisioning
of the plant. Following the implementation of the new law, Fortum estimates that
the total amount of guarantees relating to nuclear waste management in Sweden
will increase from SEK 1 841 million (EUR 196 million) to SEK 5 314 million (EUR
565 million) during Q2 2008. This amount will also apply for 2009.
--------------------------------------------------------------------------------
| 20. LEGAL ACTIONS AND OFFICIAL PROCEEDINGS |
--------------------------------------------------------------------------------
In March the Finnish Market Court decision overruled the conditional decision
given by the Finnish Competition Authority in June 2006 on the acquisition of
E.ON Finland. In their ruling, the Market Court stated that the Finnish
Competition Authority had no grounds for setting conditions, because Fortum
cannot be condidered to have a dominant position in the power generation and
wholesale market. According to the Market Court, the relevant geographical
market area in power generation and wholesale consist of at least Finland and
Sweden. The Finnish Competition authority has appealed the decision to the
Supreme Administrative Court.
--------------------------------------------------------------------------------
| 21. RELATED PARTY TRANSACTIONS |
--------------------------------------------------------------------------------
Related party transactions are described in the annual financial statements as
of the year ended 31 December 2007. No material changes have occurred during the
period.
The Finnish State owned 50.86% of the shares in Fortum 31 December 2007. After
the changes in amount of shares during 2007, increase in amount of shares due to
the share subscriptions under the option schemes, the Finnish state owned 50.83%
of the Company's shares at 31 March 2008.
--------------------------------------------------------------------------------
| ASSOCIATED COMPANY TRANSACTIONS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | Q1 2008 | Q1 2007 | 2007 |
--------------------------------------------------------------------------------
| Sales to associated | 35 | 43 | 129 |
| companies | | | |
--------------------------------------------------------------------------------
| Interest on associated | 8 | 6 | 26 |
| company loan receivables | | | |
--------------------------------------------------------------------------------
| Purchases from associated | 134 | 130 | 519 |
| companies | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ASSOCIATED COMPANY | | | |
| BALANCES | | | |
--------------------------------------------------------------------------------
| MEUR | March 31 | March 31 | Dec 31 |
| | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| Long-term | 671 | 576 | 636 |
| interest-bearing loan | | | |
| receivables | | | |
--------------------------------------------------------------------------------
| Trade receivables | 14 | 11 | 17 |
--------------------------------------------------------------------------------
| Other receivables | 7 | 7 | 7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Long-term loan payables | 184 | 164 | 171 |
--------------------------------------------------------------------------------
| Trade payables | 22 | 15 | 25 |
--------------------------------------------------------------------------------
| Other payables | 34 | 24 | 53 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TRANSACTIONS AND | | | | | | | |
| BALANCES WITH JOINT | | | | | | | |
| VENTURES | | | | | | | |
--------------------------------------------------------------------------------
| Transactions and balances with joint ventures as at and for | | |
| the period ended 31 March 2008 are not material for the | | |
| Group. | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 22. EVENTS AFTER THE BALANCE SHEET DATE |
--------------------------------------------------------------------------------
Fortum Corporation's Annual General Meeting AGM) was held on April 1 2008. The
AGM authorised the board of Directors to repurchase the company's own shares by
using non-restricted equity. The authorisation is valid until the next AGM. The
maximum amount of shares to be repurchased is 15 million shares for a maximum
amount of EUR 300 million.
Shares repurchased shall be cancelled by a separate decision of the Board of
Directors. Regarding the decision for dividend payment, see Note 11.
Norwegian Renewable Energy Corporation (REC) is partly owned by Fortum's
associated company Hafslund ASA. Fortum shows the fair value changes of REC in
equity. At end of March, the cumulative fair value change booked in Fortum's
equity was approximately EUR 380 million. REC's share price has increased since
the end of March. Based on REC's closing price on 22 April, the cumulative fair
value change in Fortum's equity would have been approximately EUR 515 million.
--------------------------------------------------------------------------------
| 23. DEFINITION | | | | | | | | | |
| OF KEY FIGURES | | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EBITDA (Earnings | = | Operating profit + | | | | |
| before interest, | | Depreciation, | | | | |
| taxes, | | amortisation | | | | |
| depreciation | | | | | | |
--------------------------------------------------------------------------------
| and | | and impairment | | | | | |
| amortisation) | | charges | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Comparable | = | Operating profit - non-recurring items - other | |
| operating profit | | items effecting comparability | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-recurring | = | Mainly capital | | | | |
| items | | gains and | | | | |
| | | losses | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Other items | = | Includes effects from financial derivatives | |
| effecting | | hedging future cash-flows where hedge | |
| comparability | | accounting is | |
--------------------------------------------------------------------------------
| | | not applied according to IAS 39 and effects | |
| | | from the accounting of Fortum´s part of the | |
| | | Finnish | |
--------------------------------------------------------------------------------
| | | Nuclear Waste Fund where the asset in the | |
| | | balance sheet cannot exceed the related | |
| | | liabilities | |
--------------------------------------------------------------------------------
| | | according to IFRIC | | | |
| | | interpretation 5. | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Funds from | = | Net cash from operating activities before | |
| operations (FFO) | | change in working capital | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital | = | Capitalised investments in property, plant and | |
| expenditure | | equipment and intangible assets | |
--------------------------------------------------------------------------------
| | | including maintenance, productivity, growth | |
| | | and investments required by legislation | |
--------------------------------------------------------------------------------
| | | including borrowing costs | | |
| | | capitalised during construction | | |
| | | period. Maintenance | | |
--------------------------------------------------------------------------------
| | | investments expand lifetime of an existing | |
| | | asset, maintain useage/availability and/or | |
--------------------------------------------------------------------------------
| | | maintains reliability. Productivity | |
| | | improves productivity an existing asset. | |
| | | Growth | |
--------------------------------------------------------------------------------
| | | investments' purpose is to build new assets | |
| | | and/or to increase customer base within | |
--------------------------------------------------------------------------------
| | | existing businesses. Legislation | |
| | | investments are done at certain point of | |
| | | time due to | |
--------------------------------------------------------------------------------
| | | legal | | | | | |
| | | requirem | | | | | |
| | | ents. | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gross | = | Investments in subsidiary shares, shares in | |
| investments in | | associated companies and other shares in | |
| shares | | available for | |
--------------------------------------------------------------------------------
| | | sale financial assets. Investments in | |
| | | subsidiary shares are net of cash and grossed | |
| | | with | |
--------------------------------------------------------------------------------
| | | interest-bearing liabilities in | | |
| | | the acquired company. | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on | = | Profit | | | | | x 100 |
| shareholders' | | for the | | | | | |
| equity, % | | year | | | | | |
--------------------------------------------------------------------------------
| | | Total | | | | | |
| | | equity | | | | | |
| | | average | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on | = | Profit before taxes + interest | | x 100 |
| capital | | and other financial expenses | | |
| employed, % | | | | |
--------------------------------------------------------------------------------
| | | Capital | | | | |
| | | employed | | | | |
| | | average | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Return on net | = | Operating profit + Share of profit | x 100 |
| assets, % | | (loss) in associated companies and | |
| | | joint | |
| | | ventures | |
--------------------------------------------------------------------------------
| | | Net | | | | | |
| | | assets | | | | | |
| | | average | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Comparable | = | Comparable operating profit + Share | x 100 |
| return on net | | of profit (loss) in associated | |
| assets, % | | companies | |
--------------------------------------------------------------------------------
| | | and joint ventures (adjusted for IAS 39 effects | |
| | | and major sales gains or losses) | |
--------------------------------------------------------------------------------
| | | Comparable net | | | | |
| | | assets average | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Capital employed | = | Total assets - non-interest bearing liabilities | |
| | | - deferred tax liabilities - provisions | |
--------------------------------------------------------------------------------
| | | - | | | | | |
| | | provisio | | | | | |
| | | ns | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net assets | = | Non-interest bearing assets + interest-bearing | |
| | | assets related to the Nuclear Waste Fund - | |
--------------------------------------------------------------------------------
| | | non-interest bearing liabilities - provisions | |
| | | (non-interest bearing assets and liabilities do | |
| | | not include | |
--------------------------------------------------------------------------------
| | | finance related items, tax and deferred tax and | |
| | | assets and liabilities from fair valuations of | |
--------------------------------------------------------------------------------
| | | derivatives where hedge | | |
| | | accounting is applied) | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Comparable net | = | Net assets adjusted for non-interest bearing | |
| assets | | assets and liabilities arising from financial | |
| | | derivatives | |
--------------------------------------------------------------------------------
| | | hedging future cash-flows where hedge | |
| | | accounting is not applied according to IAS 39 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest-bearing | = | Interest-bearing liabilities - | | |
| net debt | | cash and cash equivalents | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gearing, % | = | Interest-beari | | | | x 100 |
| | | ng net debt | | | | |
--------------------------------------------------------------------------------
| | | Total | | | | | |
| | | equity | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity-to-assets | = | Total equity | | | x 100 |
| ratio, % | | including minority | | | |
| | | interest | | | |
--------------------------------------------------------------------------------
| | | Total | | | | | |
| | | assets | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net debt / | = | Interest-beari | | | | |
| EBITDA | | ng net debt | | | | |
--------------------------------------------------------------------------------
| | | Operating profit + Depreciation, | |
| | | amortisation and impairment charges | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest | = | Operatin | | | | | |
| coverage | | g profit | | | | | |
--------------------------------------------------------------------------------
| | | Net interest | | | | |
| | | expenses | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per | = | Profit for the period | | | |
| share (EPS) | | - minority interest | | | |
--------------------------------------------------------------------------------
| | | Average number of | | | |
| | | shares during the | | | |
| | | period | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity per | = | Sharehol | | | | | |
| share, EUR | | der's | | | | | |
| | | equity | | | | | |
--------------------------------------------------------------------------------
| | | Number of shares excluding treasury | |
| | | shares at the end of the period | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Last twelve | = | Twelve months | | | |
| months | | preceding the | | | |
| | | reporting date | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| ATTACHMENT TO | | | | | | | | |
| THE PRESS | | | | | | | | |
| RELEASE | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SEGMENT INFORMATION: COMPARISON BETWEEN OLD | | | |
| AND CURRENT SEGMENT STRUCTURES 2007 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SALES BY SEGMENT | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 |
| | 2007 | 2007 | 2007 | Curre | 2007 | 2007 | 2007 | Old |
| | Curre | Curre | Curre | nt | Old | Old | Old | |
| | nt | nt | nt | | | | | |
--------------------------------------------------------------------------------
| Power | 641 | 1 163 | 1 665 | 2 350 | 641 | 1 163 | 1 665 | 2 350 |
| Generati | | | | | | | | |
| on | | | | | | | | |
--------------------------------------------------------------------------------
| - of | 156 | 248 | 318 | 323 | 156 | 248 | 318 | 323 |
| which | | | | | | | | |
| internal | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | 479 | 731 | 917 | 1 356 | 479 | 731 | 917 | 1 356 |
--------------------------------------------------------------------------------
| - of | 24 | 35 | 39 | 38 | 24 | 35 | 39 | 38 |
| which | | | | | | | | |
| internal | | | | | | | | |
--------------------------------------------------------------------------------
| Distribu | 225 | 397 | 563 | 769 | 225 | 397 | 563 | 769 |
| tion | | | | | | | | |
--------------------------------------------------------------------------------
| - of | 2 | 4 | 6 | 9 | 2 | 4 | 6 | 9 |
| which | | | | | | | | |
| internal | | | | | | | | |
--------------------------------------------------------------------------------
| Markets | 519 | 870 | 1 201 | 1 683 | 519 | 870 | 1 201 | 1 683 |
--------------------------------------------------------------------------------
| - of | 44 | 76 | 106 | 155 | 44 | 76 | 106 | 155 |
| which | | | | | | | | |
| internal | | | | | | | | |
--------------------------------------------------------------------------------
| Russia | - | - | - | - | - | - | - | - |
--------------------------------------------------------------------------------
| - of | - | - | - | - | - | - | - | - |
| which | | | | | | | | |
| internal | | | | | | | | |
--------------------------------------------------------------------------------
| Other | 19 | 41 | 60 | 81 | 19 | 41 | 60 | 81 |
--------------------------------------------------------------------------------
| - of | 16 | 35 | 52 | 72 | 16 | 35 | 52 | 72 |
| which | | | | | | | | |
| internal | | | | | | | | |
--------------------------------------------------------------------------------
| Eliminat | -543 | -903 | -1 | -1 | -543 | -903 | -1 247 | -1 760 |
| ions | | | 247 | 760 | | | | |
--------------------------------------------------------------------------------
| Total | 1 340 | 2 299 | 3 159 | 4 479 | 1 340 | 2 299 | 3 159 | 4 479 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OPERATING PROFIT BY SEGMENTS | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 |
| | 2007 | 2007 | 2007 | Curre | 2007 | 2007 | 2007 | Old |
| | Curre | Curre | Curre | nt | Old | Old | Old | |
| | nt | nt | nt | | | | | |
--------------------------------------------------------------------------------
| Power | 300 | 543 | 764 | 1 115 | 298 | 542 | 762 | 1 125 |
| Generation | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | 142 | 175 | 173 | 294 | 142 | 175 | 173 | 294 |
--------------------------------------------------------------------------------
| Distributi | 79 | 132 | 182 | 233 | 79 | 132 | 414 | 465 |
| on | | | | | | | | |
--------------------------------------------------------------------------------
| Markets | -12 | -5 | 10 | 12 | -12 | -5 | 10 | 12 |
--------------------------------------------------------------------------------
| Russia | - | - | 232 | 244 | - | - | - | - |
--------------------------------------------------------------------------------
| Other | -19 | -28 | -34 | -51 | -17 | -27 | -32 | -49 |
--------------------------------------------------------------------------------
| Total | 490 | 817 | 1 327 | 1 847 | 490 | 817 | 1 327 | 1 847 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| COMPARABLE OPERATING PROFIT BY SEGMENTS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 |
| | 2007 | 2007 | 2007 | Curre | 2007 | 2007 | 2007 | Old |
| | Curre | Curre | Curre | nt | Old | Old | Old | |
| | nt | nt | nt | | | | | |
--------------------------------------------------------------------------------
| Power | 330 | 547 | 732 | 1 095 | 328 | 546 | 730 | 1 093 |
| Generation | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | 137 | 173 | 170 | 290 | 137 | 173 | 170 | 290 |
--------------------------------------------------------------------------------
| Distribution | 78 | 130 | 181 | 231 | 78 | 131 | 181 | 231 |
--------------------------------------------------------------------------------
| Markets | -14 | -11 | 0 | -1 | -14 | -11 | 0 | -1 |
--------------------------------------------------------------------------------
| Russia | - | - | - | - | - | - | - | - |
--------------------------------------------------------------------------------
| Other | -19 | -29 | -35 | -51 | -17 | -29 | -33 | -49 |
--------------------------------------------------------------------------------
| Comparable | 512 | 810 | 1 048 | 1 564 | 512 | 810 | 1 048 | 1 564 |
| operating | | | | | | | | |
| profit | | | | | | | | |
--------------------------------------------------------------------------------
| Non-recurrin | 1 | 5 | 237 | 250 | 1 | 5 | 237 | 250 |
| g items | | | | | | | | |
--------------------------------------------------------------------------------
| Other items | -23 | 2 | 42 | 33 | -23 | 2 | 42 | 33 |
| effecting | | | | | | | | |
| comparabilit | | | | | | | | |
| y | | | | | | | | |
--------------------------------------------------------------------------------
| Operating | 490 | 817 | 1 327 | 1 847 | 490 | 817 | 1 327 | 1 847 |
| profit | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NON-RECURRING ITEMS BY SEGMENTS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 |
| | 2007 | 2007 | 2007 | Curren | 2007 | 2007 | 2007 | Old |
| | Curre | Curre | Curre | t | Old | Old | Old | |
| | nt | nt | nt | | | | | |
--------------------------------------------------------------------------------
| Power | 0 | 2 | 2 | 2 | 0 | 2 | 2 | 14 |
| Generatio | | | | | | | | |
| n | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | 0 | 1 | 1 | 2 | 0 | 1 | 1 | 2 |
--------------------------------------------------------------------------------
| Distribut | 1 | 1 | 0 | 0 | 1 | 0 | 232 | 232 |
| ion | | | | | | | | |
--------------------------------------------------------------------------------
| Markets | 0 | 0 | 1 | 0 | 0 | 0 | 1 | 0 |
--------------------------------------------------------------------------------
| Russia | - | 0 | 232 | 244 | - | - | - | - |
--------------------------------------------------------------------------------
| Other | 0 | 1 | 1 | 2 | 0 | 2 | 1 | 2 |
--------------------------------------------------------------------------------
| Total | 1 | 5 | 237 | 250 | 1 | 5 | 237 | 250 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OTHER ITEMS EFFECTING | | | | | | | |
| COMPARABILITY BY | | | | | | | |
| SEGMENTS | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | Q1 | Q1-Q2 | Q1-Q | 2007 | Q1 | Q1-Q | Q1-Q3 | 2007 |
| | 2007 | 2007 | 3 | Curre | 2007 | 2 | 2007 | Old |
| | Curre | Curre | 2007 | nt | Old | 2007 | Old | |
| | nt | nt | Curr | | | Old | | |
| | | | ent | | | | | |
--------------------------------------------------------------------------------
| Power | -30 | -6 | 30 | 18 | -30 | -6 | 30 | 18 |
| Generation 1) | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | 5 | 1 | 2 | 2 | 5 | 1 | 2 | 2 |
--------------------------------------------------------------------------------
| Distribution | 0 | 1 | 1 | 2 | 0 | 1 | 1 | 2 |
--------------------------------------------------------------------------------
| Markets | 2 | 6 | 9 | 13 | 2 | 6 | 9 | 13 |
--------------------------------------------------------------------------------
| Russia | - | - | - | - | - | - | - | - |
--------------------------------------------------------------------------------
| Other | 0 | 0 | 0 | -2 | 0 | 0 | 0 | -2 |
--------------------------------------------------------------------------------
| Total | -23 | 2 | 42 | 33 | -23 | 2 | 42 | 33 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| 1) Including effects from the | | | | | | |
| accounting of Fortum's part | | | | | | |
| of | | | | | | |
--------------------------------------------------------------------------------
| the Finnish State | | | | | | | |
| Nuclear Waste | | | | | | | |
| Management Fund with | | | | | | | |
--------------------------------------------------------------------------------
| (EUR | -5 | -9 | 24 | 17 | -5 | -9 | 24 | 17 |
| million): | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| DEPRECIATION, AMORTISATION AND IMPAIRMENT CHARGES BY SEGMENTS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 |
| | 2007 | 2007 | 2007 | Curre | 2007 | 2007 | 2007 | Old |
| | Curre | Curre | Curre | nt | Old | Old | Old | |
| | nt | nt | nt | | | | | |
--------------------------------------------------------------------------------
| Power | 26 | 52 | 79 | 103 | 26 | 51 | 78 | 102 |
| Generation | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | 40 | 80 | 120 | 163 | 40 | 80 | 120 | 163 |
--------------------------------------------------------------------------------
| Distributi | 39 | 79 | 119 | 162 | 39 | 79 | 119 | 162 |
| on | | | | | | | | |
--------------------------------------------------------------------------------
| Markets | 4 | 7 | 9 | 11 | 4 | 7 | 9 | 11 |
--------------------------------------------------------------------------------
| Russia | - | - | - | - | - | - | - | - |
--------------------------------------------------------------------------------
| Other | 3 | 5 | 9 | 12 | 3 | 6 | 10 | 13 |
--------------------------------------------------------------------------------
| Total | 112 | 223 | 336 | 451 | 112 | 223 | 336 | 451 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SHARE OF PROFITS IN ASSOCIATES AND JOINT VENTURES BY SEGMENTS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 |
| | 2007 | 2007 | 2007 | Curre | 2007 | 2007 | 2007 | Old |
| | Curre | Curre | Curre | nt | Old | Old | Old | |
| | nt | nt | nt | | | | | |
--------------------------------------------------------------------------------
| Power | -6 | -12 | -21 | -23 | 188 | 195 | 194 | 196 |
| Generation | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | 7 | 12 | 16 | 24 | 7 | 12 | 16 | 24 |
--------------------------------------------------------------------------------
| Distributi | 6 | 9 | 13 | 18 | 6 | 9 | 13 | 18 |
| on | | | | | | | | |
--------------------------------------------------------------------------------
| Markets | 1 | 1 | 0 | 0 | 1 | 1 | 0 | 3 |
--------------------------------------------------------------------------------
| Russia | - | - | - | - | - | - | - | - |
--------------------------------------------------------------------------------
| Other | 194 | 207 | 215 | 222 | 0 | 0 | 0 | 0 |
--------------------------------------------------------------------------------
| Total | 202 | 217 | 223 | 241 | 202 | 217 | 223 | 241 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PARTICIPATIONS IN ASSOCIATES AND JOINT VENTURES BY SEGMENTS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | March | June | Sept | Dec | March | June | Sept | Dec 31 |
| | 31 | 30 | 30 | 31 | 31 | 30 | 30 | 2007 |
| | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | Old |
| | Curre | Curre | Curre | Curre | Old | Old | Old | |
| | nt | nt | nt | nt | | | | |
--------------------------------------------------------------------------------
| Power | 783 | 775 | 768 | 806 | 1 861 | 2 026 | 2 367 | 2 455 |
| Generatio | | | | | | | | |
| n | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | 157 | 146 | 151 | 158 | 157 | 146 | 151 | 158 |
--------------------------------------------------------------------------------
| Distribut | 221 | 220 | 226 | 229 | 291 | 290 | 229 | 232 |
| ion | | | | | | | | |
--------------------------------------------------------------------------------
| Markets | 9 | 9 | 8 | 8 | 9 | 9 | 8 | 8 |
--------------------------------------------------------------------------------
| Russia | 277 | 277 | 455 | 455 | - | - | - | - |
--------------------------------------------------------------------------------
| Other | 871 | 1 044 | 1 147 | 1 197 | 0 | 0 | 0 | 0 |
--------------------------------------------------------------------------------
| Total | 2 318 | 2 471 | 2 755 | 2 853 | 2 318 | 2 471 | 2 755 | 2 853 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CAPITAL | | | | | | | | |
| EXPENDITURE BY | | | | | | | | |
| SEGMENTS | | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 |
| | 2007 | 2007 | 2007 | Curren | 2007 | 2007 | 2007 | Old |
| | Curre | Curre | Curre | t | Old | Old | Old | |
| | nt | nt | nt | | | | | |
--------------------------------------------------------------------------------
| Power | 16 | 40 | 61 | 93 | 16 | 40 | 61 | 93 |
| Generati | | | | | | | | |
| on | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | 44 | 109 | 189 | 309 | 44 | 109 | 189 | 309 |
--------------------------------------------------------------------------------
| Distribu | 36 | 78 | 119 | 236 | 36 | 78 | 119 | 236 |
| tion | | | | | | | | |
--------------------------------------------------------------------------------
| Markets | 1 | 2 | 2 | 3 | 1 | 2 | 2 | 3 |
--------------------------------------------------------------------------------
| Russia | - | - | - | - | - | - | - | - |
--------------------------------------------------------------------------------
| Other | 3 | 7 | 11 | 14 | 3 | 7 | 11 | 14 |
--------------------------------------------------------------------------------
| Total | 100 | 236 | 382 | 655 | 100 | 236 | 382 | 655 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| GROSS INVESTMENTS IN SHARES BY SEGMENTS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | Q1 | Q1-Q2 | Q1-Q3 | 2007 | Q1 | Q1-Q2 | Q1-Q3 | 2007 |
| | 2007 | 2007 | 2007 | Curre | 2007 | 2007 | 2007 | Old |
| | Curre | Curre | Curre | nt | Old | Old | Old | |
| | nt | nt | nt | | | | | |
--------------------------------------------------------------------------------
| Power | - | 0 | 0 | 52 | - | 0 | 245 | 297 |
| Generation | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | 15 | 15 | 17 | 18 | 15 | 15 | 17 | 18 |
--------------------------------------------------------------------------------
| Distributi | - | - | - | 1 | - | 0 | 0 | 1 |
| on | | | | | | | | |
--------------------------------------------------------------------------------
| Markets | - | - | - | 0 | - | 0 | 0 | 0 |
--------------------------------------------------------------------------------
| Russia | - | - | 245 | 245 | - | | | - |
--------------------------------------------------------------------------------
| Other | - | 2 | 2 | 1 | - | 2 | 2 | 1 |
--------------------------------------------------------------------------------
| Total | 15 | 17 | 264 | 317 | 15 | 17 | 264 | 317 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NET ASSETS BY SEGMENTS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| MEUR | March | June | Sept | Dec | March | June | Sept | Dec |
| | 31 | 30 | 30 | 31 | 31 | 30 | 30 | 31 |
| | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 |
| | Curre | Curre | Curre | Curre | Old | Old | Old | Old |
| | nt | nt | nt | nt | | | | |
--------------------------------------------------------------------------------
| Power | 5 636 | 5 657 | 5 659 | 5 599 | 6 607 | 6 818 | 7 164 | 7 148 |
| Generation | | | | | | | | |
--------------------------------------------------------------------------------
| Heat | 3 444 | 3 333 | 3 402 | 3 507 | 3 444 | 3 333 | 3 402 | 3 507 |
--------------------------------------------------------------------------------
| Distributi | 3 245 | 3 282 | 3 292 | 3 239 | 3 314 | 3 351 | 3 296 | 3 243 |
| on | | | | | | | | |
--------------------------------------------------------------------------------
| Markets | 140 | 149 | 157 | 247 | 140 | 149 | 157 | 247 |
--------------------------------------------------------------------------------
| Russia | 302 | 305 | 482 | 456 | - | - | - | - |
--------------------------------------------------------------------------------
| Other and | 937 | 1 052 | 1 144 | 1 237 | 199 | 127 | 117 | 140 |
| Eliminatio | | | | | | | | |
| ns | | | | | | | | |
--------------------------------------------------------------------------------
| Total | 13 | 13 | 14 | 14 | 13 | 13 778 | 14 136 | 14 |
| | 704 | 778 | 136 | 285 | 704 | | | 285 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| RETURN ON NET ASSETS BY SEGMENTS |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| % | | Dec 31 | Dec 31 |
| | | 2007 Current | 2007 |
| | | | Old |
--------------------------------------------------------------------------------
| Power Generation | | 19.2 | | 19.2 |
--------------------------------------------------------------------------------
| Heat | | 9.3 | | 9.3 |
--------------------------------------------------------------------------------
| Distribution | | 7.7 | | 14.5 |
--------------------------------------------------------------------------------
| Markets | | 6.9 | | 6.9 |
--------------------------------------------------------------------------------
| Russia | | 66.3 | | - |
--------------------------------------------------------------------------------
| Other | | 17.1 | | 0.0 |
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| COMPARABLE RETURN ON NET ASSETS BY SEGMENTS |
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| % | | Dec 31 | Dec 31 |
| | | 2007 Current | 2007 |
| | | | Old |
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| Power Generation | | 18.9 | | 17.7 |
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| Heat | | 9.2 | | 9.2 |
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| Distribution | | 7.6 | | 7.5 |
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| Markets | | -0.6 | | -0.6 |
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| Russia | | 0.0 | | - |
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| Other | | -2.1 | | - |
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| ASSETS BY SEGMENTS |
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| MEUR | March | June | Sept | Dec | March | June | Sept | Dec 31 |
| | 31 | 30 | 30 | 31 | 31 | 30 | 30 | 2007 |
| | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | Old |
| | Curre | Curre | Curre | Curre | Old | Old | Old | |
| | nt | nt | nt | nt | | | | |
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| Power | 6 037 | 6 161 | 6 254 | 6 154 | 7 014 | 7 327 | 7 764 | 7 724 |
| Generation | | | | | | | | |
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| Heat | 3 830 | 3 686 | 3 766 | 3 928 | 3 830 | 3 686 | 3 766 | 3 928 |
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| Distributi | 3 735 | 3 729 | 3 741 | 3 778 | 3 804 | 3 798 | 3 745 | 3 782 |
| on | | | | | | | | |
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| Markets | 617 | 496 | 468 | 630 | 617 | 496 | 468 | 630 |
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| Russia | 302 | 305 | 482 | 456 | - | - | - | - |
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| Other and | 1 057 | 1 166 | 1 264 | 1 392 | 313 | 236 | 232 | 274 |
| Eliminatio | | | | | | | | |
| ns | | | | | | | | |
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| Assets | 15 | 15 | 15 | 16 | 15 | 15 | 15 975 | 16 338 |
| included | 578 | 543 | 975 | 338 | 578 | 543 | | |
| in Net | | | | | | | | |
| assets | | | | | | | | |
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| Interest-b | 710 | 718 | 738 | 747 | 710 | 718 | 738 | 747 |
| earing | | | | | | | | |
| receivable | | | | | | | | |
| s | | | | | | | | |
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| Deferred | 7 | 4 | 3 | 3 | 7 | 4 | 3 | 3 |
| taxes | | | | | | | | |
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| Other | 377 | 307 | 138 | 159 | 377 | 307 | 138 | 159 |
| assets | | | | | | | | |
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| Cash and | 1 067 | 879 | 815 | 427 | 1 067 | 879 | 815 | 427 |
| cash | | | | | | | | |
| equivalent | | | | | | | | |
| s | | | | | | | | |
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| Total | 17 | 17 | 17 | 17 | 17 | 17 | 17 669 | 17 674 |
| assets | 739 | 451 | 669 | 674 | 739 | 451 | | |
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| LIABILITIES BY SEGMENTS |
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| MEUR | March | June | Sept | Dec | March | June | Sept | Dec 31 |
| | 31 | 30 | 30 | 31 | 31 | 30 | 30 | 2007 |
| | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | 2007 | Old |
| | Curre | Curre | Curre | Curre | Old | Old | Old | |
| | nt | nt | nt | nt | | | | |
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| Power | 401 | 504 | 595 | 555 | 407 | 509 | 600 | 576 |
| Generation | | | | | | | | |
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| Heat | 386 | 353 | 364 | 421 | 386 | 353 | 364 | 421 |
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| Distributi | 490 | 447 | 449 | 539 | 490 | 447 | 449 | 539 |
| on | | | | | | | | |
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| Markets | 477 | 347 | 311 | 383 | 477 | 347 | 311 | 383 |
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| Russia | 0 | 0 | 0 | 0 | - | - | - | - |
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| Other and | 120 | 114 | 120 | 155 | 114 | 109 | 115 | 134 |
| Eliminatio | | | | | | | | |
| ns | | | | | | | | |
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| Liabilitie | 1 874 | 1 765 | 1 839 | 2 053 | 1 874 | 1 765 | 1 839 | 2 053 |
| s included | | | | | | | | |
| in Net | | | | | | | | |
| assets | | | | | | | | |
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| Deferred | 1 826 | 1 788 | 1 715 | 1 687 | 1 826 | 1 788 | 1 715 | 1 687 |
| tax | | | | | | | | |
| liabilitie | | | | | | | | |
| s | | | | | | | | |
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| Other | 1 446 | 395 | 351 | 390 | 1 446 | 395 | 351 | 390 |
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| Total | 5 146 | 3 948 | 3 905 | 4 130 | 5 146 | 3 948 | 3 905 | 4 130 |
| liabilitie | | | | | | | | |
| s included | | | | | | | | |
| in Capital | | | | | | | | |
| employed | | | | | | | | |
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| Interest-b | 4 999 | 5 489 | 5 271 | 4 893 | 4 999 | 5 489 | 5 271 | 4 893 |
| earing | | | | | | | | |
| liabilitie | | | | | | | | |
| s | | | | | | | | |
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| Total | 7 594 | 8 014 | 8 493 | 8 651 | 7 594 | 8 014 | 8 493 | 8 651 |
| equity | | | | | | | | |
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| Total | 17 | 17 | 17 | 17 | 17 | 17 | 17 669 | 17 674 |
| equity and | 739 | 451 | 669 | 674 | 739 | 451 | | |
| liabilitie | | | | | | | | |
| s | | | | | | | | |
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