Sale of Fortum’s electricity
distribution business
in Sweden
2
Disclaimer
This presentation does not constitute an invitation to underwrite, subscribe for,
or otherwise acquire or dispose of any Fortum shares.
Past performance is no guide to future performance, and persons needing
advice should consult an independent financial adviser.
Any references to the future represent the management’s current best
understanding. However the final outcome may differ from them.
Fortum’s mission and strategy
3
Strategy
Fortum’s purpose is to create energy that improves life for present and future
generations. We provide sustainable solutions for society and deliver excellent
value to our shareholders.
Mission
Build on the strong
Nordic core
Create solid earnings
growth in Russia
Build a platform for
future growth
Strong competence in CO2-free hydro and nuclear, efficient CHP production and
energy markets
Fortum’s Distribution business divestment
• Fortum sells its electricity distribution business in Sweden to a consortium consisting of Första AP-Fonden, Tredje AP-Fonden and Folksam from Sweden and Borealis Infrastructure Management Inc.
• Total consideration SEK 60.6 billion on a debt- and cash-free basis
– Corresponding to EUR 6.6 billion
• Fortum’s Distribution business divestment now concluded
• Fortum is looking for growth
• Sweden is our home market
4
Distribution business in Sweden sold for approx. EUR 6.6 billion
5
EUR SEK
Total consideration ~6.6 bln ~60.6 bln
Sales gain ~4.4 bln ~40 bln
Sales gain per share ~5 euro
• Subject to regulatory approvals and customary closing conditions
• Closing estimated during the second quarter 2015
• Approx. 390 employees will transfer after closing with the existing
terms of employment
Divestment of distribution in Finland, Norway and Sweden
TOTAL
Total consideration ~EUR 9.3 billion
Sales gain booked in 2014 and 2015 ~EUR 6.3 billion
Key facts about the Distribution business in Sweden
6
2014
Customers 906,000
Electricity network, km 71,000
Volume of distributed electricity, TWh 13.7
EUR
million
SEK
billion
Sales 634 5.8
Comparable operating profit 235 2.1
Comparable EBITDA 365 3.3
Net assets (at period end) 2,615 24.6
Capital expenditure 134 1.2
Fortum has been in the distribution business in Sweden since 1997 through acquisitions
Buyers with more than 20 years of experience of infrastructure and strong presence in Sweden
• Extensive experience and competence, long-term commitment to infrastructure and customer service
• Members have over 20 years of combined experience in the acquisition and management of infrastructure assets
• Strong Swedish presence, with 50% of the shares owned by local members
• Development of the business as a core business
• Customer relationships continue as before
Consortium members:
• Första AP-Fonden (AP 1) 12.5%
• Tredje AP-Fonden (AP 3) 20.0%
• Folksam 17.5%
• Borealis Infrastructure Management Inc. 50.0%
7
Customer relationships continue as before
• Distribution customer position
continues the same
– Regulated by the Swedish Energy
Market Directorate (Ei)
– Licenced business
• Fortum will continue as electricity
supplier to retail customers
– 1.3 million retail customers in the Nordic
countries – The largest electricity retailer
– New products and services for the
management of electricity consumption
and energy saving
8
Change in ownership – Distribution personnel view
9
• Some 390 Fortum employees will
move with the business with existing
terms
• Long-term commitment from the buyer
to develop as a core business
• Buyer has extensive experience in the
management of electricity networks
• Strong domestic presence in the
buyer’s side
10
Sweden continues to be important part of Fortum’s home market
1,139
4,615
Other thermal
Hydro
Nuclear
CHP
3,279
Wind 30
Nordic power
generation capacity
9,501
438
Nordic MW
3,088
1,820
30 12
Sweden MW
Hydro
Nuclear
Wind
Other
Power generation capacity, total 4,950
1,526
1,460
438
1,127
0,4 Hydro
Nuclear
CHP
Otherthermal
Wind
Power generation capacity, total 4,551
Heat production capacity, total 1,936
Finland MW
Number of employees in
Sweden approx. 640
Number of electricity sales
customers in the Nordics 1.3 million,
nearly half of them in Sweden Fortum Värme MW
CHP electricity 627
Heat
production
capacity, total
3 636
Number of employees in Fortum Värme appr. 700
AB Fortum Värme samägt med Stockholms Stad
is a joint venture with City of Stockholm
Fortum continues according to its strategy
11
Strategy
Fortum’s purpose is to create energy that improves life for present and future
generations. We provide sustainable solutions for society and deliver excellent
value to our shareholders.
Mission
Build on the strong
Nordic core
Create solid earnings
growth in Russia
Build a platform for
future growth
Strong competence in CO2-free hydro and nuclear, efficient CHP production and
energy markets
Lo
w
Eff
icie
ncy
Hig
h E
ffic
iency
High Emissions Emission free
Solar based production with
high overall system efficiency
Traditional
energy production Exhaustible fuels that
burden the environment
Coal Gas
Oil
Advanced
energy production Energy efficient and/or
low-emission production
Nuclear
today
Nuclear
tomorrow
CHP
CCS
Geothermal
Hydro
Wind
Sun
Ocean
Bio
Storage
Active
Consumer Demand
Response
Interconnectors
Smart
applications
12
Copyright © Fortum Corporation
All rights reserved by Fortum Corporation and shall be deemed the sole property of Fortum Corporation and nothing in this slide
or otherwise shall be construed as granting or conferring any rights, in particular any intellectual property rights
Towards solar economy
13
Next generation energy company
Our strategic route
14
Birka Energi
50% → 100%
Østfold
Shares in
Lenenergo
Shares in
Hafslund
Gullspång
Neste
Divestment of
non-strategic
heat business
Oil business
spin-off
2007
Skandinaviska
Elverk
Länsivoima
45% → 65%
Birka Energi
50% Fortum
50% Stockholm Gullspång merged
with Stockhom Energi
E.ON
Finland
TGC-10
District heating
in Poland →
Divestment of
Fingrid shares
Divestment of
heat operations
outside of
Stockholm
Divestment of electricity
distribution and heat
businesses
TGC-1
established
Divestment
of Lenenergo shares
Divestment of electricity
distribution business
1996
IVO Fortum
Divestment of
small scale
hydro
2012 2008 2006
1997
Lenenergo
shares →
Stora Kraft
Länsivoima
→100%
2000
Elnova
50% → 100%
2003 2005
2011
Divestment of
Grangemouth power plant
2014
1998 2002
Research and development supporting business
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• New solutions for electricity customers
– E.g. Fortum Fiksu: online optimisation of
heating
• New solutions in district heating
– Demand side management
– Open district heating network
• Bio-oil CHP+ concept: renewable energy
and flexibility
• Nuclear R&D: Nures® – purifying radioactive liquids
• Solar power plans: Pilots in India
• Wave power in demonstration phase
0
200
400
600
800
1 000
1 200
DE
I
RW
E
Dra
x
SS
E
CE
Z
E.O
N
Vatt
en
fall
ED
P
Enel
Edip
ow
er
EnB
W
Gas N
atu
ral F
enosa
GD
F S
UE
Z
Do
ng
En
erg
y
Fo
rtu
m to
tal
Iberd
rola
PV
O
ED
F
Verb
und
Fort
um
EU
Sta
tkra
ft
64
g CO2/kWh electricity, 2013
2014
64% of Fortum's total power generation CO2-free
94% of Fortum’s power generation in the EU CO2-free
Close to 100% of the ongoing investment program
in the EU CO2-free
Average 328 g/kWh
200
Fortum's carbon exposure among the lowest in Europe
16
Note: : Fortum’s specific emissions of the power generation in 2014 in the EU were 39 g/kWh and in total 177 g/kWh.
Only European generation except “Fortum total“ which includes Russia.
Source:
PWC & Enerpresse, December 2014
Climate Change and Electricity, Fortum