public eurobond offering · this presentation does not constitute a prospectus or other offering...
TRANSCRIPT
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Public Eurobond Offering
Investor presentationJune 2006
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Disclaimer
THIS PRESENTATION DOES NOT CONSTITUTE A PROSPECTUS OR OTHER OFFERING DOCUMENT (AN "OFFERING DOCUMENT") IN WHOLE OR IN PART. INFORMATION CONTAINED IN THIS PRESENTATION IS A SUMMARY ONLY, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE OFFERING DOCUMENT. IT IS STRONGLY RECOMMENDED THAT EACH INVESTOR READ THE PROSPECTUS FOR MORE COMPLETE INFORMATION REGARDING THIS OFFERING BEFORE MAKING AN INVESTMENT DECISION. TO REQUEST A COPY OF THE PROSPECTUS PLEASE CONTACT YOUR BARCLAYS CAPITAL, BNP PARIBAS OR DEUTSCHE BANK (THE "UNDERWRITERS") SALESPERSON OR ONE OF THE UNDERWRITER'S REPRESENTATIVES ATTENDING THIS MEETING
THIS PRESENTATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY. THERE SHALL BE NO SALE OF THESE SECURITIES IN ANY STATE OR JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO QUALIFICATION UNDER SECURITIES LAWS OF SUCH STATE OR JURISDICTION
BY RECEIVING THIS PRESENTATION EACH INVESTOR IS DEEMED TO REPRESENT THAT IT IS A SOPHISTICATED INVESTOR AND POSSESSES SUFFICIENT INVESTMENT EXPERTISE TO UNDERSTAND THE RISKS INVOLVED IN THE OFFERING. INVESTORS MUST RELY SOLELY ON THEIR OWN EXAMINATIONS OF THE OFFERING DOCUMENT AND THE OFFERING IN MAKING A DETERMINATION AS TO WHETHER TO INVEST IN THE SECURITIES OFFERED
ALTHOUGH THE STATEMENTS OF FACT IN THIS PRESENTATION HAVE BEEN OBTAINED FROM AND ARE BASED UPON SOURCES THAT THE UNDERWRITERS BELIEVE TO BE RELIABLE, THE UNDERWRITERS DOES NOT GUARANTEE THEIR ACCURACY, AND ANY SUCH INFORMATION MAY BE INCOMPLETE OR CONDENSED. ALL OPINIONS AND ESTIMATES INCLUDED IN THIS PRESENTATION CONSTITUTE THE FIRM'S JUDGEMENT AS OF THE DATE OF THIS PRESENTATION AND ARE SUBJECT TO CHANGE WITHOUT NOTICE
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Summary terms and conditions
Barclays Capital, BNP Paribas and Deutsche BankJoint Bookrunners
English lawGoverning Law
A2 (stable outlook) / A- (stable outlook)Ratings (Moody’s / S&P)
Issued under Fortum’s €4bn EMTN programmeDocumentation
Refinancing and general corporate purposesUse of proceeds
10 yearsMaturity
Issue
Issuer
Benchmark size
Fortum Oyj
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Fortum todayFortum’s main markets
Nordic
Northwest Russia and Baltic Rim
Financials, capital and financing structureRecent events and outlookAppendix
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Fortum is a leading Nordic Power & Heat (“P&H”) company
Focus is entirely on power and heat following the disposal of the oil refining & marketing business (Neste Oil) in 2005
Strong cash generation supported by leading operational efficiency
Operations spanning the entire P&H value chain
Stable long-term majority ownership by Finnish Government (currently 51.2%)
Financial profile benefiting from stable A2 / A- ratings and supported by
Stable and predictable cash flows within the heating business
Compliance with financial targets
Fortum investment highlights
€17bn
Market capitalisation*
€3,158m€1,754m€3,877m
Net debtEBITDARevenues
Source: Company filings* Bloomberg 6 June 2006
Key performance figures as of YE 2005
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Fortum's strategy
Become the leadingpower and heat
company
Become theenergy supplier
of choice
Benchmark business performance
Fortum focuses on the Nordic and Baltic Rim markets as a platform for profitable growth
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Fortum provides leadership in core businesses
#1 Electricity #1 Distribution#1 Heat#2 Power Generation
MarketsDistributionHeat/VärmeServicePortfolio
Management and Trading
Generation
Leading efficiency14% Nordic market share
Best-in-class physical and financial market operations
1.2 mio. business and private electricity sales customers
€30m (2%)
€1,365m (26%)
Markets
Leading Nordic distribution company1.4 mio. customers
€244m (18%)
€707m (14%)
Distribution
€1,063m (20%)€2,058m (40%)
HeatPower Generation
Nordic leader in district heatingDeveloping presence in the Baltics and Poland
Efficient operation and maintenance services
€253m (18%)€854m (62%)
Nordic market position*
Revenues and operating profit are 2005 figures*Including E.ON Finland
Revenues
Operating profit (comparable)
Businesses
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Baltic countriesDistribution cust. 22,000Heat sales 1.2 TWh Poland
Electricity sales 20 GWhHeat sales 3.9 TWh
NW Russia(in associated companies)Generation ~6 TWhHeat production ~10 TWh
NordicGeneration 51.2 TWhElectricity sales 58.2 TWhDistribution cust. 1.4mElectricity cust. 1.2mHeat sales 19.4 TWh
Nordic market remains key to Fortum’s operations
Source: Company data
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Fortum’s Nordic P&H production and capacity
20.6 TWh in 2005Total production capacity 8,252 MW
Oil 10%
Peat 7%
Heat pumps, electricity16%
Waste 6%
Biomass 24%
Natural gas 9%
Other 11%
Coal 17%Hydro power 42%
Peat 1%
Coal 3%
Other 2%
Nuclear power 50%
Biomass 2%
51.2 TWh in 2005Total generation capacity 11,136 MW
Fortum’s Nordic power generation Fortum’s Nordic heat production
Source: Company data
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Majority ownership by Finnish Government
Finnish state 51.2%
International investors 34.4%
Financial and Insurance Institutions 2.2%
Households 5.0%
Other Finnish investors 7.2%
Distribution of ownership
Source: Company data, 30 April 2006
More than 50,000 shareholders
Among the most traded shares on Helsinki stock exchange
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Fortum todayFortum’s main markets
Nordic
Northwest Russia and Baltic Rim
Financials, capital and financing structureRecent events and outlookAppendix
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Towards an open European power market
Market-based development Increased competitionIncreased efficiency
EU Directive: Market liberalisation, i.e., free choice of supplier
EU Commission Integration of national power strategy: markets through regional
markets into one European power market
1990's 2000 - 2010 -
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Large customers
Nordic market structure - business value chain
Small customers
Retail marketRetail
marketRetail companies
Competitive businesses
DistributionRegulated monopolies
Transmission and system services
Nordic wholesale
market
Nordic wholesale
market
Nord Pool and bilateral
Generation
Independent TSO Independent DSO
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Spot history and forwards in Europe
Source: Reuters, OMEL
€/MWhYearly moving average spot price Forwards
€/MWh
UK
Dutch
German
Nord Pool
SpanishMay 2, 2006
2001 2002 2003 2004 2005 2006 2007 2008 20090
10
20
30
40
50
60
70
80
90
100
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Nordic market becoming more integrated into Europe
Increased transmission capacity between Nordic and Central European markets will over time lead to price convergence
NorNed (Norway-the Netherlands) by 2008
Estlink (Estonia-Finland) by 2007
Nordel priority projects enhance Nordic power market integration
PresentUnder construction
DiscussedPlanned
2750 1500
1300
300
5060
900
2200
900
1200600
1000 200
125
600
10001600
2500
35001700
1500800
500
2050
70
1040630 (490)+901600
550600
1200
3800
700
350
600
+100
100+ 200
1000
600
600
+200
1000
550
+300
+800
1000
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Demand driven capacity investments will be needed...
Demand and capacity developmentin the Nordic market
Existing/remaining capacityCommitted new capacity
0
100
200
300
400
500
2000 2004 2005 2010 2015 2020
TWh
Electricity demand is expected to increase by around 50 TWh by 2020 compared to 2005
Committed plans of new capacity approx. 30-35 TWh
Additionally:
Possible closures of current capacity may take away up to 10 TWh by 2020
Upgrades of Swedish nuclear capacity requires licences
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... but new capacity will require €35+/MWh prices
Source: Nord Pool, Fortum Source: NEA & IEA "Projected Cost of Generating Electricity", 2005 update (average of European projects); Elforsk: "El från nya anläggningar", 2003.
Coal Gas Nuclear Hydro Wind0
10
20
30
40
50
60
70
80€/MWh
Fuel costs, excl. CO2 costs
Fixed costs( variation)
FuturesMay 24, 2006
€/MWh
Electricity production costs
0
10
20
30
40
50
60
1995 1997 1999 2001 2003 2005 2007 2009
70
80
Electricity prices and futures
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Fortum
Vattenfall
Elsam
others
Statkraft
31%
E.ON
PVOEnergi E2
E-CO EnergiHelsinki
Norsk Hydro
Fortum
Vattenfall
Nesa
others
Hafslund
E.ON54%
CopenhagenHelsinki
StatkraftGöteborgBKK
Still a highly fragmented Nordic power market
Distribution RetailGeneration
Source: Fortum, Company data; Shares of 10 largest actors, 2004 figures
Fortum
Vattenfall
Hafslund
othersE.ON
55%Nesa
PlusenergiCopenhagen
HelsinkiFjordkraft
Öresundskraft
379 TWh> 350 companies
14 million customers>500 companies
14 million customers ~450 companies
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Fortum todayFortum’s main markets
Nordic
Northwest Russia and Baltic Rim
Financials, capital and financing structureRecent events and outlookAppendix
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Russia is a large country – power market twice the size of Nordic
Generation 931 TWh377 TWh
Demand 923 TWh389 TWh
Capacity 216 700 MW91 300 MW
Population 143 million24 million
Consumption/capita 5 525 kWh15 138 kWh
RussiaNordic
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Russian power industry reform
"Power industry law" approvedRestructuring of regional energos (P&H companies)Formation of new companiesEstablishment of Russian power exchange (ATS) Launch of the free-trade sector of the wholesale marketIntroduction of vested bilateral contracts for a transitional period to replace the regulated sector of the wholesale marketLaunch of balancing power marketCompetitive market of ancillary services and generating capacityGradual liberalisation of the retail market
Pricing model reform – from tariff regulation to competitive
pricing
Market liberalisation in competitive businesses
TransmissionDistribution
GenerationSales
Regulated monopolies
Competitive businesses
Unbundling of businesses by type of activity
Key steps in the reformA Nordic/Western analogy
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TGC-1 operating as of 1 October 2005
Finland 16,500
Installed capacity MW
Norway 28,300
Sweden 33,600
Denmark 12,700
Territorial Generating Company TGC-1
Production capacity ~ 5,750 MW, of which hydro 2,874 MW
from Lenenergo, Kolenergo and Karelenergo
Third largest territorial generation company in Russia
Started operation on 1 October 2005 based on a leasing model
Transfer of assets into TGC-1's ownership targeted at the beginning of 2007
Fortum's calculated share ~26% *)
Fortum has 3 members of 11 in total on TGC-1's Board of Directors
*) Direct owners of TGC-1 are initially Lenenergo 63%, Kolenergo 25%, Karelenergo 12%
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Polish power and heat markets
Population 38 millionGDP growth around 4.5% in 2004Total electricity consumption 130-140 TWh/aPolish generation approx. 150 TWh/aNumber of electricity customers around 15.6 million8 distribution companiesEnergy sector privatisation ongoing in generation, district heating and distributionSize of the heating markets around 165 TWh/a
Source: EIU, Eurelectric/Eurprog; 2004 or 2003 estimates, Fortum
Existing operations of Fortum HeatWrocław Płock
Płock
Operations of Fortum Heat in Poland
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Baltic countries' power and heat markets
Population 1.3 million (Estonia), 2.3 million (Latvia) and 3.4 million (Lithuania)GDP growth 6.0% (Estonia), 5.5% (Latvia), 6.5% (Lithuania)Total electricity consumption; Estonia and Latvia 6-7 TWh/a, Lithuania 10 TWh/aTotal generation; Estonia 9-10 TWh/a, Latvia 4-5 TWh/a, Lithuania 18 TWh/aThree larger distribution companies in Estonia, one in Latvia, two in LithuaniaPrivatisation not active in generation or distribution, privatisation of district heating started in 2000 Size of the heating markets around 30 TWh/a
Source: EIU, Eurelectric/Eurprog; 2004 or 2003 estimates
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Fortum todayFortum’s main markets
Nordic
Northwest Russia and Baltic Rim
Financials, capital and financing structureRecent events and outlookAppendix
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A good start of the year
Key financial ratios
Key financial figures (€ m)
N/A43%71%60%Gearing (%)
39.3%
2.4
4,878
386
509
1,133
I/2005
43.2%
1.8
3,158
1,267
1,754
3,877
2005
49.6%
1.7
3,900
492
570
1,343
I/2006
N/AInterest-bearing net debt
1,373Profit Before Tax
34.9%FFO/ Interest-bearing net debt*** (%)
2.1Net debt/ EBITDA** (x)
1,815
4,087
LTM*
EBITDA
Sales
Source: Fortum interim report January-March 2006. Based on key figures from continuing operations unless otherwise stated.
*Last Twelve Months, **Quarterly figures are annualised, ***Quarterly figures are annualised. Based on Total Fortum
Comparable operating profit from continuing operations, up by 24%
All segments excluding Markets improved their performance
From continuing operations
Earnings per shareup by 39%
Net cash from operating activities €303 (62) million
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Continued improvements in performance metrics
Source: Fortum 2005 Annual report. Gearing is defined as interest-bearing net debt over shareholders’ equity plus minority interestYears 2001-2003 have not been restated to comply with IFRS. They are presented under Finnish Accounting Standards (FAS). Year 2004 figures include discontinued operations.
0
1
2
3
4
5
6
7
8
9
2001 2002 2003 2004 2005 2006Q1
€bn
20%
30%
40%
50%
60%
70%
80%
90%
Gearing (%
)
Interest-bearing net debt Gearing
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2001 2002 2003 2004 2005 2006Q1 LTM
€bn
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Net debt/ EBITD
A (x)
EBITDA Net debt/ EBITDA
Stable cash flow generation Comparatively low leverage
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Capital structure
Fortum wants to have a prudent and efficient capital structure, which at the same time allows the implementation of its strategy
Access to flexible funding sources is key
Dividend policy of 50 - 60% payout on the average for Fortumcontinuing operations' results
In the medium term, allowing the implementation of strategy and the returns of capital, Fortum expects to have its net debt to EBITDA round 3.0x (including)
Repurchase programme ~ €500m
E.ON Finland acquisition ~ €750m
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Stable ratings and compliance with financial targets
Actual performance
< DepreciationNormal CAPEX
Target 3.0-3.5x
Minimum 12%
Financial target
1.8x
1.4x
13.5%
16.6%2005
-
2.1x
11.4%
15.8%2004
Net Debt/ EBITDA cont operations
Net Debt/ EBITDA
ROCE cont operations
ROCE
Source: Fortum 2005 Annual Report. 2004 and 2005 under IFRS. Year 2001-2003 presented according to Finnish Accounting Standards (FAS)
"Due to the cash outflows, which in 2006 total €2.23 billion, Fortum’s debt is expected to increase significantly and credit measures are likely to weaken as a
result, thereby markedly reducing rating headroom. Nevertheless, given the company's very strong financial results in 2005 that led to a low adjusted debt-to-
total-capital ratio of 33% at year-end, we expect credit metrics to remain in line with our previously indicated ratio targets." Standard & Poor's 27 March 2006
A- (stable outlook) A2 (stable outlook)
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Capital expenditure
In the power and heat business, the investment horizon is measured in decadesMaintenance/productivity capex:
Annual level in the Group ~ depreciation. This is currently~ €450 millionDistribution investment programme, including AMM and reliabilityinvestments ~€700 million in the next 5 years
Capacity expansions:Nuclear (OL3) in Finland ~€225 million (2004-2009) Nuclear investments in Sweden ~€600 million in 10 yearsExpansion of E.ON Finland's Suomenoja CHP plant to 400 MW of power generation (+300 MW)
Acquisitions:E.ON Finland acquisition and further consolidation of fragmented Nordic Power and Heat market expected.Strategy to grow Power and Heat business in North Western part of Russia, and Heat business in Poland and Baltic rim
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Funding sources and maturity profile
Funding and treasury risk management centralised on parent company level and managed by Group Treasury unit
Strategy to raise unsecured debt at parent company level
Stable investment rate rating and access to all relevant debt markets
Today, approx.60% of total debt financing in Fortum is under EMTN or Swedish MTN documentation
Source: Company data. Average interest rate disclosed at the end of 2005 for the year 2005 was 4%
0.0
0.2
0.4
0.6
0.8
1.0
2006 2007 2008 2009 2010 2011 2012-2015
2016-2020
2020+
€bn
Debt maturity profile
Interest bearing loans at the end of March 2006
Total €4,107m
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Fortum todayFortum’s main markets
Nordic
Northwest Russia and Baltic Rim
Financials, capital and financing structureRecent events and outlookAppendix
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Finnish competition authority approved Fortum's acquisition of E.ON Finland (total acquisition approximately €750m). E.ON Finland in brief
Net sales of €237m (Electricity 2,7 TWh and Heat 2,5 TWh) in 2005
0.2m distribution and electricity customers
Fortum signed a service agreement on the delivery of an automated meter management (AMM) system in Sweden
Service agreement covers years 2006-2016
Total value of the procurement is approximately 2.2bn Swedish kronor (approximately €240m)
Fortum's Board of Directors decided to start repurchasing the company's own shares (€500m or maximum 35m shares)
Recent events
* Heat sales represent 2.5TWh in energy terms
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Hedging of Power Generation's Nordic sales
Fortum's achieved Nordic Generation power price was on average €31.3 /MWh in 2005
Fortum has hedged Power Generation's Nordic sales volume at the beginning of April 2006
April to December 2006
Hedge ratio Hedge price
~ 80 % ~ €33 per MWh
Calendar year 2007 ~ 55 % ~ €37 per MWh
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Concluding remarks
Strong market positions in the Nordic market and platforms established in NW Russia, Poland and the Baltic countries
Competitive corporate structure, costs and production portfolio
Solid financial position and strong underlying strong cash-flow generation capacity enables further developments in the focus markets
Positive market fundamentals supporting continued strong performance (Need for new capacity and liberalisation of European electricity markets)
Opportunities for strengthening presence in the consolidating Nordic and developing Russian, Polish and Baltic markets
Stable ownership structure
Fortum has the foundations for good performance
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Fortum todayFortum’s main markets
Nordic
Northwest Russia and Baltic Rim
Financials, capital and financing structureRecent events and outlookAppendix
-
Fortum37
... in the UK and Germany ...
... in Nordic countries ...
Source: Eurprog
~50 TWh
0100200300400500
2005 2010 2020
TWh
DemandSupply
0200
400
600TWh
2005 2010 2020
~180 TWh
Source: Eurprog 10/2005: 2005 generation, capacity closures by 2010 and 2020 included
0200
400
600
2005 2010 2020
TWh
~170 TWh
New capacity will be needed
... and in Russia
Source: Ministry of Energy; Russian Energy Strategy 2020
Demand growth~300-400+ TWh before 2020
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The large Russian power market is undergoingmajor change
Source: IEA
A major need for new capacity
Big potential for efficiency improvement
Power generation 2003
0
500
1 000
1 500
2 000
USCh
inaJa
pan
Russ
iaInd
iaGe
rman
yCa
nada
Fran
ce UKNo
rdic
Bras
il
> 4,000TWh
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Prices of fuel and electricity in Russia are currentlylow
Source: IEA, RAO UESAverage prices Jan - Oct 2005
Hydro 17%
156 TWh
Nuclear16%
150 TWh
Oil 3%
Gas 45%407 TWh
Coal 19% 172 TWh
Russian power generation914 TWh in 2003
Price liberalisation of gas is important in setting the electricity price in RussiaSo far, the implicit price cap set by the tariff in the regulated sector has prevented free price formation in the free-trade sector of the wholesale market
0
10
20
30
40
50
Russia Germany
Electricity price and typical marginal costs for gas-fired power plant
Gas cost
CO2 cost
Electricity price
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MEUR I/2006 I/2005 2005 LTMPower Generation 293 224 854 923Heat 126 107 253 272Distribution 81 66 244 259Markets 0 7 30 23Other -14 -11 -47 -50Comparable operating profit 486 393 1,334 1,427Non-recurring items 0 6 30 24Other items effecting comparability -14 7 -17 -38OP from continuing operations 472 406 1,347 1,413
Comparable operating profit
Source: Fortum Interim Report January-March 2006
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MEUR I/2006 I/2005 2005 LTMSales 1 343 1 133 3 877 4 087Operating profit 472 406 1 347 1 413
Share of profit of associates and joint ventures 35 15 55 75Financial expenses, net -15 -35 -135 -115
Profit before taxes 492 386 1 267 1 373Income tax expense -120 -116 -331 -335
Profit for the period from continuing operations 372 270 936 1 038Profit for the period from discontinued operations 0 84 474 390Net profit for the period 372 354 1 410 1 428
Of which minority interest 26 25 52 53
Income statement
Source: Fortum Interim Report January-March 2006
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MEUR I/2006 I/2005 2005
Operating profit before depreciations, continuing operations 570 509 1 754Non-cash flow items and divesting activities 24 -14 15Financial items and taxes -110 -205 -405
Funds from operations, continuing operations (FFO) 484 290 1 364Change in working capital -181 -228 -93
Net cash from operating activities, continuing operations 303 62 1 271Net cash from operating activities, discontinued operations - 152 133Total cash from operating activities 303 214 1 404Capital expenditures -71 -49 -346Other investing activities -59 4 -52Investing activities, discontinued operations - -137 1 155Cash flow before financing activities 173 32 2 161
Cash flow statement
Source: Fortum Interim Report January-March 2006
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Balance sheet
MEUR Mar 31 Dec 312006 2005
Non-current assets 13 106 13 075Current assets 1 595 2 055ASSETS 14 701 15 130
Total equity 6 498 7 411 of which minority interest 231 260Interest-bearing liabilities 4 107 3 946Non-interest bearing liabilities 4 096 3 773EQUITY AND LIABILITIES 14 701 15 130
Net debt / EBITDA 1.7 1.8Net debt, (MEUR) 3 900 3 158
Source: Fortum Interim Report January-March 2006
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Source: , ; market prices May 3, 2006 ; 2006-2008 future quotations
Fuel and CO2 allowance prices
Gas price (UK)
0
20
40
60
80
100
120
GB
P / t
herm
2004 2005 20082006 2007
CO2 price
05
101520253035
EUR
/ tC
O2
2004 2005 20082006 2007
Oil price
01020304050607080
USD
/ bb
l
2004 2005 20082006 2007
Coal price
0102030405060708090
USD
/ t
2004 2005 20082006 2007
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Development of the European Emission Trading System
Future challenges• EU committed to emission trading• Improving the market by
increasing market transparency– information available to all
market participants at the same time
– common procedures -harmonisation
– stability and predictability• Expansion of emission trading
during the Kyoto period– JI and CDM utilisation– National allocation plans for
second trading period (NAP 2)
ETS Prices 2005-2006
€/tC
O2
0
5
10
15
20
25
30
35
1 /05 4 /05 7 /05 10 /05 1 /06 4 /06
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Forsmark
Oskarshamn
Olkiluoto
Loviisa
Fortum's nuclear power plants
*) In Olkiluoto the third nuclear power plant is under construction. Plant will be in operation in 2009. Fortum's share will be 25 %, 400 MW and 3,2 TWh
Source: Fortum Generation
Fortum's Fortum's Average Fortum'sownership share (MW) production (TWh)
FinlandLoviisa 100,0 % 976 7,8Olkiluoto (TVO) 26,6 % 452 3,7
SwedenOskarshamn 43,4 % 964 7,6Forsmark 22,2 % 699 5,7
TOTAL 3 091 ~25
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Provisions for future costs relating to nuclear decomissioning and safe keeping of spent fuel
Nuclear Fund has been built based on current legal system (Nuclear Energy Act in Finland and Act of the Financing of Future Expenses for Spent Nuclear Fuel etc. in Sweden)The funds are administrated and managed by Ministry of Trade in Finland and by the Swedish Government respectivelyFortum's direct and indirect share of the Nuclear waste funds in Finlandand Sweden exceeds the provisions calculated in accordance with IAS 37
As of 31.12.2005 EURm
Nuclear plantDiscounted
nuclear liabilityFortum's
ownership**Fortum's share
of liability Nuclear fund***Fortum's share
of fund
Loviisa 418 100,0% 418 618 618
Olkiluoto 1&2 570 26,6% 152 827 220
Forsmark * 923 22,2% 205 1210 268
Oskarshamn * 715 43,4% 310 943 409
1085 1515
Source: Company information
* Numbers for Forsmar and Oskarshamn are indicative and unaudited. ** excluding possible minority. *** Share of fund per year end including paid in fee for 2005
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Distribution regulation differ country by country
Finland
Maximum allowed rate ofreturn based on actualdefined cost data
Sweden Norway
Maximum annual income limitbased on historical or definedcost data
Regulation authority has supervised 41 areas for 2003 and 55 areas for 2004 due to claimed overpricing. All companies that have received a decision to reimburse customers have appealed to court.
Status
Regulation principle
Allowed return
New model for period 2005 - 2007
New regulatory model is being applied to 2003 and 2004 tariffs
The regulator has proposed a model for the next 5-year period starting in 2007.
Rate of return,ex-post regulation
Yardstick, ex-post regulation, with benchmarking based on hypothetical efficient company
Revenue cap, ex-ante regulation
Actual operation vs.fictious network parametersdefines return
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