2010 Annual Re

FORTUM CORPORATION

This Annual Report communicates our commitment 2010 Report Annual to excellent performance and continuous operational Annual Report 2010 improvement. Fortum enters the new decade with a 2010 renewed strategy and an evolved corporate culture that support growth.

Read how we are responding to future challenges FORTUM IN 2010 01 FORTUM FINANCIALS 2010 34 Fortum in brief 02 1RGTCVKPICPFƂPCPEKCNTGXKGY  Group business structure 03 %QPUQNKFCVGFƂPCPEKCNUVCVGOGPVU  and staying on top of development in a world where Sales and production 04  0QVGUVQVJGEQPUQNKFCVGFƂPCPEKCNUVCVGOGPVU  Market position 05  -G[ƂIWTGU  the balance in the global economy is quickly shifting Financial summary 06  2CTGPVEQORCP[ƂPCPEKCNUVCVGOGPVU (#5   Fortum in 2010 08 Proposal for the distribution of earnings 142 away from developed economies. Rapid population #WFKVQToUTGRQTV  CEO’S INTERVIEW 10 Statement by the Supervisory Board 144 growth is increasing the demand for energy and Strategy 16 3WCTVGTN[ƂPCPEKCNKPHQTOCVKQP  MARKET DEVELOPMENT 18 CORPORATE GOVERNANCE 146 growing environmental problems are requiring Investments and research & development 24 Corporate Governance Statement 148 Remuneration 156 SUSTAINABILITY 28 Board of Directors 160 more and more sustainable energy solutions that Group Management 162 Report XWLOLVHQDWXUDOUHVRXUFHVHIğFLHQWO\ Financial information in 2011 164 Report

Report Report Annual In addition to the Annual Report, Fortum Report Annual publishes a Sustainability Report for 2010. Report Annual Annual The report follows the Global Reporting Report Annual Fortum Corporation Initiative‘s (GRI) G3 Guidelines. -GKNCPKGOGPVKG'URQQ^21$^(1467/^(+0.#0& Report Annual VGN   ^HCZ   ^YYYHQTVWOEQO Report Domicile Espoo, Business ID 1463611-4 Report Annual

Report Annualort Annual nual AnnualReport Report Annualal Annualrt Annual An rt al nu po Rep FORTUM CORPORATION Investor information

Annual General Meeting Payment of dividends Fortum share basics Investor relations at Fortum Annual Report 2010 The Annual General Meeting of Fortum The Board of Directors proposes to the Listed on NASDAQ OMX Helsinki Sophie Jolly, Vice President, Corporation will be held on Thursday, Annual General Meeting that Fortum Trading ticker: FUM1V Investor Relations 31 March 2011, starting at 15:00 EET at Corporation pay a cash dividend of EUR Number of shares, 1 February 2011: tel. +358 (0) 10 453 2552 ­Finlandia Hall, address: Mannerheimin- 1.00 per share for 2010, totalling EUR 888,367,045. fax +358 (0) 10 452 4176 tie 13 e, Helsinki, Finland. The reception 888 million based on the number of Sector: Utilities e-mail: [email protected] of shareholders who have registered for registered shares as of 1 February 2011. the meeting will commence at 14:00 EET. The possible dividend-related dates plan- Ordering financial information Rauno Tiihonen, Manager, ned for 2011 are: Financial documents can be obtained Investor Relations • Ex-dividend date 1 April 2011, from Fortum Corporation, Mail Room, tel. +358 (0) 10 453 6150 • Record date for dividend payment POB 1, FI-00048, FORTUM, Finland, fax +358 (0) 10 452 4176 5 April 2011 and tel. +358 (0)10 452 9151, e-mail: e-mail: [email protected] Fortum IN 2010 01 Fortum FINANCIALS 2010 34 • Dividend payment date 12 April 2011. [email protected] Fortum in brief 02 Operating and financial review 36 Investor information is available online Group business structure 03 Consolidated financial statements 62 at www.fortum.com/investors Sales and production 04 Notes to the consolidated financial statements 67 Investor information online 90 Market position 05 Key figures 129 minutes Financial summary 06 Parent company financial statements (FAS) 136 Fortum in 2010 08 Proposal for the distribution of earnings 142 Auditor’s report 143 CEO’S INTERVIEW 10 Statement by the Supervisory Board 144 Investor information Strategy 16 Quarterly financial information 145 The Fortum corporate website was ranked In 90 minutes, as number one of the stock-listed Nordic MARKET DEVELOPMENT 18 CORPORATE GOVERNANCE 146 companies in the Hallvarsson&Halvarsson the sun gives out Investments and research & development 24 Corporate Governance Statement 148 Webranking 2010 survey. Among the European the same amount Remuneration 156 companies, Fortum was ranked fifth. SUSTAINABILITY 28 Board of Directors 160 of energy to the Group Management 162 Annual Reports and interim reports including webcasts earth as the world’s Financial information in 2011 164 population uses in Calendar with coming events one year. aNNU AL REPORT 2010 In addition to the Annual Report, Fortum Glossary with energy units, Graphic design and illustrations: Neutron Design publishes a Sustainability Report for 2010. some industry-specific and Production and coordination: Miltton Oy The report follows the Global Reporting financial terminology Photographs: Getty images (cover, 1, 28), Fortum (8–9), Corbis (10, 34, 146), Tomi Parkkonen (13, 19, 37), Initiative‘s (GRI) G3 Guidelines. Tuomo Manninen (160–164), Topi Saari (11, 29) Paper: Invercote Creato 300 g, Galerie Art Matt 130/170 g Printing: Lönnberg Oy 2011 Investor information

Annual General Meeting Payment of dividends Fortum share basics Investor relations at Fortum The Annual General Meeting of Fortum The Board of Directors proposes to the Listed on NASDAQ OMX Helsinki Sophie Jolly, Vice President, Corporation will be held on Thursday, Annual General Meeting that Fortum Trading ticker: FUM1V Investor Relations 31 March 2011, starting at 15:00 EET at Corporation pay a cash dividend of EUR Number of shares, 1 February 2011: tel. +358 (0) 10 453 2552 ­Finlandia Hall, address: Mannerheimin- 1.00 per share for 2010, totalling EUR 888,367,045. fax +358 (0) 10 452 4176 tie 13 e, Helsinki, Finland. The reception 888 million based on the number of Sector: Utilities e-mail: [email protected] of shareholders who have registered for registered shares as of 1 February 2011. the meeting will commence at 14:00 EET. The possible dividend-related dates plan- Ordering financial information Rauno Tiihonen, Manager, ned for 2011 are: Financial documents can be obtained Investor Relations • Ex-dividend date 1 April 2011, from Fortum Corporation, Mail Room, tel. +358 (0) 10 453 6150 • Record date for dividend payment POB 1, FI-00048, FORTUM, Finland, fax +358 (0) 10 452 4176 5 April 2011 and tel. +358 (0)10 452 9151, e-mail: e-mail: [email protected] • Dividend payment date 12 April 2011. [email protected] Investor information is available online at www.fortum.com/investors 90 Investor information online minutes

Investor information The Fortum corporate website was ranked In 90 minutes, as number one of the stock-listed Nordic companies in the Hallvarsson&Halvarsson the sun gives out Webranking 2010 survey. Among the European the same amount companies, Fortum was ranked fifth. of energy to the Annual Reports and interim earth as the world’s reports including webcasts population uses in Calendar with coming events one year. aNNU AL REPORT 2010 Glossary with energy units, Graphic design and illustrations: Neutron Design some industry-specific and Production and coordination: Miltton Oy financial terminology Photographs: Getty images (cover, 1, 28), Fortum (8–9), Corbis (10, 34, 146), Tomi Parkkonen (13, 19, 37), Tuomo Manninen (160–164), Topi Saari (11, 29) Paper: Invercote Creato 300 g, Galerie Art Matt 130/170 g Printing: Lönnberg Oy 2011 Fortum’s purpose is to create energy that improves life for present DQGIXWXUHJHQHUDWLRQV:HSURYLGHVXVWDLQDEOHVROXWLRQVWKDWIXOğO WKHQHHGVIRUORZHPLVVLRQVUHVRXUFHHIğFLHQF\DQGHQHUJ\VHFXULW\ and deliver excellent value to our shareholders. Our activities cover the generation, distribution and sales of electricity and heat as well as related expert services.

Fortum’s operations focus on the Nordic countries, Russia and Baltic Rim area. In the future, fast-growing and liberalising energy markets in Europe and Asia provide additional growth opportunities. In 2010, Fortum’s sales totalled EUR 6.3 billion and comparable RSHUDWLQJSURğWZDV(85ELOOLRQ:HHPSOR\DSSUR[LPDWHO\ 10,500 people. Fortum’s shares are quoted on NASDAQ OMX Helsinki. 2 FORTUM IN 2010 FORTUM ANNUAL REPORT 2010

Fortum in brief Finland Sweden Power generation capacity 5,181 MW Power generation capacity 5,885 MW Heat production capacity 3,745 MW Heat production capacity 4,576 MW Fortum’s operations are based in the Distribution customers 620,000 Distribution customers 893,000 Nordic countries, Russia and the Baltic Rim Share of electricity customers 15% Share of electricity customers 12% Employees 2,609 Employees 2,257 CTGC(WVWTGITQYVJQRRQTVWPKVKGU|ECPDG HQTGUGGPKPVJG|HCUVITQYKPINKDGTCNKUKPI energy markets in Europe and Asia. Russia Power generation capacity 2,785 MW Russia Heat production capacity 13,796 MW OAO Fortum Distribution network Employees 4,289

Norway Sweden Russia Heat production capacity 167 MW Finland TGC-1 Distribution customers 100,000 Poland Share of electricity customers Norway 3% Heat production capacity 757 MW Employees 137 Estonia Employees 633 Latvia Lithuania Estonia Latvia Heat production capacity 951 MW Heat production capacity 192 MW Great Britain Distribution customers 24,000 Employees 90 Poland Employees 350

Great Britain Lithuania Power generation capacity 140 MW Heat production capacity 60 MW Heat production capacity 250 MW Employees 73 Employees 63 FORTUM ANNUAL REPORT 2010 FORTUM IN 2010 3 Group business structure

Divisions Power Heat Russia Electricity Solutions and Distribution Business The Power Division consists of The Heat Division consists of combined The Russia Division consists of power The division is responsible for Fortum’s electricity sales and distri- Fortum’s power generation, physical heat and power generation (CHP), and heat generation and sales in Russia. bution activities. It consists of two business areas: Distribution and operation and trading as well as expert district heating and cooling activities It includes OAO Fortum and Fortum’s Electricity Sales. services for power producers. and business-to-business heating solu- slightly over 25% holding in TGC-1. tions. Reporting segment Power Heat Russia Distribution Electricity Sales Sales EUR 2,702 million EUR 1,770 million EUR 804 million EUR 963 million EUR 1,798 million %QORCTCDNGQRGTCVKPIRTQƂV EUR 1,298 million EUR 275 million EUR 8 million EUR 307 million EUR 11 million Share of Fortum’s sales 33% 22% 10% 12% 22% Net assets EUR 5,806 million EUR 4,182 million EUR 2,817 million EUR 3,683 million EUR 210 million Employees, 31 Dec. 2010 1,819 2,394 4,294 962 525 Market position Third largest power producer in the Leading heat supplier in the Nordic Leading operator in Western Siberia and Leading operator in electricity Second largest electricity sales Nordic countries; among the 15 largest countries; growing operations in the Urals area distribution in the Nordic coun- company in the Nordic countries: in Europe and Russia Poland and the Baltics tries: total of 1.6 million elec- 1.2 million private and business tricity distribution customers customers Geographic area of operations Production in Finland, Sweden and Finland, Sweden, Norway, Poland, Russia Finland, Sweden, Norway, Finland, Sweden, Norway Great Britain; expert services world- Lithuania, Latvia, Estonia Estonia wide Business drivers r0QTFKERQYGTRTKEGUVCDKNKV[VJTQWIJ r5VGCF[ITQYVJVJTQWIJKPXGUVOGPVU r.KDGTCNKUCVKQPQHVJGRQYGTOCTMGV r4GIWNCVGFUVGCF[TGVWTP r/CTIKPDGVYGGP0QTFKEYJQNG- hedging r(WGNƃGZKDKNKV[CPFGHƂEKGPE[RNC[C r+PXGUVOGPVRTQITCOOGGCTPKPIU r8GT[ECRKVCNKPVGPUKXG sale procurement cost and retail r#DQWVQHVJGRTQFWEVKQPKU key role growth through new capacity and r)TQYVJVJTQWIJKPXGUVOGPVU sales price levels hydro and nuclear power: hydro- r4GEGPVKPXGUVOGPVUKPVQPGY%*2 new volumes r.QPIVGTOQRVKOKUGFNGXGNUQH r'HƂEKGPVJGFIKPIQHVJGOCTIKP logical situation, nuclear power avail- production have started to bring r'HƂEKGPE[WRITCFGU investment and maintenance r.GCFKPIUGNNGTQHGEQNCDGNNGF ability, and prices of fuels and emis- earnings r)CUCPFGNGEVTKEKV[RTKEGTCVKQ r%QUVGHƂEKGPE[CPFSWCNKV[QH and CO2-free electricity in sions allowances important r&GXGNQROGPVQHJGCVDWUKPGUU service Finland, Sweden and Norway

Strategy drivers r(NGZKDNGOCTMGVFTKXGPRTQFWEVKQP r0GGFHQTKPETGCUGFTGUQWTEGGHƂ- r*KIJRQYGTFGOCPFITQYVJ r5VCDNGTGIWNCVGFGCTPKPIU r%QUVGHƂEKGPE[VJTQWIJGHƂEKGPV portfolio ciency will increase CHP’s competi- r$QQUVKPIGHƂEKGPE[QHGZKUVKPIQRGTC- r6GEJPKECNFGXGNQROGPVWVKNKUGF business processes r(QEWUQP%12-free nuclear and hydro tiveness tions and bringing the ongoing invest- HQTCOQTGGHƂEKGPVTGNKCDNG r)TQYVJKPEWUVQOGTDCUG power r'7FKTGEVKXGVQFTKXGPGY%*2KPXGUV- ment programme to completion and smarter network enabling through new offerings and r5QNKFRQUKVKQPQPVJG0QTFKERQYGT ments UWUVCKPCDNGCPFGPGTI[GHƂ- innovative solutions market and proven track-record from r2QVGPVKCNHQTKPETGCUGFWUCIGQHNQECN cient solutions for customers r'EQPQOKGUQHUECNG liberalised power markets central biofuels and waste to capturing opportunities in the r1TICPKEITQYVJQRRQTVWPKVKGUKP integrating European market emerging markets r7VKNKUCVKQPQH%*2EQORGVGPEGKP HWGNUCPFGHƂEKGPVRTQFWEVKQP

Further information on the web www.fortum.com/power www.fortum.com/heat www.fortum.com/russia www.fortum.com/esd 4 FORTUM IN 2010 FORTUM ANNUAL REPORT 2010 Sales and production

FORTUM’S TOTAL ELECTRICITY PROCUREMENT BY FORTUM’S TOTAL HEAT SALES BY AREA, TWh FORTUM’S TOTAL ELECTRICITY SALES BY AREA, FORTUM’S POWER GENERATION BY SOURCE TYPE, TWh TWh (1 TWh 2010 2009 100 60 100 Hydro 22.0 22.1 Nuclear 22.0 21.4 80 50 80 Thermal 9.7 5.8 40 60 60 Total in EU and Norway 53.7 49.3 30 Thermal in Russia 16.1 16.0 40 40 20 Total 69.8 65.3

20 10 20

0 0 0 06 07 08 09 10 06 07 08 09 10 06 07 08 09 10

Purchases Other countries Other countries Import to the Nordic market Finland Russia Own power plants in Russia Sweden Sweden Partly-owned power plants in Europe Russia Finland Own power plants in Europe 1) Power, Heat and Electricity Sales sell electricity to the Nordic power exchange or external customers and purchase electricity from the power exchange or other external sources. Fortum’s power exchange transactions are calculated as net amount of hourly sales at the Group Level. The Russia Division sells electricity to the Russian wholesale market.

POWER GENERATION BY SOURCE (2, % HEAT PRODUCTION BY SOURCE (3, % FORTUM’S POWER GENERATION CAPACITY, 31 DECEMBER 2010

Peat MW Finland Sweden Russia Other Total Oil Hydropower 1,521 3,162 4,683 Biomass Waste Others Others Nuclear power 1,439 1,778 3,217 Coal Hydro Heat pumps and electricity Natural Combined heat and power 842 536 2,785 262 4,425 gas Condensing power 1,376 397 1,773 Other 312 15 Biomass Total 5,181 5,885 2,785 262 14,113

FORTUM’S HEAT PRODUCTION CAPACITY, 31 DECEMBER 2010 Natural Coal gas Nuclear MW Finland Sweden Russia Other Total Heat 3,745 4,576 13,796 2,377 24,494

2) Total power generation in 2010 was 69.8 TWh 3) Total heat production in 2010 was 52.1 TWh 5HDGPRUHDERXWWKHGLYLVLRQVDQGWKHLURSHUDWLRQVLQRQOLQHDQGLQWKH2SHUDWLQJDQGğQDQFLDOUHYLHZ pages 40–46 and in the Financial Statements Note 5 on page 90. FORTUM ANNUAL REPORT 2010 FORTUM IN 2010 5

In the Nordic market, (QTVWOKUCUKIPKƂECPV player in power genera- Market position tion as well as in electricity distribution and retail.

NORDIC POWER GENERATION, 370 TWh NORDIC ELECTRICITY RETAIL, 14 million customers NORDIC ELECTRICITY DISTRIBUTION, 14 million >350 companies ~350 companies customers, ~500 companies

Vattenfall Vattenfall Fortum Others Fortum Vattenfall Others Others Dong Energy Helsingin Statkraft Energia E.ON E.ON Agder Energi Hafslund Dong Energy Hafslund Statkraft Norsk Hydro Fortum SEAS-NVE SEAS-NVE E-CO Energi Syd Energi Helsingin E.ON Öresundskraft Helsingin Energia PVO Dong Energia Energy Bixia Göteborg Statkraft Energi

Fortum is the world’s fourth POWER GENERATION, TWh largest heat producer and a HEAT PRODUCTION, TWh Largest generators in Europe and Russia, 2009 mid-sized European power Largest producers globally, 2009 generator. 600 140

500 120 100 400 80 300 60 200 40

100 20

0 0

(1 (2 (1 (3 (2 (3 EDF RWE CEZ PGE DEI SSE East E.ON Enel EnBW IES IES TGC-2 Lukoil KDHC Fortum DalkiaFortum OneximSUEK Energy TGC-14ELCEN GazpromVattenfallIberdrolaRusHydro Statkraft Gazprom VattenfallTatenergo GDF SUEZ RAO ES Kievenergo Energoatom Minsk EnergoDongBeijing DH Rosenergoatom Inter RAO UES Irkutskenergo BashkirenergoIrkutskenergoInter RAO UES NNEGC 1) incl. TGC-5, TGC-6, TGC-7, TGC-9 1) incl. International Power 2) incl. TGC-12, TGC-13 2) incl. TGC-5, TGC-6, TGC-7, TGC-9 3) 2007

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1RGTCVKPIRTQƂVGZENWFKPI Comparable operating non-recurring items, fair RTQƂVRNWURTQƂVHTQO Financial summary value changes of derivatives associated companies not getting hedge accounting divided by comparable net and nuclear fund adjustment. assets average.

KEY FINANCIAL FIGURES KEY FIGURES BY DIVISION / BUSINESS AREA

EUR million or as indicated 2010 2009 2008 Sales %QORCTCDNGQRGTCVKPIRTQƂV Comparable RONA% Sales 6,296 5,435 5,636 EUR million or as indicated 2010 2009 2008 2010 2009 2008 2010 2009 2008 EBITDA 2,271 2,292 2,478 Power 2,702 2,531 2,892 1,298 1,454 1,528 22.3 26.4 28.0 Comparable EBITDA 2,396 2,398 2,360 Heat 1,770 1,399 1,466 275 231 250 7.7 7.3 7.3 1RGTCVKPIRTQƂV 1,708 1,782 1,963 Distribution 963 800 789 307 262 248 9.3 8.6 8.2 %QORCTCDNGQRGTCVKPIRTQƂV 1,833 1,888 1,845 Electricity Sales 1,798 1,449 1,922 11 22 –33 9.3 18.6 –15.3 2TQƂVHQTVJGRGTKQFQYPGTUQHVJGRCTGPV 1,300 1,312 1,542 Russia 804 632 489 8 –20 –92 0.7 0.0 –3.8 Capital employed 16,124 15,350 15,911 Other 51 71 83 –66 –61 –56 –7.7 -17.0 –1.7 Interest-bearing net debt 6,826 5,969 6,179 Eliminations –1,792 –1,447 –2,005 - -- Net debt / EBITDA 3.0 2.6 2.5 Total 6,296 5,435 5,636 1,833 1,888 1,845 Comparable Net debt / EBITDA 2.8 2.5 2.6 Return on capital employed, % 11.6 12.1 15.0 4GVWTPQPUJCTGJQNFGTUoGSWKV[| 15.7 16.0 18.7 Capital expenditure 1,222 862 1,108 Gross investments in shares 27 67 1,516 Net cash from operating activities 1,437 2,264 2,002

SHARE KEY FIGURES SALES, EUR million OPERATING PROFIT AND COMPARABLE RETURN ON CAPITAL EMPLOYED, % OPERATING PROFIT, EUR million EUR or as indicated 2010 2009 2008 8,000 2,000 20 Earnings per share 1.46 1.48 1.74 %CUJƃQYRGTUJCTG 1.62 2.55 2.26 6,000 1,500 15 'SWKV[RGTUJCTG 9.24 9.04 8.96 Dividend per share 1.00 (1 1.00 1.00 4,000 1,000 10 Pay-out ratio, % 68.5 (1 67.6 57.5 Dividend yield ,% 4.4 (1 5.3 6.6 2,000 500 5 1) Board of Directors’ proposal for the Annual General Meeting on 31 March 2011. 0 0 0 06 07 08 09 10 06 07 08 09 10 06 07 08 09 10

2SHUDWLQJSURğW Current target &RPSDUDEOHRSHUDWLQJSURğW Incl. REC and Lenenergo gains .H\ğQDQFLDOğJXUHVIRUWKH\HDUVŋDUHSUHVHQWHGLQWKH)LQDQFLDO6WDWHPHQWVVHHSDJHVŋ. 'HğQLWLRQVIRUWKHNH\ğJXUHVDUHLQFOXGHGRQSDJHVŋLQWKH)LQDQFLDO6WDWHPHQWV FORTUM ANNUAL REPORT 2010 FORTUM IN 2010 7

RETURN ON SHAREHOLDERS’ EQUITY, % NET CASH FROM OPERATING ACTIVITIES, CAPITAL EXPENDITURE AND GROSS INVESTMENTS INTEREST-BEARING NET DEBT, EUR million EUR million IN SHARES, EUR million

20 2,500 3,000 8,000

2,000 2,500 15 6,000 2,000 1,500 10 1,500 4,000 1,000 1,000 5 2,000 500 500

0 0 0 0 06 07 08 09 10 06 07 08 09 10 06 07 08 09 10 06 07 08 09 10

Current target Investments in shares Incl. REC and Lenenergo gains Capital expenditure

Net debt / EBITDA NUMBER OF EMPLOYEES SHARE QUOTATIONS 2006–2010, Index 100 = quote on 2 January 2006

3.0 16,000 250

200 12,000 2.0 150 8,000 100 1.0 4,000 50

0 0 0 06 07 08 09 10 06 07 08 09 10 06 07 08 09 10

Net debt / EBITDA Fortum Comparable net debt / EBITDA DJ European Utilities OMX HKI CAP 8 FORTUM IN 2010 FORTUM ANNUAL REPORT 2010 Fortum in 2010

January February March April May June

JAN 4 FEB 1 MAR 2 MAY 21 Fortum acquires a com- Fortum divests its share in Fortum Foundation grants Fortum and the City of bined heat and power plant Karlskoga Energi & Miljö to EUR 650,000 in scholarships Kurikka in Finland team up in Nokia, Finland the Karlskoga municipality for energy related research, to promote electric motoring education and development FEB 2 MAY 26 Fortum’s energy mapping of Fortum’s tests to increase sports centres shows large use of renewable fuels, such possibilities to save both as olive pits, in energy pro- money and climate duction in Stockholm are succesful FEB 9 APR 21 Fortum renews its service Finnish Government gives JUN 3 offering to large electricity a negative decision-in-prin- Fortum and the City of business customers ciple on Fortum’s nuclear Espoo in Finland inaugurate application a new solar power station in the city car depot APR 28 Fortum begins renovation JUN 3 MAR 12 and capacity upgrade works Fortum showcases a wave JAN 21 Tieto chooses Fortum’s eco- at Monta hydropower plant power buoy in Stockholm Fortum and Stockmann HIğFLHQWHQHUJ\VROXWLRQ in Finland department stores work for its new data centre in JUN 7 together to install recharg- Finland City of Espoo, Valmet Auto- ing points for electric cars MAY 27 motive, Fortum and Nokia in Oulu, Turku and Tam- MAR 13 Fortum and Skanska to uti- lise smart grids for energy- announced Eco Urban Living pere in Finland The EVA concept electric car, initiative in Finland developed by Valmet Auto- HIğFLHQWXUEDQOLYLQJ JAN 29 motive together with For- JUN 9 Fortum and the Chelyabinsk FEB 11 tum and a number of other Fortum inaugurates new Region Administration in Fortum and Seabased Finnish companies, was pre- ELRPDVVğUHGKHDWSODQWLQ Russia initiate large-scale Industry receive positive sented at Geneva Motor Hanko, Finland cooperation to improve re sponse from Swedish Show HQHUJ\HIğFLHQF\ Energy Agency regarding JUN 10 investment grant for wave MAR 15 Fortum launches iPhone power project Fortum receives the EEI application for electric International Utility Award vehicle charging locations in FEB 23 IRUORQJWHUPğQDQFLDO Sweden Fortum invests in a new achievement waste-to-energy power plant JUN 29 in Lithuania MAR 25 Fortum and the Russian New lighting installed at TGC-1 celebrate 50 years of Mariatorget in Stockholm collaboration – twice as much light with HQHUJ\HIğFLHQWWHFKQRORJ\ JUN 30 Fortum joins the UN Global MAR 31 Compact initiative Elisa and Fortum announce that they will implement an environmentally friend ly data centre in Espoo, Finland FORTUM ANNUAL REPORT 2010 FORTUM IN 2010 9

July August September OctoberOctober November December

JUL 1 AUG 23 SEP 1 NOV 4 Teollisuuden Voima Oyj, of Fortum joins the Cleantech Fortum supports Aalto Uni- Unit 2 of Fortum’s Loviisa which Fortum owns a 25% Finland research and devel- versity in Finland with power plant celebrates its share, receives a positive opment initiative a contribution of EUR 3 30th anniversary in Finland decision-in-principle from million the Finnish Parliament to AUG 31 NOV 15 build a fourth nuclear reac- Fortum announces invest- SEP 6 Competition Authority drops tor to Olkiluoto, Finland ment in one of Europe’s Fortum divests minority investigation into Fortum’s biggest onshore wind farm holding in Russian electric- district heat pricing in projects in Blaiken, Sweden ity sales company to INTER Sweden RAO UES NOV 15 DEC 10 OCTOCT 7 Fortum begins negotia- SEP 6 Fortum starts pilot rollout of Fortum and the Russian Fortum issues SEK 6,200 tions on the restructuring Energy Agency strengthen million bonds smart metering to network of Naantali power plant’s customers in Finland cooperation to improve ownership in Finland HQHUJ\HIğFLHQF\DQG SEP 10 OCT 18 innovations Fortum included in the Dow NOV 17 Jones Sustainability Index Fortum divests its share in Fortum introduces Energy Energiapolar Oy DEC 12 JUL 1 World for the eight consecu- Display – a smart way of Fortum announces divest- CHP-integrated pyrolysis tive year reducing energy consump- ment of heat operations out- pilot tests at Metso’s facility OCT 19 Fortum announces plan to tion – in Sweden side Stockholm in Sweden in Tampere and test pro- SEP 16 gram of combusting bio-oil Fortum presents its updated build a new industrial steam plant in Oulu, Finland NOV 18 DEC 17 at Fortum Masala heat plant VWUDWHJ\DQGğQDQFLDOSRVL- Fortum and Novatek extend Fortum announces deci- completed successfully tion in Capital Markets Day OCT 21 cooperation in gas supply sion to participate in French Fortum included in the Car- DQGHQHUJ\HIğFLHQF\LQ hy dropower concessions bids JUL 29 Russia Fortum announces it will bon Leadership index in the CDP Nordic 200 Report DEC 21 implement the largest ever NOV 24 7KHğUVWQHZXQLWRI nitrogen oxides reduc- OCT 27 Fortum announces acquisi- Fortum’s investment pro- tion project at Polish power Fortum decides to discon- tion of two Polish power and gramme in Russia inaugu- plants tinue the Meri-Pori carbon heat companies rated at Tyumen CHP plant capture and storage project NOV 26 in Finland Fortum and the Russian SEP 22 Rosatom sign Memorandum Fortum commissions a new of Understanding on coope- ELRPDVVğUHGFRPELQHG ration in nuclear power heat and power plant in &]ÙVWRFKRZD3RODQG

SEP 24 Fortum organises design WWW.FORTUM.COM/MEDIAROOM competition to redecorate See all Fortum’s press releases from 2010. electricity cabinets

SEP 28 Fortum decides to invest in NOV 30 DQHZZDVWHğUHGXQLWIRU Fortum, Rosatom and the Brista combined heat NEK sign Memorandum of and power plant in Sweden Understanding on coopera- tion in Belene nuclear power project in Bulgaria 1.5

1.5 billion people BILLION PEOPLE in the world live WITHOUT without electricity. ELECTRICITY

The challenge in the IN THE WORLD future is to offer them access to modern and sustainable energy systems.

MEGATREND: POPULATION GROWTH FORTUM ANNUAL REPORT 2010 11 Interview with the President and CEO

+P(QTVWOoUƂPCPEKCNRGTHQTOCPEG remained solid. In the aftermath of the global ƂPCPEKCNETKUKU(QTVWOHQEWUGFQPFGXGNQRKPI VJGEQORCP[oUNQPIVGTOUVTCVGI[WPFGTVJG leadership of President and CEO Tapio Kuula in order to face the challenges of the new FGECFGGXGPUVTQPIGT

7DSLR.XXOD\RXUğUVWIXOO\HDU How would you assess Fortum’s as President and CEO of Fortum ğQDQFLDOSHUIRUPDQFHLQ" is now behind you. How have you To summarise the year, I am pleased developed the company? with our results. Industrial activity For Fortum, 2010 has been a time of clearly picked up in Fortum’s key mar- development. After the reorganisation ket areas and the Russian economy implemented in 2009, we updated our continued its solid path of recovery. The strategy and have continued improv- overall Nordic and Russian power con- LQJRXURSHUDWLRQDOHIğFLHQF\:H sumption continued to increase in 2010. also started a long-term management 7KUHHRXWRIRXUğYHEXVLQHVVHVŋ+HDW development program to ensure the Distribution and Russia – were able to implementation of our updated strategy improve their performance. Electric- and to develop the corporate culture with ity Sales suffered from the very cold the aim of enhancing performance and weather in January and December that strengthening growth. drove market prices and consumption Fortum’s President and CEO Tapio Kuula sees that the global megatrends affect the energy sector, e.g., from the perspective of population growth and environment. 12 CEO’S INTERVIEW FORTUM ANNUAL REPORT 2010

We updated our strategy up. Power Division had a relatively good and high spot prices in January and and have tion than a revolution. We built our year considering that it was burdened by December. In addition to the low water strategy and goals for Fortum’s opera- additional costs from capacity upgrades levels, the reason for the peak prices tions for a longer perspective of time and modernisation programmes in our was the cold winter weather combined continued than before. Fortum’s operations, its Swedish associated nuclear generating with reduced transmission capacity and future, challenges and opportunities companies. Power also had higher share outages in the Swedish nuclear power improving were assessed on the basis of the global of thermal generation in the production plants. The average spot price in the megatrends; against this backdrop, mix. Nordic market increased to EUR 53 per our opera- several interesting growth opportuni- )RUWXPłVğQDQFLDOSRVLWLRQDQG megawatt-hour (MWh) in 2010 from WLHVZHUHLGHQWLğHG7KH\DUHEDVHG liquidity are strong and the group’s key EUR 35 per MWh in 2009 on average. RQRXUVWUHQJWKVğUVWDQGIRUHPRVWLQ ğQDQFLDOUHWXUQWDUJHWVKDYHUHPDLQHG Our Power Division’s achieved Nordic tional the production side: in nuclear power, unchanged. Maintaining Fortum’s strong power price in 2010 was EUR 49.7 per hydropower, and combined heat and EDODQFHVKHHWDQGWKHĠH[LELOLW\RIWKH MWh. The reason that our power price H I ğ F L H Q F \  ń power (CHP) production. In CHP pro- capital structure will continue to be a GRHVQRWDOZD\VFRPSOHWHO\UHĠHFWWKH duction we have the capability to use a priority also in the future. Signalling the market prices is that we hedge our broad range of fuels and our know-how importance of the strong balance sheet, power sales in order to protect our ranks at the top. Fortum adjusted its net debt/EBITDA FDVKĠRZDQGHDUQLQJVIURPYDULDWLRQV target to be around 3 in September. The in market prices. It should be noted :K\ZHUHVSHFLğFDOO\K\GURSRZHU earlier target was between 3 and 3.5. WKDWZHPDGHDVLJQLğFDQWSDUWRIWKH nuclear power and CHP hedges for 2010 in the middle of the the capital-intensive energy sector. The production pinpointed for The Nordic power price increased ğQDQFLDOFULVLVGXULQJDQG SURğWDELOLW\RILQYHVWPHQWVLVEHLQJVFUX- Fortum’s strategy? considerably in 2010, but Fortum tinised ever more closely. Nuclear power and hydropower are very achieved roughly the same price In your view, how has the operat- I see that the global megatrends competitive forms of production due to for its Nordic power sales as in ing environment in the energy affect the energy sector from the per- their CO2-free nature and in terms of 2009. How do you comment? sector changed in recent years? spective of population growth, efforts to variable costs. With hydropower, we can 2010 was a year characterised by record 7KHğQDQFLDOFULVLVDQGWKHXQFHUWDLQW\ raise living standards, and, especially, also react quickly to different market low levels in the Nordic water reservoirs it evoked have impacted investments in the environment. A challenge for the conditions and operate competitively in HQHUJ\VHFWRULVWRERRVWWKHHIğFLHQW the electricity markets. use of energy while bringing electric- Fortum is inarguably one of the ity and modern energy systems to an world’s leading companies in CHP GROUP FINANCIAL TARGETS increasing number of people. With production-related know-how. In terms HQHUJ\HIğFLHQF\WKHUROHRIHOHFWULFLW\ of total volumes, we are also the world’s Target 2010 2009 is emphasised in the energy sector, a fact fourth largest heat producer. CHP- ROCE, % 12 11.6 12.1 that offers opportunities for Fortum’s production is environmentally-benign ROE, %| 14 15.7 16.0 operations. DQGHQHUJ\HIğFLHQWEHFDXVHYLUWXDOO\ Capital structure: Net debt / EBITDA Around 3 3.0 2.6 all of the energy content of the fuel can Fortum updated its strategy in be utilised. Our goal is to further reduce 2010; what has changed? the environmental impacts by increasing 'HğQLWLRQVIRUWKHNH\ğJXUHVDUHSUHVHQWHGRQSDJHVŋ I would like to emphasise that the energy production based on biofuels and updated strategy is more of an evolu- waste. FORTUM ANNUAL REPORT 2010 CEO’S INTERVIEW 13

Where and how is Fortum pursuing growth in the future? We are pursuing market-driven growth above all in production in Europe and Russia. In addition to the integrating European market, we see new opportuni- ties in the rapidly growing markets in Asia. Fortum’s power market expertise DQGĠH[LEOHSURGXFWLRQVWUXFWXUHVXS- port the growth. We also have a solid ğQDQFLDOVWDQGLQJDVWURQJEDODQFH VKHHWJRRGFDVKĠRZDQGGLYLGHQG paying capacity are vitally important for Fortum as a listed company. I would like to add that we will put more focus on R&D and in the related partnerships. We will examine opportunities with an open mind.

What kind of opportunities does Fortum see in Europe? In line with our strategy, we have been active in Europe in nuclear power, hydro- power and CHP-production. For example, in Poland we inaugurated a CHP plant LQ&]ÙVWRFKRZDLQDQGDFTXLUHG two power and heat companies at the beginning of 2011. Additionally, we aim to participate in nuclear power develop- ment, e.g., in Bulgaria by offering expert services in nuclear power technology and safety for the Belene nuclear power pro- ject. We are also preparing to participate in the tender processes for hydropower concessions in France. 14 CEO’S INTERVIEW FORTUM ANNUAL REPORT 2010

How will Europe’s integrating Naturally, we were disappointed that Hydropower has been important scale solutions are not yet competitive HQHUJ\PDUNHWVEHUHĠHFWHGLQ Fortum did not get the permit for Loviisa for Fortum traditionally, but how without public subsidies. Fortum’s operations? 3. Time will tell whether we receive a does the company view other Subsidies for renewable forms of Integration of Europe’s energy markets, permit to replace the Loviisa units to be renewable forms of energy? energy have sparked a lot of public and particularly the power markets, decommissioned. Fortum is strong in CHP and we want debate. It is my belief that the possibility is something we’ve always considered Despite the negative decision-in- to increase the use of local fuels like for sizable energy sector subsidies will important, and we believe that the wider principle, nuclear power will continue biomass and waste in production. The be limited in the future because public PDUNHWZLOOLQFUHDVHHIğFLHQF\VWDELO- WRKDYHDVLJQLğFDQWUROHLQRXURSHUD- Nordic operating environment and the sector funds are needed much more in, ity and reliability. The low Nordic water tions. Our know-how is needed, e.g., in region’s strong roots in the forest indus- e.g., healthcare, eldercare and education. reservoirs impacting electricity produc- the modernisation of Sweden’s nuclear try make biomass in particular a com- 7KXVWKHHIğFLHQWXWLOLVDWLRQRIVXEVLGLHV tion in 2010 is a good example of the fact power plants and in securing the safe petitive alternative. Also waste-to-energy for renewable energy is very important; that more widely integrated markets are and reliable operation of Loviisa’s is a good solution to the increasing waste in my opinion, market-driven and har- GHğQLWHO\LQWKHLQWHUHVWVRIWKH1RUGLF existing units. Moreover, Fortum is an management problems in rapidly grow- monised subsidy systems are the best countries also from the perspective of internationally recognised player in the ing metropolises. solutions in this. electricity users. nuclear power sector, as indicated by the I also believe that, in the long-term, In many ways, the Nordic electric- multiple contacts and inquiries we have new forms of energy, like solar, will How are Fortum’s operations in ity market functions as an example for received about our willingness to partici- become more common; we are moni- Russia progressing? the integration of Europe’s electricity pate in foreign nuclear power projects. In toring the development of this also at I am very pleased that the development PDUNHWV,QIDFW)RUWXPLVYHU\TXDOLğHG fact, the Memorandum of Understanding Fortum. Solar electricity is already prof- in Russia has been positive. The power to be a frontrunner in understanding, signed with the Russian State Atomic itable in some countries today, but large- market reform continued as planned monitoring and anticipating the mar- Energy Corporation Rosatom on coopera- kets, in terms of investment choices or WLRQLQWKHğHOGRIQXFOHDUSRZHUDQG anticipating price development. our offering of nuclear power know-how for the Belene nuclear power project in Fortum did not receive a Bulgaria are examples of our activeness FORTUM’S CARBON EXPOSURE AMONG THE LOWEST IN EUROPE, gCO /kWh electricity, 2009 permit last year to build a new in the nuclear power sector. Through 2 nuclear power plant unit, Loviisa these projects, we will ensure that For- 3, in Finland. How does this affect WXPEHFRPHVDQLQFUHDVLQJO\VLJQLğFDQW 1,200 the role of nuclear power? nuclear power expert. 1,000 Fortum’s expertise in the nuclear power sector is based on our long experience Nuclear power production in 800 in the different phases of commis- Sweden has suffered from low 600 sioning and operating nuclear power availability. When will the situa- 400 plants. Our plants in Finland enjoy tion normalise? Average 346 g/kWh outstanding availability, and a good $VDUHVXOWRI6ZHGHQłVQXFOHDU 200 safety culture and quality control are power referendum, the nation’s nuclear 0 a top priority for us. We also have a power culture and know-how faded CEZ SSE solid track record in annual outages of away. However, a change in attitudes is DEI Drax RWE EDP Enel E.ON EDF PVO Vattenfall Iberdrola Verbund Statkraft Fortum EU nuclear power plants and in moderni- being seen, and there have been positive DongUnion Energy Fenosa Fortum total sation, capacity upgrade and lifetime advancements for a few years in Sweden. GDF Suez Europe Source: PWC & Enerpresse, 2010, Changement climatique et Électricité, Fortum. extension projects, and we have com- There is a lot of work ahead, and it is prehensive know-how in building new bound to take a few years before the nuclear power plants and in assessing nuclear power culture and availability 1RWH7KHJUDSKSUHVHQWVğJXUHVIRUDOOFRPSDQLHVIRUIRUWKHVDNHRIFRPSDUDELOLW\)RUWXPłVVSHFLğF&22 different supplier alternatives. are at a top level. HPLVVLRQVRIWKHSRZHUJHQHUDWLRQLQLQWKH(8ZHUHJN:KDQGLQWRWDOJN:KğJXUHVIRUDOORWKHU companies include only emissions in the EU. FORTUM ANNUAL REPORT 2010 CEO’S INTERVIEW 15

and as of the beginning of this year, the 100 million improvements in 2011 com- What are Fortum’s goals for this wholesale market has been fully liber- pared to the time of the acquisition in decade? alised. We are aiming for solid earnings  ,VHHWKDW)RUWXPłVVWUHQJWKLVWKHĠH[- In addi- growth in Russia, and our investment LEOHFRVWHIğFLHQWDQGFOLPDWHEHQLJQ program, in fact, does play a decisive What is the role of sustainability in generation portfolio – and that will be tion to the role in this respect. At the end of 2010 Fortum’s updated strategy? our main asset also in the future. In line ZHLQDXJXUDWHGWKHğUVWQHZXQLWRI Sustainability is – and will continue to with our strategy, our goal is to develop our investment programme at Tyumen be – one of Fortum’s strategic corner- three key areas in our business: lever- integrating CHP-1. stones. In fact, you can quickly see from age our strong Nordic core, create solid The capacity market rules recently our updated strategy that in terms of earnings growth in Russia, and build European agreed upon in Russia create a good growth it is mainly based on goals that a platform for future growth. We are framework for carrying out our invest- align with sustainability. In terms of CO2 researching opportunities in the inte- ment programme. The recovered eco- emissions, we are also proud to be among grating European power market and also market, nomic growth and the boosted demand the least emitting power companies in Asia’s growth markets, particularly in for electricity has prompted us to even in Europe. However, alongside carbon terms of CHP. we see new accelerate the implementation of our exposure, we will put stronger emphasis Naturally, we are also aiming to investment program – we believe we will on other environmental factors as well make our company as attractive as pos- opportu- KDYHLWFRPSOHWHGLQ2XUHIğFLHQF\ as on the social and economic aspects of sible to investors, customers, partners improvement programme in Russia is sustainability. and personnel. Interest in our company also on track to reach the targeted EUR has grown; one indication of this is the nities in VLJQLğFDQWLQFUHDVHLQWKHQXPEHURI our shareholders. During last ten years the rapidly we have generated a EUR 26.2 billion increase in shareholder value and our FORTUM’S SHARE PRICE SINCE 2001, INDEX TOTAL SHAREHOLDER VALUE INCREASE share has outperformed most of its Euro- growing EUR 26.2 BILLION pean peers. It is our aim, of course, to Total EUR deliver excellent value to our sharehold- markets in 1000 30 29.9 billion ers also in the future. Total I am very pleased also with our posi- 800 25 dividends EUR 9.9 tive public image during the past year; $VLDń 20 billion 600 our customer satisfaction has also devel- 15 Market cap oped favourably. For this I want to thank 400 EUR 20 our competent personnel. They have 10 Market billion cap EUR worked diligently to advance Fortum’s 200 5 3.7 billion growth and performance. And, of course,

0 0 we must also thank our collaboration 1/011/04 1/07 12/10 Jan 2001 31 Dec 2010 partners and our extensive customer base for the past year. I believe that this Fortum (1 Market capitalisation DJ European Utilities Neste Oil shares EUR 3.3 and QHZGHFDGHLVğOOHGZLWKRSSRUWXQLWLHV 1) Neste Oil spin-off adjusted cash dividend EUR 6.6 billion for Fortum.

Fortum’s share has outperformed the DJ European Utilities Index during last ten years. During 2010, Fortum’s share price appreciated approximately 16%, while Dow Jones European Utility index decreased 9% and OMX Helsinki Cap index increased 22%. eg 16 STRATEGY FORTUM ANNUAL REPORT 2010 Strategy m’ str

generation nuclear power technologies, The growing demand for CO2-free (QTVWOoUUVTCVGI[CKOUHQTEQPVKPKQWUFGXGNQROGPVQH are emphasised in the energy production DQGHQHUJ\HIğFLHQWVROXWLRQVDQGWKH or GZKUVKPIDWUKPGUUGUCPFHQTOCTMGVFTKXGPITQYVJKP of the transition period. increasing consumption in the liberalis- Fortum is well positioned and is bas- ing energy markets offer Fortum new nuclear, hydro and combined heat and power (CHP) ing its strategy on advanced know-how opportunities for growth. The energy production. In addition to Fortum’s technical competen in nuclear power and hydropower and in demand growth is fastest in Asian mar- CHP production. Monitoring the technol- kets, but there are also opportunities in um EKGUVJGEQORCP[oUGZRGTVKUGCPFRTQXGPVTCEMTGEQTF ogy development of the so-called new Europe and Russia. Fortum is preparing renewable sources of energy production for growth that will take place through KPQRGTCVKPIKPEQORGVKVKXGGPGTI[OCTMGVUJCUCEGPVTCN is an important part of the company’s the right balance of faster returning research and development activities, DFTXLVLWLRQVDQGVORZHUFDVKĠRZJHQ- role when pursuing opportunities in existing markets however the role these sources will play HUDWLQJJUHHQğHOGLQYHVWPHQWV0DLQ- eg in production in the near future is small. taining a strong balance sheet to secure and in the rapidly growing and liberalising energy mar The way Fortum sees it, positions taken ĠH[LELOLW\IRUJURZWKRSSRUWXQLWLHVDOVR kets of Europe and Asia. and the solutions applied have to be in the long run is a priority for Fortum. ğQDQFLDOO\VRXQGRQWKHLURZQPHULWV When pursuing new opportunities, For- basing decisions on a continuous high tum can base its growth also on the in- Fo Fortum’s mission is to create energy is mainly produced from non-renewable level of subsidies is not sustainable in the depth know-how gained from operating that improves life for present and future HQHUJ\VRXUFHVZLWKORZHIğFLHQF\ long-term. in the competitive Nordic power market. generations. We provide sustainable solu- and often generating large amounts of WLRQVWKDWIXOğOWKHQHHGVIRUORZHPLV- emissions, whereas in a solar economy, New opportunities in the East Strong commitment to VLRQVUHVRXUFHHIğFLHQF\DQGHQHUJ\ production is mostly based on emissions- The Nordic countries have traditionally performance str security, and deliver excellent value to IUHHDQGQHDUO\LQğQLWHHQHUJ\VRXUFHV formed Fortum’s most important market A strong drive for high performance our shareholders. The shift to solar economy is the only area, and the Nordic power market is still and continuous operational improve- The mission embodies Fortum’s way to get the world’s natural resources most important in terms of value crea- ment are characteristic to Fortum. The responsibility for the environment, WRODVWIRUIXWXUHJHQHUDWLRQVDQGWRğQG tion for the company. In the future, the FRPPLWPHQWWRFUHDWHVLJQLğFDQWVKDUH- te VRFLHW\DQGLWVğQDQFLDOSHUIRUPDQFH a solution for climate change and for the integrating European electricity mar- holder value is also an integral part of in accordance with the three areas of increasing environmental problems. kets, the relative increase in the impor- Fortum’s mission. To advance this goal, sustainability. The mission, strategy and Changes in the capital-intensive tance of Fortum’s Russian businesses, Fortum launched in 2010 a new, multi- values – accountability, creativity, respect energy industry are slow and the transi- and growth in the Baltic Sea region will year Leading Performance and Growth and honesty – form a foundation for all tion towards a solar economy is advanc- gradually decrease the role of Nordic programme designed to ensure strategy of Fortum’s activities. ing in phases. With the exception of electricity wholesale price as the main implementation and to develop the cor- um hydropower, most production forms in driver of Fortum’s earnings. Electricity porate culture. Towards a solar economy a solar economy are still in the develop- distribution and sales will continue to In Fortum’s view, a gradual transition PHQWSKDVHDQGUHTXLUHVLJQLğFDQWVXE- have a central role in the Nordic coun- st from a traditional so-called Carnot world sidies from society. In fact, traditional, tries, but in other market areas power towards a solar economy is necessary and EXWKLJKO\HIğFLHQWSURGXFWLRQIRUPV and heat production offer more attrac- inevitable. In a Carnot world, electricity like bio-based CHP production and next- tive growth opportunities. Fo u

In the printed Annual Report, Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin this page includes a separate insert strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy about Fortum’s strategy. Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy FortuminOpen the insert as a new PDF-file strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategyby clicking here >> Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortumin strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy Fortum’s strategy 520 kg

Better use of waste AMOUNT OF WASTE is vital. In the Euro- GENERATED PER

pean Union alone, we CAPITA IN THE EU generate over half a tonne of municipal waste per person each year. A large portion of this could be used for MEGATREND: energy production con- INCREASING ENVIRONMENTAL serving scarce natural PROBLEMS resources. FORTUM ANNUAL REPORT 2010 19 Market development

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In 2010, the Finnish and Swedish Nordic spot system price was EUR 53.1 recovery was fuelled by exports, manu- per megawatt-hour (MWh), up 50% from facturing and increased consumption. the previous year. The Nordic spot system Norway’s performance was weaker. Elec- price was on average 19% higher than the tricity consumption in the Nordic mar- German EPEX Spot price in 2010, mainly ket area recovered temperature-adjusted due to a tighter demand-supply balance by nearly 2% in 2010 and is expected to and low water reservoir levels in the reach pre-crisis levels in 2013 – 2014. Nordic area. Power consumption growth was primar- Also the Russian economy recovered ily driven by industrial demand and cold quickly in 2010, driven by commodity winter weather; growth in household exports and increased export prices. demand was modest. The largest growth Russian electricity consumption recov- in electricity consumption was visible in ered by 4% and is expected to reach Finland, driven by the good recovery in pre-crisis levels in 2011 – 2012. Regional industrial demand. The yearly average differences in demand growth were

Fortum’s Högdalen combined heat and power plant in Stockholm has generated energy from waste since 1970. 20 MARKET DEVELOPMENT FORTUM ANNUAL REPORT 2010

considerable. Consumption in the For the EU, leadership in climate tive from February 2010 and has now operational from January 2012 onwards. Chelyabinsk area grew by 9%, driven change mitigation is still a priority. also a new dedicated directorate general The aim is to have the same amount of by the metals industry, while demand The EU has already committed to cut for energy, which further strengthens QHZ5(6ZLWKDFRVWHIğFLHQWVXSSRUW in the oil- and gas-rich Tyumen area emissions by 20% from the 1990 level the EU’s role in the area of energy policy. scheme, and without creating market grew only 1%, as the impact of the reces- by 2020. A discussion on increasing the In November, the Commission presented distortions. The Swedish RES target is sion to demand was less severe there. EU’s target to 30% is ongoing. In autumn a new comprehensive EU energy strat- set at 49% by 2020. Fortum supports the In north-western Russia, electricity 2010, the European Commission assessed egy, which aims to ensure that the EU 6ZHGLVK1RUZHJLDQFHUWLğFDWHLQLWLDWLYH consumption increased by 5%. The aver- the effects of such a shift and several will meet the ambitious 2020 targets and prefers market-based and harmo- age spot price, excluding capacity price, Member States have publicly supported on energy, climate and economy. The nised support mechanisms when aiming in the European and Urals part of Rus- a higher EU target regardless of the energy strategy is to be adopted in 2011 for RES targets. sia increased by nearly a third to RUB commitments, or lack thereof, by other and includes policy initiatives for energy The new EU energy strategy also SHU0:K (85SHU0:K  countries. LQIUDVWUXFWXUHHQHUJ\HIğFLHQF\QXFOHDU emphasises tapping into the biggest In Fortum’s other market areas, the Most of the emissions reduction in power and smart grids, among others. energy-saving potential – buildings and Baltic economies were the hardest hit by the EU is carried out through the Emis- The Commission has also started prepa- transport. Furthermore, efforts are WKHğQDQFLDOFULVLVDQGWKHLUUHFRYHU\ sions Trading System (ETS). Legislation rations for a roadmap to a low-carbon needed to substantially increase the was very uneven; Poland’s economy suf- related to a revision of the ETS for the economy by 2050. XSWDNHRIKLJKHIğFLHQF\FRPELQHGKHDW fered the least. period 2013 – 2020 was adopted earlier, In July 2010, the EU approved the and power (CHP) production, district Global economic growth in 2010 and more detailed rules of implementa- Industrial Emissions Directive (IED), heating and cooling. Fortum is running was clearly driven by the large emerg- tion followed in 2010. In July, the EU which is designed to bring several sepa- CHP and district heating operations in ing economies, particularly China and Commission proposed new auctioning rate pieces of EU legislation on industrial eight countries and is the fourth largest India, whose roles in the world economy regulation of the ETS for 2013 – 2020, emissions under one directive. It sets heat producer globally. are strengthening. The emerging econ- with a tighter cap than in the previous stricter limits on power and heat produc- District heat operations are under omies’ hunger for commodities drove period. New rules for the allocation tion from 2016 onwards. increased competition with regard to up demand and prices through the year. of free allowances were proposed in The implementation of the EU new connections, while heat prices China also passed the US in 2010 as the December 2010. Electricity generation Renewable Energy Sources (RES) target are still strictly regulated in Baltic world’s largest primary energy consumer. will not, in general, receive any free of 20% by 2020 also proceeded when countries, Poland and Russia. A gradual allowances after 2012, except in some the Member States had to submit their trend towards more market-oriented Climate change and transitional countries like Poland. Heat national action plans to the Commission price regulatory regimes is foreseen, regulatory outlook production will still get a decreasing by the end of June 2010. and also encouraged in the new EU International negotiations on global amount of free allowances based on an Finland has a target to increase the energy strategy. climate change mitigation in Cancun in EU-wide benchmark. VKDUHRI5(6LQğQDOFRQVXPSWLRQWR November-December 2010 did not yet After many years of uncertainty, the by 2020, primarily through the introduc- Nordic power and heat markets lead to any legally binding post-2012 ğUVW.\RWR-RLQW,PSOHPHQWDWLRQ -,  tion of feed-in tariffs for wind, biomass- As an important enabler in further agreements. Focus has now shifted to the projects were approved in Russia in July and biogas-based electricity production. integration of the European power mar- next round in South Africa at the end of 2010 and resulted in 30 million emis- The taxation for fossil fuels used in ket, the European Transmission System 2011. Fortum believes that a global price sion reduction units (ERU). Fortum’s heating was heavily tightened from 2011 2SHUDWRUV (1762( VLJQHGWKHLUğUVW RQFDUERQZRXOGEHWKHPRVWHIğFLHQW two Russian JI projects, a new unit at onwards. The Finnish Government also joint ten-year network development way to reduce global emissions. However, the Tyumen CHP-1 and the reconstruc- withdrew from the plan of introducing SODQLQ-XQH7KHğQDOVXSSRUW it seems more likely that different coun- tion of TGC-1’s Newsky hydropower windfall taxes for old hydro and nuclear. decisions from the EU recovery pack- try groups will proceed with their own plant, were approved by the Ministry While most EU Member States focus age for new power grid investments climate targets, and a binding interna- of Finance of the Russian Federation in on feed-in tariffs for RES, Sweden and between the Nordic area and Europe, tional agreement will not be in place yet December 2010. Norway plan to create a common cross- enabling further market integration, for several years to come. The new EU Commission was opera- ERUGHUPDUNHWIRUJUHHQFHUWLğFDWHVWREH were also done for Estlink 2 (FI-EE), FORTUM ANNUAL REPORT 2010 MARKET DEVELOPMENT 21

COBRAcable (DK-NL), Kriegers Flak (DK- into four bidding areas from the begin- DE) and NordBalt (SE-LT). ning of 2011, in order to manage conges- The Estonian power market was inte- tion caused by limited transmission grated to the Nordic power market as a capacity. Fortum believes that the new separate price area in April 2010. Further bidding areas should be later enlarged integration of the Baltic power market over national borders based on the goals to the Nordic power market is expected to develop a common European whole- to occur during 2011, when legal frame- sale market, as well as an integrated works are in place. In November 2010, the Nordic retail market. Nordic power market was also connected The proposal by the Nordic Energy with the new market coupling area in Ministers from October 2009 to develop Central West Europe (CWE), which was a harmonised market for electricity by strengthened further in December 2010 2015 was developed further by NordREG through coupling the SwePol (SE-PL) and during 2010. As one of the leading elec- NorNed (NO-NL) cables. tricity sales companies in the Nordic The power price peaks in the Nordic market with 1.2 million customers, For- area in winter 2009 – 2010 prompted tum supports the creation of the harmo- the Nordic energy ministers to ask the nised Nordic retail market. Market-based Nordic Energy Regulators (NordREG) development would increase competition to study the reasons behind the peaks. DQGZRXOGWKHUHIRUHEULQJEHQHğWVIRU They concluded that the price peaks were the customers. caused mainly by the cold weather, main- In June 2010, the Finnish Parliament tenance operations in Swedish nuclear approved the decision-in-principle for plants and congestion within the Nordic construction of two new nuclear reactors market. No indication of market mal- by Teollisuuden Voima (TVO) and Fenno- function or misuse was found. NordREG voima. The new units are planned to come :DVWHWRHQHUJ\SURGXFWLRQEHQHğWV recommended increased transparency in online around 2020. Fortum’s application WKHPDUNHWPRUHDFWLYHGHPDQGĠH[LELO- for building a third reactor in Loviisa was the environment ity and to further study the possibility of not approved, but Fortum owns a quarter dividing the market into smaller bidding of TVO. Sweden also adopted a law in June areas. Fortum welcomes the proposal on 2010 that makes replacement investments (QTVWOYKNNDWKNFCPGYYCUVGƂTGFWPKVHQTKVUEQODKPGFJGCVCPFRQYGT %*2 RNCPVKP PRUHDFWLYHGHPDQGVLGHĠH[LELOLW\ in nuclear possible. Brista, Sweden. The unit will burn about 240,000 tonnes of waste annually, which corre- Regulators and policy makers sponds to the amount of waste produced by the population of Stockholm over the course are also increasingly discussing the Read more about Fortum’s nuclear power pro- QHC[GCT9KVJVJGNCVGUVVGEJPQNQI[CYCUVGƂTGFRQYGTRNCPVCNOQUVCNYC[URTQFWEGU jects under Investments and R&D on pages 24–27. GHPDQGĠH[LELOLW\LQEDODQFLQJVXSSO\ less emissions into the air and water than when using other fuels. and demand. In order to improve the demand response of consumers, hourly In spring 2010, the Finnish competition Fortum is also building a new CHP plant fuelled by municipal and industrial waste as well measurement will be adopted in Finland authorities announced that they are CUDKQOCUUKP-NCKRGFC.KVJWCPKC6JGRNCPVKUVJGƂTUVYCUVGVQGPGTI[RQYGTRNCPVKPVJG in accordance with smart metering, and studying the pricing of the ten largest Baltic countries. The new CHP plant will play a key role in the city of Klaipeda’s waste man- it is under rapid investigation in Sweden district heat companies. The study also CIGOGPVDGECWUGQHVJGUKIPKƂECPVTGFWEVKQPKPVJGFKURQUCNQHYCUVGKPVQNCPFƂNNU and Norway. included Fortum’s Espoo and Joensuu In Sweden, the TSO Svenska Kraftnät district heat businesses and it was still proceeds with the plan to divide Sweden ongoing at the end of 2010. 22 MARKET DEVELOPMENT FORTUM ANNUAL REPORT 2010

In November 2010, the Swedish China New long-term capacity market rules balance sheet strengthening, i.e., on Competition Authority (SCA) dropped were adopted in autumn 2010 and will measures initiated when the crisis hit. its investigation concerning the market passed be in force by the beginning of 2011. European power utilities also reassessed position and price setting of Fortum’s The generation capacity built after 2007 their investment plans and several of the district heating in the Stockholm area. under government capacity supply agree- power plant projects were either delayed The authority concludes, for example, the US in PHQWV &6$ŋŃQHZFDSDFLW\ń ZLOOUHFHLYH or cancelled during the year. Moreover, that the real price of district heat has guaranteed payments for a period of 10 long-term research and development decreased in Stockholm by 1.5% during years. Prices for capacity under CSA are initiatives, such as carbon capture and 2005 – 2010. 2010 as GHğQHGLQRUGHUWRHQVXUHDVXIğFLHQW storage, were not promoted as heavily in The EU’s third energy market pack- return on investments. The payments 2010 as they were during some earlier age, which entered into force in Sep- the world’s begin when commencial operation years. tember 2009, calls for the separation of begins. 7KHğQDQFLDOFULVLVGLGQRWFKDQJH high voltage transmission and power The Russian Futures Power Exchange the power utilities’ aim to reduce their largest ARENA was launched in June 2010, which CO exposure in power generation. Many generation. Consequently, Fortum will 2 have to divest its 25% ownership in the notably improved the derivate trade in utilities were investing in wind power Finnish transmission system opera- the Russian power sector. Also the com- and also divesting some of their coal- tor Fingrid by early 2012. In January primary petitive market for ancillary services was ğUHGSRZHUSODQWV&RUUHVSRQGLQJO\ 2011, Fortum, the Finnish State and launched at the end of the year. hydro assets and nuclear new-builds are Ilmarinen Mutual Pension Insurance energy In Russia, the promotion of increased seen attractive if available. With regard Company came to a preliminary agree- HQHUJ\HIğFLHQF\LQWKHUHJXODWLRQV to nuclear as well as other large scale ment according to which the State will have been discussed intensively during capital-intensive investments, power EX\DSSUR[LPDWHO\DQG,OPDULQHQ FRQVXPHUń 2010. A new heat law was adopted in July utilities continue building different approximately 19% of Fortum’s Fingrid including an obligation to install energy cooperation models to plan and carry out shares. The transaction is subject to a metering devices by 2012. the investments. ğQDODJUHHPHQWEHWZHHQWKHSDUWLHV European power plants and networks and to the necessary approvals by their Power utilities adjust their strategies are largely built in the 1960’s and 1970’s decision-making bodies. Furthermore, The European utility sector had outper- and many of them are soon coming up the completion of the transaction formed the market during many con- for replacement or major refurbish- requires the approval of the Finnish secutive years after the millennium, but ment. Whilst the sector will face a large Competition Authority. WKHVLWXDWLRQFKDQJHGZKHQWKHğQDQFLDO increase in replacement investments, The share of wholesale electricity sold FULVLVKLWLQDQGFRPPRGLW\SULFHV it also has to respond to environmental Russian power and heat market at competitive prices has been gradually plummeted. In 2010, European utility targets set by the EU and national gov- Despite the economic recession in 2009, replacing the tariff-based pricing since sector underperformed the market by ernments. Moreover, power demand is the Russian power market reform has 2007. From the beginning of 2010, the some 15%. projected to rise, for instance due to a proceeded as announced by the Federal VKDUHZDVDWDQGLWZDVUDLVHGWR Continued market uncertainties shift towards a low-carbon economy in Government. The Russian power market in July, and then to 100% from the begin- DQGZHDNHQHGFDVKĠRZRXWORRNVLQ which the role of electricity increases. is now divided into a wholesale and ning of 2011. Electricity sales to house- Europe, e.g., due to increasing nuclear The upcoming investment cycle is a huge capacity market. The wholesale market hold customers will still be regulated, taxation in Germany and launching of challenge, but Fortum believes that the is intended to cover mainly the variable corresponding to about one tenth of the the CO2-auction from 2013, triggered sector can overcome it through consis- production costs, while the capacity mar- wholesale market. Plans to liberalise the many European power utilities to adjust tent and harmonised European power ket is intended for covering capital costs household market are being discussed by their strategies in 2010. Short-term focus market integration. for new capacity. the Russian Government. UHPDLQHGRQHIğFLHQF\SURJUDPVDQG FORTUM ANNUAL REPORT 2010 MARKET DEVELOPMENT 23

FUELS, USD/bbl oil equivalent WHOLESALE PRICES FOR ELECTRICITY, EUR/MWh

Forward prices Spot prices Forward prices 30 December 2010 30 December 2010 140 100 90 120 80 100 70 80 60 50 60 40 40 30 20 20 10 0 0 00 01 02 03 04 05 06 07 08 09 10 11 12 09 10 11

Coal price (ICE Rotterdam) 1) No future contract prices available Russian (1 1) Including capacity tariff estimate: EUR 9.4 per MWh for 2009 and 2010. UK NBP spot gas (ICE UK) Source: ICE, BAFA Nordic German gas import average (BAFA) (1 German Crude oil (ICE Brent) Source: , ATS.

NORDIC AND RUSSIAN POWER DEMAND EXPECTATIONS, TWh PRIMARY ENERGY DEMAND BY REGION IN THE IEA NEW POLICIES SCENARIO (Mtoe)

1,400 18,000

1,200 16,000 14,000 1,000 12,000 800 10,000 600 8,000 6,000 400 4,000 200 2,000 0 0 09 10 11 12 13 14 15 16 17 18 19 20 1990 1995 2000 2005 2008 2015 2020 2025 2030 2035

Nordic demand forecast China Russian demand forecast US EU Source: ABPE, Fortum India Russia Rest of world Source: IEA World Energy Outlook 2010, IEA statistics.

5HDGPRUHRQPDUNHWFRQGLWLRQVLQWKH2SHUDWLQJDQGğQDQFLDOUHYLHZSDJH 24 INVESTMENTS AND R&D FORTUM ANNUAL REPORT 2010

CHP production brings growth In early 2010, Fortum acquired a CHP Fortum is a global leader in know-how plant in Nokia, Finland, and the com- Investments and related to CHP production and the pany also decided to invest in a new world’s fourth largest heat producer in biomass and waste-fuelled CHP plant terms of production volumes. The Heat in Klaipeda, Lithuania. According to research & development 'LYLVLRQDLPVWRVLJQLğFDQWO\UHGXFH plan, the power plant is estimated to CO2-emissions from heat and power be ready for production by the end of production during the next decade. 2012. (QHUJ\HIğFLHQW&+3SURGXFWLRQKDV In October, Fortum started to build a 6JGOCLQTKV[QH(QTVWOoUECRCEKV[KPXGUVOGPVUKP a very important role in reducing the new waste-to-energy CHP unit in Brista, HQEWUGFQPVJG4WUUKCPKPXGUVOGPVRTQITCOOG environmental load and in achieving Sweden, where it will be part of the emissions reduction targets because it Stockholm-region district heating sys- CPFITQYVJKPTGUQWTEGGHƂEKGPVEQODKPGFJGCVCPF utilises up to 90% of the energy con- tem. With a capacity of 60 MW heat and tained in the fuel. Fortum’s goal is to 20 MW electricity, the new production power (CHP) production in Poland and the Baltics. decrease the environmental impacts unit, Brista 2, is estimated to be ready of its energy production by increasing for operation in 2013. According to plan, +PNKIJVQHVJGTGEQXGTKPIRQUVETKUKUFGOCPFCPF production based on local biofuels and the local municipal energy company, FGXGNQROGPVQHVJG4WUUKCPECRCEKV[OCTMGV(QTVWO waste-derived fuels. Sollentuna Energi, will participate with a 15%-share in the project. CFXCPEGFVJGUEJGFWNGQHKVU4WUUKCPKPXGUVOGPV Fortum also plans to increase the Fortum commissioned two new CHP plants share of renewable energy at the Värtan programme and increased its capital expenditure in 2010: CHP plant’s existing units in Stockholm, estimate for 2011–2012. ō &]ÙVWRFKRZD3RODQG ELRPDVVDQGFRDOğUHG Sweden, from the current 45% to 70% by 120 MW heat, 64 MW electricity, commercial 2015. Värtan is the largest production operation started in fourth quarter) facility in the city with a capacity of 1,700 ō 3ÃUQX(VWRQLD ELRPDVVDQGSHDWğUHG0: In the coming years Fortum will con- Fortum currently expects capital heat, 24 MW electricity, commercial operation 0:KHDW0:HOHFWULFLW\DQG tinue to leverage its strong position expenditure in 2011 and 2012 to be started in fourth quarter) MW district cooling. The preliminary in the Nordic power and heat market DURXQG(85ŋELOOLRQH[FOXG- plans also call for a new bio-oil-fuelled while creating solid earnings growth ing potential acquisitions. The annual in Russia. In line with the updated level of Fortum’s capital expenditure NEW CAPACITY, EXCEPT NUCLEAR, WILL REQUIRE OVER 60 EUR/MWh POWER PRICE strategy, growth is being pursued in in 2013 – 2014 is estimated to total EUR CO2-free nuclear and hydro power pro- 1.1 – 1.4 billion. In 2010, the annual EUR/MWh EUR/MWh duction and in energy- and resource- maintenance and productivity invest- 120 120 HIğFLHQW&+3SURGXFWLRQ0RVWRI ments amounted to EUR 315 million Futures Fortum’s growth investments in 2010 (2009: 277). Growth investments in new 31 January 2011 80 80 were implemented by the Russia, Heat Russian power generation capacity will be and Power Divisions. In the Distribu- un evenly spread through 2011 – 2014 and tion business area, Fortum is investing are estimated to total approximately EUR 40 40 in further improving the reliability of 1.5 billion from January 2011 onwards. its grid and in the installation of new The rest of the annual capital expenditure 0 0 95 00 0511 16 smart meters in Finland for electricity will target growth in CO2-free nuclear, Gas Coal HydroWind distribution customers. hydro and CHP production in the Nordic Source: Nord Pool Spot, NASDAQ OMX Commodities Europe Nuclear In 2010, Fortum’s capital expendi- countries and around the Baltic Rim. Clean coal ture and investments in shares totalled CO² cost EUR 1.2 billion (2009: 0.9). Investments, Other costs ( variation) Estimated lifetime average cost in nominal 2014 terms. excluding acquisitions, were EUR 1.2 bil- 1) Divestments in 2010 are reported in the Large variations in cost of new hydro and wind due to (1 lion (2009: 0.9). Financial Statements, notes 6, 8, 23 and 40. location and conditions. FORTUM ANNUAL REPORT 2010 INVESTMENTS AND R&D 25 unit at the Värtan CHP plant, which on consolidating energy production in Fortum has advanced the schedule would be commissioned in 2016. of its Russian investment programme Three new units will begin commercial the Turku area to one co-owned produc- operation in 2011: In November 2010, Fortum tion company, Turun Seudun Maakaasu as a result of the recovering electricity ō Tyumen CHP-1, electricity production capac- DQQRXQFHGWKDWLWZDVDFTXLULQJRI ja Energiantuotanto (TSME). Fortum demand and the development of the LW\0: JDVğUHGFRPPHUFLDORSHUDWLRQ shares the Polish power and heat compa- will provide energy production services capacity market. Now the intention is to started in February 2011) nies Elektrocieplownia Zabrze S.A. and to TSME and, according to the letter of ğQDOLVHWKHSURJUDPPHRQH\HDUHDUOLHU ō Tobolsk CHP, electricity production capacity Zespol Elektrocieplowni Bytom S.A. for intent, will own 50.5% of the company. than previously estimated, i.e., in 2014. 0: JDVğUHGFRPPHUFLDORSHUDWLRQVWDUWV approximately EUR 20.6 million. The In December 2010, Fortum inaugurated mid-2011) companies are sold as part of the priva- Investment programme a new unit at its Tyumen CHP-1 power ō Chelyabinsk CHP-3, electricity production tisation of the power and heat sector in in Russia advances plant in Western Siberia. The new unit FDSDFLW\0: JDVğUHGFRPPHUFLDORSHUD- tion starts mid-2011) Poland and they are among the main Fortum’s subsidiary OAO Fortum, operat- ZDVWKHğUVWRIVHYHQXQLWVLQ)RUWXPłV producers of heat for local municipalities ing in the oil- and gas-producing Urals and investment programme and begun its in the Silesia region of southern Poland. Western Siberia regions, has committed to commercial operation in February 2011. The value of the remaining part of the Total combined heat sales of the com- implementing an investment programme Two other units are estimated to start investment programme, calculated at panies is 930 gigawatt-hours annually that will increase its electricity production their commercial operation during the exchange rates prevailing at the end (GWh/a) and electricity sales 260 GWh/a. FDSDFLW\IURPa0:WRa0: mid-2011. Also the construction of the of December 2010, is estimated to be 3URGXFWLRQLVPDLQO\FRDOğUHG7KH The programme is a key driver for solid new power plant in Nyagan in the North approximately EUR 1.5 billion as of Janu- acquisition was completed in the begin- earnings growth in Russia. New capacity Urals region continued. Once completed, ary 2011. ning of 2011. will bring income from new volumes sold the plant will have three natural gas- In December, Fortum in colla- and according to Capacity Market rules ğUHGXQLWVZLWKD0:HOHFWULFLW\ Nuclear power retains its strong boration with the Naantali, Raisio and is expected to receive at least 3 –4 times SURGXFWLRQFDSDFLW\HDFK7KHğUVWXQLW position Kaarina municipalities and Turku Ener- higher price in the capacity market than is estimated to start supply in 2012. In addition to own nuclear production, gia in Finland signed a letter of intent old capacity. Fortum is a co-owner in the Finnish

FORTUM’S EUROPEAN INVESTMENT PLAN AS OF 2010 ACQUISITIONS IN 2010

Planned generation Capacity (MW) capacity (MW) Commercial Acquisition Plant Production/Fuel type Heat Electricity operation begins Plant Production/Fuel typeHeat Electricity completed

219'4&+8+5+10(1 EC Zarbze, Poland Coal 226 35 2011 177 55 2011 Forsmark 1 , Sweden Nuclear 25 Decision in 2011 ZEC Bytom, Poland Coal 85 70 2010 Forsmark 2 , Sweden Nuclear 25 2012 Nokian Lämpövoima, Finland Natural Gas Forsmark 3, Sweden Nuclear 35 Decision in 2013 Oskarshamn 2, Sweden Nuclear 80 2013 Olkiluoto 3, Finland Nuclear 400 2013 EXTENSIVE INVESTMENT PROGRAMME IN RUSSIA Hydro refurbishment, Finland and Hydro 100 by 2015 Sweden Existing Commercial

*'#6&+8+5+10 capacity New capacity operation Plant Fuel type electricity MW electricity MW Total begins (2 %\öUVQEJQYC%*22QNCPF Biofuel/Coal 120 64 2010 Tyumen CHP-1 Natural Gas 472 230, 2x225 1,152 2011, 2014 50 24 2010 Pärnu CHP, Estonia Biofuel/Peat Tobolsk CHP Natural Gas 452 200 652 2011 -NCKRôFC%*2.KVJWCPKC Waste 60 20 2012 Chelyabinsk CHP-3 Natural Gas 360 226 586 2011 Brista CHP, Sweden Waste 60 20 2013 Nyagan GRES Natural Gas 0 3x418 1,254 2012–2013 Total new capacity 290 793 Total capacity 1,284 2,360 3,644 1) Capacity increases reported under Power Division, represent Fortum’s share of increase. 2) Capacity payments begin. 26 INVESTMENTS AND R&D FORTUM ANNUAL REPORT 2010

nuclear power company Teollisuuden XSJUDGHPRGLğFDWLRQV)XOORXWSXWIURP power equipment supplier Seabased Finland, Sweden, Norway, and Estonia. Voima Oyj (TVO) and in the Swedish Fors- the unit began in November 2010. Industry EUR 14 million in investment To maintain and further improve reli- mark and Oskarshamn nuclear power support to develop and build a full-scale ability and quality and to enable more plants. wave power plant on the west coast of connections of renewable power produc- Fortum is participating in the build- Progression of the Swedish nuclear power Sweden. Upon completion, the 10-MW tion into the grid, Distribution continu- LQJRI)LQODQGłVğIWKQXFOHDUSRZHUXQLW plant capacity upgrade programme: production unit would be the world’s ously invests in its electricity network. (Olkiluoto 3, 1,600 MW). The power plant ō 5HDOLVDWLRQRIWKHIXOOEHQHğWRIWKH largest wave power plant. The total In 2010, a total of EUR 213 million is being constructed by TVO, of which Oskarshamn 3 capacity increase that was taken amount of the investment is estimated was invested securing overhead lines, LQWRXVHLQODWH )RUWXPłVVKDUH0:  Fortum holds a ~25% share. The AREVA- at about EUR 25 million. An investment replacing overhead lines by cables in the ō 2011–2012: Capacity upgrades of Forsmark 1 Siemens Consortium, TVO’s turnkey DQG)RUVPDUN )RUWXPłVVKDUH0: decision is yet to be made. ground, installing remote disconnectors supplier, reported that most of the works ō 2009–2013: Capacity upgrade of Oskarshamn 2 In August 2010, Fortum announced to increase grid automation, and new will be completed in 2012. The supplier )RUWXPłVVKDUH0: that it will acquire a 40% stake in the connections of wind power parks to our indicated that the regular operation of ō Post 2013: Upgrade of Forsmark 3 Blaiken wind power project in Sweden. network. Also the installations of smart Olkiluoto 3 will start during the latter The remaining 60% is held by the Swed- metering for all customers in Finland half of 2013. ish energy company Skellefteå Kraft. started in 2010. In May 2010, The Finnish Govern- In November 2010, Fortum, the Rus- Fortum and Skellefteå Kraft’s joint ment gave a negative decision-in-princi- sian State Atomic Energy Corporation venture, Blaiken Vind AB, is planning Towards a CO2-free future through ple on Fortum’s application concerning Rosatom and the national Bulgarian the construction of the wind farm in the research and development the construction of a new nuclear power utility company NEK signed a Memoran- Blaiken region in northern Sweden. The The purpose of research and develop- plant unit, Loviisa 3. TVO’s decision-in- dum of Understanding on cooperation wind farm’s approximately 100 wind ment (R&D) is to improve Fortum’s principle application for a new nuclear in the development of nuclear power turbines will have a total capacity of 250 competitiveness and to create a basis for power plant unit, Olkiluoto 4 was plant Belene in Bulgaria. According to MW and an estimated production of QHZSURğWDEOHEXVLQHVV7KHORQJWHUP approved by the Finnish Government the Memorandum of Understanding, 600 – 720 GWh/a. According to the plan, aspiration of R&D is to enable a sustain- DQGUDWLğHGE\WKH)LQQLVK3DUOLDPHQW Fortum will participate in the Belene the wind farm will be built in phases. able CO2-free future for Fortum. Each Fortum is involved in the project devel- nuclear power plant project by providing Construction will begin in 2011, and the new development activity is assessed opment. competences in nuclear technology and wind farm is expected to be completed against the criteria of emission reduc- Forsmark and Oskarshamn nuclear safety. In addition, Fortum has reserved in 2015. WLRQDQGUHVRXUFHHIğFLHQF\7KHIRFXV power plants are undergoing capac- an opportunity to obtain a 1% share of Fortum is also preparing to partici- areas of R&D are performance excellence ity upgrades in Sweden. Fortum owns the equity in the Project Company that pate in the tender processes for hydro- of current operations, enabling growth approximately 23% of Forsmarks Kraft- will be established and will be the owner power concessions in France, which are and contributing to the long-term non- grupp AB and approximately 43% of OKG of the power plant and the electricity H[SHFWHGWRRIğFLDOO\VWDUWLQ,Q emitting energy system. Fortum’s R&D AB (Oskarshamn). Fortum’s share of the generated by it. the frame of the European directive, SURFHVVZDVGHYHORSHGVLJQLğFDQWO\ planned capacity increases will be about France is to open up the hydro conces- 290 MW. In 2010, capacity increase and Investments in renewable sion renewal process for competition. R&D EXPENDITURE, EUR million modernisation projects were carried out power production The French Government is putting the at the Oskarshamn 3 and Forsmark 2 The Power Division’s investment ğUVWWUDQFKHRIWHQFRQFHVVLRQVZLWKD nuclear power plant units. The start-up programme includes refurbishment total capacity of 5,300 MW into a tender 30 of the upgraded capacity of both units investments in several hydropower process in 2011– 2015. 25 has been delayed. To secure availability, plants to increase capacity, improve the capacity of Oskarshamn 3 has been safety and maintain good plant avail- Investments in electricity 20 limited to 1,100 MW, which corresponds ability. On average, the hydropower network and smart metering 15 to the unit’s capacity prior to the refurbishment programme will Fortum’s Distribution business area upgrade. Test runs with the upgraded increase Fortum’s production capacity owns, operates and develops local and 10 capacity will re-start in March 2011. Also by 20 – 30 MW annually by 2015. regional distribution networks and sup- 5 )RUVPDUNZDVRSHUDWLQJDWVLJQLğ- In February 2010, the Swedish energy SOLHVVDIHHOHFWULFLW\ZLWKUHOLDELO- 0 cantly reduced capacity after the capacity agency granted Fortum and the wave ity to a total of 1.6 million customers in 06 07 08 09 10 FORTUM ANNUAL REPORT 2010 INVESTMENTS AND R&D 27

during 2010 and it now includes a struc- Over the year, Fortum continued the tured approach to quantify the expected development of solutions for sustainable value of development activities. In addi- urban living. Fortum’s focus in buildingg tion, an R&D management team was set the future smart grid has especially beenenn up for decision-making in R&D issues of on electricity grid development, distrib-sttrriibb- interest to divisions. uted energy systems and smart-homeoommmee The Group’s total R&D expenditure solutions. In autumn 2010 Fortum,m, ABBAABBBBB in 2010 was EUR 30 million (2009: 30). and the KTH Royal Institute of Technol-ecechhhnnoolol- Fortum’s R&D expenditure in 2010 was ogy received funding from the Swedishddiisshh RIQHWVDOHV  DQGRI energy authority for a preliminary study total expenses (2009: 0.9%). intended to design and install a smart In addition, the Fortum Foundation DQGĠH[LEOHODUJHVFDOHHOHFWULFLW\JULG gave grants to research supporting the in the Royal Seaport of Stockholm. As company’s R&D focus areas. The grants an urban environment, the area is ideal totalled EUR 650,000. for testing and developing new energy Nuclear R&D is the largest and most solutions. Construction is planned to valuable part of Fortum’s R&D portfolio. FRPPHQFHLQDQGWKHğUVWUHVLGHQWV In 2010, Fortum continued nuclear devel- will move into the area in 2012. Addition- RSPHQWDFWLYLWLHVLQğYHLQWHUQDO5 ' ally, Fortum, Skanska, ABB and KONEONE programs. Important milestones were are working on a joint project to developl achieved, e.g., regarding higher burn-up an eco-conscious urban livingngg conceptp ini of nuclear fuel and reactor pressure Espoo, Finland. vessel licensing for the Loviisa power In September 2010, Fortum andd Aalto plant. Fortum has also been active in key University in Finland agreed on wide-idde national and international nuclear R&D ranging research cooperation.ion. A contri- networks. bution totalling EUR 3 million to Aalto In addition, Fortum focused its R&D University’s base capital is an important Safety is always at the core of activities particularly on the develop- part of Fortum’s R&D model of building ment of CHP and sustainable cities in networks and partnerships with lead- nuclear power development 2010. The CHP projects aimed to increase ing universities, research organisations, IXHOĠH[LELOLW\DQGWRXWLOLVHDGYDQFHG engineering companies, and equipment Fortum’s nuclear power research and development work covers an extensive range bioenergy technologies. One example is and power plant suppliers. of some 50 separate projects. Among other things, Fortum researches nuclear power Fortum’s development work on pyrolysis The priorities of Fortum’s research materials, nuclear fuel behaviour, power plant lifetime management and radioactive waste technology in collaboration with Metso, and development activities have been management. The company actively monitors the radiation doses the nuclear power plant UPM and VTT Technical Research Centre adjusted to correspond to the company’s personnel are exposed to, and takes proactive steps to reduce the amount of radiation of Finland. The energy of bio-oil gener- updated strategy. In the future, more RTQFWEGFYJKEJKUCNTGCF[GZVTGOGN[OKPKOCNsGXGPUKIPKƂECPVN[NGUUVJCPVJGDCEM- ated in pyrolysis is about six times more focus will be on solutions integrated ground radiation in nature. compact than in forest residues. This to CHP plants and on analysing solar One research and development area is the materials and components that have become concept under development in Finland energy technologies with a breakthrough radioactive during a power plant’s operation and which increase the employees’ radiation can, in principle, be applied to all bio- potential as well as on the business mod- dose during a maintenance outage, for example. Fortum is studying the effects of radia- masses. When these bio-oils are used els they will require. tion on materials and designing development measures to reduce the radioactivity of the to replace fossil fuel oil, CO2 emissions components during use. decrease by about 90%. Furthermore, Read more about Fortum’s research and All of these measures help Fortum to ensure that its nuclear power plants run smoothly in 2010, new fuel tests were conducted development activities at and continue to be safe for employees and the environment now and in the future. using olive pits as fuel at the Värtan WWW.FORTUM.COM/RESEARCH power plant in Stockholm. 90%

Future energy systems ENERGY- should be based on EFFICIENCY

HQHUJ\HIğFLHQF\,Q IN CHP combined heat and PRODUCTION power (CHP) plants, up to 90% of the energy contained in the fuel can be utilised.

MEGATREND: RESOURCE SCARCITY AND ENERGY SHORTAGE FORTUM ANNUAL REPORT 2010 29 Sustainability

Along with the updated strategy, Fortum also TGXKUGFKVUCRRTQCEJVQUWUVCKPCDKNKV[KP (QTVWODGNKGXGUVJCVKVECPCEJKGXGCPCFXCPVCIG through balanced consideration of the economic, GPXKTQPOGPVCNCPFUQEKCNGZRGEVCVKQPUTGNCVGFVQ its operations.

Sustainable solutions are at the core of personnel are among the top priorities in Fortum’s strategy. The company’s com- social responsibility. petitive and market-driven operations Targets consistent with the new create long-term economic value and DSSURDFKWRVXVWDLQDELOLW\ZHUHGHğQHG growth. In the area of environmental in 2010, and are applicable as of 1 responsibility, Fortum’s competence in January 2011. In addition to Group-level CO2IUHHDQGUHVRXUFHHIğFLHQWSRZHU targets, the divisions have targets that and heat production as well as research DUHLQOLQHZLWKFHUWLğHGHQYLURQPHQWDO and development are emphasised. In the management systems (ISO 14001) and area of social responsibility, Fortum’s occupational health and safety manage- innovations and the security of supply PHQWV\VWHPV 2+6$6  of low-carbon energy promote social well-being and development. Being a good corporate citizen and taking care of Target setting is presented in more detail in Fortum’s Sustainability Report 2010.

The Suomenoja CHP plant, inaugurated in 2009, uses natural gas as IXHODQGUHGXFHVHPLVVLRQVVLJQLğFDQWO\LQWKH(VSRRDUHDLQ)LQODQG 30 SUSTAINABILITY FORTUM ANNUAL REPORT 2010

Sustainability governance and Labour Organisation (ILO). In 2010, expenditure totalled EUR 30 million. The )RUWXPłVFOLPDWHWDUJHWVRYHUWKHQH[WğYH management Fortum became a registered member biggest investments were made in Russia years: Fortum’s operations are guided by the of the United Nations Global Compact (EUR 599 million), Sweden (EUR 300 mil- ō 6SHFLğF&22 emissions from power generation in the EU: < 80 g/kWh as a 5-year average Sustainability Approach covering eco- initiative. Even prior to that, the com- lion) and Finland (EUR 190 million). In nomic, environmental and social respon- pany’s values and Code of Conduct were 2010, Fortum’s investments in CO -free ō 6SHFLğF&22 emissions from energy production 2 SRZHUDQGKHDW  JN:KDVD\HDUDYHU- sibility and Fortum’s Code of Conduct, consistent with the Global Compact’s ten capacity totalled EUR 214 million. DJH QHZ as well as other policies and guidelines, principles. Fortum’s procurement of materials presented in more detail online. DQGVHUYLFHVWRWDOOHG(85PLOOLRQ Fortum’s other environmental targets: At Fortum, sustainability is an Economic responsibility The majority of the procurements came ō (QHUJ\HIğFLHQF\7RWDOHIğFLHQF\RIFRPEXVWLRQ integral part of the strategy and daily For Fortum, economic responsibility from the suppliers operating in the Euro- GHğQHGDVSRZHUDQGKHDWSURGXFWLRQGLYLGHG management of operations. Divisions means generating steady and long-term pean Union (EU). by the primary energy of fuel, 70% as a 5-year DYHUDJH QHZ incorporate sustainability targets and economic well-being and added value ō ,62FHUWLğFDWLRQE\LQ5XVVLD other business targets into their annual in the company’s operating and market Read more about investments on pages 24 – 27 and on Fortum’s economic impacts in the Sustain- ō ,62FHUWLğFDWLRQE\LQWKH(8 business plans. The Sustainability and DUHDV7KHPRVWVLJQLğFDQWGLUHFWPRQ- Public Affairs steering group manages the HWDU\ĠRZVFRPHIURPVDOHVUHYHQXH ability Report 2010. Fortum’s occupational safety target: uniform, consistent and effective imple- employee wages and salaries, procure- ō /RVWZRUNGD\LQMXU\IUHTXHQF\ /:,)   mentation of Fortum’s Sustainability ments of goods and services, dividends, )LQDQFLDOEHQHğWVIURPHPLVVLRQVIUHH Approach throughout the organisation. investments and taxes. Additionally, production Fortum’s target for sustainability perfor- Fortum’s Management Team regu- )RUWXPłVRSHUDWLRQVFUHDWHVLJQLğFDQW CO2IUHHSURGXFWLRQEULQJVDOVRğQDQ- mance: larly monitors the achievement of the indirect economic impacts on society. FLDOEHQHğWVIRU)RUWXPLQWKH(8DUHD ō Listing in Dow Jones Sustainability World and Europe indexes targets. where carbon dioxide has economic Fortum respects and supports the Investments support social activity value. In 2010, Fortum had 9.7 million United Nations Universal Declaration of In 2010, Fortum invested a total of EUR tonnes of CO2 emissions within the The results are disclosed in the Annual Report, Human Rights, the United Nations Con- 1,222 million in growth and mainte- sphere of the EU’s emissions trading, interim reports, Sustainability Report and at vention on the Rights of the Child, and nance projects and other capital expendi- and 5.6 million free emission allowances www.fortum.com/sustainability. the core conventions of the International ture projects. Research and development were granted to Fortum.

CO2 EMISSIONS FROM HEAT PRODUCTION, g/kWh CO2 EMISSIONS FROM FORTUM’S CO2 EMISSIONS, Mt SO2, NOx AND PARTICLES EMISSIONS, 1,000 t POWER GENERATION, g/kWh

250 200 30 40

200 25 150 30 20 150 100 15 20 100 10 50 10 50 5

0 0 0 0 08 09 10 08 09 10 08 09 10 08 09 10

Fortum total Particles Fortum in EU NOx SO2 FORTUM ANNUAL REPORT 2010 SUSTAINABILITY 31

Fortum can use the emissions Environmental responsibility In 2010, also about 32% of Fortum’s of the energy used by Fortum’s custom- reduction units received from the Kyoto Fortum’s most important means of power generation, 22 TWh, was nuclear ers. In Finland installation of the meters mechanisms (Joint Implementation and mitigating climate change is to increase power. Nuclear power production is started in 2010 and will be completed Clean Development Mechanism) in EU CO2-free energy production, resource- totally CO2-free and therefore has a key by 2014. In Sweden the corresponding emissions trading. In Russia, two Joint DQGHQHUJ\HIğFLHQF\DQGLQSXWLQ role in Fortum’s actions in mitigating installations were completed in 2009. Implementation projects reducing green- environmentally benign research and climate change. Fortum is contributing to sustainable house gas emissions were approved by development. In 2010, Fortum used 25 tonnes of urban living by developing smart grids the State in late 2010. Fortum’s long-term aspiration is to uranium as fuel at the Loviisa power and recharging solutions for electric Fortum also increased its invest- be a CO2-free power and heat company. plant. In addition to the highly active vehicles. ments in the World Bank’s Prototype The use of renewable energy sources, bio- used fuel, approximately 250 m3 of low Carbon Fund (PCF). Additionally, Fortum and waste-based CHP as well as more and medium level radioactive waste was Read more about Fortum’s initiatives under has invested in Nefco’s Testing Ground advanced nuclear power will be among generated. Fortum is a forerunner in the Investments and R&D on pages 24–27 and about Facility, a carbon fund operating in the the solutions to reduce fossil fuel-based development of storage systems for the Fortum’s environmental responsibility in the Sus- Baltic Sea region. production in the long-term. radioactive waste and has after 30 years tainability Report 2010. ,QWKHVSHFLğF&22 emissions RIGHYHORSPHQWZRUNDğQDOUHSRVLWRU\ Fortum in sustainability indexes of Fortum’s total energy production solution available. The low and medium- Expert assessments of sustainability (electricity + heat) were 196 g/kWh, and level radioactive waste will be disposed of )RUWXPFDUHVIRUWKHHQYLURQPHQW and rankings in sustainability indexes the 5-year average 157 g/kWh. In the EU, in the bedrock of Hästholmen in Loviisa. Fortum is systematically developing its are important to Fortum because they )RUWXPłVVSHFLğF&22-emissions from Highly radioactive spent fuel will be dis- operations through comprehensive envi- provide impartial information about the SRZHUJHQHUDWLRQZHUHJN:KDQGWKH SRVHGRILQ3RVLYD2\łVğQDOUHSRVLWRU\LQ URQPHQWDOFHUWLğFDWLRQ7KHJRDOZDV level of responsibility of the company’s 5-year average 69 g/kWh. Olkiluoto, in the municipality of Eurajoki WRKDYH,62FHUWLğFDWLRQIRUDOO operations and help improve the perfor- Over the medium term, emissions in Finland. Fortum’s operations in the EU in 2010. mance. from Fortum’s production will grow due %\WKHHQGRIWKH\HDURI)RUWXPłV Fortum is the only Nordic power to the extensive investment programme (PLVVLRQVIUHHHOHFWULFLW\DQGHQHUJ\ RSHUDWLRQVLQWKH(8DQGRIRSHUD- and heat company included in the Dow in Russia where energy generation relies HIğFLHQF\IRUFXVWRPHUV WLRQVZRUOGZLGHKDGEHHQFHUWLğHG Jones Sustainability World index. In the heavily on the use of gas. Outside the Fortum supports the building of a Fortum’s goal in Russia is to certify Sustainability Yearbook 2010, published EU, Fortum is committed to increasing low-carbon society also by selling only operations by the end of 2012. by the SAM Group, Fortum was awarded HQHUJ\HIğFLHQF\DQGWKHUHE\UHGXFLQJ CO2-free electricity to all its private and The nitrogen, sulphur and particle SAM Bronze Class. In the Carbon Disclo- VSHFLğFHPLVVLRQV business customers in the Nordic coun- emissions in Fortum’s European produc- sure Project’s Carbon Performance Index tries. The shift to smart metering sup- WLRQKDYHGHFUHDVHGVLJQLğFDQWO\GXULQJ measuring of performance in climate CO2IUHHSURGXFWLRQZLWKQXFOHDUDQG ports the monitoring and management WKHSDVWGHFDGHV$ERXWRIWKHĠXH issues, Fortum received an overall score K\GURSRZHU of B on an A–D scale, and is included in In 2010, CO2-free energy sources the Nordic Carbon Leadership index. accounted for 66% of Fortum’s electricity ENVIRONMENTAL KEY FIGURES Fortum is also ranked a Best in Class production and 19% of heat production. 2010 2009 2008 company by the Storebrand banking As CO2-free production forms, hydro and CO emissions, 1,000 t JURXSIRUIXOğOOLQJLWV6RFLDOO\5HVSRQVL- nuclear power have a crucial role in For- 2 25,300 21,800 17,600 ble Investment (SRI) criteria. tum’s energy portfolio. SO2 emissions, 1,000 t 20.7 14.6 16.7 In the latest assessment of corporate Approximately 32% of Fortum’s power NOx emissions, 1,000 t 36.7 31.4 29.5 responsibility performance of energy generation, 22 TWh, in 2010 was hydro CO2 emissions of power generation, g/kWh 189 155 134 companies, Fortum was ranked best power, which is a renewable and clean Share of renewable sources in power generation, % 35 36 38 overall. source of energy. Hydro power causes no Share of CO2-free sources in power generation, % 66 69 75 emissions on air, water or soil. Share of renewable and CO2-free sources in heat production, % 18 17 19 32 SUSTAINABILITY FORTUM ANNUAL REPORT 2010

gas emissions (SO2 and NO2) and up to fuel consumption and emissions will be 7KHSURPLVHRIDVDIHZRUNSODFH Investment projects were a particular 90% of the particle emissions originate substantially reduced. Occupational safety has a key role in focus of safety in 2010. Through effec- from the Russian operations. One of the In December 2010, Fortum also Fortum’s Sustainability Approach. tive measures, safety has been improved goals of the Environment, Health and signed a Memorandum of Understand- Improving occupational safety is sup- to an exemplary level. For example, the Safety (EHS) programme in Russia is to LQJLQWKHğHOGRIHQHUJ\HIğFLHQF\ ported by management’s strong commit- &]ÙVWRFKRZDFRPELQHGKHDWDQGSRZHU switch to a better quality of coal used and innovations with the Federal State ment, risk assessments, the systematic SODQWFRQVWUXFWLRQSURMHFWZRQWKHń6DIH DVIXHOZKLFKZLOOVLJQLğFDQWO\UHGXFH Organisation, Russian Energy Agency. investigation of accidents and improve- FRQVWUXFWLRQVLWHńFRPSHWLWLRQRUJDQLVHG emissions from production, even by as According to the agreement, the parties ment measures, and safety initiatives by Poland’s national authority that moni- PXFKDVIRUSDUWLFOHHPLVVLRQVDW will endeavor to strengthen their cooper- and campaigns. tors occupational safety; the plant also Argayash power plant. Fuel switching ation in the areas of combined power and The target for 2010 was to decrease received Fortum’s internal Safety Award was started late 2010. heat generation, environmental develop- the lost workday injury frequency in 2010. In Russia, the utilisation of ash PHQWDQGSURPRWLQJHQHUJ\HIğFLHQW (LWIF*). Fortum did not achieve the from coal combustion is minimal, and technologies. target; the LWIF was 2.4 (2009: 2.4). In *LWIF: the number of accidents that have led to an the ash is placed in ash basins. In 2010, Europe, Fortum’s safety performance absence of one or more full working days or shifts per million working hours operational improvements were made to Social responsibility measured as LWIF was best ever, 2.2 reduce the environmental impacts of the Fortum interacts with millions of people (2009: 2.4). Additionally, Fortum’s goal 6XFFHVVIURPZHOOEHLQJ ash basins. and affects the surrounding society in is to eliminate fatal accidents and to A strong and well-being organisation is Fortum also signed a letter of many different ways. For that reason, improve the results measured by all a key for successful performance. A pre- intent with the Chelyabinsk Regional social responsibility is a cornerstone of safety indicators. In 2010, there was requisite for well-being is the equal and Administration to launch extensive Fortum’s operations. one fatal accident involving a Fortum fair treatment of employees. Along with HQHUJ\HIğFLHQF\FROODERUDWLRQ7KHPRVW Healthy and motivated employees are employee in Russia. The accident was corporate wide guidelines and practices, sizable measure of the programme is the a prerequisite to a successful business – investigated thoroughly and procedures Fortum invests in recruitment and ori- automation and upgrade project of the taking care of employees is a priority for were developed to improve safety. entation, leadership and remuneration Chelyabinsk district heating network. As Fortum. Contractor safety has improved year- and in the development and training of a result of the project, energy loss in the by-year. In 2010, the LWIF for contractors employees. In 2010, Fortum launched the area will decrease by more than 30% and was 5.0 (2009: 6.5). work well-being programme, ForCARE,

SAFETY KEY FIGURES KEY PERSONNEL FIGURES 2010 2009 2008 (2 2010 2009 Change, % Lost workday injuries, own personnel 45 37 63 Average number of employees 11,156 13,278 –16.0 Lost workday injuries, contractors 43 51 47 Number of employees at 31 Dec. 10,585 11,613 –8.9 6QVCNTGEQTFCDNGKPLWT[HTGSWGPE[(1, own personnel 4.6 (2 6.0 (2 9.4 of whom permanently employed 10,307 11,332 –9.0 Fatalities 1 21 Duration of employment, years 13 14 –7.1 .QUVYQTMFC[KPLWT[HTGSWGPE[(1, own personnel 2.4 2.4 (2 4.3 Average age 44 46 –4.3 .QUVYQTMFC[KPLWT[HTGSWGPE[(1, contractors 5.0 6.5 (2 8.2 Female, % 29 30 –3.3 1) Number of incidents per million working hours Women in management positions, % 27 30 –10.0 (1 2) Excluding Russia Division Health care expenditure , EUR per person 501 484 3.5 Expenditure on recreation and leisure activities (1, % of salaries 0.4 0.4 0.0 paid on working time 1) Finland FORTUM ANNUAL REPORT 2010 SUSTAINABILITY 33

the aim of which is to promote the health Fortum operates responsibly in society and work safety of employees by develop- Fortum requires that its supply chain ing working methods and the work envi- is managed in accordance with the ronment. The ForCARE programme will principles of sustainability. In the pro- be adopted at all Fortum’s work sites curement of goods and services, Fortum by the end of 2012. uses supplier screening and attaches a Supplier Code of Conduct to all purchase &RPSHWHQWSHUVRQQHODVWUHQJWK agreements exceeding EUR 50,000. The The competence and performance of Supplier Code of Conduct was adopted in Fortum’s personnel is developed through 2009, and by the end of 2010 it had been annual development and performance taken into use in all operating countries. discussions, feedback processes, and Fortum’s operations for the good of by developing the supporting tools and society are also emphasised in the goal SURFHVVHV,QGLYLGXDORUWHDPVSHFLğF to secure an uninterrupted supply of targets are set to support the strategy; electricity and heat for all customers. the achievement of these targets forms The reliability of Fortum’s electricity the foundation for the remuneration. QHWZRUNVLV)RUWXPLVFRQWLQX- The competence of the organisation and ously investing in network reliability and personnel is developed also through job HIğFLHQF\E\HJLQFUHDVLQJDXWRPDWLRQ rotation. In 2010, Fortum had 603 inter- and by replacing overhead lines with QDOYDFDQFLHV  LQ)LQODQGDQG underground cables. Also the distribu- Sweden. In 2010, 62 Fortum employees tion reliability of heat was very good were on a foreign work assignment. during the year and there were no major The number of Fortum employees disruptions. decreased in 2010 and was an average Fortum supports society in the coun- RI  7KHQXPEHURI tries in which it operates through co- employees with a permanent position operation programmes, sponsorship and was 10,307 (2009: 11,332). Of the person- charitable donations. In 2010, Fortum QHO  ZHUHğ[HGWHUP supported projects with a total of about employees. Women represented 29% EUR 5.2 million. Support and donations Sustainable urban living of Fortum’s workforce (2009: 30%) and are directed particularly to children, accounted for 27% of corporate and divi- young people, the environment and Kestävää tulevaisuuden asumista sion management teams (2009: 30%). society. In addition, EUR 2.3 million was A modern, ecologically sustainable district, Royal Seaport, is under construction in Stock- The average age of Fortum employees donated to universities in Finland. holm. The project will test the interactivity between buildings and the power grid: Energy in 2010 was 44 (2009: 46), and the share will be produced locally, e.g., with solar panels, and a smart grid will make it possible to of personnel over the age of 50 years store surplus energy or feed it back into the grid. Additionally, residents will get real-time Read more about Fortum’s social responsibility ZDV  3URYLVLRQVKDYH information about electricity price and consumption. Construction will be completed in in the Sustainability Report 2010. been made for employees’ transitioning DWVVJGƂTUVTGUKFGPVUYKNNOQXGKPVQVJGCTGCKP to retirement by investing in employer image, resource planning, transfer of In Espoo, Finland, Fortum is participating in the Eco Urban Living joint project, launched knowledge and know-how, and compe- at the same time. The purpose of the project is to ensure rapid development of the infra- tence development of the personnel. structure needed for recharging electric vehicles and thus to help build an eco-conscious urban environment. 3. The emerging LARGEST ENERGY nations, particularly CONSUMER China and India, have IN 2030 IS INDIA a growing role in the global economy and HQHUJ\ğHOG,QGLDLV projected to surpass Japan and Russia to become the world’s MEGATREND: NEW ECONOMIC third biggest energy POWERS consumer by 2030. FORTUM ANNUAL REPORT 2010 35 Fortum Financials 2010

OPERATING AND FINANCIAL REVIEW 36 Financial performance 36 Risk management 51 The Fortum share and shareholders 57

CONSOLIDATED FINANCIAL STATEMENTS 62 Consolidated income statement 62 Consolidated statement of comprehensive income 63 Consolidated balance sheet 64 %QPUQNKFCVGFUVCVGOGPVQHEJCPIGUKPVQVCNGSWKV[  %QPUQNKFCVGFECUJƃQYUVCVGOGPV  0QVGUVQVJGEQPUQNKFCVGFƂPCPEKCNUVCVGOGPVU 

KEY FIGURES 129 (KPCPEKCNMG[ƂIWTGU  5JCTGMG[ƂIWTGU  1RGTCVKQPCNMG[ƂIWTGUXQNWOGU  1RGTCVKQPCNMG[ƂIWTGUUGIOGPVU  &GƂPKVKQPUQHMG[ƂIWTGU 

PARENT COMPANY FINANCIAL STATEMENTS, FINNISH GAAP (FAS) 136 Income statement 136 Balance sheet 136 %CUJƃQYUVCVGOGPV  2CTGPVEQORCP[PQVGUVQVJGƂPCPEKCNUVCVGOGPVU 

PROPOSAL FOR THE DISTRIBUTION OF EARNINGS 142

AUDITOR’S REPORT 143

STATEMENT BY THE SUPERVISORY BOARD 144

QUARTERLY FINANCIAL INFORMATION 145

36 FORTUM FINANCIALS 2010 2SHUDWLQJDQGğQDQFLDOUHYLHZ Financial performance

The overall Nordic and Russian power consumption continued to increase in 2010. been approved by the Government regarding capacity supply agreements (CSA – “new Industrial activity clearly picked up in Fortum’s key market areas and the Russian capacity”) and competitive capacity selection (CCS – “old capacity”). economy continued a solid path of recovery. 5HFRYHULQJHOHFWULFLW\GHPDQGDQGWKHGHYHORSPHQWRIWKHFDSDFLW\PDUNHWHQFRXU- DJHG)RUWXPWRVOLJKWO\DGMXVWWKHVFKHGXOHRILWV5XVVLDQLQYHVWPHQWSURJUDPPHQRZ .H\ğQDQFLDOğJXUHV WREHğQDOLVHGRQH\HDUHDUOLHUWKDQSUHYLRXVO\HVWLPDWHGLQ7KHSURğWVIURPWKH Change Russia Division are estimated to build up in pace with the capacity increase. EUR million 2010 2009 2008 10/09 )RUWXPłVXSGDWHGVWUDWHJ\ZDVODXQFKHGLQ6HSWHPEHU7KHVWUDWHJ\EXLOGVRQWKH Sales 6,296 5,435 5,636 16% 1RGTCVKPIRTQƂV 1,708 1,782 1,963 –4% company’s core competence in CO2IUHHQXFOHDUDQGK\GURSRZHUHQHUJ\DQGUHVRXUFH 1RGTCVKPIRTQƂVQHUCNGU 27.1 32.8 34.8 –17% HIğFLHQWFRPELQHGKHDWDQGSRZHUSURGXFWLRQDVZHOODVWKHFRPSDQ\łVH[SHUWLVHDQG %QORCTCDNGQRGTCVKPIRTQƂV 1,833 1,888 1,845 –3% SURYHQWUDFNUHFRUGLQRSHUDWLQJLQFRPSHWLWLYHHQHUJ\PDUNHWV,QWKHFRPLQJ\HDUV 2TQƂVDGHQTGVCZGU 1,615 1,636 1,850 –1% )RUWXPZLOOFRQWLQXHWROHYHUDJHLWVVWURQJSRVLWLRQLQWKH1RUGLFSRZHUDQGKHDWPDUNHW 2TQƂVHQTVJGRGTKQFCVVTKDWVCDNGVQQYPGTUQHVJGRCTGPV 1,300 1,312 1,542 –1% while creating solid earnings growth in Russia. 'CTPKPIURGTUJCTG'74 1.46 1.48 1.74 –1% 0GVECUJHTQOQRGTCVKPICEVKXKVKGU 1,437 2,264 2,002 –37% )XUWKHURSSRUWXQLWLHVIRUIXWXUHJURZWKVWHPIURPWKHQHHGIRU&22-free and energy- 5JCTGJQNFGTUoGSWKV[RGTUJCTG'74 9.24 9.04 8.96 2% HIğFLHQWVROXWLRQVDQGLQFUHDVLQJGHPDQGLQIDVWJURZLQJOLEHUDOLVLQJHQHUJ\PDUNHWV %CRKVCNGORNQ[GF 16,124 15,350 15,911 5% especially in emerging Euro-Asian countries. Coupled with the integration of the Euro- +PVGTGUVDGCTKPIPGVFGDV 6,826 5,969 6,179 14% SHDQHQHUJ\PDUNHWDQGZLWK)RUWXPłV5XVVLDQEXVLQHVVłLQFUHDVLQJZHLJKWWKHLPSRU- 'SWKV[VQCUUGVUTCVKQ 40 43 41 –7% WDQFHRIWKH1RUGLFSRZHUSULFHDVWKHPDLQGULYHURI)RUWXPłVHDUQLQJVZLOOJUDGXDOO\ #XGTCIGPWODGTQHUJCTGUU 888,367 888,230 887,256 0% GHFUHDVH7KHH[LVWLQJHOHFWULFLW\GLVWULEXWLRQDQGUHWDLOVDOHVEXVLQHVVHVZLOOFRQWLQXH WRKDYHDVXEVWDQWLDOUROHLQWKH1RUGLFPDUNHW,QRWKHUUHJLRQV)RUWXPVHHVPRUHDW- *URXSğQDQFLDOWDUJHWV tractive earnings and growth prospects in power and heat generation. Change )RUWXPłVWDUJHWVIRUğQDQFLDONH\UDWLRVDUHWRDFKLHYHUHWXUQRQFDSLWDOHPSOR\HGRI EUR million Target 2010 2009 2008 10/09 DUHWXUQRQVKDUHKROGHUłVHTXLW\RIDQGDQHWGHEWWR(%,7'$RIDSSUR[LPDWHO\ 41%' 12 11.6 12.1 15.0 –4% 41' 14 15.7 16.0 18.7 –2% %CRKVCNUVTWEVWTG0GVFGDV'$+6&# #TQWPF 3.0 2.6 2.5 15% SALES, EUR million OPERATING PROFIT, EUR million The Heat and Russia divisions as well as the Distribution business were able to im- prove their results from a year ago. Electricity Sales’ results were negatively impacted 8,000 2,000 LQWKHğUVWDQGODVWTXDUWHUPDLQO\GXHWRKLJKZKROHVDOHPDUNHWSULFHV,QWKH3RZHU 'LYLVLRQFRVWVLQFUHDVHGSDUWO\GXHWRFRQWLQXHGSRZHUXSJUDGHDQGPRGHUQLVDWLRQ 6,000 1,500 programmes in Swedish associated nuclear generating companies.

The overall Nordic and Russian power consumption continued to increase in 2010. 4,000 1,000 ,QGXVWULDODFWLYLW\KDVFOHDUO\SLFNHGXSLQ)RUWXPłVNH\PDUNHWDUHDVDQGWKH5XVVLDQ economy has continued a solid path of recovery. 2,000 500 7KH5XVVLDQZKROHVDOHSRZHUVHFWRUUHIRUPSURJUHVVHGDVSODQQHGE\WKH)HGHUDO *RYHUQPHQW$VRI-DQXDU\WKHZKROHVDOHSRZHUPDUNHWKDVEHHQIXOO\OLEHUDOLVHG 0 0 ,QDGGLWLRQWKHQHZUXOHVIRUWKHORQJWHUPFDSDFLW\PDUNHWVWDUWLQJIURPKDYH 06 07 08 09 10 06 07 08 09 10 FORTUM FINANCIALS 2010 OPERATING AND FINANCIAL REVIEW 37

ZDVDSSUR[LPDWHO\DWWKHVDPHOHYHOFRPSDUHGWRWKHSUHYLRXV\HDU7KHUHFHVVLRQGLG RETURN ON CAPITAL EMPLOYED, % RETURN ON SHAREHOLDERS’ EQUITY, % not affect electricity demand in the Tyumen region in the previous year and therefore \HDURQ\HDUHOHFWULFLW\GHPDQGZDVĠDW,QWKH&KHO\DELQVNDUHDZKLFKLVGRPLQDWHGE\ 20 20 WKHPHWDOLQGXVWU\HOHFWULFLW\GHPDQGLQFUHDVHGE\DERXWLQWKHIRXUWKTXDUWHUDQG E\DSSUR[LPDWHO\GXULQJFRPSDUHGWRWKHSUHYLRXV\HDU7KHLQFUHDVHLVPDLQO\ 15 15 due to the recovery in industrial consumption. 7KHDYHUDJHHOHFWULFLW\VSRWSULFHH[FOXGLQJFDSDFLW\SULFHLQWKH)LUVWSULFH]RQH 10 10 (XURSHDQDQG8UDOVSDUWRI5XVVLD LQFUHDVHGWR58%  SHU0:KLQ WKHIRXUWKTXDUWHURI 5 5

3RZHUFRQVXPSWLRQ 0 0 06 07 08 09 10 06 07 08 09 10 TWh 2010 2009 2008 0QTFKEEQWPVTKGU 396 378 396 Current target Current target Incl. REC and Lenenergo gains Incl. REC and Lenenergo gains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ğUVWDQGWKH #XGTCIGTGIWNCVGFGNGEVTKEKV[RTKEGHQT1#1(QTVWO47$/9J1) 614 533 475 IRXUWKTXDUWHU,QWKHğUVWTXDUWHUUHGXFHGQXFOHDUDYDLODELOLW\LQ6ZHGHQFRXSOHGZLWK #XGTCIGTGIWNCVGFECRCEKV[RTKEGV47$/9OQPVJ 169 187 168 WKHUHGXFHGWUDQVPLVVLRQFDSDFLW\UHVXOWHGLQKLJKHUSULFHVLQ6ZHGHQDQG)LQODQG 5RQVRTKEGHQTRQYGTKP)GTOCP[GWT/9J 44 39 66 #XGTCIGTGIWNCVGFICURTKEGKP7TCNUTGIKQP47$O3 2,221 1,781 1,560 ,QWKHODVWTXDUWHUWKHK\GURORJLFDOGHğFLWLQERWK6ZHGHQDQG1RUZD\WRJHWKHUZLWK CO2 '65'7# GWTVQPPG%12 14 13 22 the reduced transmission capacity affected the prices. %QCN +%'4QVVGTFCO 75&VQPPG 92 70 146 $WWKHEHJLQQLQJRIWKH1RUGLFZDWHUUHVHUYRLUVZHUHWHUDZDWWKRXUV 7:K  1KN $TGPV%TWFG 75&DDN 80 63 98 EHORZWKHORQJWHUPDYHUDJH$WWKHHQGRIWKH1RUGLFZDWHUUHVHUYRLUVZHUHDW  ([FOXGLQJFDSDFLW\WDULII KLVWRULFDOO\ORZOHYHOV7:KEHORZWKHORQJWHUPDYHUDJHDQG7:KEHORZWKHOHYHOV DWWKHHQGRI :DWHUUHVHUYRLUV 'XULQJWKH1RUGLFFRXQWULHVFRQVXPHGLQWRWDODERXW7:K  RI Dec 31 Dec 31 Dec 31 HOHFWULFLW\ŋDERXWPRUHWKDQLQ7KHLQFUHDVHZDVPDLQO\GXHWRWKHFROGZHDWKHU TWh 2010 2009 2008 LQWKHğUVWDQGODVWTXDUWHUDQGKLJKHULQGXVWULDOFRQVXPSWLRQ 0QTFKEYCVGTTGUGTXQKTUNGXGN 54 74 75 0QTFKEYCVGTTGUGTXQKTUNGXGNNQPIVGTOCXGTCIG 83 81 81 1.25XVVLD ([SRUWLPSRUWEHWZHHQ1RUGLF$UHDDQG&RQWLQHQWDO(XURSH 'XULQJ5XVVLDFRQVXPHGDERXW7:K  RIHOHFWULFLW\7KHLQFUHDVH is mainly due to the general recovery of the Russian economy and increased industrial TWh (+ = import to, – = export from Nordic area) 2010 2009 2008 'ZRQTVKORQTV 21 80 activity. 2$2)RUWXPRSHUDWHVLQWKH7\XPHQDQG&KHO\DELQVNDUHDV,QWKH7\XPHQDUHD ZKHUHLQGXVWULDOSURGXFWLRQLVGRPLQDWHGE\WKHRLODQGJDVLQGXVWULHVHOHFWULFLW\GHPDQG 38 OPERATING AND FINANCIAL REVIEW FORTUM FINANCIALS 2010

3RZHUPDUNHWOLEHUDOLVDWLRQLQ5XVVLD )RUWXPłV&22HPLVVLRQV % 2010 2009 2008 Change 5JCTGQHRQYGTUQNFQPVJGNKDGTCNKUGFOCTMGV 70 40 20 Million tonnes 2010 2009 2008 2007 10/09 5JCTGQHRQYGTUQNFCVVJGNKDGTCNKUGFRTKEGD[1#1(QTVWO 61 34 19 6QVCNGOKUUKQPU 25.3 22.0 17.6 10.4 15% 'OKUUKQPUUWDLGEVVQ'65 9.7 7.7 7.2 9.8 26% (TGGGOKUUKQPCNNQECVKQP 5.6 5.5 5.9 8.1 2% 'OKUUKQPUKP4WUUKC 14.6 13.8 9.8 - 6% NORDIC WATER RESERVOIRS, WEEKLY FILLING AS ENERGY, TWh )RUWXPłVVSHFLğF&22HPLVVLRQVIURPSRZHUJHQHUDWLRQ Change 120 120 g/kWh 2010 2009 2008 2007 10/09

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0 0 6DOHVE\GLYLVLRQ 1 4 8 12 16 20 24 28 32 3640 44 48 52 Change 3) Reference level 2007 EUR million 2010 2009 2008 10/09 2010 2006 2QYGT 2,702 2,531 2,892 7% 2009 2003 2008 2000 Heat 1,770 1,399 1,466 27% &KUVTKDWVKQP1) 963 800 789 20% 'NGEVTKEKV[5CNGU1) 1,798 1,449 1,922 24% 4WUUKC 804 632 489 27% 1VJGT 51 71 83 –28% 2 )RUWXPłV&22 emissions 0GVVKPIQH0QTF2QQN5RQVVTCPUCEVKQPU2) –1,736 –1,095 –1,736 –59% Eliminations –56 –352 –269 84% &OLPDWHFKDQJHPLWLJDWLRQWKHUHGXFWLRQRIFDUERQGLR[LGHHPLVVLRQVDQGHQHUJ\HI- Total 6,296 5,435 5,636 16% ğFLHQF\DUHLPSRUWDQWIRU)RUWXP )RUWXPłVWDUJHWLQWKH(8LVWRGHFUHDVHLWVHPLVVLRQVLQSRZHUJHQHUDWLRQWROHVVWKDQ &RPSDUDEOHRSHUDWLQJSURğWE\GLYLVLRQ JUDPVSHUNLORZDWWKRXU JN:K E\DVDğYH\HDUDYHUDJH'XULQJWKHğYH Change \HDUDYHUDJHSHUIRUPDQFHLVEHORZWKHWDUJHWOHYHODWJN:K,QKHDWSURGXFWLRQWKH EUR million 2010 2009 3) 2008 10/09 DLPKDVEHHQWRUHGXFHWKHVSHFLğFHPLVVLRQVLQHDFK(8FRXQWU\E\DWOHDVWIURP 2QYGT 1,298 1,454 1,528 –11% XQWLO2XWVLGHWKH(8)RUWXPLVFRPPLWWHGWRLQFUHDVLQJHQHUJ\HIğFLHQF\ Heat 275 231 250 19% 1) DQGWKHUHE\UHGXFLQJVSHFLğFHPLVVLRQV &KUVTKDWVKQP 307 262 248 17% 'NGEVTKEKV[5CNGU1) 11 22 –33 –50% ,QDSSUR[LPDWHO\  RIWKHSRZHUJHQHUDWHGE\)RUWXPZDV&22- 4WUUKC 8 –20 –92 140% IUHH7KHFRUUHVSRQGLQJğJXUHIRU)RUWXPłVSRZHUJHQHUDWLRQZLWKLQWKH(8ZDV 1VJGT –66 –61 –56 –8%   Total 1,833 1,888 1,845 –3%

)RUWXPłVWRWDO&22HPLVVLRQVLQDPRXQWHGWRPLOOLRQWRQQHV 0W    RIZKLFK0W  ZHUHZLWKLQWKH(8łVHPLVVLRQWUDGLQJVFKHPH (76  FORTUM FINANCIALS 2010 OPERATING AND FINANCIAL REVIEW 39

2SHUDWLQJSURğWE\GLYLVLRQ 3URğWEHIRUHWD[HVZDV(85PLOOLRQ   Change 7D[HVIRUWKHSHULRGWRWDOOHG(85PLOOLRQ  7KHWD[UDWHDFFRUGLQJWR 3) EUR million 2010 2009 2008 10/09 WKHLQFRPHVWDWHPHQWZDV   2QYGT 1,132 1,363 1,599 –17% 7KHSURğWIRUWKHSHULRGZDV(85PLOOLRQ  )RUWXPłVHDUQLQJVSHU Heat 303 252 307 20% &KUVTKDWVKQP1) 321 263 248 22% VKDUHZHUH(85  7KHHIIHFWRQHDUQLQJVSHUVKDUHE\WKHDFFRXQWLQJ 'NGEVTKEKV[5CNGU1) 46 29 –35 59% WUHDWPHQWRIGHULYDWLYHVZDV(85ŋ 4WUUKC 53 –20 –91 365% 1RQFRQWUROOLQJ PLQRULW\ LQWHUHVWVDPRXQWHGWR(85PLOOLRQ  7KHVH 1VJGT –147 –105 –65 –40% DUHPDLQO\DWWULEXWDEOHWR)RUWXP9ÃUPH+ROGLQJ$%LQZKLFKWKHFLW\RI6WRFNKROP Total 1,708 1,782 1,963 –4% KDVDHFRQRPLFLQWHUHVW

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For further information see Note 5 Segment reporting on page 90. OPERATING PROFIT AND COMPARABLE PROFIT BEFORE TAXES, EUR million OPERATING PROFIT, EUR million *URXSVDOHVZHUH(85PLOOLRQ  *URXSRSHUDWLQJSURğWWRWDOOHG(85 PLOOLRQ  +LJKSRZHUIRUZDUGSULFHVDW\HDUHQGFDXVHGPDUN 2,000 2,000 WRPDUNHWYDOXDWLRQRIHOHFWULFLW\GHULYDWLYHVWRGHFUHDVH)RUWXPłVRSHUDWLQJSURğW 1,500 1,500 7KHHIIHFWRQWKHRSHUDWLQJSURğWIRUWKHIXOO\HDUZDV(85ŋPLOOLRQ7KH DFFRXQWLQJWUHDWPHQWGLGQRWKDYHDQLPSDFWRQ)RUWXPłVFDVKĠRZRUFRPSDUDEOH 1,000 1,000 RSHUDWLQJSURğW&RPSDUDEOHRSHUDWLQJSURğWWRWDOOHG(85PLOOLRQ  

1RQUHFXUULQJLWHPVPDUNWRPDUNHWHIIHFWVDQGQXFOHDUIXQGDGMXVWPHQWVGXULQJWKH 500 500 ğQDQFLDO\HDUDPRXQWHGWR(85ŋPLOOLRQ ŋ 7KHVKDUHRIQRQUHFXUULQJ

LWHPVZDV(85PLOOLRQ  DQGFRQVLVWHGRIVDOHVJDLQVIURPWKH6ZHGHJDVDQG 0 0 .DUOVNRJD(QHUJL 0LOMùVKDUHVLQ6ZHGHQDVZHOODVWKH.XUJDQ*HQHUDWLQJ&RPSDQ\ 06 07 08 09 10 06 07 08 09 10

)HGHUDO*ULG&RPSDQ\DQG6W3HWHUVEXUJ6DOHV&RPSDQ\VKDUHVLQ5XVVLD 1RGTCVKPIRTQƅV 7KHDYHUDJH6ZHGLVKNURQD 6(. UDWHZDVDSSUR[LPDWHO\VWURQJHUDJDLQVWWKH %QORCTCDNGQRGTCVKPIRTQƅV HXURGXULQJWKDQLQ7KHSRVLWLYHWUDQVODWLRQHIIHFWFDXVHGE\WKHKLJKHU DYHUDJH6(.UDWHLPSDFWHGWKHFRPSDUDEOHRSHUDWLQJSURğWE\DSSUR[LPDWHO\(85 PLOOLRQ7KHWUDQVODWLRQHIIHFWPDLQO\LPSDFWHGWKH3RZHU'LYLVLRQ7KHVWURQJ6(.KDG DQHJDWLYHLPSDFWRQWKHFDVKĠRZ 7KHVKDUHRISURğWVRIDVVRFLDWHVDQGMRLQWYHQWXUHVZDV(85PLOOLRQ  7KH improvement was mainly due to the improvement in the contribution from Hafslund ASA. 7KH*URXSłVQHWğQDQFLDOH[SHQVHVGHFUHDVHGWR(85PLOOLRQ  7KH GHFUHDVHLVDWWULEXWDEOHWRORZHULQWHUHVWH[SHQVHV7KHFKDQJHLQIDLUYDOXHRIğQDQFLDO LQVWUXPHQWVZDV(85PLOOLRQ ŋ  40 OPERATING AND FINANCIAL REVIEW FORTUM FINANCIALS 2010

1RUGLFVDOHVYROXPH 4 Division reviews Change 4.1 Power TWh 2010 2009 2008 10/09 6QVCN 51.5 48.8 52.1 6% The Power division consists of Fortum’s power generation, physical operation QHYJKEJRCUUVJTQWIJUCNGU 3.2 3.6 3.7 –11% and trading as well as expert services for power producers. 6DOHVSULFH Change Change EUR million 2010 2009 2008 10/09 EUR/MWh 2010 2009 2008 10/09 Sales 2,702 2,531 2,892 7% 2QYGT U0QTFKERQYGTRTKEG 1) 49.7 49.8 49.3 0% RQYGTUCNGU 2,580 2,413 2,566 7%  )RUWKH3RZHU'LYLVLRQLQWKH1RUGLFDUHDH[FOXGLQJSDVVWKURXJKVDOH QVJGTUCNGU 122 118 326 3% 1RGTCVKPIRTQƂV 1,132 1,363 1,599 –17% %QORCTCDNGQRGTCVKPIRTQƂV 1,298 1,454 1,528 –11% 0GVCUUGVU CVRGTKQFGPF 5,806 5,494 5,331 6% DIVISION’S POWER GENERATION DIVISION’S POWER GENERATION BY AREA, TWh 4GVWTPQPPGVCUUGVU 19.5 24.5 29.6 –20% IN THE NORDIC AREA BY SOURCE, TWh %QORCTCDNGTGVWTPQPPGVCUUGVU 22.3 26.4 28.0 –16% %CRKVCNGZRGPFKVWTGCPFITQUUKPXGUVOGPVUKPUJCTGU 122 153 134 –20% 50 50 0WODGTQHGORNQ[GGU 1,819 1,916 3,520 –5% 45 45 40 40 35 35 ,QWKHGLYLVLRQłVSRZHUJHQHUDWLRQLQWKH1RUGLFFRXQWULHVZDV7:K  30 30 25 25  DQGDSSUR[LPDWHO\  RIWKHGLYLVLRQłVSRZHUJHQHUDWLRQZDV&22-free. 20 20 'XULQJWKHGLYLVLRQłV1RUGLFSRZHUJHQHUDWLRQZDV7:KKLJKHUWKDQLQ 15 15 (VSHFLDOO\WKHUPDOJHQHUDWLRQLQFUHDVHGPDLQO\GXHWRKLJKHOHFWULFLW\SULFHVDQG 10 10 WKHHQGRI0HUL3RULOHDVHFRQWUDFW$OVRQXFOHDUJHQHUDWLRQYROXPHVLPSURYHGVOLJKWO\ 5 5 0 0 (LJKWRXWRI)RUWXPłVWHQRZQHGRUDVVRFLDWHGQXFOHDUSRZHUUHDFWRUVRSHUDWHGZHOO 06 07 08 09 10 06 07 08 09 10 GXULQJ)RUVPDUNZDVDEOHWRRYHUFRPHWKHSUREOHPVUHODWHGWRPRGHUQLVHGYDOYHV Thermal Other countries E\UHSODFLQJWKHPZLWKDGLIIHUHQWVROXWLRQLWKDVEHHQUXQQLQJDWIXOOFDSDFLW\VLQFH Nuclear Sweden WKHEHJLQQLQJRI1RYHPEHU2VNDUVKDPQIDFHGVLJQLğFDQWEHDULQJSUREOHPVZLWKLWV Hydro Finland UHQHZHGWXUELQHZKLFKFDXVHGSURGXFWLRQORVVHVXQWLOWKHHQGRI'HFHPEHU&XUUHQWO\ LWLVUXQQLQJDWDQDSSUR[LPDWHO\PHJDZDWW 0: SRZHUOHYHOZKLFKFRUUHVSRQGV to the power level before the capacity increases. To secure availability during the winter PRQWKVWKHSODQLVWRUXQWKHXQLWDWWKLVSRZHUOHYHODQGWRUHVWDUWFRPPLVVLRQLQJWHVW UXQVRQ0DUFK$IWHUWKLVWKHWHVWSHULRGZLOOFRQWLQXHXQWLOWKHVFKHGXOHGVKXW ,QWKHGLYLVLRQDFKLHYHGD1RUGLFSRZHUSULFHRI(85SHU0:KZKLFKZDV down for maintenance on 22 May 2011. DWDERXWWKHVDPHOHYHODVLQ7KHFOHDUO\KLJKHU1RUG3RRO6SRWSULFHVDOPRVW offset lower hedge prices. The total achieved price remained stable due to the higher 3RZHUJHQHUDWLRQE\VRXUFH SULFHVDFKLHYHGLQWKHUPDOSRZHUGXULQJSHDNKRXUV Change ,Q3RZHUłVFRPSDUDEOHSURğWGHFUHDVHG&RQWLQXHGFDSDFLW\XSJUDGHVDQGSUR- TWh 2010 2009 2008 10/09 ORQJHGPRGHUQLVDWLRQSURJUDPPHVLQ6ZHGLVKDVVRFLDWHGQXFOHDUJHQHUDWLQJFRPSDQLHV *[FTQRQYGTKPVJG0QTFKEEQWPVTKGU 22.0 22.1 22.9 0% 0WENGCTRQYGTKPVJG0QTFKEEQWPVTKGU 22.0 21.4 23.7 3% DSURGXFWLRQPL[ZLWKLQFUHDVHGWKHUPDOJHQHUDWLRQYROXPHVWRJHWKHUZLWKDQLQFUHDVH 6JGTOCNRQYGTKPVJG0QTFKEEQWPVTKGU 2.3 0.2 0.3 1,050% LQQXFOHDUUHODWHGSURYLVLRQVDQGWKH/RYLLVDSURMHFWLQFUHDVHGFRVWVLQFRPSDUHG Total in the Nordic countries 46.3 43.7 46.9 6% WR 6JGTOCNKPQVJGTEQWPVTKGU 1.1 1.2 1.0 –8% )RUWXPDQGWKH5XVVLDQ6WDWH$WRPLF(QHUJ\&RUSRUDWLRQ526$720VLJQHGD0HPR- Total 47.4 44.9 47.9 6% UDQGXPRI8QGHUVWDQGLQJRQFRRSHUDWLRQLQWKHğHOGRIQXFOHDUSRZHULQ1RYHPEHU )XUWKHUPRUH)RUWXP526$720DQGWKHQDWLRQDO%XOJDULDQXWLOLW\1(.VLJQHG FORTUM FINANCIALS 2010 OPERATING AND FINANCIAL REVIEW 41

D0HPRUDQGXPRI8QGHUVWDQGLQJRQFRRSHUDWLRQLQWKHGHYHORSPHQWRIWKH%HOHQH 4.2+HDW QXFOHDUSRZHUSODQWLQ%XOJDULD$FFRUGLQJWRWKH0HPRUDQGXPRI8QGHUVWDQGLQJ The Heat division consists of combined heat and power (CHP) generation, district ZLWK526$720DQG1(.)RUWXPLVHQGHDYRXULQJWRSDUWLFLSDWHLQWKH%HOHQHSURMHFW heating activities and business-to-business heating solutions in the Nordic coun- E\SURYLGLQJFRPSHWHQFHVLQQXFOHDUWHFKQRORJ\DQGVDIHW\,QUHODWLRQWRWHFKQRORJ\ tries and other parts of the Baltic Rim. VHUYLFHV)RUWXPKDVUHVHUYHGDQRSSRUWXQLW\WRREWDLQDVKDUHRIWKHHTXLW\LQWKH SURMHFWFRPSDQ\WKDWZLOOEHHVWDEOLVKHGDQGZLOOEHWKHRZQHURIWKHSRZHUSODQWDQG Change EUR million 2010 2009 2008 10/09 the electricity generated by it. Sales 1,770 1,399 1,466 27% )RUWXPGHFLGHGWRGLVFRQWLQXHWKH0HUL3RULFDUERQFDSWXUHDQGVWRUDJHSURMHFWZKLFK JGCVUCNGU 1,269 1,055 1,120 20% WKHFRPSDQ\KDVGHYHORSHGWRJHWKHUZLWK7HROOLVXXGHQ9RLPD 792 DWWKHFRPSDQLHVł RQYGTUCNGU 368 224 228 64% MRLQWO\RZQHG0HUL3RULSRZHUSODQW3UHYLRXVO\DOVR792KDGGHFLGHGWRZLWKGUDZ QVJGTUCNGU 133 120 118 11% IURPWKHSURMHFW 1RGTCVKPIRTQƂV 303 252 307 20% %QORCTCDNGQRGTCVKPIRTQƂV 275 231 250 19% )RUWXPLVSUHSDULQJWRSDUWLFLSDWHLQWKHWHQGHUSURFHVVHVIRUK\GURSRZHUFRQFHVVLRQV 0GVCUUGVU CVRGTKQFGPF 4,182 3,787 3,468 10% LQ)UDQFHZKLFKDUHH[SHFWHGWRRIğFLDOO\VWDUWLQ,QWKHIUDPHRIWKH(XURSHDQ 4GVWTPQPPGVCUUGVU 8.4 7.9 8.9 6% GLUHFWLYH)UDQFHLVWRRSHQXSWKHK\GURFRQFHVVLRQUHQHZDOSURFHVVIRUFRPSHWLWLRQ %QORCTCDNGTGVWTPQPPGVCUUGVU 7.7 7.3 7.3 5% 7KH)UHQFK*RYHUQPHQWLVWKXVSXWWLQJWKHğUVWWUDQFKHRIWHQFRQFHVVLRQVZLWKDWRWDO %CRKVCNGZRGPFKVWTGCPFITQUUKPXGUVOGPVUKPUJCTGU 305 359 431 –15% FDSDFLW\RI0:LQWRDWHQGHUSURFHVVLQŋ 0WODGTQHGORNQ[GGU 2,394 2,552 2,318 –6% $W\HDUHQGWKH3RZHU'LYLVLRQłVWRWDOSRZHUJHQHUDWLQJFDSDFLW\ZDV0:   RIZKLFK0:  ZDVLQWKH1RUGLFFRXQWULHV+\GURSRZHUFDSDF- 'XULQJKHDWVDOHVYROXPHVDPRXQWHGWR7:K  DQGZHUHPDLQO\ LW\LQWKH1RUGLFFRXQWULHVWRWDOOHG0:  QXFOHDUSRZHUFDSDFLW\ JHQHUDWHGLQWKH1RUGLFFRXQWULHV'XULQJWKHVDPHSHULRGSRZHUVDOHVYROXPHVWRWDOOHG 0:  DQGFRQGHQVLQJFDSDFLW\0:   7:K  7KHLQFUHDVHGYROXPHVZHUHDUHVXOWRIFROGZHDWKHUGXULQJWKH ZLQWHUPRQWKVLQFUHDVHGLQGXVWULDOVDOHVDQGQHZFRPELQHGKHDWDQGSRZHU &+3  FDSDFLW\LQ)LQODQGDQG(VWRQLD 7KHFRPSDUDEOHRSHUDWLQJSURğWIRUIRUWKH+HDW'LYLVLRQZDV(85PLO- NORD POOL SPOT, POWER PRICE 2006–2010 OLRQ  7KHLQFUHDVHZDVPDLQO\GXHWRKLJKHUYROXPHVDQGSRZHUSULFHV)XHO FRVWVZHUHKLJKHUWKDQLQWKHSUHYLRXV\HDU,Q6ZHGHQWKHQHJDWLYHSHDNORDGLPSDFW on production costs during the winter was offset by a stronger SEK currency. 140 140 'XULQJWKHIRXUWKTXDUWHURIFRPPHUFLDORSHUDWLRQEHJDQDWWZRQHZ&+3SODQWV 120 120 RQHLQ&]ÙVWRFKRZD3RODQGDQGRQHLQ3ÃUQX(VWRQLD)RUWXPDOVRVWDUWHGVLWHDFWLYLWLHV 100 100 RQDQHZZDVWHWRHQHUJ\&+3SODQWLQ.ODLSHGD/LWKXDQLDDQGFRQVWUXFWLRQRIDQHZ 80 80 ZDVWHWRHQHUJ\SODQWLQ%ULVWDQHDU6WRFNKROPLQ6ZHGHQ,QDGGLWLRQ)RUWXPVLJQHG 60 60 DQDJUHHPHQWWRDFTXLUHWZR3ROLVKSRZHUDQGKHDWFRPSDQLHVIURPWKH3ROLVKVWDWH7KH 40 40 FRPSDQLHVZHUHVROGDVSDUWRIWKHSULYDWLVDWLRQRIWKHSRZHUDQGKHDWVHFWRULQ3RODQG 20 20 $OVRLQWKHIRXUWKTXDUWHUDQDJUHHPHQWZDVVLJQHGRQWKHGLYHVWPHQWRI)RUWXPłVKHDW

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Fortum achieved 7KHUHVWUXFWXULQJDFWLYLWLHVVXSSRUW)RUWXPłVXSGDWHGVWUDWHJ\WKDWIRFXVHVRQWKHIXUWKHU Spot average GHYHORSPHQWRI&+3SURGXFWLRQ Spot price ,Q6ZHGHQLQ1RYHPEHUWKH6ZHGLVK&RPSHWLWLRQ$XWKRULW\ 6&$ DQQRXQFHG WKDWWKHDXWKRULW\GURSSHGLWVLQYHVWLJDWLRQFRQFHUQLQJWKHXVHRIPDUNHWSRVLWLRQDQG SULFHVHWWLQJRI)RUWXPłVGLVWULFWKHDWLQJLQWKH6WRFNKROPDUHD7KHDXWKRULW\FRQFOXGHG WKDWWKHUHDOSULFHRIGLVWULFWKHDWKDVGHFUHDVHGLQ6WRFNKROPE\GXULQJŋ 42 OPERATING AND FINANCIAL REVIEW FORTUM FINANCIALS 2010

,Q)LQODQGWD[HVRQIXHOVIRUKHDWSURGXFWLRQDVZHOODVWD[HVRQHOHFWULFLW\ZHUHLQ- (OHFWULFLW\6ROXWLRQVDQG'LVWULEXWLRQ FUHDVHGFRQVLGHUDEO\DVRI-DQXDU\7D[LQFUHDVHVZLOOEHUHĠHFWHGLQWKHHQGXVHU The division is responsible for Fortum’s electricity sales and distribution activities prices of heat and electricity accordingly. and consists of two business areas: Distribution and Electricity Sales.

+HDWVDOHVE\DUHD 4.3.1'LVWULEXWLRQ Change Fortum owns and operates distribution and regional networks and distributes electricity TWh 2010 2009 2008 10/09 to a total of 1.6 million customers in Sweden, Finland, Norway and Estonia. (KPNCPF 9.6 8.0 10.8 20% 5YGFGP 10.9 9.8 9.1 11% 2QNCPF 4.0 3.7 3.6 8% Change EUR million 2010 2009 2008 10/09 1VJGTEQWPVTKGU 1.6 1.4 1.4 14% Sales 963 800 789 20% Total 26.1 22.9 24.9 14% FKUVTKDWVKQPPGVYQTMVTCPUOKUUKQP 820 685 669 20% TGIKQPCNPGVYQTMVTCPUOKUUKQP 92 75 77 23% $W\HDUHQGWKH+HDW'LYLVLRQłVSRZHUJHQHUDWLQJFDSDFLW\WRWDOOHG0:  QVJGTUCNGU 51 40 43 28% 1RGTCVKPIRTQƂV  RIZKLFK0:  ZDVLQWKH1RUGLFFRXQWULHV7KH+HDW'LYL- 321 263 248 22% %QORCTCDNGQRGTCVKPIRTQƂV 307 262 248 17% VLRQłVWRWDOKHDWSURGXFWLRQFDSDFLW\ZDV0:  RIZKLFK0: 0GVCUUGVU CVRGTKQFGPF 3,683 3,299 3,032 12%  ZDVLQWKH1RUGLFFRXQWULHV 4GVWTPQPPGVCUUGVU 9.7 8.7 8.1 11% %QORCTCDNGTGVWTPQPPGVCUUGVU 9.3 8.6 8.2 8% 3RZHUVDOHV %CRKVCNGZRGPFKVWTGCPFITQUUKPXGUVOGPVUKPUJCTGU 213 193 296 10% 0WODGTQHGORNQ[GGU 962 1,088 1,336 –12% Change TWh 2010 2009 2008 10/09 Total 6.5 4.4 4.7 48% 'XULQJHOHFWULFLW\WUDQVPLVVLRQYLDWKHUHJLRQDOGLVWULEXWLRQQHWZRUNWRWDOOHG 7:K  LQ6ZHGHQDQG7:K  LQ)LQODQG

DIVISION’S DISTRICT HEATING AND INDUSTRIAL DIVISION’S DISTRICT HEATING AND INDUSTRIAL 'XULQJWKHEXVLQHVVDUHDłVFRPSDUDEOHRSHUDWLQJSURğWZDV(85PLOOLRQ STEAM SALES, TWh STEAM SALES BY AREA, TWh  7KHLPSURYHPHQWZDVPDLQO\GXHWRKLJKHUVDOHVDQGZDVSDUWO\RIIVHWE\ KLJKHUYDULDEOHPDLQWHQDQFHDQGIDXOWUHSDLUFRVWV,QDGGLWLRQWKHVWURQJHU6(.LQ- 30 30 FUHDVHGWKHFRPSDUDEOHRSHUDWLQJSURğWE\VRPH(85PLOOLRQ 25 25 7KHSLORWUROORXWRIVPDUWPHWHULQJWRQHWZRUNFXVWRPHUVLQ)LQODQGVWDUWHGLQ2FWREHU

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Steam Other countries in November 2011. Heat Sweden 'LVWULEXWLRQLPSURYHVHIğFLHQF\WKURXJKDXWRPDWLRQDQGE\IRFXVLQJRQLWVFRUH Finland SURFHVVHV$VDFRQVHTXHQFHVRPHğHOGRSHUDWLRQVZHUHRXWVRXUFHGGXULQJWKHIRXUWK TXDUWHU

FORTUM FINANCIALS 2010 OPERATING AND FINANCIAL REVIEW 43

9ROXPHRIGLVWULEXWHGHOHFWULFLW\LQGLVWULEXWLRQQHWZRUN 4.3.2(OHFWULFLW\VDOHV Change The Electricity Sales business area is responsible for retail sales of electricity to a total of 1.2 TWh 2010 2009 2008 10/09 million private and business customers as well as to other electricity retailers in Sweden, 5YGFGP 15.2 14.0 14.0 9% (KPNCPF 10.0 9.4 9.3 6% Finland and Norway. Electricity Sales buys its electricity from the Nordic power exchange. 0QTYC[ 2.5 2.3 2.3 9% Estonia 0.2 0.2 0.2 0% Change EUR million 2010 2009 2008 10/09 Total 27.9 25.9 25.8 8% Sales 1,798 1,449 1,922 24% RQYGTUCNGU 1,778 1,417 1,865 25% QVJGTUCNGU 20 32 57 –38% 1XPEHURIHOHFWULFLW\GLVWULEXWLRQFXVWRPHUVE\DUHD 1RGTCVKPIRTQƂV 46 29 –35 59% %QORCTCDNGQRGTCVKPIRTQƂV 11 22 –33 –50% Change Thousands 2010 2009 2008 10/09 0GVCUUGVU CVRGTKQFGPF 210 125 188 68% 5YGFGP 893 882 877 1% 4GVWTPQPPGVCUUGVU 38.4 28.9 –14.0 33% (KPNCPF 620 611 606 1% %QORCTCDNGTGVWTPQPPGVCUUGVU 9.3 18.6 –15.3 –50% 0QTYC[ 100 99 99 1% %CRKVCNGZRGPFKVWTGCPFITQUUKPXGUVOGPVUKPUJCTGU 0 13–100% Estonia 24 24 24 0% 0WODGTQHGORNQ[GGU 525 611 635 –14% Total 1,637 1,616 1,606 1% (OHFWULFLW\VDOHVYROXPHVLQWRWDOOHG7:K  7KHUHVWUXFWXULQJRI WKHXQSURğWDEOH%XVLQHVV0DUNHWVHJPHQWVWDUWHGLQ)HEUXDU\DQGKDVLPSDFWHG WKHVDOHVYROXPHRIWKH(OHFWULFLW\6DOHVEXVLQHVVDUHDIURPWKHIRXUWKTXDUWHURI VOLUME OF DISTRIBUTED ELECTRICITY BY AREA, NUMBER OF ELECTRICITY CUSTOMERS BY AREA, TWh THOUSANDS onwards. &ROGHUWKDQQRUPDOZHDWKHUFRQGLWLRQVDQGWKHORZK\GURVLWXDWLRQWKDWGURYHPDUNHW 30 2,000 VSRWSULFHVVLJQLğFDQWO\XSZHUHWKHPDLQUHDVRQVIRUWKHORZHUVDOHVPDUJLQV7KLV

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0 0 06 07 08 09 10 06 07 08 09 10 50 Other countries Estonia Finland Norway 40 Sweden Finland Sweden 30

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0 06 07 08 09 10 44 OPERATING AND FINANCIAL REVIEW FORTUM FINANCIALS 2010

4.45XVVLD 7KHQHZUXOHVIRUWKHORQJWHUPFDSDFLW\PDUNHWVWDUWLQJIURPKDYHEHHQDS- The Russia division consists of power and heat generation and sales in Russia. It SURYHGE\WKH5XVVLDQ*RYHUQPHQW7KHJHQHUDWLRQFDSDFLW\EXLOWDIWHUXQGHU includes OAO Fortum and Fortum’s over 25% holding in TGC-1 which is an associ- government capacity supply agreements (CSA) will receive guaranteed payments for a ated company and is accounted for using the equity method. SHULRGRI\HDUV3ULFHVIRUFDSDFLW\XQGHU&6$DUHGHğQHGLQRUGHUWRHQVXUHDVXIğ- cient return on investments. Capacity that is not under CSA will compete in competitive Change FDSDFLW\VHOHFWLRQ &&6 ,Q'HFHPEHUWKHğUVW&&6IRUWKH\HDUZDVKHOGLQ EUR million 2010 2009 2008 1) 10/09 Sales 804 632 489 27% DFFRUGDQFHZLWKWKHQHZUXOHVRIWKHORQJWHUPFDSDFLW\PDUNHW RQYGTUCNGU 505 390 332 29% 8SRQFRPSOHWLRQ2$2)RUWXPłVQHZFDSDFLW\ZLOOEHDNH\GULYHUIRUVROLGHDUQLQJV JGCVUCNGU 287 219 141 31% growth in Russia as it will bring income from new volumes sold and receive consider- QVJGTUCNGU 12 23 16 –48% ably higher capacity payments than the old capacity. The payments for new capacity '$+6&# 139 55 –24 153% ZLOOEHDSSUR[LPDWHO\ŋWLPHVKLJKHUWKDQWKHDYHUDJHSULFHIRUWKHROGFDSDFLW\7KH 1RGTCVKPIRTQƂV 53 –20 –91 365% %QORCTCDNGQRGTCVKPIRTQƂV 8 –20 –92 140% DYHUDJHSULFHRIROGFDSDFLW\LVH[SHFWHGWREHDSSUR[LPDWHO\58%0:PRQWK 0GVCUUGVU CVRGTKQFGPF 2,817 2,260 2,205 25% IRU2$2)RUWXP 4GVWTPQPPGVCUUGVU 2.4 0.0 –3.7 ,QOLJKWRIWKHUHFRYHULQJSRVWFULVHVGHPDQGDQGWKHGHYHORSPHQWRIWKH5XVVLDQ %QORCTCDNGTGVWTPQPPGVCUUGVU 0.7 0.0 –3.8 FDSDFLW\PDUNHW)RUWXPKDVDFFHOHUDWHGWKHVFKHGXOHRI2$2)RUWXPłVFRPPLWWHG %CRKVCNGZRGPFKVWTGCPFITQUUKPXGUVOGPVUKPUJCTGU 599 218 1,748 175% 0:LQYHVWPHQWSURJUDPPHVDQGSODQVWRFRPPLVVLRQWKHODVWQHZXQLWVLQ7KH 0WODGTQHGORNQ[GGU 4,294 4,855 7,262 –12% YDOXHRIWKHUHPDLQLQJSDUWRIWKHLQYHVWPHQWSURJUDPPHFDOFXODWHGDWWKHH[FKDQJH  &RQVROLGDWHGIURP0DUFK UDWHVSUHYDLOLQJDWWKHHQGRI'HFHPEHULVHVWLPDWHGWREHDSSUR[LPDWHO\(85 billion as of 1 January 2011. 2$2)RUWXPRSHUDWHVLQWKHZHOOGHYHORSHGLQGXVWULDOUHJLRQVRIWKH8UDOVDQGLQRLO ,Q'HFHPEHUDQHZXQLWZDVLQDXJXUDWHGDW)RUWXPłV7\XPHQ&+3SRZHU SURGXFLQJZHVWHUQ6LEHULDSRZHUVDOHVYROXPHVZHUH7:K  DQG SODQW7KHXQLWLVWKHğUVWRIWKHQHZXQLWVLQ)RUWXPłVH[WHQVLYHLQYHVWPHQWSURJUDPPH KHDWVDOHVYROXPHVZHUH7:K  'XULQJ2$2)RUWXPVROGRILWV LQ5XVVLDWKHğUVWXQLWLVHVWLPDWHGWREHLQFRPPHUFLDORSHUDWLRQGXULQJWKHğUVWKDOI power production at the liberalised electricity price. of 2011 and additional two units are estimated to start their commercial operation during mid-year 2011. .H\HOHFWULFLW\FDSDFLW\DQGJDVSULFHVIRU2$2)RUWXP 2$2)RUWXPłVHIğFLHQF\LPSURYHPHQWSURJUDPPHLVSURFHHGLQJDFFRUGLQJWRSODQV Change (IğFLHQF\LPSURYHPHQWVDUHH[SHFWHGWREHDSSUR[LPDWHO\(85PLOOLRQLQ 2010 2009 2008 10/09 FRPSDUHGWRWKHOHYHODWWKHDFTXLVLWLRQLQ 'NGEVTKEKV[URQVRTKEGU OCTMGVRTKEGU 7TCNUJWD47$/9J 835 633 672 32% #XGTCIGTGIWNCVGFGNGEVTKEKV[RTKEGHQT1#1(QTVWO47$/9J 614 533 475 15% $W\HDUHQGWKH5XVVLDGLYLVLRQłVWRWDOSRZHUJHQHUDWLQJFDSDFLW\ZDV  #XGTCIGTGIWNCVGFECRCEKV[RTKEG47$/9OQPVJ 169 187 168 –10%  PHJDZDWWV 0: $W\HDUHQGWKHGLYLVLRQłVWRWDOKHDWSURGXFWLRQFDSDFLW\ZDV #XGTCIGNKOKVICURTKEGKP7TCNUTGIKQP47$O3 2,221 1,781 1,560 25% 0:  

7KHGLYLVLRQłVFRPSDUDEOHRSHUDWLQJSURğWIRU-DQXDU\ŋ'HFHPEHUZDV(85 PLOOLRQ ŋ 7KHLPSURYHGUHVXOWZDVPDLQO\GXHWRKLJKHUHOHFWULFLW\PDUNHW SULFHVDQG2$2)RUWXPłVHIğFLHQF\LPSURYHPHQWSURJUDPPHZKLFKSURJUHVVHGZHOO 2$2)RUWXPłVEXVLQHVVLVW\SLFDOO\YHU\VHDVRQDO,WVUHVXOWVDUHXVXDOO\VWURQJHVW GXULQJWKHğUVWDQGWKHODVWTXDUWHUVRIWKH\HDU 7KH5XVVLDQZKROHVDOHSRZHUVHFWRUUHIRUPLVSURFHHGLQJ)URP-DQXDU\RQ- ZDUGVRIDOOSRZHUJHQHUDWHGLQ5XVVLDZDVVROGRQWKHFRPSHWLWLYHPDUNHW7KH VKDUHLQFUHDVHGWRDWWKHEHJLQQLQJRI-XO\DQGWKHZKROHVDOHSRZHUPDUNHW has been fully liberalised from the beginning of 2011. FORTUM FINANCIALS 2010 OPERATING AND FINANCIAL REVIEW 45

)RUWXPH[SHFWVWRVWDUWWKHVXSSO\RISRZHUDQGKHDWIURPQHZSRZHUSODQWVDQG 5 &DSLWDOH[SHQGLWXUHLQYHVWPHQWV  XSJUDGHH[LVWLQJRQHVDVIROORZV divestments of shares Electricity MW Heat MW Type Capacity Capacity Supply starts 1) EUR million 2010 2009 2008 Heat Capital expenditure -NCKRGFC.KVJWCPKC 9CUVG %*2 20 60 2012 Intangible assets 19 20 24 Power 2TQRGTV[RNCPVCPFGSWKROGPV 1,203 842 1,084 *[FTQTGHWTDKUJOGPV *[FTQRQYGT 10–20 2011 Total 1,222 862 1,108 Russia 6[WOGP )CU %%)6 231 * Gross investments in shares 6QDQNUM )CU 5622 200 /KF 5WDUKFKCTKGU 0 81,506 %JGN[CDKPUM )CU %%)6 226 /KF #UUQEKCVGFEQORCPKGU 26 58 8 0[CICP )CU %%)6 418 2012 #XCKNCDNGHQTUCNGƂPCPEKCNCUUGVU 1 120[CICP )CU %%)6 418 2012 Total 27 67 1,516  6WDUWRIFRPPHUFLDORSHUDWLRQSUHFHGHGE\WHVWUXQVOLFHQVLQJHWF &DSLWDOH[SHQGLWXUHVDQGLQYHVWPHQWVLQVKDUHVLQWRWDOOHG(85PLOOLRQ  ,QYHVWPHQWVH[FOXGLQJDFTXLVLWLRQVZHUH(85PLOOLRQ   5.1 Power ,Q$XJXVW)RUWXPDQQRXQFHGWKDWLWZLOODFTXLUHDVWDNHLQWKH%ODLNHQZLQG CAPITAL EXPENDITURE AND GROSS INVESTMENTS CAPITAL EXPENDITURE BY AREA, EUR million SRZHUSURMHFWLQ6ZHGHQ7KHUHPDLQLQJLVKHOGE\WKH6ZHGLVKHQHUJ\FRPSDQ\ IN SHARES, EUR million 6NHOOHIWHÆ.UDIW)RUWXPDQG6NHOOHIWHÆ.UDIWłVMRLQWYHQWXUH%ODLNHQ9LQG$%LVSODQ- Estonia Norway QLQJWRVWDUWFRQVWUXFWLRQRIDZLQGIDUPLQWKH%ODLNHQUHJLRQLQQRUWKHUQ6ZHGHQ 3,000 Poland 53 15 Finland 45 190 7KHZLQGIDUPZLOOKDYHDPD[LPXPRIZLQGWXUELQHVZLWKDWRWDOFDSDFLW\RI 2,500 Other European 0:DQGDQHVWLPDWHGDQQXDOSURGXFWLRQRIŋJLJDZDWWKRXUV *:K $FFRUGLQJ 2,000 Countries WRWKHSODQWKHZLQGIDUPZLOOEHEXLOWLQSKDVHVZLWKFRQVWUXFWLRQWREHJLQLQ 20 1,500 DQGWREHFRPSOHWHGLQ)RUWXPłVVKDUHRIWKHWRWDOLQYHVWPHQWGXULQJWKHSURMHFW Sweden ZLOODPRXQWWRDPD[LPXPRI(85PLOOLRQ 1,000 300 7KH)LQQLVK*RYHUQPHQWJDYHDQHJDWLYHGHFLVLRQLQSULQFLSOHRQ)RUWXPłVDSSOLFD- 500 Russia WLRQFRQFHUQLQJWKHFRQVWUXFWLRQRIDQHZQXFOHDUSRZHUSODQWXQLW/RYLLVD)RUWXP 599 0 LVDOVRZLWKDQDSSUR[LPDWHO\LQWHUHVWDVKDUHKROGHULQ7HROOLVXXGHQ9RLPD2\M 06 07 08 09 10 792 ZKRVHGHFLVLRQLQSULQFLSOHDSSOLFDWLRQIRUDQHZQXFOHDUSRZHUSODQWXQLW Investments in shares 2ONLOXRWRZDVDSSURYHGE\WKH)LQQLVK*RYHUQPHQWDQGUDWLğHGE\WKH)LQQLVK Capital expenditure 3DUOLDPHQW)RUWXPLVLQYROYHGLQWKHSURMHFWGHYHORSPHQW 7KURXJKLWVLQWHUHVWLQ792)RUWXPLVSDUWLFLSDWLQJLQWKHEXLOGLQJRI2ONLOXRWRD 0:QXFOHDUSRZHUSODQWXQLWLQ)LQODQG7KH$5(9$6LHPHQV&RQVRUWLXP792łV WXUQNH\VXSSOLHURI2ONLOXRWRUHSRUWHGWKDWPRVWRIWKHZRUNVZLOOEHFRPSOHWHGLQ 7KH6XSSOLHULQGLFDWHGWKDWFRPPLVVLRQLQJZLOOWDNHHLJKWPRQWKVZKLFKPHDQV UHJXODURSHUDWLRQZLOOVWDUWGXULQJWKHODWWHUKDOIRI ,Q6HSWHPEHU)RUWXPGLYHVWHGLWVVKDUHLQWKH)LQQLVKZLQGSRZHUSURGXFHU +\ùW\WXXOL2\ 46 OPERATING AND FINANCIAL REVIEW FORTUM FINANCIALS 2010

5.2+HDW ,QDGGLWLRQ)RUWXPGLYHVWHGDSSUR[LPDWHO\VPDOOKHDWLQJSODQWVGXULQJ7KH ,Q-DQXDU\)RUWXPDFTXLUHGWKH&+3SODQWLQ1RNLD)LQODQG7KHSODQWłVFDSDFLW\ divestments had a minor impact on results. LVDURXQG0:KHDWDQG0:HOHFWULFLW\ The investments and divestments are part of the renewed strategy to focus on the ,Q)HEUXDU\)RUWXPGHFLGHGWRLQYHVWLQDQHZZDVWHIXHOOHG&+3SODQWLQ.ODL- GHYHORSPHQWRI&+3SURGXFWLRQ SHGD/LWKXDQLD7KHYDOXHRIWKHLQYHVWPHQWDPRXQWVWRDSSUR[LPDWHO\(85PLOOLRQ $FFRUGLQJWRSODQWKHSRZHUSODQWZLOOEHUHDG\IRUSURGXFWLRQE\WKHHQGRIDQG 5.3'LVWULEXWLRQ it will use municipal and industrial waste and biomass as fuels. The plant’s production ,QHDUO\)HEUXDU\)RUWXPVROGLWVVKDUHKROGLQJLQ.DUOVNRJD(QHUJL 0LOMù FDSDFLW\ZLOOEHDSSUR[LPDWHO\0:KHDWDQG0:HOHFWULFLW\ LQ6ZHGHQWRWKH.DUOVNRJDPXQLFLSDOLW\IRUDSSUR[LPDWHO\(85PLOOLRQ7KHVDOHV 7KHVDOHRI)RUWXPłVVKDUHVLQWKH6ZHGLVKJDVWUDQVPLVVLRQFRPSDQ\6ZHGHJDV$% JDLQZDVLQFOXGHGLQWKHğUVWTXDUWHUQRQUHFXUULQJLWHPV ZDVFORVHGLQ)HEUXDU\7KHJDLQIURPWKHVDOHZDVLQFOXGHGLQWKHğUVWTXDUWHUQRQ recurring items. 5.45XVVLD ,Q 6HSWHPEHU  )RUWXP LQDXJXUDWHG D &+3 SODQW LQ 3RODQG LQ WKH FLW\ RI ,Q'HFHPEHU)RUWXPLQDXJXUDWHGDQHZXQLWDWLWVFRPELQHGKHDWDQGSRZHU &]ÙVWRFKRZD&RPPHUFLDORSHUDWLRQVWDUWHGGXULQJWKHIRXUWKTXDUWHU7KHSODQWLV SODQW7\XPHQ&+3LQWKHFLW\RI7\XPHQLQ:HVWHUQ6LEHULD7KHQHZXQLWZDVWKH IXHOOHGE\ELRPDVV DURXQG DQGFRDO7KHWRWDOYDOXHRIWKHLQYHVWPHQWZDVDERXW ğUVWRIVHYHQXQLWVLQ)RUWXPłVH[WHQVLYHLQYHVWPHQWSURJUDPPHLQ5XVVLDWKHXQLW (85PLOOLRQ7KHQHZ&]ÙVWRFKRZD&+3SODQWKDVDKHDWSURGXFWLRQFDSDFLW\RI LVHVWLPDWHGWREHJLQLWVFRPPHUFLDORSHUDWLRQGXULQJWKHğUVWKDOIRI 0:DQGDQHOHFWULFLW\SURGXFWLRQFDSDFLW\RI0: )RUWXPVROGLWVVKDUHVLQ)HGHUDO*ULG&RPSDQ\ )RUWXPłVRZQHUVKLSZDV  $OVR)RUWXPłVQHZ&+3SODQWLQ3ÃUQX(VWRQLDZDVV\QFKURQLVHGWRWKHJULGLQ6HS- DQGLQ.XUJDQ*HQHUDWLQJ&RPSDQ\ RIWKHYRWLQJULJKWV LQ5XVVLDGXULQJWKHğUVW WHPEHU&RPPHUFLDORSHUDWLRQVWDUWHGGXULQJWKHIRXUWKTXDUWHU7KHWRWDOYDOXHRI TXDUWHURI7KHVDOHVJDLQVZHUHLQFOXGHGLQWKHğUVWTXDUWHUQRQUHFXUULQJLWHPV WKHLQYHVWPHQWZDVDURXQG(85PLOOLRQ7KHSURGXFWLRQFDSDFLW\RIWKHELRPDVVDQG )RUWXPGLYHVWHGLWVDSSUR[LPDWHO\KROGLQJLQMRLQWVWRFNFRPSDQ\6DLQW3HWHUV- SHDWğUHGSRZHUSODQWLV0:KHDWDQG0:HOHFWULFLW\ EXUJ6DOH&RPSDQ\ -6&66& WRWKH5XVVLDQ,17(55$28(67KHVDOHVJDLQZDVLQFOXGHG ,Q2FWREHU)RUWXPVWDUWHGWREXLOGDQHZZDVWHWRHQHUJ\&+3XQLWLQ%ULVWD6ZH- LQWKHWKLUGTXDUWHUQRQUHFXUULQJLWHPV GHQZKHUHLWZLOOEHSDUWRIWKH6WRFNKROPUHJLRQGLVWULFWKHDWLQJV\VWHP7KHYDOXHRI WKHLQYHVWPHQWLVDERXW(85PLOOLRQDQGFRPSOHWLRQRIWKHQHZSURGXFWLRQXQLW 5.52WKHU LVSODQQHGIRU7KHHVWLPDWHGFDSDFLW\RIWKHXQLWLV0:KHDWDQG0:HOHF- ,Q'HFHPEHU)RUWXPłVDVVRFLDWHGFRPSDQ\+DIVOXQG$6$RZQHUVKLS WULFLW\7KHSODQWZLOOEHFRRZQHGZLWK6ROOHQWXQD(QHUJLWKHHQHUJ\FRPSDQ\RIWKH DQQRXQFHGWKHVDOHRIVKDUHVLQLWVIXOO\RZQHGVXEVLGLDU\+DIVOXQG)LEHUQHWW$6IRUD nearby Sollentuna municipality. VDOHVSULFHRI12.PLOOLRQ DSSUR[(85PLOOLRQ +DIVOXQGZLOOERRNDJDLQ ,Q1RYHPEHU)RUWXPVLJQHGDQDJUHHPHQWWRDFTXLUHWZR3ROLVKSRZHUDQGKHDW RIDSSUR[LPDWHO\12.PLOOLRQ DSSUR[(85PLOOLRQ &RQVHTXHQWO\)RUWXP FRPSDQLHVIURPWKH3ROLVKVWDWH7KHFRPSDQLHVZHUHVROGDVSDUWRIWKHSULYDWLVDWLRQ ZLOOERRNDJDLQRIURXJKO\(85PLOOLRQFRUUHVSRQGLQJWRDSSUR[LPDWHO\(85 RIWKHSRZHUDQGKHDWVHFWRULQ3RODQG7KHDFTXLVLWLRQVLJQLğFDQWO\LQFUHDVHV)RUWXPłV SHUVKDUH7KHJDLQZLOOEHERRNHGLQWKHğUVWTXDUWHURIDVSURğWIURPDVVRFL- SRZHUSURGXFWLRQFDSDFLW\LQ3RODQG7KHLQYHVWPHQWDPRXQWHGWRDSSUR[LPDWHO\(85 ated companies. PLOOLRQDQGWKHğQDOFORVLQJRIWKHDFTXLVLWLRQZDVPDGHDIWHUWKH\HDUHQGRQ January 2011. ,Q'HFHPEHU)RUWXPDQG0DFTXDULHPDQDJHGIXQGVVLJQHGDQDJUHHPHQWZKHUHE\ )RUWXPZLOOGLYHVWLWVGLVWULFWKHDWRSHUDWLRQVDQGKHDWSURGXFWLRQIDFLOLWLHVRXWVLGHWKH 6WRFNKROPDUHDLQ6ZHGHQ7KHVDOHVSULFHLVDSSUR[LPDWHO\(85PLOOLRQ)RUWXP H[SHFWVWRğQDOLVHWKHGLYHVWPHQWGXULQJWKHğUVWTXDUWHURI ,Q'HFHPEHU)RUWXPLQFROODERUDWLRQZLWKWKH1DDQWDOL5DLVLRDQG.DDULQDPXQLFL- SDOLWLHVDQG7XUNX(QHUJLDVLJQHGDOHWWHURILQWHQWRQFRQVROLGDWLQJHQHUJ\SURGXFWLRQ LQWKH7XUNXDUHDWRRQHFRRZQHGSURGXFWLRQFRPSDQ\7XUXQ6HXGXQ0DDNDDVXMD (QHUJLDQWXRWDQWR 760( )RUWXPZLOOSURYLGHHQHUJ\SURGXFWLRQVHUYLFHVWR760( 7KHGLVWULFWKHDWSURGXFHGZLOOEHVROGWR7XUNX(QHUJLDWKHVWHDPWR)RUWXPDQGWKH HOHFWULFLW\WR760(VKDUHKROGHUV)RUWXPZLOORZQRI760( FORTUM FINANCIALS 2010 OPERATING AND FINANCIAL REVIEW 47

6 )LQDQFLQJ 7 Employees 7KHQXPEHURIHPSOR\HHVDWWKHHQGRIZDV  RIZKLFK Change EUR million 2010 2009 2008 10/09  ZHUHSHUPDQHQWHPSOR\HHV +PVGTGUVGZRGPUG –197 –241 –351 –18% 7KHQXPEHURIHPSOR\HHVLQWKHSDUHQWFRPSDQ\)RUWXP2\MZDVDWWKHHQGRI Interest income 72 98 143 –27%    (CKTXCNWGICKPUCPFNQUUGU 12 –1 –11 1,300% 1VJGTƂPCPEKCNGZRGPUGU –42 –23 –20 83% 2010 2009 2008 Finance costs - net –155 –167 –239 –7% 0WODGTQHGORNQ[GGU&GE 10,585 11,613 15,579 #XGTCIGPWODGTQHGORNQ[GGU 11,156 13,278 14,077 Interest-bearing liabilities 7,382 6,859 7,500 8% 6QVCNCOQWPVQHGORNQ[GGEQUVU'74OKNNKQP 507 495 587 .GUU.KSWKFHWPFU 556 890 1,321 –38% Interest-bearing net debt 6,826 5,969 6,179 14% )RUIXUWKHUGHWDLOVRIJURXSSHUVRQQHOVHH1RWH(PSOR\HHFRVWVDQGPDQDJHPHQWUHPXQHUD- WLRQRQSDJHRIWKH&RQVROLGDWHG)LQDQFLDO6WDWHPHQWV 1HWGHEWLQFUHDVHGGXULQJWKH\HDUE\(85PLOOLRQWR(85PLOOLRQ   7KHLQFUHDVHLQQHWGHEWGXULQJWKH\HDULVPDLQO\OLQNHGWRWKHVWURQJHU6(. NUMBER OF EMPLOYEES EMPLOYEES BY AREA and translation of SEK-denominated debt in the Group. 7RWDOOLTXLGIXQGVGHFUHDVHGE\(85PLOOLRQWR(85PLOOLRQ  /LT- Other countries XLGIXQGVLQFOXGHFDVKDQGEDQNGHSRVLWVKHOGE\2$2)RUWXPDQGDPRXQWVWR(85 16,000 310 Finland PLOOLRQ  ,QDGGLWLRQWRWKHOLTXLGIXQGV)RUWXPKDGDFFHVVWRDSSUR[LPDWHO\ 2,609 (85ELOOLRQRIXQGUDZQFRPPLWWHGFUHGLWIDFLOLWLHV 12,000 7KH*URXSłVQHWğQDQFLDOH[SHQVHVZHUH(85PLOOLRQ  7KHGHFUHDVH Russia is mainly attributable to lower average interest rates in 2010 compared to the previous 8,000 4,289 \HDU1HWğQDQFLDOH[SHQVHVLQFOXGHFKDQJHVLQWKHIDLUYDOXHRIğQDQFLDOLQVWUXPHQWV 4,000 RI(85PLOOLRQ ŋ 1HWGHEWWR(%,7'$IRUWKH\HDUZDV   )RUWXP&RUSRUDWLRQłVORQJWHUPFUHGLWUDWLQJIURP0RRG\łVDQG6WDQGDUGDQG3RRUłV Sweden 0 Norway 2,257 ZDV$ VWDEOH DQG$ VWDEOH UHVSHFWLYHO\ 06 07 08 09 10 137 Estonia Poland 350 633 )RUIXUWKHUGHWDLOVDERXWğQDQFLQJVHH1RWH)LQDQFLDOULVNPDQDJHPHQWRQSDJH

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2.3.3(QYLURQPHQWDOKHDOWKDQGVDIHW\ULVNV Operating power and heat generation and electricity distribution facilities involves WKHXVHVWRUDJHDQGWUDQVSRUWDWLRQRIIXHOVDQGPDWHULDOVWKDWFDQKDYHDGYHUVHHIIHFWV RQWKHHQYLURQPHQW7KHULVNVLQYROYHGZLWKWKHVHDFWLYLWLHVDQGWKHLUVXSSO\FKDLQ are receiving increased attention due to the growing public awareness of sustainable GHYHORSPHQWDQGWKHH[SHFWDWLRQVRQFRPSDQLHVłUHVSRQVLEOHFRQGXFW2SHUDWLRQDQG PDLQWHQDQFHRIWKHIDFLOLWLHVH[SRVHWKHSHUVRQQHOWRSRWHQWLDOVDIHW\ULVNV(QYLURQPHQ- WDOKHDOWKDQGVDIHW\ (+6 ULVNVDUHUHJXODUO\HYDOXDWHGWKURXJKLQWHUQDODQGH[WHUQDO DXGLWVDQGULVNDVVHVVPHQWVDQGFRUUHFWLYHDQGSUHYHQWLYHDFWLRQVDUHODXQFKHGZKHQ QHFHVVDU\(+6UHODWHGULVNVDULVLQJLQLQYHVWPHQWVDUHV\VWHPDWLFDOO\HYDOXDWHGLQDF- FRUGDQFHZLWK)RUWXPłV,QYHVWPHQW(YDOXDWLRQDQG$SSURYDO3URFHGXUH FORTUM FINANCIALS 2010 OPERATING AND FINANCIAL REVIEW 57

7KH)RUWXPVKDUHDQGVKDUHKROGHUV SHARE QUOTATIONS 2006–2010, Index 100 = quote on 2 January 2006 Fortum Corporation’s shares have been listed on NASDAQ OMX Helsinki since 18 December 1998. The trading code is FUM1V. Fortum Corporation’s shares are in 250 250 the Finnish book entry system maintained by Euroclear Finland Ltd which also 200 200 OCKPVCKPUVJGQHƂEKCNUJCTGTGIKUVGTQH(QTVWO%QTRQTCVKQP 150 150 6KDUHNH\ğJXUHV 100 100 EUR 2010 2009 2008 'CTPKPIURGTUJCTG 1.46 1.48 1.74 50 50 %CUJƃQYRGTUJCTG 1.62 2.55 2.26 'SWKV[RGTUJCTG 9.24 9.04 8.96 0 0 06 07 08 09 10 &KXKFGPFRGTUJCTG 1.00 1) 1.00 1.00 2C[QWVTCVKQ 68.5 1) 67.6 57.5 Fortum &KXKFGPF[KGNF 4.4 1) 5.3 6.6 DJ European Utilities OMX HKI CAP

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SHARE PRICE PERFORMANCE, EUR Participation in 243 MEUR EUR share issue in TGC-1 35 35 E.ON Finland Acquisition of TGC-10 (Changed acquisition name to OAO Fortum) EUR 2.5 bn 713 MEUR Sale of Russian Lenenergo 30 stake for 30 Acquisition 295 MEUR of Wroclaw 120 MEUR Increase in Lenenergo stake

25 Ministry of 25 Trade and Industry Ministry of Trade sells down and Industry sells to 51.7% down to 61% 20 20 Sale of Norwegian Dividending E&P for $1.1 bn out and sale of Neste Oil shares Asset swap worth 800 market value 15 MEUR gaining share- 3.8 bn EUR 15 Sale of Fortum Energie holdings in Hafslund GmbH 545 MEUR and Lenenergo

Birka acquisi- Increase in 10 10 tion remaining Hafslund 50% 3.6 bn EUR stake to 31%

Acquisition of Stora Enso power generation assets 5 1.9 bn EUR 5

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Number of shares Share capital, EUR 3 Share capital 5WDUETKRVKQPUYKVJQRVKQPUKP )RUWXPKDVRQHFODVVRIVKDUHV%\WKHHQGRIDWRWDORIVKDUHVKDG DQPFNQCPYKVJYCTTCPVU 1,284,370 4,366,858 OCPCIGOGPVUJCTGQRVKQPUEJGOG 1,698,000 5,773,200 EHHQLVVXHG7KHQRPLQDOYDOXHRIWKHVKDUHLV(85DQGHDFKVKDUHHQWLWOHVWKH #UJCTGQRVKQPUUEJGOG 1,636,350 5,563,590 KROGHUWRRQHYRWHDWWKH$QQXDO*HQHUDO0HHWLQJ$OOVKDUHVHQWLWOHKROGHUVWRDQHTXDO #UJCTGQRVKQPUUEJGOG 3,591,400 12,210,760 GLYLGHQG$WWKHHQGRI)RUWXP&RUSRUDWLRQłVVKDUHFDSLWDOSDLGLQLWVHQWLUHW\ 31 December 2005 875,294,025 2,975,999,685 DQGHQWHUHGLQWKHWUDGHUHJLVWHUZDV(85 7KHUHJLVWHUHGVKDUHFDSLWDOH[FHHGVWKHDJJUHJDWHQRPLQDOYDOXHRIWKHLVVXHGVKDUHV 5WDUETKRVKQPUYKVJQRVKQPUKP GXHWRWKHFDQFHOODWLRQVRIWKHFRPSDQ\łVRZQVKDUHVLQDQG LQWRWDO  #UJCTGQRVKQPUUEJGOG 3,026,200 10,289,080 $UJCTGQRVKQPUUEJGOG 5,360,133 18,224,452 without decreasing the share capital. #UJCTGQRVKQPUUEJGOG 516,800 1,757,120 $UJCTGQRVKQPUUEJGOG 4,856,488 16,512,059 6KDUHFDSLWDOŋ %CPEGNNCVKQPQHQYPUJCTGU –1,660,000 - Number of shares Share capital, EUR 31 December 2006 887,393,646 3,022,782,396 (QTVWOGUVCDNKUJGFQP(GDTWCT[ 500,000 1,681,879 4KIJVUKUUWGKP 782,282,635 2,631,409,886 5WDUETKRVKQPUYKVJQRVKQPUKP 'ORNQ[GGKUUWGKP 2,000,000 6,727,517 #UJCTGQRVKQPUUEJGOG 274,920 934,728 31 December 1998 784,782,635 2,639,819,282 $UJCTGQRVKQPUUEJGOG 1,339,867 4,555,548 #UJCTGQRVKQPUUEJGOG 122,100 415,140 31 December 1999 784,782,635 2,639,819,282 $UJCTGQRVKQPUUEJGOG 3,462,525 11,772,585 %CPEGNNCVKQPQHQYPUJCTGU –5,910,000, - 5ETKRVKUUWGKP - 28,441,677 31 December 2007 886,683,058 3,040,460,397 4KIJVUKUUWGKP 60,825,940 206,808,196 31 December 2000 845,608,575 2,875,069,155 5WDUETKRVKQPUYKVJQRVKQPUKP $UJCTGQRVKQPUUEJGOG 955,022 3,247,075 31 December 2001 845,608,575 2,875,069,155 31 December 2008 887,638,080 3,043,707,472

5WDUETKRVKQPUYKVJQRVKQPUKP 5WDUETKRVKQPUYKVJQRVKQPUKP DQPFNQCPYKVJYCTTCPVU 148,380 504,492 $UJCTGQRVKQPUUEJGOG 728,965 2,478,481 OCPCIGOGPVUJCTGQRVKQPUEJGOG 3,000 10,200 31 December 2009 888,367,045 3,046,185,953 31 December 2002 845,759,955 2,875,583,847 31 December 2010 888,367,045 3,046,185,953 5WDUETKRVKQPUYKVJQRVKQPUKP DQPFNQCPYKVJYCTTCPVU 159,520 542,368 OCPCIGOGPVUJCTGQRVKQPUEJGOG 2,913,000 9,904,200 SHARE CAPITAL 1998–2010 31 December 2003 848,832,475 2,886,030,415 EUR million million shares 5WDUETKRVKQPUYKVJQRVKQPUKP 3,500 3,500 DQPFNQCPYKVJYCTTCPVU 4,560,730 15,506,482 3,000 3,000 OCPCIGOGPVUJCTGQRVKQPUEJGOG 7,154,000 24,323,600 2,500 2,500 #UJCTGQRVKQPUUEJGOGHQTMG[GORNQ[GGU 6,536,700 22,224,780 2,000 2,000 31 December 2004 867,083,905 2,948,085,277 1,500 1,500

1,000 1,000

500 500

0 0 98 99 00 01 02 03 04 05 06 07 08 09 10 Share capital Number of shares 60 OPERATING AND FINANCIAL REVIEW FORTUM FINANCIALS 2010

%UHDNGRZQRIVKDUHRZQHUVKLS'HFHPEHU 4 Shareholders No. of % of % of total $WWKHHQGRIWKH)LQQLVK6WDWHRZQHGRIWKHFRPSDQ\łVVKDUHV7KH)LQQ- By number of shares owned sharholders shareholders No. of shares amount of shares 1–100 23,767 24.25 1,452,739 0.16 LVK3DUOLDPHQWKDVDXWKRULVHGWKH*RYHUQPHQWWRUHGXFHWKH)LQQLVK6WDWHłVKROGLQJLQ 101–500 40,904 41.74 10,977,346 1.24 )RUWXP&RUSRUDWLRQWRQROHVVWKDQRIWKHVKDUHFDSLWDODQGYRWLQJULJKWV 501–1,000 17,582 17.94 12,587,920 1.42 The proportion of nominee registrations and direct foreign shareholders decreased 1,001–10,000 14,793 15.10 37,046,498 4.17 WR   10,001–100,000 839 0.86 20,333,770 2.29 100,001–1,000,000 88 0.09 29,502,657 3.32 6KDUHKROGHUV'HFHPEHU 1,000,001–10,000,000 18 0.02 50,466,956 5.68 QXGT 2 0.00 464,889,238 52.33 Shareholders No. of shares Holding % 97,993 100.00 627,257,124 70.61 (KPPKUJ5VCVG 450,932,988 50.76 7PTGIKUVGTGFWPENGCTGF +NOCTKPGP/WVWCN2GPUKQP+PUWTCPEG%QORCP[ 13,956,250 1.57 VTCPUCEVKQPUQP&GEGODGT 75,696 0.01 8CTOC/WVWCN2GPUKQP+PUWTCPEG%QORCP[ 8,894,843 1.00 Nominee registrations 261,034,225 29.38 6JG5QEKCN+PUWTCPEG+PUVKVWVKQPQH(KPNCPF-'.# 7,195,896 0.81 Total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of the total shares in the company. 1VJGTUJCTGJQNFGTUKPVQVCN 113,988,569 12.83 $IXOOGHVFULSWLRQRI)RUWXPłVORQJWHUPLQFHQWLYHVFKHPHVLVVKRZQLQ1RWH(PSOR\HHERQXV Total number of shares 888,367,045 100.00 V\VWHPSHUVRQQHOIXQGDQGLQFHQWLYHVFKHPHVRQSDJH6HHDOVR1RWH(PSOR\HHFRVWVDQG PDQDJHPHQWUHPXQHUDWLRQIRUGHWDLOVRQWKH3UHVLGHQWDQG&(2DQGRWKHUPHPEHUVRIWKH)RUWXP By shareholder category % of total amount of shares 0DQDJHPHQW7HDPłVVKDUHKROGLQJVDQGLQWHUHVWVLQORQJWHUPLQFHQWLYHVFKHPHVRQSDJH (KPPKUJUJCTGJQNFGTU Corporations 1.34 (KPCPEKCNCPFKPUWTCPEGKPUVKVWVKQPU 2.63 )GPGTCNIQXGTPOGPV 56.80 6 Authorisations from the Annual 0QPRTQƂVQTICPKUCVKQPU 1.60 *QWUGJQNFU 7.39 General Meeting 2010 0QP(KPPKUJUJCTGJQNFGTU 30.24 &XUUHQWO\WKH%RDUGRI'LUHFWRUVKDVQRXQXVHGDXWKRULVDWLRQVIURPWKH$QQXDO*HQHUDO Total 100.00 0HHWLQJRI6KDUHKROGHUVWRLVVXHFRQYHUWLEOHORDQVRUERQGVZLWKZDUUDQWVWRLVVXH QHZVKDUHVRUWREX\)RUWXP&RUSRUDWLRQłVRZQVKDUHV FORTUM FINANCIALS 2010 OPERATING AND FINANCIAL REVIEW 61

7 Dividend policy )RUWXPłVDFWLYLWLHVLQFDSLWDOPDUNHWVGXULQJ )RUWXP&RUSRUDWLRQłVGLYLGHQGSROLF\VWDWHVWKDWWKHFRPSDQ\DLPVWRSD\DGLYLGHQG )RUWXPłV,QYHVWRU5HODWLRQV ,5 DFWLYLWLHVFRYHUHTXLW\DQGğ[HGLQFRPHPDU- ZKLFKFRUUHVSRQGVWRDQDYHUDJHSD\RXWUDWLRRIWR NHWVWRHQVXUHIXOODQGIDLUYDOXDWLRQRIWKH&RPSDQ\łVVKDUHVDFFHVVWRIXQGLQJ VRXUFHVDQGVWDEOHERQGSULFLQJ,QYHVWRUVDQGDQDO\VWVSULPDULO\LQ(XURSHDQG North America are met on a regular basis. 8 Dividend distribution proposal ,Q)RUWXPPHWDSSUR[LPDWHO\SURIHVVLRQDOHTXLW\LQYHVWRUVLQGLYLGX- DOO\RULQJURXSPHHWLQJVZKLOVWPDLQWDLQLQJUHJXODUFRQWDFWZLWKHTXLW\UHVHDUFK 7KHSDUHQWFRPSDQ\łVGLVWULEXWDEOHHTXLW\DVRI'HFHPEHUDPRXQWHGWR(85 DQDO\VWVDWLQYHVWPHQWEDQNVDQGEURNHUDJHğUPV,QDGGLWLRQVLWHYLVLWVZHUH $IWHUWKHHQGRIWKHğQDQFLDOSHULRGWKHUHKDYHEHHQQRPDWHULDO DUUDQJHGIRUPHPEHUVRIWKHLQYHVWPHQWFRPPXQLW\'XULQJWKH\HDU,5DQG FKDQJHVLQWKHğQDQFLDOSRVLWLRQRIWKH&RPSDQ\ VHQLRUPDQDJHPHQWJDYHDSSUR[LPDWHO\SUHVHQWDWLRQVDWLQYHVWRUFRQIHUHQFHV 7KH%RDUGRI'LUHFWRUVSURSRVHVWRWKH$QQXDO*HQHUDO0HHWLQJWKDW)RUWXP&RUSRUD- LQ6FDQGLQDYLDWKH8QLWHG.LQJGRPDQG1RUWK$PHULFD WLRQSD\DFDVKGLYLGHQGRI(85SHUVKDUHIRUWRWDOOLQJ(85PLOOLRQEDVHG RQWKHQXPEHURIUHJLVWHUHGVKDUHVDVRI)HEUXDU\7KH$QQXDO*HQHUDO0HHWLQJ ZLOOEHKHOGRQ0DUFKDWSPDW)LQODQGLD+DOOLQ+HOVLQNL

EARNINGS PER SHARE, EUR DIVIDEND PER SHARE, EUR

1.8 1.6

1.5 1.2 1.2

0.9 0.8

0.6 0.4 0.3

0 0 06 07 08 09 10 06 07 08 09 101)

Additional dividend 2006 and 2007

1) Board of Directors’ proposal for the Annual General Meeting in March 2011. 62 FORTUM FINANCIALS 2010 &RQVROLGDWHGğQDQFLDOVWDWHPHQWV

Consolidated income statement

EUR million Note 2010 2009 EUR million 2010 2009 Sales 5 6,296 5,435 %QORCTCDNGQRGTCVKPIRTQƂV 1,833 1,888 Other income 10 108 84 0QPTGEWTTKPIKVGOU UCNGUICKPU 93 29 Materials and services 11 –2,846 –2,027 %JCPIGUKPHCKTXCNWGUQHFGTKXCVKXGUJGFIKPIHWVWTGECUJƃQY –216 –76 'ORNQ[GGDGPGƂVEQUVU 13 –507 –495 0WENGCTHWPFCFLWUVOGPV –2 –59 Depreciation, amortisation and impairment charges 5, 14 –563 –510 1RGTCVKPIRTQƂV 1,708 1,782 Other expenses 12 –655 –599 %QORCTCDNGQRGTCVKPIRTQƂV 5 1,833 1,888 Items affecting comparability 6, 7 –125 –106 1RGTCVKPIRTQƂV 5 1,708 1,782 5JCTGQHRTQƂVQHCUUQEKCVGUCPFLQKPVXGPVWTGU 5, 23 62 21 +LJKHUFRQWULEXWLRQIURP+DIVOXQG$6$(85PLOOLRQRIWKHLQFUHDVH Interest expense 15 –197 –241 Interest income 15 72 98 (CKTXCNWGICKPUCPFNQUUGUQPƂPCPEKCNKPUVTWOGPVU 7, 15 12 –1 1VJGTƂPCPEKCNGZRGPUGUPGV 15 –42 –23 (KPCPEGEQUVUPGV 15 –155 –167 'HFUHDVHPDLQO\GXHWRORZHUDYHUDJHLQWHUHVWUDWHV  IRUGHEW LQFOXGLQJGHULYDWLYHV 2TQƂVDGHQTGKPEQOGVCZ 1,615 1,636 Income tax expense 16 –261 –285 2TQƂVHQTVJGRGTKQF 1,354 1,351

SALES BY SEGMENT, % SALES BY COUNTRY, % Attributable to: Owners of the parent 1,300 1,312 Other Other Estonia countries 0QPEQPVTQNNKPIKPVGTGUVU 54 39 Russia 1 1 3 1,354 1,351 10 Norway 3 Poland 3 Power Russia Finland 'CTPKPIURGTUJCTG KP'74RGTUJCTG 17 33 13 31 Basic 1.46 1.48 Electricity &KNWVGF 1.46 1.48 Sales 22

Distribution 12 Heat Sweden 22 46 FORTUM FINANCIALS 2010 CONSOLIDATED FINANCIAL STATEMENTS 63

&RPSRQHQWVRI&RQVROLGDWHGVWDWHPHQWRIFRPSUHKHQVLYHLQFRPH 2&,  DUHLWHPVRILQFRPHDQGH[SHQVHWKDWDUHUHFRJQLVHGLQHTXLW\DQGQRW UHFRJQLVHGLQWKH&RQVROLGDWHGLQFRPHVWDWHPHQW7KH\LQFOXGHXQUHDO- Consolidated statement of LVHGLWHPVVXFKDVIDLUYDOXHJDLQVDQGORVVHVRQğQDQFLDOLQVWUXPHQWV KHGJLQJIXWXUHFDVKĠRZV7KHVHLWHPVZLOOEHUHDOLVHGLQWKH&RQVROLGDWHG comprehensive income LQFRPHVWDWHPHQWZKHQWKHXQGHUO\LQJKHGJHGLWHPLVUHFRJQLVHG2&, DOVRLQFOXGHVJDLQVDQGORVVHVRQIDLUYDOXDWLRQRQDYDLODEOHIRUVDOHğ- EUR million 2010 2009 QDQFLDODVVHWVLWHPVLQFRPSUHKHQVLYHLQFRPHLQDVVRFLDWHGFRPSDQLHV 2TQƂVHQTVJGRGTKQF 1,354 1,351 DQGWUDQVODWLRQGLIIHUHQFHV 1VJGTEQORTGJGPUKXGKPEQOG %CUJƃQYJGFIGU (CKTXCNWGICKPUNQUUGUKPVJGRGTKQF –583 –195 )DLUYDOXDWLRQRIFDVKĠRZKHGJHVPDLQO\UHODWHVWRKHGJLQJHOHFWULFLW\SULFHLQIX- Transfers to income statement 1 –218 WXUHFDVKĠRZV:KHQHOHFWULFLW\SULFHLVKLJKHUWKDQWKHKHGJLQJSULFHWKHLPSDFW 6TCPUHGTUVQKPXGPVQT[ƂZGFCUUGVU –16 –4 RQHTXLW\LVQHJDWLYHDQGYLFHYHUVD Tax effect 151 108 Net investment hedges (CKTXCNWGICKPUNQUUGUKPVJGRGTKQF –1 –25 Tax effect 0 6 #XCKNCDNGHQTUCNGƂPCPEKCNCUUGVU (CKTXCNWGNQUUGUKPVJGRGTKQF 0 0 Exchange differences on translating foreign operations 344 21 7UDQVODWLRQGLIIHUHQFHVIURPWUDQVODWLRQRIIRUHLJQHQWLWLHVPDLQO\LQ6(.12.DQG58% Share of other comprehensive income of associates –69 –37 0DLQO\IDLUYDOXHFKDQJHLQ+DIVOXQG$6$łVVKDUHKROGLQJLQ5(&LQFOWUDQVODWLRQ Other changes –16 1 GLIIHUHQFHV(85–PLOOLRQ –  1VJGTEQORTGJGPUKXGKPEQOGHQTVJGRGTKQFPGVQHVCZ –189 –343 6QVCNEQORTGJGPUKXGKPEQOGHQTVJG[GCT 1,165 1,008

6QVCNEQORTGJGPUKXGKPEQOGCVVTKDWVCDNGVQ Owners of the parent 1,064 971 0QPEQPVTQNNKPIKPVGTGUVU 101 37 1,165 1,008 64 CONSOLIDATED FINANCIAL STATEMENTS FORTUM FINANCIALS 2010

Consolidated balance sheet

EUR million Note 2010 2009 EUR million Note 2010 2009 ASSETS EQUITY 0QPEWTTGPVCUUGVU 'SWKV[CVVTKDWVCDNGVQQYPGTUQHVJGRCTGPV Intangible assets 21 421 391 Share capital 29 3,046 3,046 2TQRGTV[RNCPVCPFGSWKROGPV 22 14,621 12,855 5JCTGRTGOKWO 73 73 2CTVKEKRCVKQPUKPCUUQEKCVGUCPFLQKPVXGPVWTGU 23 2,161 2,188 Retained earnings 5,448 4,762 5JCTGKP5VCVG0WENGCT9CUVG/CPCIGOGPV(WPF 34 625 570 1VJGTGSWKV[EQORQPGPVU –357 153 Pension assets 36 62 59 Total 8,210 8,034 1VJGTPQPEWTTGPVCUUGVU 24 72 69 0QPEQPVTQNNKPIKPVGTGUVU 31 532 457 Deferred tax assets 33 141 47 6QVCNGSWKV[ 8,742 8,491 >KXCVKXGƂPCPEKCNKPUVTWOGPVU 3 183 195 .QPIVGTOKPVGTGUVDGCTKPITGEGKXCDNGU 25 1,149 918 LIABILITIES 6QVCNPQPEWTTGPVCUUGVU 19,435 17,292 0QPEWTTGPVNKCDKNKVKGU +PVGTGUVDGCTKPINKCDKNKVKGU 32 6,520 6,002 Current assets >KXCVKXGƂPCPEKCNKPUVTWOGPVU 3 238 191 Inventories 26 387 447 Deferred tax liabilities 33 1,725 1,750 >KXCVKXGƂPCPEKCNKPUVTWOGPVU 3 148 182 0WENGCTRTQXKUKQPU 34 625 570 Trade and other receivables 27 1,284 1,030 Other provisions 35 239 209 Bank deposits 271 397 Pension obligations 36 20 23 %CUJCPFECUJGSWKXCNGPVU 285 493 1VJGTPQPEWTTGPVNKCDKNKVKGU 37 471 472 .KSWKFHWPFU 28 556 890 6QVCNPQPEWTTGPVNKCDKNKVKGU 9,838 9,217 Assets held for sale 39 154  6QVCNEWTTGPVCUUGVU 2,529 2,549 Current liabilities +PVGTGUVDGCTKPINKCDKNKVKGU 32 862 857 Total assets 21,964 19,841 >KXCVKXGƂPCPEKCNKPUVTWOGPVU 3 1,207 276 Trade and other payables 38 1,265 1,000 Liabilities related to assets held for sale 39 50  6QVCNEWTTGPVNKCDKNKVKGU 3,384 2,133

Total liabilities 13,222 11,350

6QVCNGSWKV[CPFNKCDKNKVKGU 21,964 19,841 FORTUM FINANCIALS 2010 CONSOLIDATED FINANCIAL STATEMENTS 65

Consolidated statement of changes in total equity

Non- 5JCTG 5JCTG 1YPGTUQH EQPVTQNNKPI Total ECRKVCN premium 4GVCKPGFGCTPKPIU 1VJGTGSWKV[EQORQPGPVU VJGRCTGPV interests GSWKV[ 4GVCKPGF earnings Translation OCI items CPFQVJGT QHHQTGKIP %CUJƃQY 1VJGT1%+ CUUQEKCVGF EUR million Note HWPFU operations JGFIGU items EQORCPKGU 6QVCNGSWKV[&GEGODGT 3,046 73 5,329 –567 21 1 131 8,034 457 8,491 0GVRTQƂVHQTVJGRGTKQF 1,300 1,300 54 1,354 Translation differences 289 3 14 306 55 361 Other comprehensive income –15 –443 –1 –83 –542 –8 –550 Total comprehensive income for the period 1,285 289 –440 –1 –69 1,064 101 1,165 Cash dividend 18 –888 –888 –888 &KXKFGPFUVQPQPEQPVTQNNKPIKPVGTGUVU 0–22–22 %JCPIGUFWGVQDWUKPGUUEQODKPCVKQPU 8 0–4–4 6QVCNGSWKV[&GEGODGT 3,046 73 5,726 –278 –419 0 62 8,210 532 8,742

6QVCNGSWKV[&GEGODGT 3,044 73 4,888 –576 321 36 168 7,954 457 8,411 0GVRTQƂVHQTVJGRGTKQF 1,312 1,312 39 1,351 Translation differences 9–4 28331245 Other comprehensive income 6–296–19–65–374–14–388 Total comprehensive income for the period 1,318 9 –300 –19 –37 971 37 1,008 Cash dividend 18 –888 –888 –888 &KXKFGPFUVQPQPEQPVTQNNKPIKPVGTGUVU 0–19–19 %JCPIGUFWGVQDWUKPGUUEQODKPCVKQPU 8 –5 –5 –18 –23 Stock options exercised 1) 30 216–162 2 6QVCNGSWKV[&GEGODGT 3,046 73 5,329 –567 21 1 131 8,034 457 8,491

 $FFRXQWLQJHIIHFWRIWKHODVWVWRFNRSWLRQSURJUDPPH % XSRQHQGLQJRIWKHVXEVFULSWLRQ &DVKĠRZKHGJHV SHULRGRQ0D\ 7KHLPSDFWRQHTXLW\DWWULEXWDEOHWRRZQHUVRIWKHSDUHQWIURPIDLUYDOXDWLRQRIFDVK Translation differences ĠRZKHGJHV(85–PLOOLRQ ŋ PDLQO\UHODWHVWRFDVKĠRZKHGJHVKHGJLQJ 7UDQVODWLRQRIğQDQFLDOLQIRUPDWLRQIURPVXEVLGLDULHVLQIRUHLJQFXUUHQF\LVGRQH HOHFWULFLW\SULFHIRUIXWXUHWUDQVDFWLRQV:KHQHOHFWULFLW\SULFHLVORZHUKLJKHUWKDQ XVLQJDYHUDJHUDWHIRUWKHLQFRPHVWDWHPHQWDQGHQGUDWHIRUWKHEDODQFHVKHHW7KH WKHKHGJLQJSULFHWKHLPSDFWRQHTXLW\LVSRVLWLYHQHJDWLYH H[FKDQJHUDWHGLIIHUHQFHVRFFXUULQJIURPWUDQVODWLRQWR(85DUHERRNHGWRHTXLW\ 7UDQVODWLRQGLIIHUHQFHVLPSDFWHGHTXLW\DWWULEXWDEOHWRRZQHUVRIWKHSDUHQWFRPSDQ\ Non-controlling interests ZLWK(85PLOOLRQGXULQJ  LQFOXGLQJQHWHIIHFWIURP6(.12.DQG 7KHPDLQFKDQJHVLQQRQFRQWUROOLQJLQWHUHVWVLQHTXLW\DUHWUDQVODWLRQGLIIHUHQFHV(85 58%DPRXQWLQJWR(85PLOOLRQLQ  3DUWRIWKHWUDQVODWLRQGLIIHU- PLOOLRQ  DULVLQJIURP58%DQG6(.FKDQJHVGXHWRGLYLGHQGGLVWULEXWLRQVWR HQFHLVDULVLQJIURPWKH12.HIIHFWLQIDLUYDOXDWLRQRI+DIVOXQGłV5(&VKDUHV(85 QRQFRQWUROOLQJLQWHUHVWV(85–PLOOLRQ ŋ DQGLQDOVRFKDQJHVWKURXJK PLOOLRQ  ZKLFKLVVKRZQWRJHWKHUZLWKWKHFKDQJHLQIDLUYDOXHLQ2&,LWHPV EXVLQHVVFRPELQDWLRQVZKLFKUHODWHWRWKHQRQFRQWUROOLQJLQWHUHVWVLQ2$2)RUWXP DVVRFLDWHGFRPSDQLHV For information regarding exchange rates used, see Note 9 Exchange rates on page 96. 66 CONSOLIDATED FINANCIAL STATEMENTS FORTUM FINANCIALS 2010

&RQVROLGDWHGFDVKĠRZVWDWHPHQW

EUR million Note 2010 2009 %CUJƃQYHTQOQRGTCVKPICEVKXKVKGU 0GVRTQƂVHQTVJGRGTKQF 1,354 1,351 #FLWUVOGPVU Income tax expenses 261 285 (KPCPEGEQUVUPGV 155 167 5JCTGQHRTQƂVQHCUUQEKCVGUCPFLQKPVXGPVWTGU –62 –21 Depreciation, amortisation and impairment charges 563 510 1RGTCVKPIRTQƂVDGHQTGFGRTGEKCVKQPU '$+6&# 2,271 2,292 0QPECUJƃQYKVGOUCPFFKXGUVKPICEVKXKVKGU 124 46 1RQFDVKĠRZLWHPVLQFOXGHVPDLQO\DGMXVWPHQWVIRUIDLUYDOXHJDLQVDQGORVVHVRQ Interest received 66 106 GHULYDWLYHVQRWTXDOLI\LQJIRUKHGJHDFFRXQWLQJQXFOHDUUHODWHGLWHPVDQGFKDQJHVLQ SURYLVLRQV'LYHVWLQJDFWLYLWLHVLQFOXGHVUHYHUVDOVRIVDOHVJDLQVDQGORVVHVLQFOXGHGLQ Interest paid –234 –291 (%,7'$7KHDFWXDOSURFHHGVIRUGLYHVWPHQWV(85PLOOLRQIRU  DUH Dividends received 62 33 VKRZQXQGHUFDVKĠRZIURPLQYHVWLQJDFWLYLWLHV 1VJGTƂPCPEKCNKVGOUCPFTGCNKUGFHQTGKIPGZEJCPIGICKPU and losses –535 298 ,QFOXGHVUHDOLVHGIRUHLJQH[FKDQJHJDLQVDQGORVVHVDPRXQWLQJWR(85–PLOOLRQ Taxes –355 –239  ZKLFKPDLQO\UHODWHVWRğQDQFLQJRI)RUWXPłV6ZHGLVKVXEVLGLDULHVDQGWKH (WPFUHTQOQRGTCVKQPU 1,399 2,245 IDFWWKDWWKH*URXSłVPDLQH[WHUQDOğQDQFLQJFXUUHQF\LV(857KHPDMRUSDUWRIWKHVH IRUZDUGVLVHQWHUHGLQWRZLWKVKRUWPDWXULWLHVLHOHVVWKDQWZHOYHPRQWKV Change in working capital 40 38 19 6QVCNPGVECUJHTQOQRGTCVKPICEVKXKVKGU 1,437 2,264

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Gross 8QNWOG69J (CKTXCNWG'74OKNNKQP Gross 8QNWOG69J (CKTXCNWG'74OKNNKQP 7PFGT 1–5 1XGT 7PFGT 1–5 1XGT [GCT [GCTU [GCTU Total 2QUKVKXG 0GICVKXG Net [GCT [GCTU [GCTU Total 2QUKVKXG 0GICVKXG Net >KXCVKXGUYKVJJGFIGCEEQWPVKPI >KXCVKXGUYKVJJGFIGCEEQWPVKPI UVCVWU 69 44 0 113 628 1,249 –621 UVCVWU 98 60 0 158 582 628 –46 >KXCVKXGUYKVJPQPJGFIG >KXCVKXGUYKVJPQPJGFIG CEEQWPVKPIUVCVWU 56 28 0 84 670 903 –233 CEEQWPVKPIUVCVWU 72 32 1 105 327 351 –24 Total 125 72 0 197 1,298 2,152 –854 Total 170 92 1 263 909 979 –70

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Maturity of interest-bearing liabilities /LTXLGIXQGVPDMRUFUHGLWOLQHVDQGGHEWSURJUDPPHV

EUR million 2010 Total &TCYP #XCKNCDNG 2011 862 EUR million HCEKNKV[ amount amount 2012 624 .KSWKFHWPFU 2013 636 %CUJCPFECUJGSWKXCNGPVU 285 2014 1,191 Bank deposits over 3 months 271 2015 1,042 Total 556 2016 and later 3,027 QHYJKEJ4WUUKC 1#1(QTVWO 348 Total 7,382 %QOOKVVGFETGFKVNKPGU EUR 1,200 million syndicated credit facility 1,200  1,200 EUR 1,500 million syndicated credit facility 1,500  1,500 DEBT MATURITY PROFILE, EUR million Bilateral overdraft facilities 218 0 218 Total 2,918 0 2,918

1,500 1,500 &GDVRTQITCOOGU WPEQOOKVVGF

1,250 1,250 (QTVWO%QTRQTCVKQP%2RTQITCOOGU'74OKNNKQP 500 148 352 (QTVWO%QTRQTCVKQP%2RTQITCOOGU5'-OKNNKQP 558 386 172 1,000 1,000 (QTVWO%QTRQTCVKQP'/60RTQITCOOGU'74OKNNKQP 6,000 4,504 1,496 750 750 Total 7,058 5,038 2,020

500 500 /LTXLGIXQGVDPRXQWHGWR(85PLOOLRQ  LQFOXGLQJ2$2)RUWXPłVEDQN 250 250 GHSRVLWVDPRXQWLQJWR(85PLOOLRQ  HDUPDUNHGIRUFDSDFLW\LQFUHDVH 0 0 LQYHVWPHQWVLQ5XVVLD2IWKHVHGHSRVLWVDW\HDUHQG(85PLOOLRQ   2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021+ ZHUHLQHXURVDQG(85PLOOLRQ  LQ5XVVLDQURXEOHV Bonds Financial institutions Other long-term debt CPs /LTXLGIXQGVPDMRUFUHGLWOLQHVDQGGHEWSURJUDPPHV

Total &TCYP #XCKNCDNG EUR million HCEKNKV[ amount amount .KSWKFHWPFU %CUJCPFECUJGSWKXCNGPVU 493 Bank deposits over 3 months 397 Total 890 QHYJKEJ4WUUKC 1#1(QTVWO 632

%QOOKVVGFETGFKVNKPGU EUR 1,200 million syndicated credit facility 1,200  1,200 EUR 1,500 million syndicated credit facility 1,500  1,500 Bilateral overdraft facilities 211  211 Total 2,911 - 2,911

&GDVRTQITCOOGU WPEQOOKVVGF (QTVWO%QTRQTCVKQP%2RTQITCOOGU'74OKNNKQP 500 78 422 (QTVWO%QTRQTCVKQP%2RTQITCOOGU5'-OKNNKQP 488 172 316 (QTVWO%QTRQTCVKQP'/60RTQITCOOGU'74OKNNKQP 5,000 4,166 834 Total 5,988 4,416 1,572 FORTUM FINANCIALS 2010 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 85

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5.56HJPHQWLQIRUPDWLRQ Assets and liabilities Income statement &KUVTK- 'NGEVTKEK- Elimina- EUR million 2QYGT Heat bution V[5CNGU Russia 1VJGT tions Total Netting 0QPKPVGTGUVDGCTKPICUUGVU 6,022 4,574 3,990 650 2,750 286 –576 17,696 CPF &KUVTK- 'NGEVTKEK- elimina- Participations in associated EUR million Note 2QYGT Heat bution V[5CNGU Russia 1VJGT tions  Total EQORCPKGUCPFLQKPVXGPVWTGU 912 159 217 13 423 437 2,161 Sales 2,702 1,770 963 1,798 804 51 –1,792 6,296 #UUGVUKPENWFGFKP0GVCUUGVU 6,934 4,733 4,207 663 3,173 723 –576 19,857 of which internal –281 –8 18 158  169 –56 0 +PVGTGUVDGCTKPITGEGKXCDNGU 1,208 External sales 2,983 1,778 945 1,640 804 –118 –1,736 6,296 Deferred taxes 141 Depreciation, amortisa Other assets 202 tion and impairment –100 –187 –178 –2 –86 –10 –563 .KSWKFHWPFU 556 Comparable Total assets 21,964 QRGTCVKPIRTQƂV 1,298 275 307 11 8 –66 1,833 0QPTGEWTTKPIKVGOU 6 62912  45 1 93 .KCDKNKVKGUKPENWFGFKP0GVCUUGVU 1,128 551 524 453 356 694 –576 3,130 %JCPIGUKPHCKTXCNWGU Deferred tax liabilities 1,725 of derivatives hedging Other liabilities 985 HWVWTGECUJƃQY 6, 7 –170 –1 2 35  –82 –216 6QVCNNKCDKNKVKGUKPENWFGFKP 0WENGCTHWPF %CRKVCNGORNQ[GF 5,840 CFLWUVOGPV 6, 34 –2  –2 +PVGTGUVDGCTKPINKCDKNKVKGU 7,382 1RGTCVKPIRTQƂV 1,132 303 321 46 53 –147 1,708 6QVCNGSWKV[ 8,742 5JCTGQHRTQƂVQHCU sociated companies and 6QVCNGSWKV[CPFNKCDKNKVKGU 21,964 LQKPVXGPVWTGU 23, 34 –253119182862 (KPCPEGEQUVUPGV –155 Investments Income taxes –261 &KUVTK- 'NGEVTKEK- 2TQƂVHQTVJGRGTKQF 1,354 EUR million Note 2QYGT Heat bution V[5CNGU Russia 1VJGT Total )TQUUKPXGUVOGPVUKPUJCTGU 8, 23 25 1 0 - - 1 27  1HWWLQJDQGHOLPLQDWLRQVLQFOXGHHOLPLQDWLRQVRI*URXSLQWHUQDOVDOHVDQGQHWWLQJRI1RUG3RRO 6SRWWUDQVDFWLRQV6DOHVDQGSXUFKDVHVZLWK1RUG3RRO6SRW(85PLOOLRQDUHQHWWHGRQ*URXS %CRKVCNGZRGPFKVWTG 21, 22 97 304 213 0 599 9 1,222 OHYHORQDQKRXUO\EDVLVDQGSRVWHGHLWKHUDVUHYHQXHRUFRVWGHSHQGLQJRQLI)RUWXPLVDQHWVHOOHU of which capitalised RUQHWEX\HUGXULQJDQ\SDUWLFXODUKRXU borrowing costs 0 11 34  45

Impairment losses and restructuring costs Comparable return on net assets

&KUVTK- 'NGEVTKEK- 0GVCUUGVUD[ Return on Comparable return EUR million 2QYGT Heat bution V[5CNGU Russia 1VJGT Total EUR million segments PGVCUUGVU  QPPGVCUUGVU  Recognised impairment losses for trade Power 5,806 19.5 22.3 receivables 1 0 –1 –1 –26 0 –27 *GCV 4,182 8.4 7.7 Recognised impairment losses for &KUVTKDWVKQP 3,683 9.7 9.3 intangible assets and property, plant and Electricity Sales 210 38.4 9.3 GSWKROGPV 00  –1 –2  –3 4WUUKC 2,817 2.4 0.7 4GUVTWEVWTKPIEQUVU 0 0 –1 –4 –1 –1 –7 Other 29 –48.2 –7.7 ,PSDLUPHQWORVVHVDQGUHVWUXFWXULQJFRVWVDUHLQFOXGHGLQFRPSDUDEOHRSHUDWLQJ SURğW Employees &KUVTK- 'NGEVTKEK- 2QYGT Heat bution V[5CNGU Russia 1VJGT Total 0WODGTQHGORNQ[GGU&GE 1,819 2,394 962 525 4,294 591 10,585 #XGTCIGPWODGTQHGORNQ[GGU 1,891 2,482 1,098 538 4,555 592 11,156 FORTUM FINANCIALS 2010 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 93

5.66HJPHQWLQIRUPDWLRQ Assets and liabilities Income statement &KUVTK- 'NGEVTKEK- Elimina- 1 EUR million 2QYGT Heat bution V[5CNGU Russia 1VJGT tions Total 2 Netting 0QPKPVGTGUVDGCTKPICUUGVU 5,397 4,066 3,535 463 2,117 141 –293 15,426 CPF 3 &KUVTK- 'NGEVTKEK- elimina- Participations in associated EUR million Note 2QYGT Heat bution V[5CNGU Russia 1VJGT tions  Total EQORCPKGUCPFLQKPVXGPVWTGU 863 178 230 12 425 480 2,188 4 Sales 2,531 1,399 800 1,449 632 71 –1,447 5,435 #UUGVUKPENWFGFKP0GVCUUGVU 6,260 4,244 3,765 475 2,542 621 –293 17,614 5 of which internal 254 23 13 67  –5 –352 0 +PVGTGUVDGCTKPITGEGKXCDNGU 943 6 External sales 2,277 1,376 787 1,382 632 76 –1,095 5,435 Deferred taxes 47 7 Depreciation, amortisa Other assets 347 8 tion and impairment –93 –162 –164 –6 –75 –10 –510 .KSWKFHWPFU 890 9 10 Comparable Total assets 19,841 QRGTCVKPIRTQƂV 1,454 231 262 22 –20 –61 1,888 11 12 0QPTGEWTTKPIKVGOU 6621100129.KCDKNKVKGUKPENWFGFKP0GVCUUGVU 766 456 466 350 282 240 –293 2,267 13 %JCPIGUKPHCKTXCNWGU Deferred tax liabilities 1,750 14 of derivatives hedging Other liabilities 474 HWVWTGECUJƃQY 6, 7 –38 0 0 7  –45 –76 15 6QVCNNKCDKNKVKGUKPENWFGFKP 0WENGCTHWPF %CRKVCNGORNQ[GF 4,491 16 CFLWUVOGPV 6, 34 –59  –59 +PVGTGUVDGCTKPINKCDKNKVKGU 6,859 17 1RGTCVKPIRTQƂV 1,363 252 263 29 –20 –105 1,782 6QVCNGSWKV[ 8,491 18 5JCTGQHRTQƂVQHCU 6QVCNGSWKV[CPFNKCDKNKVKGU 19,841 19 sociated companies and 20 LQKPVXGPVWTGU 23, 34 –35 30 10 0 20 –4 21 21 (KPCPEGEQUVUPGV –167 Investments 22 Income taxes –285 &KUVTK- 'NGEVTKEK- 23 2TQƂVHQTVJGRGTKQF 1,351 EUR million Note 2QYGT Heat bution V[5CNGU Russia 1VJGT Total )TQUUKPXGUVOGPVUKPUJCTGU 8, 23 5715-3167 24  1HWWLQJDQGHOLPLQDWLRQVLQFOXGHHOLPLQDWLRQVRI*URXSLQWHUQDOVDOHVDQGQHWWLQJRI1RUG3RRO 25 6SRWWUDQVDFWLRQV6DOHVDQGSXUFKDVHVZLWK1RUG3RRO6SRW(85PLOOLRQDUHQHWWHGRQ*URXS %CRKVCNGZRGPFKVWTG 21, 22 96 358 188 1 215 4 862 OHYHORQDQKRXUO\EDVLVDQGSRVWHGHLWKHUDVUHYHQXHRUFRVWGHSHQGLQJRQLI)RUWXPLVDQHWVHOOHU of which capitalised 26 RUQHWEX\HUGXULQJDQ\SDUWLFXODUKRXU borrowing costs  12 18  30 27 28 Impairment losses and restructuring costs Comparable return on net assets 29 30 &KUVTK- 'NGEVTKEK- 0GVCUUGVUD[ Return on Comparable return EUR million 2QYGT Heat bution V[5CNGU Russia 1VJGT Total EUR million segments PGVCUUGVU  QPPGVCUUGVU  31 Recognised impairment losses for trade Power 5,494 24.5 26.4 32 receivables 00–2–4–5  –11 *GCV 3,787 7.9 7.3 33 Recognised impairment losses for &KUVTKDWVKQP 3,299 8.7 8.6 34 intangible assets and property, plant and 35 GSWKROGPV 00 –2 –1 –3 Electricity Sales 125 28.9 18.6 36 4GUVTWEVWTKPIEQUVU –2 –2 0 –1 –5 –1 –11 4WUUKC 2,260 0.0 0.0 Other 382 –19.4 –17.0 37 38 ,PSDLUPHQWORVVHVDQGUHVWUXFWXULQJFRVWVDUHLQFOXGHGLQFRPSDUDEOHRSHUDWLQJSURğW Employees 39 40 &KUVTK- 'NGEVTKEK- 2QYGT Heat bution V[5CNGU Russia 1VJGT Total 41 0WODGTQHGORNQ[GGU&GE 1,916 2,552 1,088 611 4,855 591 11,613 42 #XGTCIGPWODGTQHGORNQ[GGU 2,068 2,652 1,166 629 6,170 593 13,278 43 44 45 46 47 48 94 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FORTUM FINANCIALS 2010

5.7*URXSZLGHGLVFORVXUHV &DSLWDOH[SHQGLWXUHE\ORFDWLRQ 7KH*URXSłVRSHUDWLQJVHJPHQWVRSHUDWHPDLQO\LQWKH1RUGLFFRXQWULHV5XVVLD3RODQG EUR million 2010 2009 DQGRWKHUSDUWVRIWKH%DOWLF5LPDUHD3RZHU'LVWULEXWLRQDQG(OHFWULFLW\VDOHVRSHU- Finland 190 255 DWHPDLQO\LQ)LQODQGDQG6ZHGHQZKHUHDV+HDWRSHUDWHVLQDOOJHRJUDSKLFDODUHDV Sweden 300 264 4WUUKC H[FHSW5XVVLD2WKHUFRXQWULHVDUHPDLQO\/DWYLD/LWKXDQLDDQGWKH8.7KHKRPH 599 215 Poland 45 65 FRXQWU\LV)LQODQG Estonia 53 47 7KHLQIRUPDWLRQEHORZLVGLVFORVLQJVDOHVE\SURGXFWDUHDDVZHOODVVDOHVE\WKH Norway 15 12 FRXQWU\LQZKLFKWKHFXVWRPHULVORFDWHG$VVHWVFDSLWDOH[SHQGLWXUHDQGSHUVRQQHODUH 1VJGTEQWPVTKGU 20 4 UHSRUWHGZKHUHWKHDVVHWVDQGSHUVRQQHODUHORFDWHG3DUWLFLSDWLRQVLQDVVRFLDWHVDQG Total 1,222 862 MRLQWYHQWXUHVDUHQRWGLYLGHGE\ORFDWLRQVLQFHWKHFRPSDQLHVFRQFHUQHGFDQKDYHEXVL- 6HJPHQWDVVHWVE\ORFDWLRQ QHVVLQVHYHUDOJHRJUDSKLFDODUHDV EUR million 2010 2009 Finland 4,755 4,148 ([WHUQDOVDOHVE\SURGXFWDUHD Sweden 9,980 8,760 EUR million 2010 2009 4WUUKC 2,747 2,111 2QYGTUCNGUGZENWFKPIKPFKTGEVVCZGU 3,615 3,192 Poland 356 310 *GCVUCNGU 1,596 1,314 Estonia 269 222 Network transmissions 912 760 Norway 254 223 Other sales 173 169 1VJGTEQWPVTKGU 136 185 Total 6,296 5,435 Eliminations –801 –533 Non-interest bearing assets 17,696 15,426 +HDWLQJVDOHVLQFOXGHVDOHRIGHOLYHUHGKHDWDQGWUDQVPLVVLRQRIKHDW 2CTVKEKRCVKQPUKPCUUQEKCVGUCPFLQKPVXGPVWTGU 2,161 2,188 'XHWRWKHODUJHQXPEHURIFXVWRPHUVDQGWKHYDULHW\RILWVEXVLQHVVDFWLYLWLHVWKHUH Total 19,857 17,614 DUHQRLQGLYLGXDOFXVWRPHUZKRVHEXVLQHVVYROXPHLVPDWHULDOFRPSDUHGZLWK)RUWXPłV 1XPEHURIHPSOR\HHVRQ'HFHPEHUE\ORFDWLRQ WRWDOEXVLQHVVYROXPH 2010 2009 6DOHVE\PDUNHWDUHDEDVHGRQFXVWRPHUORFDWLRQ Finland 2,609 2,700 Sweden 2,257 2,445 EUR million 2010 2009 4WUUKC 4,289 4,853 Nordic 5,039 4,449 Poland 633 756 4WUUKC 802 632 Estonia 350 357 Poland 169 136 Norway 137 143 Estonia 99 71 1VJGTEQWPVTKGU 310 359 1VJGTEQWPVTKGU 187 147 Total 10,585 11,613 Total 6,296 5,435

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8.2'LVSRVDOVLQDQG 8 $FTXLVLWLRQVDQGGLVSRVDOV 7KHUHZHUHQRPDWHULDOGLYHVWPHQWVGXULQJRU,Q'HFHPEHU)RUWXP VLJQHGDQDJUHHPHQWWRGLYHVWGLVWULFWKHDWRSHUDWLRQVDQGSURGXFWLRQIDFLOLWLHVRXWVLGH Gross Investments in subsidiary shares by segment 6WRFNKROPLQ6ZHGHQ7KHWRWDOVHOOLQJSULFHLVDSSUR[LPDWHO\(85PLOOLRQ0DMRU EUR million 2010 2009 SDUWRIWKHRSHUDWLRQVWREHGLYHVWHGLVRZQHGE\)RUWXPłVVXEVLGLDU\$%)RUWXP9ÃUPH Power 0  VDPÃJWPHG6WRFNKROPVVWDGLQZKLFKWKHFLW\RI6WRFNKROPKDVDHFRQRPLFLQWHUHVW *GCV 0 0 )RUWXPH[SHFWVWRUHFRJQLVHDVDOHVJDLQZLWKDPLQRUHIIHFWRQ(36LQWKHğUVWTXDUWHU &KUVTKDWVKQP 0 5 Electricity Sales   RI7KHRSHUDWLRQVDUHSDUWRIWKH+HDWVHJPHQW7KHDVVHWVDQGOLDELOLWLHVUHODWHG 4WUUKC  3 WRWKHRSHUDWLRQVWREHGLYHVWHGDUHSUHVHQWHGDVDVVHWVDQGOLDELOLWLHVKHOGIRUVDOH Other 0  See note 39 Assets held for sale on page 123. Total 0 8 ,Q-DQXDU\)RUWXPDQG 1RUZHJLDQ +DIVOXQG,QIUDWHN$6$FRPELQHGWKHLUEXVL- Gross Investments in subsidiary shares by country QHVVHVRIFRQVWUXFWLRQDQGRSHUDWLQJRILQIUDVWUXFWXUHLQ6ZHGHQ)LQODQGDQG1RUZD\ ,QWKHWUDQVDFWLRQ)RUWXPUHFHLYHGRZQHUVKLSLQWKHQHZFRPELQHGFRPSDQ\ EUR million 2010 2009 Finland 0 0 For more information see Note 23 Participations in associated companies and joint ventures Sweden 0 5 on page 108. 4WUUKC  3 1VJGTEQWPVTKGU 0  Total 0 8 9 ([FKDQJHUDWHV

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EUR million 2010 2009 9CIGUCPFUCNCTKGU 365 351 7RWDOFRPSHQVDWLRQIRU6XSHUYLVRU\%RDUGVHUYLFH Pensions &GƂPGFEQPVTKDWVKQPRNCPU 35 35 EUR 2010 2009 /CTMMW.CWMMCPGP%JCKTOCP 13,000 13,000 &GƂPGFDGPGƂVRNCPU 11 13 5CPPC2GTMKÒ&GRWV[%JCKTOCP 8,000 8,000 5QEKCNUGEWTKV[EQUVU 68 67 Martti Alakoski 7,000 7,000 5JCTGDCUGFTGOWPGTCVKQPU 7 9 6CTLC(KNCVQX HTQO#RTKN 6,800 5,300 Other employee costs 21 20 5CORUC-CVCLC 7,000 6,600 Total 507 495 -KOOQ-KNLWPGP 7,200 6,600 -CVTK-QOK %JCPIGKPHCKTXCNWGQH.6+JGFIGCTTCPIGOGPVKURTGUGPVGFKPQVJGTKVGOUCHHGEVKPI 6,800 6,800 comparability –2 –5 2CPW.CVWTK 7,200 6,600 ,WJC/KGVQ 7,000 7,000 ,WMMC/ÀMGNÀ WPVKN1EVQDGT 5,800 6,800 7KHFRPSHQVDWLRQSDFNDJHIRU)RUWXPHPSOR\HHVFRQVLVWVRIDFRPELQDWLRQRIVDODULHV *GNGPC2GUQNC HTQO#RTKN 7,200 5,300 EHQHğWVVKRUWWHUPLQFHQWLYHVSURğWVKDULQJSDLGWR3HUVRQQHO)XQGDQGVKDUHEDVHG 4CMGN*KNVWPGP WPVKN#RTKN NA 1,700 ORQJWHUPLQFHQWLYHV7KHPDMRULW\RI)RUWXPHPSOR\HHVDUHFRYHUHGE\DSHUIRUPDQFH Total 83,000 80,700 ERQXVV\VWHP7KHORQJWHUPLQFHQWLYHVFKHPHVDUHLQWHQGHGIRUVHQLRUH[HFXWLYHVDQG RWKHUPDQDJHPHQWRIWKH)RUWXP*URXS 13.2 Board remuneration 7KH1RPLQDWLRQDQG&RPSHQVDWLRQ&RPPLWWHHGLVFXVVHVDVVHVVHVDQGPDNHVUHF- 7KH%RDUGRI'LUHFWRUVFRPSULVHVğYHWRVHYHQPHPEHUVZKRDUHHOHFWHGDWWKH$QQXDO RPPHQGDWLRQVDQGSURSRVDOVRQWKHUHPXQHUDWLRQSROLF\SD\VWUXFWXUHVERQXVDQG *HQHUDO0HHWLQJIRUDRQH\HDUWHUPRIRIğFHZKLFKH[SLUHVDWWKHHQGRIWKHğUVW LQFHQWLYHV\VWHPVIRUWKH*URXSDQGLWVPDQDJHPHQWDQGFRQWULEXWHVWRWKH*URXSłV $QQXDO*HQHUDO0HHWLQJIROORZLQJWKHHOHFWLRQ$WWKH$QQXDO*HQHUDO0HHWLQJ QRPLQDWLRQLVVXHV7KHUHPXQHUDWLRQSROLF\LVGHWHUPLQHGE\WKH%RDUGRI'LUHFWRUV VHYHQPHPEHUVZHUHHOHFWHG SUHYLRXVO\VL[PHPEHUV  For further information on Fortum’s employee bonus and long term incentive schemes as well 7KH$QQXDO*HQHUDOPHHWLQJFRQğUPVWKH\HDUO\FRPSHQVDWLRQIRUWKH%RDUGRI'LUHF- as Personnel Fund, see Note 30 on page 113 and for pension obligations see Note 36 on page 120. WRUV,QDGGLWLRQD(85PHHWLQJIHHLVSDLG7KHPHHWLQJIHHLVDOVRSDLGIRUFRPPLW- WHHPHHWLQJVDQGLVSDLGLQGRXEOHWRDPHPEHUZKROLYHVRXWVLGH)LQODQGLQ(XURSHDQG FORTUM FINANCIALS 2010 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 99

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DQG&(2LVHQWLWOHGWRUHWDLQWKHEHQHğWVDFFUXHGLQWKHDUUDQJHPHQWIRUKLVEHQHğW 6KDUHULJKWVGHOLYHUHGRUJUDQWHGWRWKHPDQDJHPHQW )RURWKHUPDQDJHPHQWWHDPPHPEHUVWKHUHWLUHPHQWDJHLVRUGHSHQGLQJRQ Year 2010  Year 2011  WKHDUUDQJHPHQW7KHSHQVLRQSDLGLVPD[LPXPRURIWKHUHPXQHUDWLRQXSRQ 6CRKQ-WWNC 8,422 24,639 UHWLUHPHQW,QWKHğUVWFDVHWKH\DUHGHğQHGEHQHğWSHQVLRQSODQVDQGDUHLQVXUHGDQG #PPG$TWPKNC  2,491 #NGZCPFGT%JWXCGX  12,586 SDLGE\)RUWXPłVSHQVLRQIXQG,QWKHODWWHUSHQVLRQVDUHHLWKHUGHğQHGEHQHğWRUGH- Mikael Frisk 6,041 8,984 ğQHGFRQWULEXWLRQVFKHPHVLQVXUHGE\DQLQVXUDQFHFRPSDQ\ 6KOQ-CTVVKPGP 5,166 9,173 ,QWKHHYHQWWKDW)RUWXPGHFLGHVWRJLYHQRWLFHRIWHUPLQDWLRQWRWKH3UHVLGHQWDQG ,WJC.CCMUQPGP 7,014 11,684 &(2KHLVHQWLWOHGWRFRPSHQVDWLRQHTXDOOLQJPRQWKVłVDODU\DQGRWKHU)07PHPEHUV Per Langer 2,989 6,691 WRDFRPSHQVDWLRQHTXDOOLQJWRPRQWKVłVDODU\ /CTKC2CCVGTQ-CCTPCMCTK 2,539 4,767 /CVVK4WQVUCNC  6,137 Additional information about the terms and conditions of the remuneration of the President and CEO Tapio Kuula is available online at www.fortum.com/Investors/Corporate governance/  $FWXDOQXPEHURIVKDUHVGHOLYHUHG Management team/Remuneration of President and CEO and on page 156 Remuneration in the  (VWLPDWHGWRWDOQXPEHURIVKDUHVIRUWKHROGDQGWKHQHZ/7,DUUDQJHPHQW Annual Report. 13.4 Management shareholding 6KDUHVGHOLYHUHGRUWREHGHOLYHUHGWRWKHPDQDJHPHQW 2Q'HFHPEHUWKHPHPEHUVRIWKH6XSHUYLVRU\%RDUGRI)RUWXP&RUSRUDWLRQ 7KHWDEOHEHORZVKRZVWKHQXPEHURIVKDUHVGHOLYHUHGRUWREHGHOLYHUHGWRWKH3UHVLGHQW RZQHGDWRWDORIVKDUHV  RURIWKHVKDUHVDQGYRWLQJULJKWV DQG&(2DQGRWKHU)07PHPEHUVXQGHUWKHORQJWHUPLQFHQWLYHSODQV,QVSULQJ 7KHPHPEHUVRIWKH%RDUGRI'LUHFWRUVRZQHGDWRWDORIVKDUHV   WKHUHZLOOEHGHOLYHULHVRIWZR/7,DUUDQJHPHQWVWKHROGSODQŋDQGQHZSODQ ZKLFKFRUUHVSRQGVWRRIWKHFRPSDQ\łVVKDUHVDQGYRWLQJULJKWV ŋ6KDUHVGHOLYHUHGXQGHUWKHQHZSODQZLOOEHVXEMHFWWRDWZR\HDUORFNXS 7KH3UHVLGHQWDQG&(2DQGRWKHUPHPEHUVRIWKH)RUWXP0DQDJHPHQW7HDPRZQHGD SHULRGXQGHUZKLFKWKH\FDQQRWEHVROGRUWUDQVIHUUHGWRDWKLUGSDUW\,QWKHWDEOH WRWDORIVKDUHV  ZKLFKFRUUHVSRQGVWRDSSUR[LPDWHO\  EHORZVKDUHDPRXQWVWREHGHOLYHUHGXQGHUWKHQHZSODQDUHHVWLPDWHGDQGWKHDFWXDO  RIWKHFRPSDQ\łVVKDUHVDQGYRWLQJULJKWV QXPEHURIVKDUHVZLOOEHGHWHUPLQHGDWWKHWLPHRIGHOLYHU\LQVSULQJ $FFRUGLQJWRWKH&DELQHW&RPPLWWHHłV(FRQRPLF3ROLF\IRUWKH6WDWHRZQHGFRUSRUD- 6KDUHVKHOGE\PHPEHUVRIWKH%RDUGRI'LUHFWRUV WLRQVWKHWRWDOWD[DEOHJURVVYDOXHRIWKHEHQHğWDULVLQJIURPWKHVKDUHVGHOLYHUHGWRD 2010 2009 SDUWLFLSDQWFDQQRWH[FHHGWKHSDUWLFLSDQWłVRQH\HDUVDODU\LQFOXGLQJIULQJHEHQHğWV Chairman Matti Lehti 2,000 2,000 6KDUHVGLVFORVHGDUHQRWUHĠHFWLQJWKLVOLPLWDWLRQZKLFKZLOOEHDSSOLHGDWWKHWLPHRI &GRWV[EJCKTOCP5CTK$CNFCWH 2,300 2,300 Esko Aho   GHOLYHU\LQVSULQJ +NQPC'TXCUVK8CKPVQNC 4,000 4,000 For more information on the LTI arrangements see Note 30 Employee bonus system, personnel $KTIKVVC,QJCPUUQP*GFDGTI 900 900 fund and incentive schemes on page 113. ,QUJWC.CTUQP  NA %JTKUVKCP4COO5EJOKFV 2,250 3,500 Total 11,450 12,700 6KDUHVKHOGE\PHPEHUVRI)RUWXP0DQDJHPHQW7HDP

2010 2009 6CRKQ-WWNC 81,569 73,147 #PPG$TWPKNC   #NGZCPFGT%JWXCGX   Mikael Frisk 30,000 31,642 6KOQ-CTVVKPGP 48,962 43,796 ,WJC.CCMUQPGP 34,241 27,227 Per Langer 8,478 5,489 /CTKC2CCVGTQ-CCTPCMCTK 5,083 4,044 /CVVK4WQVUCNC   Total 208,333 185,345 FORTUM FINANCIALS 2010 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 101

14 'HSUHFLDWLRQDPRUWLVDWLRQDQG 15 )LQDQFHFRVWVŋQHW 1 LPSDLUPHQWFKDUJHV 2 EUR million Note 2010 2009 3 Interest expense 4 EUR million 2010 2009 Borrowings –241 –268 5 &GRTGEKCVKQPQHRTQRGTV[RNCPVCPFGSWKROGPV Other interest expense –1 –3 6 $WKNFKPIUCPFUVTWEVWTGU 91 86 Capitalised borrowing costs 22 45 30 7 /CEJKPGT[CPFGSWKROGPV 443 396 Total –197 –241 8 Other tangible assets 5 5 9 Amortisation of intangible assets 21 20 Interest income 10 Total 560 507 Loan receivables 66 88 11 Impairment charges Other interest income 6 10 12 Other intangible assets 1  Total 72 98 13 $WKNFKPIUCPFUVTWEVWTGU 2 3 14 Total 3 3 (CKTXCNWGICKPUCPFNQUUGUQPƂPCPEKCNKPUVTWOGPVU 7 12 –1 15 16 Depreciation, amortisation and impairment charges total 563 510 Exchange gains and losses 17 Loans and receivables 7 744 315 18 See also Note 5 Segment reporting on page 90. Derivatives 7 –741 –312 19 Dividend income 1 1 20 +PVGTGUVKPEQOGQPUJCTGQH5VCVG0WENGCT9CUVG/CPCIGOGPV(WPF 34 14 20 21 7PYKPFKPIQHFKUEQWPVQPPWENGCTRTQXKUKQPU 34 –40 –26 22 7PYKPFKPIQHFKUEQWPVQPQVJGTRTQXKUKQPU 35 –16 –14 23 1VJGTƂPCPEKCNKPEQOG 3 2 24 1VJGTƂPCPEKCNGZRGPUGU –7 –9 25 Total –42 –23 26 (KPCPEGEQUVUPGV –155 –167 27 28 29 ,QWHUHVWH[SHQVHVLQFOXGHLQWHUHVWH[SHQVHVRQLQWHUHVWEHDULQJORDQVLQWHUHVWRQLQ- 30 WHUHVWUDWHDQGFXUUHQF\VZDSVIRUZDUGSRLQWVRQIRUZDUGIRUHLJQH[FKDQJHFRQWUDFWV 31 KHGJLQJORDQVDQGUHFHLYDEOHV2WKHULQWHUHVWH[SHQVHVLQFOXGHVLQWHUHVWRQğQDQFLDO 32 OHDVHV(85–PLOOLRQ ŋ DQGRWKHULQWHUHVWFRVW(85PLOOLRQ ŋ  33 Further information can be found in the Notes mentioned in the table. 34 35 36 ,QWHUHVWLQFRPHLQFOXGHV(85PLOOLRQ  IURPVKDUHKROGHUVłORDQVLQ)LQQLVK 37 DQG6ZHGLVKQXFOHDUFRPSDQLHV(85PLOOLRQ  IURPGHSRVLWVDVZHOODV 38 WKHHIIHFWIURPKHGJLQJRI6(.GHQRPLQDWHGLQWHUHVWLQFRPHRI(85PLOOLRQ  39 ŋ 2WKHULQWHUHVWLQFRPHLQFOXGHVPDLQO\LQFRPHIURPğQDQFLDOOHDVHVDVDOHVVRU 40 41 )DLUYDOXHJDLQVDQGORVVHVRQğQDQFLDOLQVWUXPHQWVLQFOXGHFKDQJHLQFOHDQSULFH 42 RILQWHUHVWUDWHDQGFURVVFXUUHQF\VZDSVQRWJHWWLQJKHGJHDFFRXQWLQJDQGIDLUYDOXH 43 FKDQJHVRILQWHUHVWUDWHGHULYDWLYHVLQKHGJHUHODWLRQVKLSDQGKHGJHGLWHPV$FFUXHG 44 LQWHUHVWRQWKHVHGHULYDWLYHVLVHQWHUHGLQLQWHUHVWH[SHQVHVRIERUURZLQJV)DLUYDOXH 45 JDLQVDQGORVVHVLQFOXGHDOVRUDWHGLIIHUHQFHIURPIRUZDUGFRQWUDFWVKHGJLQJORDQVDQG 46 47 UHFHLYDEOHVZLWKRXWKHGJHDFFRXQWLQJ 48 102 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FORTUM FINANCIALS 2010

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Fair value changes on interest rate and currency derivatives EUR million 2010 2009 Finnish companies 513 540 EUR million 2010 2009 Swedish companies 666 659 +PVGTGUVTCVGCPFETQUUEWTTGPE[UYCRU Other companies 436 437 Interest expenses on borrowings 22 20 Total 1,615 1,636 Exchange rate difference from derivatives –130 –95 4CVGFKHHGTGPEGKPHCKTXCNWGICKPUCPFNQUUGUQPƂPCPEKCNKPUVTWOGPVU 34 8 6QVCNHCKTXCNWGEJCPIGQHKPVGTGUVTCVGFGTKXCVKXGUKPƂPCPEGEQUVUPGV –74 –67 16.2 0DMRUFRPSRQHQWVRILQFRPHWD[H[SHQVHE\PDMRUFRXQWULHV

EUR million 2010 2009 (QTYCTFHQTGKIPGZEJCPIGEQPVTCEVU %WTTGPVVCZGU Interest expenses on borrowings –7 –4 Finnish companies –183 –168 Exchange rate difference from derivatives –611 –217 Swedish companies –178 –179 4CVGFKHHGTGPEGKPHCKTXCNWGICKPUCPFNQUUGUQPƂPCPEKCNKPUVTWOGPVU 10 6 Other companies –29 –40 6QVCNHCKTXCNWGEJCPIGQHEWTTGPE[FGTKXCVKXGUKPƂPCPEGEQUVUPGV –608 –215 Total –390 –387 6QVCNHCKTXCNWGEJCPIGQHKPVGTGUVCPF EWTTGPE[FGTKXCVKXGUKPƂPCPEGEQUVUPGV –682 –282 &GHGTTGFVCZGU Finnish companies 74 70  )DLUYDOXHJDLQVDQGORVVHVRQğQDQFLDOLQVWUXPHQWVLQFOXGHIDLUYDOXHFKDQJHVIURPLQWHUHVWUDWH Swedish companies 5 17 VZDSVQRWJHWWLQJKHGJHDFFRXQWLQJDPRXQWLQJWR(85PLOOLRQ   Other companies 50 8 Total 129 95 $JJUHJDWHGH[FKDQJHUDWHGLIIHUHQFHVLQFOXGHGLQRSHUDWLQJSURğWZHUH(85PLOOLRQ #FLWUVOGPVUTGEQIPKUGFHQTEWTTGPVVCZQHRTKQTRGTKQFU ŋ DQGLQğQDQFHFRVWV(85PLOOLRQ   Finnish companies 0 –2 Swedish companies 0 –2 Other companies 0 11 Total 0 7 6QVCNKPEQOGVCZGU –261 –285 FORTUM FINANCIALS 2010 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 103

16.3,QFRPHWD[UDWH 17 (DUQLQJVSHUVKDUH 7KHWDEOHEHORZH[SODLQVWKHGLIIHUHQFHEHWZHHQWKHWKHRUHWLFDOHQDFWHGWD[UDWHLQ 1 )LQODQGFRPSDUHGWRWKHWD[UDWHLQWKHLQFRPHVWDWHPHQW %DVLF 2 %DVLFHDUQLQJVSHUVKDUHLVFDOFXODWHGE\GLYLGLQJWKHSURğWDWWULEXWDEOHWRRZQHUV 3 EUR million 2010  2009  RIWKHSDUHQWFRPSDQ\E\WKHZHLJKWHGDYHUDJHQXPEHURIRUGLQDU\VKDUHVLQLVVXH 4 2TQƂVDGHQTGVCZ 1,615 1,636 GXULQJWKH\HDU 5 6CZECNEWNCVGFCVPQOKPCN(KPPKUJVCZTCVG –420 26.0 –425 26.0 6 &KHHGTGPEGUKPVCZTCVGUCPFTGIWNCVKQPUKPQVJGTEQWPVTKGU 113 –7.0 126 –7.7 7 2010 2009 +PEQOGPQVUWDLGEVVQVCZ 5–0.3 16 –1.0 8 2TQƂVCVVTKDWVCDNGVQQYPGTUQHVJGRCTGPV '74OKNNKQP 1,300 1,312 Tax exempt capital gains 20 –1.2 1–0.1 9 9GKIJVGFCXGTCIGPWODGTQHUJCTGU VJQWUCPFU 888,367 888,230 'ZRGPUGUPQVFGFWEVKDNGHQTVCZRWTRQUGU –5 0.3 –5 0.4 10 5JCTGQHRTQƂVQHCUUQEKCVGFEQORCPKGUCPFLQKPVXGPVWTGU 16 –1.0 5–0.4 11 $CUKEGCTPKPIURGTUJCTG '74RGTUJCTG 1.46 1.48 6CZGUTGNCVGFVQFKXKFGPFFKUVTKDWVKQPU –1 0.1 –3 0.2 12 Tax losses for which no deferred tax was recognised –1 0.1 –6 0.4 13 7VKNKUCVKQPQHRTGXKQWUN[WPTGEQIPKUGFVCZNQUUGU 1–0.1 'LOXWHG 14 Changes in tax provisions 11 –0.7 –1 0.1 'LOXWHGHDUQLQJVSHUVKDUHLVFDOFXODWHGDGMXVWLQJWKHZHLJKWHGDYHUDJHQXPEHURI 15 #FLWUVOGPVUTGEQIPKUGFHQTVCZGUQHRTKQTRGTKQFU 0 0.0 7–0.5RUGLQDU\VKDUHVRXWVWDQGLQJWRDVVXPHFRQYHUVLRQRIDOOGLOXWLYHSRWHQWLDORUGLQDU\ 16 17 6CZEJCTIGKPVJGKPEQOGUVCVGOGPV –261 16.2 –285 17.4 VKDUHV$WWKHHQGRI)RUWXPKDGQRGLOXWLQJVWRFNRSWLRQVFKHPHV 18 19 7KHZHLJKWHGDYHUDJHDSSOLFDEOHWD[UDWHZDV  7KHWD[UDWHDFFRUG- 18 'LYLGHQGSHUVKDUH 20 LQJWRWKHLQFRPHVWDWHPHQWZDV  7KHWD[UDWHXVHGLQWKHLQFRPH 21 VWDWHPHQWLVDOZD\VLPSDFWHGE\WKHIDFWWKDWVKDUHRISURğWVRIDVVRFLDWHVDQGMRLQW $GLYLGHQGLQUHVSHFWRIRI(85SHUVKDUHDPRXQWLQJWRDWRWDOGLYLGHQGRI 22 23 YHQWXUHVDUHUHFRUGHGEDVHGRQ)RUWXPłVVKDUHRISURğWVDIWHUWD[([FOXGLQJWKHVKDUH (85PLOOLRQEDVHGRQWKHQXPEHURIVKDUHVUHJLVWHUHGDVRI)HEUXDU\LVWR 24 RISURğWVIURPDVVRFLDWHVFDSLWDOJDLQVDQGRWKHURQHWLPHLWHPVWKHWD[UDWHZDV EHSURSRVHGDWWKH$QQXDO*HQHUDO0HHWLQJRQ0DUFK7KHVHğQDQFLDOVWDWH- 25    PHQWVGRQRWUHĠHFWWKLVGLYLGHQG 26 )RUWXPł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ne-time effects PLOOLRQEDVHGRQWKHDPRXQWRIVKDUHVUHJLVWHUHGDVRI$SULO7KHGLYLGHQG 34 35 'XULQJWKHUHZHUHVHYHUDOWD[H[HPSWFDSLWDOJDLQV7KHPDMRUSDUWRIWKHPUHODWHV ZDVSDLGRQ$SULO 36 WRWKHVDOHVRIVKDUHVLQDVVRFLDWHGFRPSDQLHV6W3HWHUVEXUJ6DOHV&RPSDQ\6ZHGHJDV 37 $%DQG.DUOVNRJD(QHUJL 0LOMù$% 38 7KHPDMRUSDUWRIWKHWD[H[HPSWFDSLWDOJDLQVLQFRPHVIURPVDOHRIVKDUHVLQ 39 FRPSDQLHVZLWKFRQVWUXFWLRQDQGRSHUDWLRQRILQIUDVWUXFWXUHEXVLQHVV 40 41 See also Note 33 Deferred income taxes on page 117. 42 43 44 45 46 47 48 104 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FORTUM FINANCIALS 2010

19 )LQDQFLDODVVHWVDQGOLDELOLWLHVE\FDWHJRULHV )LQDQFLDODVVHWVDQGOLDELOLWLHVLQWKHWDEOHVEHORZDUHVSOLWLQWRFDWHJRULHVLQDFFRUGDQFHZLWK,$67KHFDWHJRULHVDUHIXUWKHUVSOLWLQWRFODVVHVZKLFKDUHWKHEDVLVIRUYDOXLQJ DUHVSHFWLYHDVVHWRUOLDELOLW\)XUWKHULQIRUPDWLRQFDQEHIRXQGLQWKH1RWHVPHQWLRQHGLQWKHWDEOH

Financial assets by categories .QCPUCPFTGEGKXCDNGU (KPCPEKCNCUUGVUCVHCKTXCNWGVJTQWIJRTQƂVCPFNQUU *GFIGCEEQWPVKPIHCKT (CKTXCNWGTGEQIPKUGFKP #XCKNCDNGHQTUCNG #OQTVKUGFEQUV XCNWGJGFIGU 0QPJGFIGCEEQWPVKPI GSWKV[ECUJƃQYJGFIGU ƂPCPEKCNCUUGVU (KPCPEGNGCUGU 6QVCNƂPCPEKCNCUUGVU EUR million Note 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 (KPCPEKCNKPUVTWOGPVUKPPQPEWTTGPVCUUGVU 1VJGTPQPEWTTGPVCUUGVU 24 31 25 41 44 72 69 >KXCVKXGƂPCPEKCNKPUVTWOGPVU 3 Electricity derivatives 30 38 3 16 33 54 +PVGTGUVTCVGCPFEWTTGPE[FGTKXCVKXGU 76 59 51 77 18 3 145 139 1KNCPFQVJGTHWVWTGUCPFHQTYCTFEQPVTCEVU 5 2 5 2 .QPIVGTOKPVGTGUVDGCTKPITGEGKXCDNGU 25 1,101 854 48 64 1,149 918

(KPCPEKCNKPUVTWOGPVUKPEWTTGPVCUUGVU >KXCVKXGƂPCPEKCNKPUVTWOGPVU 3 Electricity derivatives 61 33 43 61 76 +PVGTGUVTCVGCPFEWTTGPE[FGTKXCVKXGU 34 95 5 3 39 98 1KNCPFQVJGTHWVWTGUCPFHQTYCTFEQPVTCEVU 48 8 48 8 Trade receivables 27 943 784 943 784 1VJGTUJQTVVGTOKPVGTGUVDGCTKPITGEGKXCDNGU 27 46 12 11 13 57 25 Bank deposits 28 271 397 271 397 %CUJCPFECUJGSWKXCNGPVU 28 285 493 285 493 Total 2,677 2,565 76 59 229 253 26 65 41 44 59 77 3,108 3,063

Financial liabilities by categories (KPCPEKCNNKCDKNKVKGUCVHCKTXCNWGVJTQWIJRTQƂVCPFNQUU 1VJGTƂPCPEKCNNKCDKNKVKGU *GFIGCEEQWPVKPI (CKTXCNWGTGEQIPKUGFKP 6QVCNƂPCPEKCN HCKTXCNWGJGFIGU 0QPJGFIGCEEQWPVKPI GSWKV[ECUJƃQYJGFIGU #OQTVKUGFEQUV (CKTXCNWG (KPCPEGNGCUGU liabilities EUR million Note 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 (KPCPEKCNKPUVTWOGPVUKPPQPEWTTGPVNKCDKNKVKGU +PVGTGUVDGCTKPINKCDKNKVKGU 32 5,379 4,464 1,115 1,514 26 24 6,520 6,002 >KXCVKXGƂPCPEKCNKPUVTWOGPVU 3 Electricity derivatives 46 34 130 67 176 101 +PVGTGUVTCVGCPFEWTTGPE[FGTKXCVKXGU 45 75 10 10 55 85 1KNCPFQVJGTHWVWTGUCPFHQTYCTFEQPVTCEVU 7 5 7 5

(KPCPEKCNKPUVTWOGPVUKPEWTTGPVNKCDKNKVKGU +PVGTGUVDGCTKPINKCDKNKVKGU 32 860 854 2 3 862 857 >KXCVKXGƂPCPEKCNKPUVTWOGPVU 3 Electricity derivatives 278 60 494 39 772 99 +PVGTGUVTCVGCPFEWTTGPE[FGTKXCVKXGU 386 161 5 8 391 169 1KNCPFQVJGTHWVWTGUCPFHQTYCTFEQPVTCEVU 44 8 44 8 Trade payables 38 435 317 435 317 Other liabilities 38 205 158 205 158 Total - - 806 343 639 124 6,879 5,793 1,115 1,514 28 27 9,467 7,801 FORTUM FINANCIALS 2010 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 105

Financial liabilities 20 )LQDQFLDODVVHWVDQGOLDELOLWLHV .GXGN .GXGN .GXGN Netting  Total 1 E\IDLUYDOXHKLHUDUFK\ EUR million Note 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2 +PPQPEWTTGPVNKCDKNKVKGU 3 )LQDQFLDOLQVWUXPHQWVWKDWDUHPHDVXUHGLQWKHEDODQFHVKHHWDWIDLUYDOXHDUHSUHVHQWHG +PVGTGUVDGCTKPINKCDKNKVKGU 32 1,115 1,514 1,115 1,514 4 >KXCVKXGƂPCPEKCN DFFRUGLQJWRIROORZLQJIDLUYDOXHPHDVXUHPHQWKLHUDUFK\ 5 KPUVTWOGPVU 3 6 ō /HYHOTXRWHGSULFHV XQDGMXVWHG LQDFWLYHPDUNHWVIRULGHQWLFDODVVHWVRUOLDELOLWLHV Electricity derivatives 7 ō /HYHOLQSXWVRWKHUWKDQTXRWHGSULFHVLQFOXGHGZLWKLQ/HYHOWKDWDUHREVHUY- *GFIGCEEQWPVKPI 216 215 1 –87 –149 130 67 8  DEOHIRUWKHDVVHWRUOLDELOLW\HLWKHUGLUHFWO\ LHDVSULFHV RULQGLUHFWO\ LHGHULYHG 0QPJGFIGCEEQWPVKPI 24 2 105 83 1 –84 –52 46 34 9 +PVGTGUVTCVGCPFEWTTGPE[ 10 IURPSULFHV  derivatives 11 ō /HYHO,QSXWVIRUWKHDVVHWRUOLDELOLW\WKDWLVQRWEDVHGRQREVHUYDEOHPDUNHWGDWD *GFIGCEEQWPVKPI 10 10 10 10 12 XQREVHUYDEOHLQSXWV  0QPJGFIGCEEQWPVKPI 45 75 45 75 13 1KNCPFQVJGTHWVWTGUCPF See Note 1 Accounting policies, 1.30 Fair value estimation on page 79. 14 forward contracts 15 0QPJGFIGCEEQWPVKPI 27 5 –20 7 5 Financial assets 16 17  +PEWTTGPVNKCDKNKVKGU .GXGN .GXGN .GXGN Netting Total 18 >KXCVKXGƂPCPEKCN EUR million Note 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 19 +PPQPEWTTGPVCUUGVU KPUVTWOGPVU 3 Electricity derivatives 20 #XCKNCDNGHQTUCNGƂPCPEKCN 21 assets  24 41 44 41 44 *GFIGCEEQWPVKPI 1,033 413 –539 –375 494 38 22 >KXCVKXGƂPCPEKCN 0QPJGFIGCEEQWPVKPI 156 1 616 263 –494 –203 278 61 KPUVTWOGPVU 3 +PVGTGUVTCVGCPFEWTTGPE[ 23 Electricity derivatives derivatives 24 *GFIGCEEQWPVKPI 90 164 –87 –148 3 16 *GFIGCEEQWPVKPI 5 8 5 8 25 0QPJGFIGCEEQWPVKPI 19 3 95 86 2  –84 –53 30 38 0QPJGFIGCEEQWPVKPI 386 161 386 161 26 +PVGTGUVTCVGCPFEWTTGPE[ 1KNCPFQVJGTHWVWTGUCPF 27 derivatives forward contracts 28 *GFIGCEEQWPVKPI 94 62 94 62 0QPJGFIGCEEQWPVKPI 196 8 –152 44 8 29 0QPJGFIGCEEQWPVKPI 51 77 51 77 Total 403 16 3,531 2,742 - 2 –1,376 –779 2,560 1,981 30 1KNCPFQVJGTHWVWTGUCPF 31 forward contracts  $YDLODEOHIRUVDOHğQDQFLDODVVHWVLHVKDUHVZKLFKDUHQRWFODVVLğHGDVDVVRFLDWHGFRPSDQLHVRU 32 0QPJGFIGCEEQWPVKPI 25 2 –20 5 2 MRLQWYHQWXUHVFRQVLVWVPDLQO\RIVKDUHVLQXQOLVWHGFRPSDQLHVRI(85PLOOLRQ  IRU 33 ZKLFKWKHIDLUYDOXHFDQQRWEHUHOLDEO\GHWHUPLQHG7KHVHDVVHWVDUHPHDVXUHGDWFRVWOHVVSRVVLEOH 34 LPSDLUPHQW +PEWTTGPVCUUGVU 35 >KXCVKXGƂPCPEKCNKPUVTWOGPVU 3 $YDLODEOHIRUVDOHğQDQFLDODVVHWVLQFOXGHOLVWHGVKDUHVDWIDLUYDOXHRI(85PLOOLRQ  7KH 36 FXPXODWLYHIDLUYDOXHFKDQJHERRNHGLQ)RUWXPłVHTXLW\ZDV(85–PLOOLRQ ŋ  Electricity derivatives 37  1$6'$420;&RPPRGLWLHV(XURSHTXRWHVWKHFORVHVW\HDUVIRU\HDUVEH\RQGDV\VWHPDWLFSULFH *GFIGCEEQWPVKPI 539 418 –539 –375 0 43 38 HVWLPDWHPDGHE\)RUWXPLVXVHG5HDVRQIRUWUDQVIHUULQJHOHFWULFLW\GHULYDWLYHVIURPOHYHOWROHYHO 0QPJGFIGCEEQWPVKPI 152 403 236 –494 –203 61 33 LVWKHPDWXULW\RIFRQWUDFWV 39 +PVGTGUVTCVGCPFEWTTGPE[ 40  5HFHLYDEOHVDQGOLDELOLWLHVDJDLQVWHOHFWULFLW\H[FKDQJHVDULVLQJIURPVWDQGDUGGHULYDWLYHFRQ- derivatives WUDFWVZLWKVDPHGHOLYHU\SHULRGDUHQHWWHG 41 *GFIGCEEQWPVKPI 5 3 5 3 42 0QPJGFIGCEEQWPVKPI 34 95 34 95 43 1KNCPFQVJGTHWVWTGUCPF 44 forward contracts 45 0QPJGFIGCEEQWPVKPI 200 8 –152 48 8 46 Total 396 13 1,311 1,141 41 46 –1,376 –779 372 421 47 48 106 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FORTUM FINANCIALS 2010

$VRI'HFHPEHUWKHUHFRYHUDEOHYDOXHVZHUHIRXQGWREHLQH[FHVVRIWKHLU 21 ,QWDQJLEOHDVVHWV FDUU\LQJYDOXHVDQGWKHUHIRUHWKHUHODWHGJRRGZLOOLVQRWLPSDLUHG$FFRUGLQJWRPDQ- DJHPHQWDUHDVRQDEO\SRVVLEOHFKDQJHLQGLVFRXQWUDWHRULQWKHOHYHORIHDUQLQJVZRXOG )QQFYKNN 1VJGTKPVCPIKDNGCUUGVU Total EUR million 2010 2009 2010 2009 2010 2009 QRWFDXVH5XVVLDQFDVKJHQHUDWLQJXQLWłVFDUU\LQJDPRXQWWRH[FHHGLWVUHFRYHUDEOH %QUV,CPWCT[ 285 298 372 379 657 677 DPRXQW Translation differences and other 7KHPDLQLWHPVLQRWKHULQWDQJLEOHDVVHWVDUHFRVWVIRUVRIWZDUHSURGXFWVDQGVRIW- CFLWUVOGPVU 16 –13 16 –27 32 –40 %CRKVCNGZRGPFKVWTG   19 20 19 20 ZDUHOLFHQVHVZKLFKDUHDPRUWLVHGRYHUWKHLUXVHIXOOLYHV2WKHULQWDQJLEOHDVVHWVDOVR Change in emission rights   13 0 13 0 LQFOXGHERXJKWHPLVVLRQULJKWVDQGHPLVVLRQULJKWVUHFHLYHGIUHHRIFKDUJHZKLFKDUH Disposals   –25 –6 –25 –6 UHFRJQLVHGWRWKHORZHURIIDLUYDOXHDQGKLVWRULFDOFRVW7KHDPRXQWRIHPLVVLRQULJKWV 4GENCUUKƂECVKQPU   17 6 17 6 LQLQWDQJLEOHDVVHWVLV(85PLOOLRQ   %QUV&GEGODGT 301 285 412 372 713 657

#EEWOWNCVGFFGRTGEKCVKQP,CPWCT[   266 282 266 282 22 3URSHUW\SODQWDQGHTXLSPHQW Translation differences and other CFLWUVOGPVU   25 –30 25 –30 .CPF #FXCPEGU Disposals   –25 –6 –25 –6 YCVGTHCNN $WKNFKPIU /CEJKPGT[ 1VJGT RCKFCPF TKIJVUCPF RNCPVUCPF CPF tangible EQPUVTWEVKQP 4GENCUUKƂECVKQPU   4  4  EUR million tunnels UVTWEVWTGU equipment assets in progress Total Impairment charges   1  1  %QUV,CPWCT[ 2,840 2,752 12,570 206 1,091 19,459 Depreciation for the period   21 20 21 20 Translation differences and #EEWOWNCVGFFGRTGEKCVKQP&GEGODGT - - 292 266 292 266 QVJGTCFLWUVOGPVU 392 201 1,091 14 100 1,798 %CRKVCNGZRGPFKVWTG 1 83 221 1 897 1,203 %CTT[KPICOQWPV&GEGODGT 301 285 120 106 421 391 0WENGCTCUUGVTGVKTGOGPVEQUV   18 18 Disposals –1 –13 –66  2–78 4GENCUUKƂECVKQPU 12 93 339 –21 –440 –17 7KHJRRGZLOOLVLQFOXGHGLQ5XVVLDVHJPHQWDQGUHODWHVWRWKHDFTXLVLWLRQRI2$2 Moved to Assets held for sale –1 –18 –236 –2 –1 –258 )RUWXP IRUPHU7*& 7KHJRRGZLOOKDVEHHQWHVWHGIRULPSDLUPHQWE\FRPSDULQJ %QUV&GEGODGT 3,243 3,098 13,937 198 1,649 22,125 UHFRYHUDEOHDPRXQWVRIWKHQHWRSHUDWLQJDVVHWVIRU2$2)RUWXPLQFOXGLQJJRRGZLOO ZLWKWKHLUFDUU\LQJDPRXQWV7KHUHFRYHUDEOHDPRXQWVZHUHGHWHUPLQHGRQWKHEDVLV #EEWOWNCVGFFGRTGEKCVKQP ,CPWCT[ - 1,184 5,284 136 - 6,604 RIYDOXHLQXVHDSSO\LQJGLVFRXQWHGFDVKĠRZFDOFXODWLRQV Translation differences and .H\DVVXPSWLRQVPDGHE\PDQDJHPHQWDQGXVHGLQFDOFXODWLQJYDOXHLQXVHZHUH QVJGTCFLWUVOGPVU  84 449 9  542 H[SHFWHGGHYHORSPHQWRI5XVVLDQSRZHUPDUNHWXWLOL]DWLRQRISRZHUSODQWVDQGRWKHU Disposals  –8 –44 –52 DVVHWVIRUHFDVWHGPDLQWHQDQFHDQGUHIXUELVKPHQWLQYHVWPHQWVDVZHOODVğQDOLVDWLRQ Depreciation for the period  91 443 5  539 Impairment charges  2 2 RIWKHLQYHVWPHQWSURJUDPPHDQGUDWHXVHGIRUGLVFRXQWLQJ7KHDVVXPSWLRQVDUH 4GENCUUKƂECVKQPU  –7 3 –4 EDVHGRQH[SHFWDWLRQVRIIXWXUHHYHQWVWKDWDUHEHOLHYHGWREHUHDVRQDEOHXQGHUWKH Moved to Assets held for sale  –7 –119 –1  –127 FLUFXPVWDQFHV7KHSURFHVVXVHGWRGHWHUPLQHWKHVHDVVXPSWLRQVKDVQRWFKDQJHG #EEWOWNCVGFFGRTGEKCVKQP IURPSUHYLRXV\HDU7KHFDVKĠRZVDUHEDVHGRQEXVLQHVVSODQDSSURYHGE\WKH%RDUG &GEGODGT -1,3396,016149-7,504 RI'LUHFWRUV7KHSRZHUPDUNHWOLEHUDOLVDWLRQLQ5XVVLDKDVSURJUHVVHGH[SHFWHGO\ %CTT[KPICOQWPV GXULQJ2$2)RUWXPłVLQYHVWPHQWSURJUDPPHKDVEHHQDFFHOHUDWHGLQOLJKWRI &GEGODGT 3,243 1,759 7,921 49 1,649 14,621 WKHUHFRYHULQJGHPDQGDQGGHYHORSPHQWRIWKH5XVVLDQFDSDFLW\PDUNHW7KHODVW QHZXQLWVDUHVFKHGXOHGWRFRPPLVVLRQE\WKHHQGRI2QWKHRWKHUKDQGWKH 3URSHUW\SODQWDQGHTXLSPHQWKDVLQFUHDVHGGXULQJ7KHLQFUHDVHLVPRVWO\GXH FRPPLVVLRQLQJRIWKHğUVWWKUHHXQLWVKDVEHHQVOLJKWO\GHOD\HG7KHGLVFRXQWUDWHLV WRWKHRQJRLQJLQYHVWPHQWSURJUDPPHLQ2$2)RUWXPDQG+HDWVHJPHQWłVEXLOGLQJRI GHWHUPLQHGWDNLQJLQWRDFFRXQWWKHULVNSURğOHRIWKHFRXQWU\LQZKLFKWKHFDVKĠRZV IRXU&+3SODQWVRIZKLFKWZRZHUHWDNHQLQWRFRPPHUFLDOXVHGXULQJDQGWZRDUH DUHJHQHUDWHG3UHWD[GLVFRXQWUDWHXVHGIRU5XVVLDZDV  7KHUH VWLOOXQGHUFRQVWUXFWLRQ7KHVWUHQJWKHQLQJRIFXUUHQFLHVPDLQO\6(.DOVRFRQWULEXWHG KDYHQRWEHHQDQ\PDMRUFKDQJHVLQWKHGLVFRXQWUDWHFRPSRQHQWVRULQWKHPHWKRGV WRLQFUHDVHLQSURSHUW\SODQWDQGHTXLSPHQW XVHGWRGHWHUPLQHWKHP For more information on credit risks regarding ongoing investments, see Note 3.10 Credit risk on page 87. FORTUM FINANCIALS 2010 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 107

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LVDMRLQWO\FRQWUROOHGDVVHWEHWZHHQ)RUWXPDQG792)RUWXPDFFRXQWVIRULWVRI 23.7 Transactions and balances WKHDVVHWVDQG792IRU Associated company transactions See also Jointly controlled assets in Note 1.12.1 in Accounting principles on page 73. EUR million 2010 2009 Sales to associated companies 63 86 )RUWXPRZQVRIWKHVKDUHVLQ7HUULWRULDO*HQHUDWLQJ&RPSDQ\ 7*& 7*& Interest on associated company loan receivables 39 37 2WTEJCUGUHTQOCUUQEKCVGFEQORCPKGU 764 555 ZDVIRUPHGLQODWHE\PHUJHUVRIVHYHUDO5XVVLDQFRPSDQLHV$FFRUGLQJWR)RU- WXPłVDFFRXQWLQJSROLF\WKHVKDUHRI7*&łVSURğWVLVUHFRJQLVHGEDVHGRQWKHPRVW 3XUFKDVHVIURPDVVRFLDWHGFRPSDQLHVDUHSXUFKDVHVRIQXFOHDUDQGK\GURSRZHUDW UHFHQWO\SXEOLVKHG,)56ğQDQFLDOVWDWHPHQWV SURGXFWLRQFRVWLQFOXGLQJLQWHUHVWFRVWVDQGSURGXFWLRQWD[HV ,Q4)RUWXPFKDQJHGLWVDFFRXQWLQJSUDFWLFHIRUUHFRJQLWLRQRI7*&UHVXOWV See Note 11 Materials and services on page 97. )RUWXPHOLPLQDWHVWKHLPSDLUPHQWORVVHVRUUHYHUVDOVRISULRULPSDLUPHQWVIURPLWVVKDUH See Note 46 Related party transactions on page 126. RIUHVXOWVDQGDVVHVVHVWKHQHHGIRULPSDLUPHQWVHSDUDWHO\3UHYLRXVO\)RUWXPKDVERRNHG LWVVKDUHRIUHVXOWVLQFOXGLQJDQ\LPSDLUPHQWORVVHVDQGUHYHUVDOVRISULRULPSDLUPHQWV Associated company balances UHFRJQLVHGE\7*&7KHDFFRXQWLQJSUDFWLFHFKDQJHZDVGRQHSURVSHFWLYHO\DGMXVWLQJ EUR million 2010 2009 IRUSUHYLRXVSHULRGVDVWKHLPSDFWRQWKHFRPSDUDWLYH\HDULQIRUPDWLRQLVLPPDWHULDO 4GEGKXCDNGUHTQOCUUQEKCVGFEQORCPKGU 7*&KDVFKDQJHGLWVUHSRUWLQJVFKHGXOHIRU,)56ğQDQFLDOLQIRUPDWLRQGXULQJWKH .QPIVGTOKPVGTGUVDGCTKPINQCPTGEGKXCDNGU 1,071 852 Trade receivables 22 14 \HDU)URPRQZDUGV7*&SXEOLVKHV,)56LQWHULPğQDQFLDOVWDWHPHQWVTXDUWHUO\ Other receivables 20 5 )RUWXPłVUHVXOWVLQFOXGHV)RUWXPłVVKDUHRI7*&łVSURğWVIRUWKHVHFRQGKDOIRI DVZHOODVIRUWKHğUVWWKUHHTXDUWHUVRI .KCDKNKVKGUVQCUUQEKCVGFEQORCPKGU 0DUNHWYDOXHEDVHGRQPDUNHWTXRWDWLRQVRIOLVWHGSULQFLSDODVVRFLDWHGFRPSDQLHV .QPIVGTONQCPRC[CDNGU 213 199 RQ'HFHPEHU +DIVOXQG$6$DQG7*& ZDV(85PLOOLRQ  RIZKLFK Trade payables 36 23 Other payables 15 22 +DIVOXQGZDV(85PLOOLRQDQG7*&ZDV(85PLOOLRQ /RQJWHUPLQWHUHVWEHDULQJUHFHLYDEOHVDUHPDLQO\UHFHLYDEOHVIURP6ZHGLVKQXFOHDU $VVHWVOLDELOLWLHVVDOHVDQGSURğWDQGORVVDVSUHVHQWHGE\WKH*URXSłVSULQFLSDO FRPSDQLHV2.*$%DQG)RUVPDUNV.UDIWJUXSS$%(85PLOOLRQ   DVVRFLDWHVDUHDVIROORZV ,QYHVWPHQWVLQ6ZHGLVKQXFOHDUFRPSDQLHVDUHğQDQFHGWKURXJKORDQVIURPRZQHUV EUR million RIWKHQXFOHDUFRPSDQLHVSURUDWDRZQHUVKLS %QORCP[ &QOKEKNG Assets Liabilities Sales 2TQƂVNQUU 1YPGTUJKR 8QVGU   -GOKLQMK1[ Finland 434 314 40 –7 18 18 7UDQVDFWLRQVDQGEDODQFHVZLWKMRLQWYHQWXUHV 6GQNNKUWWFGP8QKOC1[L  Finland 5,639 4,649 276 34 26 26 1-)#$  Sweden 2,210 1,806 463 1 46 46 EUR million 2010 2009 (QTUOCTMU-TCHVITWRR#$  Sweden 1,724 1,352 555 0 26 26 2WTEJCUGU 1 1 )CUWO1[ Finland 725 346 838 48 31 31 4GEGKXCDNGUHTQOLQKPVXGPVWTGU 6 4  (KPITKF1[L Finland 1,705 1,225 318 31 25 33 7KHUHZHUHQRRXWVWDQGLQJORDQUHFHLYDEOHVIURPMRLQWYHQWXUHVRQ'HFHPEHURU Territorial Generating %QORCP[ 6)%  4WUUKC 2,582 853 911 59 26 26  *CHUNWPF#5# Norway 3,506 2,266 1,326 –171 34 33 24 2WKHUQRQFXUUHQWDVVHWV

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DVVHWVDUHPHDVXUHGDWFRVWOHVVSRVVLEOHLPSDLUPHQW 25.2 Finance lease receivables $YDLODEOHIRUVDOHğQDQFLDODVVHWVLQFOXGHOLVWHGVKDUHVDWIDLUYDOXHRI(85PLOOLRQ  )RUWXPRZQVDVVHWV PDLQO\&+3DQGKHDWLQJSODQWV WKDWLWOHDVHVWRFXVWRPHUVXQGHU 1  7KHFXPXODWLYHIDLUYDOXHFKDQJHERRNHGLQ)RUWXPłVHTXLW\ZDV(85ŋPLOOLRQ ŋ  ğQDQFLDOOHDVLQJDJUHHPHQWVLQ)LQODQG6ZHGHQ1RUZD\DQG(VWRQLD7KHVHDVVHWV 2 DUHUHFRUGHGDWWKHJURVVLQYHVWPHQWFRVWLQWKHOHDVHOHVVXQHDUQHGğQDQFLDOLQFRPH 3 4 25 /RQJWHUPDQGVKRUWWHUP 7KHDYHUDJHOHDVHWHUPLVDSSUR[LPDWHO\\HDUV2IDOOFRQWUDFWVFDUU\DĠRDWLQJ LQWHUHVWUDWHDQGDğ[HGUDWH 5 6 LQWHUHVWEHDULQJUHFHLYDEOHV 7 Present value of future minimum lease payment receivables 8 EUR million 2010 2009 EUR million 2010 2009 9 .QPIVGTONQCPTGEGKXCDNGU 1,101 854 )TQUUKPXGUVOGPVKPƂPCPEGNGCUGEQPVTCEVU 78 102 10 Finance lease receivables 48 64 .GUUWPGCTPGFƂPCPEGKPEQOG 19 25 11 6QVCNNQPIVGTOKPVGTGUVDGCTKPITGEGKXCDNGU 1,149 918 Total 59 77 12 1VJGTUJQTVVGTOKPVGTGUVDGCTKPITGEGKXCDNGU 46 12 13 5JQTVVGTOƂPCPEGNGCUGTGEGKXCDNGU 11 13 0DWXULW\RIğQDQFHOHDVHUHFHLYDEOHV 14 6QVCNUJQTVVGTOKPVGTGUVDGCTKPITGEGKXCDNGU 57 25 15 EUR million 2010 2009 Total 1,206 943 16 Gross investment 17  ,QFOXGHGLQWUDGHDQGRWKHUUHFHLYDEOHVLQWKHEDODQFHVKHHWVHH1RWHRQSDJH Less than 1 year 15 17 18 1–5 years 42 60 19 Over 5 years 21 25 /RQJWHUPORDQUHFHLYDEOHVLQFOXGHUHFHLYDEOHVIURPDVVRFLDWHGFRPSDQLHV(85 20 Total 78 102 PLOOLRQ  PDLQO\IURP6ZHGLVKQXFOHDUFRPSDQLHV2.*$%DQG)RUVPDUNV 21 .UDIWJUXSS$%(85PLOOLRQ  7KHVHFRPSDQLHVDUHPDLQO\IXQGHG Maturity of present value of future minimum lease payments receivables 22 23 ZLWKVKDUHKROGHUORDQVSURUDWDHDFKVKDUHKROGHUłVRZQHUVKLS7KHLQFUHDVHLVUHODWHG EUR million 2010 2009 24 WRLQYHVWPHQWVPDGHDFFRUGLQJWRSODQLQ2.*$%DQG)RUVPDUNV.UDIWJUXSS$% Less than 1 year 12 13 25 /RQJWHUPORDQUHFHLYDEOHVDOVRLQFOXGHUHFHLYDEOHVIURP7HROOLVXXGHQ9RLPD2\M 1–5 years 30 44 26 792 DPRXQWLQJWR(85PLOOLRQ  2ONLOXRWRWKHQXFOHDUSRZHUSODQW Over 5 years 17 20 27 Total 59 77 EHLQJEXLOWE\WKHDVVRFLDWHGFRPSDQ\792LVIXQGHGWKURXJKH[WHUQDOORDQVVKDUHLV- 28 29 VXHVDQGVKDUHKROGHUORDQVDFFRUGLQJWRVKDUHKROGHUVłDJUHHPHQWEHWZHHQWKHRZQHUV 1RFRQWLQJHQWUHQWVZHUHUHFRJQLVHGLQLQFRPHVWDWHPHQWQHLWKHULQQRULQ  30 RI792,Q0DUFK792łVVKDUHKROGHUVFRPPLWWHGWRSURYLGLQJD(85PLOOLRQ 31 VXERUGLQDWHGVKDUHKROGHUVłORDQWR7927KHIDFLOLW\ZLOOEHDYDLODEOHXQWLOWKHHQGRI 32 )RUWXPłVVKDUHRIWKLVFRPPLWPHQWLVDWPD[LPXP(85PLOOLRQ 26 ,QYHQWRULHV 33 For further information regarding credit risk management, see Note 3.10 Credit risk on page 87. 34 35 EUR million 2010 2009 36 25.1 Interest-bearing receivables 0WENGCTHWGN 84 69 37 Coal 129 184 38 'HHGEVKXG %CTT[KPI 4GRTKEKPI 4GRTKEKPI Fair %CTT[KPI Fair Oil 53 40 39 interest amount WPFGT 4GRTKEKPI QXGT XCNWG amount XCNWG $KQHWGNU 44 61 EUR million rate 2010 [GCT s[GCTU [GCTU 2010 2009 2009 40 Other inventories 77 93 .QPIVGTONQCPTGEGKXCDNGU 4.1 1,103 1,086 14 3 1,112 854 886 41 Total 387 447 Finance lease receivables 7.2 59 25 4 30 73 77 94 42 Total long-term 43 KPVGTGUVDGCTKPITGEGKXCDNGU 4.3 1,162 1,111 18 33 1,185 931 980 1RLPSDLUPHQWFRVWVKDYHEHHQERRNHGUHODWHGWRLQYHQWRULHVQHLWKHULQQRULQ 44 1VJGTUJQTVVGTO  45 KPVGTGUVDGCTKPITGEGKXCDNGU 8.6 44 44 46 12 12 46 Total interest-bearing 47 TGEGKXCDNGU 4.4 1,206 1,155 18 33 1,231 943 992 48  ,QFOXGLQJFXUUHQWSRUWLRQRIORQJWHUPUHFHLYDEOHV 112 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FORTUM FINANCIALS 2010

7UDGHUHFHLYDEOHVDUHDULVLQJIURPDODUJHQXPEHURIFXVWRPHUVPDLQO\LQ(85DQG 27 7UDGHDQGRWKHUUHFHLYDEOHV 6(.PLWLJDWLQJWKHFRQFHQWUDWLRQRIULVN)RUWXPKHOGRQ'HFHPEHUEDQN JXDUDQWHHVDVFROODWHUDOVIRUWUDGHUHFHLYDEOHVDPRXQWLQJWR(85PLOOLRQ   EUR million 2010 2009 For further information regarding credit risk management and credit risks, see 2.2.9 Counter- Trade receivables 943 784 Income tax receivables 18 16 SDUWULVNVRQSDJHLQWKH2SHUDWLQJDQGğQDQFLDOUHYLHZDQG1RWH&UHGLWULVNRQSDJH #EETWGFKPVGTGUVKPEQOG 9 1 #EETWGFKPEQOGCPFRTGRCKFGZRGPUGU 62 46 28 Other receivables 195 158 /LTXLGIXQGV 5JQTVVGTOƂPCPEGNGCUGTGEGKXCDNGU 11 13 1VJGTUJQTVVGTOKPVGTGUVDGCTKPITGEGKXCDNGU 46 12 EUR million 2010 2009 Total 1,284 1,030 Cash at bank and in hand 220 154 $CPMFGRQUKVUYKVJOCVWTKV[WPFGTOQPVJU 65 339  6HHDOVR1RWH/RQJWHUPDQGVKRUWWHUPLQWHUHVWEHDULQJUHFHLYDEOHVRQSDJH %CUJCPFECUJGSWKXCNGPVU 285 493 $CPMFGRQUKVUYKVJOCVWTKV[OQTGVJCPOQPVJU 271 397 7KHPDQDJHPHQWFRQVLGHUVWKDWWKHFDUU\LQJDPRXQWRIWUDGHDQGRWKHUUHFHLYDEOHV Total 556 890 DSSUR[LPDWHVWKHLUIDLUYDOXH 6KRUWWHUPDQGORQJWHUPEDQNGHSRVLWVLQFOXGHEDQNGHSRVLWVKHOGE\2$2)RUWXPDPRXQW- 7UDGHUHFHLYDEOHV LQJWR(85PLOOLRQDQG(85PLOOLRQUHVSHFWLYHO\ DQGUHVSHFWLYHO\ ,Q DOO2$2)RUWXPłVGHSRVLWVZHUHLQHXURV$WWKH\HDUHQG2$2)RUWXPłVVKRUWWHUP Ageing analysis of trade receivables GHSRVLWVLQFOXGHG(85PLOOLRQLQ5XVVLDQURXEOHV$OORWKHUVKRUWWHUP(85PLOOLRQ 2010 2009 LQHXURVDQGDOOORQJWHUPGHSRVLWVZHUHLQHXURV7KHIXQGVLQ2$2)RUWXPDUHFRPPLWWHG EUR million Gross +ORCKTGF Gross +ORCKTGF WRWKHLQYHVWPHQWSURJUDPPHWRIXUWKHULQFUHDVH2$2)RUWXPłVHOHFWULFLW\SURGXFWLRQFDSDF- 0QVRCUVFWG 860 2 730 2 LW\7KHEDQNGHSRVLWVLQHXURVKHOGE\2$2)RUWXPDUHKHGJLQJIXWXUHSD\PHQWVLQHXURV 2CUVFWGsFC[U 88 6 51 4 2CUVFWGsFC[U 86820DWXULW\RIFDVKDQGFDVKHTXLYDOHQWVLVXQGHUPRQWKV 2CUVFWGOQTGVJCPFC[U 53 52 42 39 For further information regarding credit risk management and credit risks, see 2.2.9 Counter- Total 1,009 66 831 47 SDUWULVNVRQSDJHLQWKH2SHUDWLQJDQGğQDQFLDOUHYLHZDQG1RWH&UHGLWULVNRQSDJH

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Movements in the outstanding number of calculative share rights granted (previous LTI system) 32 ,QWHUHVWEHDULQJOLDELOLWLHV 1 Plan Plan Plan Plan 2 2007–2012 2006–2011 2005–2010 2004–2009 EUR million 2010 2009 3 1WVUVCPFKPICVVJGDGIKPPKPIQH Bonds 4,281 3,665 4 VJGRGTKQF,CPWCT[ 0 71,929 318,240 504,812 .QCPUHTQOƂPCPEKCNKPUVKVWVKQPU 845 1,024 5 )TCPVGFFWTKPIVJGRGTKQF 339,398 Finance lease liabilities 26 24 6 &KXKFGPFCFLWUVOGPVUFWTKPIVJGRGTKQF 18,546 3,932 17,396 1VJGTNQPIVGTOKPVGTGUVDGCTKPIFGDV 1,368 1,289 7 2C[OGPVUFWTKPIVJGRGTKQF –21,732 –11,696 –84,762 –504,812 6QVCNNQPIVGTOKPVGTGUVDGCTKPIFGDV 6,520 6,002 8 %CPEGNNGFFWTKPIVJGRGTKQF –929 %WTTGPVRQTVKQPQHNQPIVGTODQPFU 223 501 9 1WVUVCPFKPICVVJGGPFQH %WTTGPVRQTVKQPQHNQCPUHTQOƂPCPEKCNKPUVKVWVKQPU 88 33 VJGRGTKQF&GEGODGT 335,283 64,165 250,874 0 10 %WTTGPVRQTVKQPQHQVJGTNQPIVGTOKPVGTGUVDGCTKPIFGDV 1 12 11 %WTTGPVRQTVKQPQHƂPCPEKCNNGCUGNKCDKNKVKGU 2 3 Grant date 8.2.2010 9.2.2009 8.2.2008 8.2.2007 12 Commercial papers 534 250 Grant price, EUR 18.18 15.19 27.54 20.99 13 1VJGTUJQTVVGTOKPVGTGUVDGCTKPIFGDV 14 58 0WODGTQHUJCTGTKIJVUITCPVGF 339,398 76,134 303,153 496,362 14 6QVCNUJQTVVGTOKPVGTGUVDGCTKPIFGDV 862 857 15 Total 7,382 6,859 'UVKOCVGFFGRCTVWTGU 4.52 4.52 4.52 4.52 16 17 18 (QTVWOUJCTGRTKEGCVVJGGPFQHVJGITCPV[GCT'74 22.53 18.97 15.23 30.81 Interest-bearing debt 19 'HHGEVKXG %CTT[KPI 4GRTKEKPI 4GRTKEKPI Fair %CTT[KPI Fair 20 interest amount WPFGT 4GRTKEKPI QXGT XCNWG amount XCNWG 21 30.4 6WRFNRSWLRQVFKHPHIRUNH\HPSOR\HHV  H[SLU\GDWH0D\ EUR million rate 2010 [GCT s[GCTU [GCTU 2010 2009 2009 22 ,Q0DUFKDUHVROXWLRQZDVSDVVHGWRLVVXHDPD[LPXPRIVWRFNRSWLRQV Bonds 4.4 4,504 958 1,942 1,604 4,844 4,166 4,724 23 WRNH\HPSOR\HHVRIWKH)RUWXP*URXS7KHODVWH[HUFLVHGDWHIRUWKHRSWLRQVZDV .QCPUHTQOƂPCPEKCN 24 0D\1RUHPDLQLQJXQH[HUFLVHGRSWLRQVXQGHUWKHVWRFNRSWLRQVFKHPHVH[LVWHG KPUVKVWVKQPU 2.9 933 836 57 40 966 1,057 1,090 1VJGTNQPIVGTO 25 DW\HDUHQGRU KPVGTGUVDGCTKPIFGDV 1.9 1,411 1,165  246 1,426 1,328 1,349 26 Total long-term 27 KPVGTGUVDGCTKPIFGDV 3.7 6,848 2,959 1,999 1,890 7,236 6,551 7,163 28 31 1RQFRQWUROOLQJLQWHUHVWV Commercial papers 1.6 534 534 535 250 251 29 1VJGTUJQTVVGTO 30 KPVGTGUVDGCTKPIFGDV 2.3 0 0 0 58 60 31 Principal non-controlling interests 6QVCNUJQTVVGTO 32 KPVGTGUVDGCTKPIFGDV 1.6 534 534 - - 535 308 311 EUR million 2010 2009 33 Total interest-bearing #$(QTVWO8ÀTOG*QNFKPIUCOÀIVOGF5VQEMJQNOUUVCF)TQWR Sweden 358 302 FGDV 3.5 7,382 3,493 1,999 1,890 7,771 6,859 7,474 34 1#1(QTVWO)TQWR 4WUUKC 138 132 35 36 6CTVW'PGTIK)TQWR Estonia 13 8  ,QFOXGHVORDQVIURP6WDWH1XFOHDU:DVWH0DQDJHPHQW)XQGDQG7HROOLVXXGHQ9RLPD2\M(85 Other 23 15 PLOOLRQ  ğQDQFLDOOHDVHV(85PLOOLRQ  ORDQVIURP)RUWXPłV)LQQLVKSHQVLRQ 37 Total 532 457 IXQG(85PLOOLRQ  DQGRWKHUORDQV(85PLOOLRQ   38  ,QFOXGLQJFXUUHQWSRUWLRQRIORQJWHUPGHEW 39 )RUWXPRZQVYLD)RUWXP3RZHUDQG+HDW$%RIWKHVKDUHVZKLFKUHSUHVHQWV  7KHDYHUDJHLQWHUHVWUDWHRQORDQVDQGGHULYDWLYHVRQ'HFHPEHUZDV   40 41 RIWKHYRWHVLQ$%)RUWXP9ÃUPH+ROGLQJVDPÃJWPHG6WRFNKROPVVWDGRI 42 WKHVKDUHVDUHRZQHGE\WKH&LW\RI6WRFNKROP7KH&LW\RI6WRFNKROPKROGVSUHIHU- 'XULQJWKHğUVWTXDUWHU)RUWXPLQFUHDVHGWKHDPRXQWRIUHERUURZLQJIURPWKH)LQQLVK 43 HQFHVKDUHVLQ$%)RUWXP9ÃUPH+ROGLQJVDPÃJWPHG6WRFNKROPVVWDGZKLFKHQWLWOHV QXFOHDUZDVWHIXQGE\(85PLOOLRQWR(85PLOOLRQ'XULQJWKHVHFRQGTXDUWHU 44 WKHPRIWKHHFRQRPLFDORXWSXW7KHRZQHUVKLSDQGDGPLQLVWUDWLRQRI$%)RUWXP )RUWXP2\MUDLVHGD\HDUORDQIURP1RUGLF,QYHVWPHQW%DQNRI(85PLOOLRQ 45 9ÃUPH+ROGLQJVDPÃJWPHG6WRFNKROPVVWDGLVVHWWOHGE\DFRQVRUWLXPDJUHHPHQW 7KHORDQZLOOSDUWLDOO\ğQDQFHLQYHVWPHQWVLQDXWRPDWLFPHWHUUHDGLQJHTXLSPHQW 46 47 1RQFRQWUROOLQJLQWHUHVWSDUWLQ2$2)RUWXPLV 'XULQJWKHWKLUGTXDUWHU)RUWXP2\MLVVXHGDGXDOWUDQFKH6(.ELOOLRQğ[HGUDWH 48 116 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FORTUM FINANCIALS 2010

ERQGGXHDQGD6(.ELOOLRQ)ORDWLQJ5DWH1RWHGXHXQGHU)RUWXPłV(XUR 32.2 Finance lease liabilities 0HGLXP7HUP1RWH3URJUDPPH 2Q'HFHPEHU)RUWXPKDGDVPDOOQXPEHURIğQDQFHOHDVHDJUHHPHQWVIRU 7KH\HDU(85PLOOLRQ7HUPORDQIDFLOLW\UDLVHGLQFRQQHFWLRQZLWKWKHDF- PDFKLQHU\DQGHTXLSPHQW TXLVLWLRQRI7*& UHQDPHGDV2$2)RUWXP LQ0DUFKZDVFDQFHOOHGGXULQJWKH 1RQHZOHDVLQJFRPPLWPHQWVZHUHHQWHUHGLQWRLQRU WKLUGTXDUWHUDVWKHUHPDLQLQJRXWVWDQGLQJGUDZQDPRXQWRI(85PLOOLRQXQGHU WKHIDFLOLW\ZDVDPRUWL]HG 3UHVHQWYDOXHRIğQDQFHOHDVHOLDELOLWLHV 'XULQJWKHODVWTXDUWHU)RUWXPUHSDLGDPLOOLRQERQGLVVXHGLQ EUR million 2010 2009 2$2)RUWXPVLJQHGWZREDQNORDQVWRWDOOLQJ58%ELOOLRQWRğQDQFHLWVLQYHVW- /KPKOWONGCUGRC[OGPVU 32 32 PHQWVSURJUDPPH([WHUQDOGHEWLQ2$2)RUWXPDPRXQWHGWRWKHHTXLYDOHQWRI(85 .GUUHWVWTGƂPCPEGEJCTIGU 4 5 Total 28 27 PLOOLRQ  DVSHU\HDUHQG ,VVXDQFHRI&RPPHUFLDO3DSHUV &3V LQWKH)LQQLVKDQG6ZHGLVKPDUNHWVLQFUHDVHG Maturity of minimum lease payments

LQSHU\HDUHQGWKHDPRXQWRIVKRUWWHUP&3VRXWVWDQGLQJDPRXQWHGWR(85 EUR million 2010 2009 PLOOLRQ   Less than 1 year 2 4 7KHLQWHUHVWEHDULQJGHEWLQFUHDVHGGXULQJWKH\HDUE\(85PLOOLRQWR(85 1–5 years 30 28 PLOOLRQ  /LTXLGIXQGVGHFUHDVHGE\(85PLOOLRQWR(85PLOOLRQ Over 5 years    LQFOXGLQJOLTXLGIXQGVKHOGE\2$2)RUWXPDPRXQWLQJWR(85PLOOLRQ Total 32 32   0DWXULW\RIğQDQFHOHDVHOLDELOLWLHV For more information please see Note 3 Financial risk management on page 81, Note 41 Pledged EUR million 2010 2009 assets on page 124 and Note 44 Contingent liabilities on page 125. Less than 1 year 2 3 1–5 years 26 24 32.1 Bond issues Over 5 years   Total 28 27 Interest Interest 'HHGEVKXG Nominal %CTT[KPI +UUWGF/CVWTKV[ basis rate interest %WTTGPE[ million amount (QTVWO1[L'74/KNNKQP'/602TQITCOOG  Fixed 5.000 5.164 EUR 500 498  Fixed 3.750 3.793 5'- 2,000 223  Fixed 4.500 4.615 EUR 750 774  Floating 5VKDQT/  5'- 3,500 390  Fixed 4.700 4.764 5'- 2,600 289  Fixed 4.625 4.714 EUR 750 747  Fixed 6.000 6.095 EUR 750 766  Fixed 5.250 5.400 01- 500 64  Fixed 6.125 6.240 01- 500 64  Floating 5VKDQT/  5'- 3,100 345  Fixed 3.125 3.235 5'- 3,100 344 1#1(QTVWO HQTOGT6)%  Fixed 9.750 9.988 RUB 5.000 0 6QVCNQWVUVCPFKPIECTT[KPICOQWPV&GEGODGT 4,504

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Amounts recognised in the income statement 0RYHPHQWLQWKHSUHVHQWYDOXHRIGHğQHGEHQHğWREOLJDWLRQV

EUR million 2010 2009 EUR million 2010 2009 1 %WTTGPVUGTXKEGEQUV –12 –11 ,CPWCT[ 409 406 2 Interest cost –19 –19 Exchange rate differences 27 16 3 'ZRGEVGFTGVWTPQPRNCPCUUGVU 23 20 &GETGCUGUVJTQWIJFKURQUCNUQHUWDUKFKCT[EQORCPKGU –1 –21 4 Settlements –2 –1 Service cost 12 11 5 Past service cost 0 0 Interest cost 20 19 6 #EVWCTKCNICKPUCPFNQUUGU –2 –3 Past service cost 0 –7 7 %WTVCKNOGPVU 1 1 Effect of settlement –9 –13 8 6QVCNKPENWFGFKPGORNQ[GGEQUVU 0QVG –11 –13 #EVWCTKCNICKPU s NQUUGU QPQDNKICVKQPU 36 16 9 $GPGƂVURCKF –17 –16 10 %WTVCKNOGPVU –1 –2 7KHDFWXDOUHWXUQRQSODQDVVHWVLQ)LQODQGDQG6ZHGHQWRWDOOHG(85PLOOLRQ   11 &GEGODGT 476 409 12 13 Amounts recognised in the balance sheet Movement in the fair value of plan assets 14 EUR million 2010 2009 EUR million 2010 2009 15 2TGUGPVXCNWGQHHWPFGFQDNKICVKQPU 472 406 ,CPWCT[ 398 343 16 (CKTXCNWGQHRNCPCUUGVU –444 –398 Exchange rate differences 22 12 17 &GƂEKV UWTRNWU s 28 8 &GETGCUGUVJTQWIJFKURQUCNUQHUWDUKFKCT[EQORCPKGU  –13 18 2TGUGPVXCNWGQHWPHWPFGFQDNKICVKQPU 4 3 'ZRGEVGFTGVWTPQHRNCPCUUGVU 23 20 19 Unrecognised past service cost 3 4 #EVWCTKCNICKPUCPFNQUUGU 12 24 20 7PTGEQIPKUGFCEVWCTKCNICKPUCPFNQUUGU –77 –51 6TCPUHGTUVQVJG5YGFKUJRGPUKQPHWPF  25 21 0GVCUUGV s NKCDKNKV[ KPVJGDCNCPEGUJGGV –42 –36 %QPVTKDWVKQPUD[GORNQ[GT 8 10 22 &GƂPGFDGPGƂVCUUGVKPENWFGFKPVJGCUUGVU 62 59 Effect of settlement 0 –9 23 &GƂPGFDGPGƂVQDNKICVKQPU 20 23 $GPGƂVURCKF –19 –14 24 &GEGODGT 444 398 25 &GƂPGFDGPGƂVQDNKICVKQPUKPENWFGFKPVJGPQPEWTTGPVNKCDKNKVKGU 20 23 26 &GƂPGFDGPGƂVCUUGVUKPENWFGFKPVJGPQPEWTTGPVCUUGVU –62 –59 Fair value of plan assets comprise 27 0GVCUUGV s NKCDKNKV[  –42 –36 28 EUR million 2010 2009 29 'SWKV[KPUVTWOGPVU 179 164 'ZRGTKGPEGCFLWUVOGPVUCTKUKPIQPHWPFGFQDNKICVKQPUICKP s NQUU  9 –6 30 &GDVKPUVTWOGPVU 139 133 'ZRGTKGPEGCFLWUVOGPVUCTKUKPIQPRNCPCUUGVUICKP NQUU s 13 22 31 2TQRGTV[QHYJKEJ'74OKNNKQP  QEEWRKGFD[VJG)TQWR 82 83 32  7KHXQIXQGHGREOLJDWLRQUHODWHVWRDUUDQJHPHQWVLQ5XVVLD %QORCP[ UQYPQTFKPCT[UJCTGU 7 6 33 Other assets 37 12 &RQWULEXWLRQVH[SHFWHGWREHSDLGGXULQJWKH\HDUDUH(85PLOOLRQ 34 Total 444 398 35 36 :KHQWKHSHQVLRQSODQKDVEHHQğQDQFHGWKURXJKDQLQVXUDQFHFRPSDQ\DVSHFLğFD- 37 WLRQRIWKHSODQDVVHWVKDVQRWEHHQDYDLODEOH,QWKHVHFDVHVWKHIDLUYDOXHRISODQDVVHWV 38 KDVEHHQLQFOXGHGLQ2WKHUDVVHWV 39 40 41 42 43 44 45 46 47 48 122 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FORTUM FINANCIALS 2010

$PRXQWVUHFRJQLVHGLQWKHEDODQFHVKHHWE\FRXQWU\ 7KHGLVFRXQWUDWHLQ6ZHGHQ5XVVLDDQG1RUZD\LVEDVHGRQWKH\LHOGRIORQJWHUP 1VJGT JRYHUQPHQWERQGVZKLFKDUHFRQVLVWHQWZLWKWKHFXUUHQF\DQGWKHHVWLPDWHGWHUP EUR million (KPNCPF 5YGFGP EQWPVTKGU Total RIWKHSRVWHPSOR\PHQWEHQHğWREOLJDWLRQV7KHH[SHFWHGUHWXUQRQSODQDVVHWVLV 2TGUGPVXCNWGQHHWPFGFQDNKICVKQPU 226 214 32 472 GHWHUPLQHGE\FRQVLGHULQJWKHH[SHFWHGUHWXUQVDYDLODEOHRQWKHDVVHWVXQGHUO\LQJ (CKTXCNWGQHRNCPCUUGVU –257 –170 –17 –444 &GƂEKV UWTRNWU s –31 44 15 28 WKHFXUUHQWLQYHVWPHQWSROLF\([SHFWHGUHWXUQVDUHEDVHGRQORQJWHUPUHDOUDWHVRI 2TGUGPVXCNWGQHWPHWPFGFQDNKICVKQPU   44UHWXUQH[SHULHQFHGLQWKHUHVSHFWLYHPDUNHWVDQGUHSRUWHGE\H[WHUQDODVVHWPDQDJHU Unrecognised past service cost 33 7KHGLVFRXQWLQĠDWLRQDQGVDODU\JURZWKUDWHVXVHGDUHWKHNH\DVVXPSWLRQVXVHG 7PTGEQIPKUGFCEVWCTKCNICKPUCPFNQUUGU –7 –58 –12 –77 ZKHQFDOFXODWLQJGHğQHGEHQHğWREOLJDWLRQV(IIHFWVRISHUFHQWDJHSRLQWFKDQJHLQ 0GVCUUGV s NKCDKNKV[ KPVJGDCNCPEGUJGGV –38 –14 10 –42 WKHUDWHVWRWKHGHğQHGEHQHğWREOLJDWLRQRQ'HFHPEHUKROGLQJDOORWKHUDV- &GƂPGFDGPGƂVCUUGVKPENWFGFKPVJGCUUGVU 46 16 0 62 Pension obligations in the balance sheet 8 2 10 20 VXPSWLRQVVWDEOHDUHSUHVHQWHGLQWKHWDEOHEHORZ

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1VJGT +ORCEVVQ EUR million (KPNCPF 5YGFGP EQWPVTKGU Total VJGRGPUKQPQDNKICVKQP 2TGUGPVXCNWGQHHWPFGFQDNKICVKQPU 211 169 26 406 KPETGCUG FGETGCUGs (CKTXCNWGQHRNCPCUUGVU –239 –144 –15 –398 %JCPIGKPVJGCUUWORVKQP (KPNCPF 5YGFGP KPETGCUGKPFKUEQWPVTCVG s s &GƂEKV UWTRNWU s –28 25 11 8 FGETGCUGKPFKUEQWPVTCVG   2TGUGPVXCNWGQHWPHWPFGFQDNKICVKQPU 33 KPETGCUGKPKPƃCVKQPTCVG   Unrecognised past service cost 44 FGETGCUGKPKPƃCVKQPTCVG s s 7PTGEQIPKUGFCEVWCTKCNICKPUCPFNQUUGU –8 –38 –5 –51 KPETGCUGKPUCNCT[ITQYVJTCVG   0GVCUUGV s NKCDKNKV[ KPVJGDCNCPEGUJGGV –36 –13 13 –36 FGETGCUGKPUCNCT[ITQYVJTCVG s s &GƂPGFDGPGƂVCUUGVKPENWFGFKPVJGCUUGVU 45 14 0 59 Pension obligations in the balance sheet 911323

Comparative pension information 37 2WKHUQRQFXUUHQWOLDELOLWLHV EUR million 2010 2009 2008 2007 2006 2TGUGPVXCNWGQHFGƂPGFDGPGƂVQDNKICVKQP 476 409 406 390 361 EUR million 2010 2009 (CKTXCNWGQHRNCPCUUGVU –444 –398 –343 –276 –250 Connection fees 417 413 &GƂEKV UWTRNWU s KPVJGRNCP 32 11 63 114 111 Other liabilities 54 59 'ZRGTKGPEGCFLWUVOGPVUQPRNCPNKCDKNKVKGU 9 –6 20 11 21 Total 471 472 'ZRGTKGPEGCFLWUVOGPVUQPRNCPCUUGVU 13 22 –48 21 –10 &RQQHFWLRQIHHVWRWKHHOHFWULFLW\QHWZRUNLQ)LQODQGWKDWDUHSDLGEHIRUHDUH The principal actuarial assumptions used UHIXQGDEOHLIWKHFXVWRPHUZRXOGHYHUGLVFRQQHFWWKHLQLWLDOFRQQHFWLRQ7KHFRQ- 2010 2009 QHFWLRQVIHHVWRWKHHOHFWULFLW\QHWZRUNDPRXQWHGWR(85PLOOLRQ   1VJGT 1VJGT (KPNCPF 5YGFGP Russia EQWPVTKGU (KPNCPF 5YGFGP Russia EQWPVTKGU 5HIXQGDEOHFRQQHFWLRQIHHVWRWKHGLVWULFWKHDWLQJQHWZRUNLQ)LQODQGDPRXQWHGWR(85 &KUEQWPVTCVG 4.53 4.00 8.00 3.20 5.00 4.00 9.25 4.40 PLOOLRQ   'ZRGEVGFTGVWTPQPRNCPCUUGVU 5.94 4.64 NA 4.60 5.92 4.85 NA 5.60 (WVWTGUCNCT[KPETGCUGU 2.90 3.50 7.50 3.75 4.00 3.50 8.50 4.25 (WVWTGRGPUKQPKPETGCUGU 2.10 2.00 6.00 3.00 2.10 2.00 7.00 4.00 4CVGQHKPƃCVKQP 2.00 2.00 6.00 2.00 2.00 2.00 7.00 2.25

7KHGLVFRXQWUDWHLQ)LQODQGLVEDVHGRQKLJKTXDOLW\(XURSHDQFRUSRUDWHERQGVZLWK PDWXULW\WKDWEHVWUHĠHFWVWKHHVWLPDWHGWHUPRIWKHGHğQHGEHQHğWSHQVLRQSODQV FORTUM FINANCIALS 2010 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 123

38 7UDGHDQGRWKHUSD\DEOHV 40 $GGLWLRQDOFDVKĠRZLQIRUPDWLRQ 1 2 EUR million 2010 2009 &KDQJHLQZRUNLQJFDSLWDO 3 Trade payables 435 317 40.1 4 #EETWGFGZRGPUGUCPFFGHGTTGFKPEQOG 5 Personnel expenses 59 71 EUR million 2010 2009 6 Interest expenses 131 121 +PETGCUGFGETGCUGKPKPVGTGUVHTGGTGEGKXCDNGU –161 79 7 1VJGTCEETWGFGZRGPUGUCPFFGHGTTGFKPEQOG 91 84 Decrease in inventories 74 1 8 Other liabilities +PETGCUGFGETGCUGKPKPVGTGUVHTGGNKCDKNKVKGU 125 –61 9 8#6NKCDKNKV[ Total 38 19 78 46 10 %WTTGPVVCZNKCDKNKV[ 121 81 11 40.2 &DSLWDOH[SHQGLWXUH Energy taxes 41 34 12 Advances received 104 88 13 Other liabilities 205 158 EUR million Note 2010 2009 14 %CRKVCNGZRGPFKVWTG Total 1,265 1,000 5, 21, 22 1,222 862 15 Change in not yet paid investments –43 13 7KHPDQDJHPHQWFRQVLGHUVWKDWWKHDPRXQWRIWUDGHDQGRWKHUSD\DEOHVDSSUR[LPDWHV 16 Capitalised borrowing costs –45 –30 17 IDLUYDOXH %CRKVCNGZRGPFKVWTGKPECUJƃQY 1,134 845 18 19 40.3 $FTXLVLWLRQRIVKDUHVLQFDVKĠRZ 20 39 $VVHWVKHOGIRUVDOH 21 EUR million Note 2010 2009 22 23 7KHDVVHWVDQGOLDELOLWLHVKHOGIRUVDOHUHODWHWRGLVWULFWKHDWRSHUDWLRQVDQGSURGXFWLRQ #ESWKUKVKQPQHUWDUKFKCTKGUPGVQHECUJCESWKTGF 8 1 27 #ESWKUKVKQPQHCUUQEKCVGU 23 26 58 24 IDFLOLWLHVRXWVLGH6WRFNKROPLQ6ZHGHQ,Q'HFHPEHU)RUWXPVLJQHGDQDJUHHPHQW #ESWKUKVKQPQHCXCKNCDNGHQTUCNGƂPCPEKCNCUUGVU 1 2 25 WRGLYHVWWKRVHDVVHWVDQGRSHUDWLRQV7KHWRWDOVHOOLQJSULFHLVDSSUR[LPDWHO\(85 Total 28 87 26 PLOOLRQ7KHPDMRUSDUWRIWKHRSHUDWLRQVWREHGLYHVWHGLVRZQHGE\)RUWXPłVVXEVLGL- 27  $FTXLVLWLRQRIDVVRFLDWHVLQFOXGHVVKDUHLVVXHVDQGRWKHUFDSLWDOFRQWULEXWLRQV DU\$%)RUWXP9ÃUPHVDPÃJWPHG6WRFNKROPVVWDGLQZKLFKWKHFLW\RI6WRFNKROP 28  $YDLODEOHIRUVDOHğQDQFLDODVVHWVDUHSUHVHQWHGXQGHU2WKHUQRQFXUUHQWDVVHWVLQWKH%DODQFH 29 KDVDHFRQRPLFLQWHUHVW)RUWXPH[SHFWVWRUHFRJQLVHDVDOHVJDLQZLWKDPLQRU VKHHW 30 HIIHFWRQ(36LQWKHğUVWTXDUWHU7KHRSHUDWLRQVDUHSDUWRIWKH+HDWVHJPHQW 31 Acquisition of shares in subsidiaries 32 $VVHWVFODVVLğHGDVKHOGIRUVDOH EUR million 2010 2009 33 EUR million 2010 2009 Gross investments of shares  0 8 34 2TQRGTV[RNCPVCPFGSWKROGPV 131  %JCPIGUKPPQPRCKFCESWKUKVKQPU 1 19 35 Other assets 23  +PVGTGUVDGCTKPIFGDVKPCESWKTGFUWDUKFKCTKGU   36 Total 154 - #ESWKUKVKQPUQHUWDUKFKCTKGUPGVQHECUJCESWKTGF 1 27 37 38  *URVVLQYHVWPHQWRIVKDUHVLQFOXGHOLTXLGIXQGVLQDFTXLUHGVXEVLGLDULHV(85PLOOLRQ   39 Liabilities related to assets held for sale 40 41 EUR million 2010 2009 40.4 'LYHVWPHQWVRIVKDUHVLQFDVKĠRZ 42 +PVGTGUVDGCTKPINKCDKNKVKGU 0  43 Other liabilities 50  EUR million Note 2010 2009 44 Total 50 - 2TQEGGFUHTQOUCNGUQHUWDUKFKCTKGUPGVQHECUJFKURQUGF 8 9 11 45 Proceeds from sales of associates 23 121 2 46 2TQEGGFUHTQOUCNGUQHQVJGTPQPEWTTGPVCUUGVU 17 1 47 Total 147 14 48 124 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FORTUM FINANCIALS 2010

Divestment of shares in subsidiaries SRZHUSODQWV,QWKHHQGRIWKHUHDOHVWDWHPRUWJDJHVRI(85PLOOLRQUHODWHG EUR million 2010 2009 WR1DDQWDOLSRZHUSODQWZHUHUHWXUQHGDQGUHSODFHGE\DSDUHQWFRPSDQ\JXDUDQWHH Gross divestments of shares  9 11 See also Note 34 Nuclear related assets and liabilities on page 118 and note 44 Contingent Payments not received for proceeds   liabilities on page 125. +PVGTGUVDGCTKPIFGDVKPUQNFUWDUKFKCTKGU   2TQEGGFUUGVVNGFKPECUJ 9 11 42 2SHUDWLQJOHDVHV  /LTXLGIXQGVLQVROGVXEVLGLDULHV(85PLOOLRQ  DUHQHWWHGIURPJURVVGLYHVWPHQWV 42.1 Leases as lessor 41 3OHGJHGDVVHWV 7KHRSHUDWLQJUHQWDOLQFRPHUHFRJQLVHGLQLQFRPHVWDWHPHQWZDV(85PLOOLRQ   7KHPDMRUSDUWRIWKHRSHUDWLQJUHQWDOLQFRPHGHULYHVIURP0HUL3RULSRZHUSODQW

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48 6XEVLGLDULHVE\VHJPHQWRQ'HFHPEHU 1 2 3 = Power 1) Acquired 4 = Heat 2) Founded 5 = Distribution 3) Shares held by the parent company 6 = Electricity Sales = Russia 7 = Other 8 9 10 11 12 Group Group 13 Corp. Name &QOKEKNG Segment JQNFKPI Corp. Name &QOKEKNG Segment JQNFKPI 14 (QTVWO#UKCMCURCNXGNW1[   Finland 100.0 #5#PPG5QQLWU Estonia 60.0 15 (QTVWO#UUGVU1[ Finland 100.0 #5(QTVWO6CTVW Estonia 60.0 16 (QTVWO$%51[ Finland 100.0 #56CTVW,QWLCCO Estonia 60.0 17 (QTVWO'URQQ&KUVTKDWVKQP1[   Finland 100.0 #56CTVW-GUMMCVNCOCLC Estonia 60.0 18 (QTVWO(091[   Finland 100.0 (QTVWO%(5'GUVK17 Estonia 100.0 19 (QTVWO*GCVCPF)CU1[   Finland 100.0 (QTVWO'NGMVGT#5 Estonia 99.3 20 (QTVWO*GCV0CCPVCNK1[   Finland 100.0 (QTVWO6GTOGUV#5 Estonia 99.7 21 (QTVWO*[ÒV[VWQVCPVQ1[ Finland 100.0 .CWMC6WTXCU17 Estonia 60.0 22 (QTVWO/CTMGVU1[   Finland 100.0 (QTVWO5GTXKEG&GWVUEJNCPF)OD* Germany 100.0 23 (QTVWO0WENGCT5GTXKEGU1[ Finland 100.0 (QTVWO&KTGEV.VF Great Britain 100.0 24 (QTVWO2QTVHQNKQ5GTXKEGU1[ Finland 100.0 (QTVWO'PGTI[.VF Great Britain 100.0 25 (QTVWO2QYGTCPF*GCV1[   Finland 100.0 (QTVWO)CU.VF Great Britain 100.0 26 (QTVWO5ÀJMÒPUKKTVQ1[   Finland 100.0 (QTVWO+PUWTCPEG.VF Great Britain 100.0 27 *GZKXQ1[ Finland 52.0 (QTVWO1/ 7- .VF Great Britain 100.0 28 +OCVTCP8QKOC1[ Finland 100.0 )TCPIGOQWVJ%*2.VF Great Britain 100.0 29 +OCVTCPMQUMGP8QKOC1[ Finland 100.0 +81'PGTI[.VF Great Britain 100.0 30 -KKPVGKUVÒ1['URQQP'PGTIKCVCNQ Finland 100.0 -KNFCTG'PGTI[.VF Ireland 55.0 31 -KNNKP8QKOC1[ Finland 60.0 5+#(QTVWO,GNICXC Latvia 100.0 32 -QKNNKU2QJLCP'PGTIKCPVWQVCPVQ1[ 5+#(QTVWO.CVXKLC Latvia 100.0 Finland 100.0 33 7#$(QTVWO'MQUKNWOC .KVJWCPKC 100.0 -QUMKXQ1[ Finland 100.0 34 7#$(QTVWO*GCV.KGVWXC .KVJWCPKC 100.0 -2285KLQKVWU1[ Finland 100.0 35 7#$(QTVWO-NCKRGFC .KVJWCPKC 95.0 .KPPCPMQUMGP8QKOC1[ Finland 100.0 36 7#$,QPKUMKQGPGTIKLC .KVJWCPKC .QWPCKU5WQOGP.ÀORÒ1[ Finland 100.0 66.0 37 /CPUKMMCNCP8QKOC1[ Finland 100.0 7#$5XGPEKQPKWGPGTIKLC .KVJWCPKC 50.0 38   /ÀPV[PWOOGP.ÀORÒ1[ Finland 58.3 (QTVWO$CNVKE+PXGUVOGPVU50% .WZGODWTI 100.0 39 1[2CWMGP#D Finland 100.0 (QTVWO.#/50% .WZGODWTI 100.0 40 Oy Tersil Ab Finland 100.0 (QTVWO5GPFK2TKOC5FP$JF Malaysia 100.0 41 Oy Tertrade Ab Finland 100.0 (QTVWO&KUVTKDWVKQP#5 Norway 100.0 42 4CLCRCVUCCP8QKOC1[ Finland 100.0 (QTVWO(LGTPXCTOG#5 Norway 100.0 43 5CKOCCPTCPPCP8QKOC1[ Finland 100.0 (QTVWO(ÒTXCNVPKPI#5 Norway 100.0 44 6WPVWTKVWWNK1[ Finland 55.4 (QTVWO*QNFKPI0QTYC[#5 Norway 100.0 45 8CTUKPCKU5WQOGP5ÀJMÒ1[ Finland 100.0 (QTVWO.GCUKPI-5 Norway 100.0 46   (QTVWO'+(08 $GNIKWO 100.0 (QTVWO/CTMGVU#5 Norway 100.0 47   (QTVWO2TQLGEV(KPCPEG08 $GNIKWO 100.0 (QTVWO0+6#5 Norway 100.0 48 (QTVWO'PGTIK#5 Denmark 100.0 (QTVWO2NQEM5R\QQ Poland 99.6 128 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FORTUM FINANCIALS 2010

= Power 1) Acquired = Heat 2) Founded = Distribution 3) Shares held by the parent company = Electricity Sales = Russia = Other

Group Group Corp. Name &QOKEKNG Segment JQNFKPI Corp. Name &QOKEKNG Segment JQNFKPI (QTVWO2QYGTCPF*GCV2QNUMC5R\QQ Poland 100.0 (QTVWO NXMTCHVK8ÀTONCPF#$ Sweden 100.0 Chelyabinsk Energoremont 4WUUKC 94.5 )LWVHCUVKIJGVGPK$QTNÀPIG#$ Sweden 100.0 ..%(QTVWO'PGTI[111(QTVWO'PGTIKLC 4WUUKC 100.0 *QHQTU'PGTIK#$ Sweden 30.1 1#1(QTVWO 4WUUKC 94.5 *ÀNNGHQTU8ÀTOG#$ Sweden 47.6 6)%+PXGUV 4WUUKC 94.5 /GNNCPUXGPUM-TCHVITWRR#$ Sweden 86.9 7TCNU*GCV0GVYQTM 4WUUKC 94.5 1TGÀNXGPU-TCHV#$ Sweden 65.0 #$(QTVWO8ÀTOG*QNFKPIUCOÀIVOGF5VQEMJQNOUUVCF Sweden 50.1 Ryssa Energi AB Sweden 100.0 #$(QTVWO8ÀTOGUCOÀIVOGF5VQEMJQNOUUVCF Sweden 50.1 5KIVWPC8ÀUD[(CUVKIJGVU#$ Sweden 50.1 #$.LWUPCPU5COMÒTPKPI Sweden 80.0 Stockholm Gas AB Sweden 50.1 Akallaverket AB Sweden 37.6 Streamgate Två AB   Sweden 100.0 $N[DGTIU-TCHV#$ Sweden 66.7 5ÀHƃG(CUVKIJGVU#$ Sweden 50.1 $TÀPPÀNXGP-TCHV#$ Sweden 67.0 5ÀHƃG(LÀTTXÀTOG#$ Sweden 25.6 $WNNGTHQTUGPU-TCHV#$ Sweden 88.0 7FFGJQNO-TCHV#$ Sweden 100.0 Elbolaget OEP AB Sweden 100.0 8ÀTONCPFUMTCHV1-)FGNÀICTPC#$ Sweden 73.3 (CUVKIJGVGTK0ÀTNWPFC#$   Sweden 100.0 ($)GPGTCVKQP5GTXKEGU$8 The Netherlands 75.0 (QTVWO#$ Sweden 100.0 (QTVWO#NRJC$8 The Netherlands 100.0 (QTVWO#/%1#$ Sweden 100.0 (QTVWO(KPCPEG$8 The Netherlands 100.0 (QTVWO&CNÀNXGPU-TCHV#$ Sweden 100.0 (QTVWO*QNFKPI$8 The Netherlands 100.0 (QTVWO&KUVTKDWVKQP#$ Sweden 100.0 (QTVWO2QYGT*QNFKPI$8   The Netherlands 100.0 (QTVWO(CUVKIJGVGT#$ Sweden 100.0 (QTVWO4WUUKC$8 The Netherlands 100.0 (QTVWO)GPGTCVKQP#$ Sweden 100.0 (QTVWO4WUUKC*QNFKPI$8 The Netherlands 100.0 (QTVWO+PFCNUMTCHV#$ Sweden 100.0 (QTVWO9CXG2QYGT$8 The Netherlands 100.0 (QTVWO.LWPIC-TCHV#$ Sweden 100.0 (QTVWO.LWUPCPU-TCHV#$ Sweden 100.0 (QTVWO/CTMGVU#$ Sweden 100.0 (QTVWO0QTFKE#$   Sweden 100.0 (QTVWO2QYGTCPF*GCV#$ Sweden 100.0 (QTVWO2TQFWMVKQPUPÀV#$ Sweden 100.0 (QTVWO5YGFGP#$   Sweden 100.0 (QTVWO8KPF0QTT#$   Sweden 100.0 (QTVWO8ÀTOG#NRJC#$ Sweden 50.1 (QTVWO8ÀTOG&GNVC#$   Sweden 50.1 (QTVWO8ÀTOG(CUVKIJGVGT#$ Sweden 50.1 (QTVWO8ÀTOG0[PÀUJCOP#$ Sweden 100.0 (QTVWO

.H\ğJXUHV 1 2 3 )LQDQFLDONH\ğJXUHV 4 5 6 )RUWXP&RUSRUDWLRQDQGLWVVXEVLGLDULHV WRJHWKHUWKH)RUWXP*URXS LVDOHDGLQJHQHUJ\ 2LORSHUDWLRQVKDYHEHHQSUHVHQWHGDVGLVFRQWLQXHGRSHUDWLRQVLQ\HDUVDQG 7 FRPSDQ\IRFXVLQJRQWKH1RUGLFFRXQWULHV5XVVLDDQGWKH%DOWLF5LPDUHD)RUWXPłV $VIURP)RUWXPDSSOLHV,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ6WDQGDUGV ,)56 IRU 8 DFWLYLWLHVFRYHUWKHJHQHUDWLRQGLVWULEXWLRQDQGVDOHRIHOHFWULFLW\DQGKHDWWKHRSHUD- WKHDQQXDODQGLQWHULPUHSRUWV7KHDQQXDOUHSRUWLQFOXGHGRQHFRPSDULVRQ\HDU 9 WLRQDQGPDLQWHQDQFHRISRZHUSODQWVDVZHOODVHQHUJ\UHODWHGVHUYLFHV1HVWH2LOZDV ZKLFKZDVUHVWDWHGWR,)567KH\HDUVŋKDYHQRWEHHQUHVWDWHGWRFRPSO\ 10 LQFOXGHGLQ)RUWXP*URXSXSXQWLO0DUFKZKHQWKH$QQXDO*HQHUDO0HHWLQJ ZLWK,)567KH\DUHSUHVHQWHGXQGHU)LQQLVK$FFRXQWLQJ6WDQGDUGV )$6  11 12 WRRNWKHğQDOGHFLVLRQWRVHSDUDWHWKHRLORSHUDWLRQVE\GLVWULEXWLQJDSSUR[LPDWHO\ 13 RI1HVWH2LO&RUSRUDWLRQVKDUHVDVGLYLGHQG7KHUHPDLQLQJDSSUR[LPDWHO\RIWKH 14 VKDUHVZHUHVROGWRLQYHVWRUVLQ$SULO 15 16 17 18 Change FAS FAS FAS FAS FAS FAS IFRS IFRS IFRS IFRS IFRS IFRS IFRS 10/09 19 EUR million or as indicated 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 % 20 Sales total Fortum 8,494 8,232 10,614 10,410 11,148 11,392 11,659 5,918 21 Sales continuing operations 3,835 3,877 4,491 4,479 5,636 5,435 6,296 16 22 23 EBITDA total Fortum 1) 1,049 1,192 1,431 1,501 1,952 1,917 2,443 2,307 24 EBITDA continuing operations 1,583 1,754 1,884 2,298 2,478 2,292 2,271 –1 25 Comparable EBITDA continuing operations 1,741 1,866 2,015 2,360 2,398 2,396 0 26 27 1RGTCVKPIRTQƂVVQVCN(QTVWO 586 705 906 914 1,289 1,420 1,916 1,864 28 - of sales % 6.9 8.6 8.5 8.8 11.6 12.5 16.4 31.5 29 1RGTCVKPIRTQƂVEQPVKPWKPIQRGTCVKQPU 1,195 1,347 1,455 1,847 1,963 1,782 1,708 –4 30 - of sales % 31.2 34.7 32.4 41.2 34.8 32.8 27.1 31 32 %QORCTCDNGQRGTCVKPIRTQƂVEQPVKPWKPIQRGTCVKQPU 1,148 1,334 1,437 1,564 1,845 1,888 1,833 –3 33 34 2TQƂVDGHQTGKPEQOGVCZVQVCN(QTVWO 363 954 623 702 1,008 1,184 1,700 1,776 35 - of sales % 4.3 11.6 5.9 6.7 9.0 10.4 14.6 30.0 36 2TQƂVDGHQTGKPEQOGVCZEQPVKPWKPIQRGTCVKQPU 962 1,267 1,421 1,934 1,850 1,636 1,615 –1 37 - of sales % 25.1 32.7 31.6 43.2 32.8 30.1 25.7 38 39 2TQƂVHQTVJGRGTKQFEQPVKPWKPIQRGTCVKQPU 703 936 1,120 1,608 1,596 1,351 1,354 0 40 QHYJKEJCVVTKDWVCDNGVQQYPGTUQHVJGRCTGPV 670 884 1,071 1,552 1,542 1,312 1,300 –1 41 42 %CRKVCNGORNQ[GFVQVCN(QTVWO 8,647 9,425 11,365 11,032 13,765 12,704 12,890 43 %CRKVCNGORNQ[GFEQPVKPWKPIQRGTCVKQPU 10,739 11,357 12,663 13,544 15,911 15,350 16,124 5 44 45 +PVGTGUVDGCTKPIPGVFGDV 3,898 3,818 4,626 3,674 5,848 5,626 5,095 3,158 4,345 4,466 6,179 5,969 6,826 14 46 47 48 130 KEY FIGURES FORTUM FINANCIALS 2010

Change FAS FAS FAS FAS FAS FAS IFRS IFRS IFRS IFRS IFRS IFRS IFRS 10/09 EUR million or as indicated 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 % %CRKVCNGZRGPFKVWTGCPFITQUUKPXGUVOGPVUKPUJCTGUVQVCN(QTVWO 1,702 1,059 3,131 713 4,381 1,136 830 578 1,395 972 2,624 929 1,249 34 - of sales % 20.0 12.9 29.5 6.8 39.3 10.0 7.1 9.8 31.1 21.7 46.6 17.1 19.8 %CRKVCNGZRGPFKVWTGCPFITQUUKPXGUVOGPVUKPUJCTGUEQPVKPWKPIQRGTCVKQPU 5144791,3959722,6249291,249 34 %CRKVCNGZRGPFKVWTGEQPVKPWKPIQRGTCVKQPU 335 346 485 655 1,108 862 1,222 42

0GVECUJHTQOQRGTCVKPICEVKXKVKGUVQVCN(QTVWO 793 524 424 1,145 1,351 1,577 1,758 1,404 0GVECUJHTQOQRGTCVKPICEVKXKVKGUEQPVKPWKPIQRGTCVKQPU 1,232 1,271 1,151 1,670 2,002 2,264 1,437 –37

4GVWTPQPECRKVCNGORNQ[GFVQVCN(QTVWO 7.7 8.4 9.4 8.7 11.1 11.4 15.8 16.6 4GVWTPQPECRKVCNGORNQ[GFEQPVKPWKPIQRGTCVKQPU 11.4 13.5 13.4 16.5 15.0 12.1 11.6

4GVWTPQPUJCTGJQNFGTUGSWKV[VQVCN(QTVWO 5.7 7.7 8.6 8.3 10.5 12.3 18.2 18.7 4GVWTPQPUJCTGJQNFGTUGSWKV[EQPVKPWKPIQRGTCVKQPU2) 13.5 14.4 19.1 18.7 16.0 15.7

+PVGTGUVEQXGTCIG 2.6 3.4 3.7 4.3 4.7 5.8 8.0 11.6 11.5 12.8 9.4 12.4 13.7 +PVGTGUVEQXGTCIGKPENWFKPIECRKVCNKUGFDQTTQYKPIEQUVU 8.6 10.3 10.0 (WPFUHTQOQRGTCVKQPUKPVGTGUVDGCTKPIPGVFGDV 17.9 14.3 19.9 28.8 21.6 26.1 36.4 43.2 30.6 36.3 34.1 37.6 20.5

Gearing, % 3) 93 79 73 54 80 85 67 43 53 52 73 70 78

0GVFGDV'$+6&# 3.7 3.2 3.2 2.4 3.0 2.9 2.1 1.4 0GVFGDV'$+6&#EQPVKPWKPIQRGTCVKQPU - 1.8 2.3 1.9 2.5 2.6 3.0 %QORCTCDNGPGVFGDV'$+6&#EQPVKPWKPIQRGTCVKQPU - 1.8 2.3 2.2 2.6 2.5 2.8

'SWKV[VQCUUGVUTCVKQ 36 39 43 48 41 40 44 49 48 49 41 43 40

&KXKFGPFU4) 99 141 194 220 262 357 506 987 1,122 1,198 888 888 888 5) 0 &KXKFGPFUEQPVKPWKPIQRGTCVKQPU 511 650 683 &KXKFGPFUCFFKVKQPCNKPCPFFKUEQPVKPWGFQRGTCVKQPUKP 476 472 515

4GUGCTEJCPFFGXGNQROGPVGZRGPFKVWTG 92 72 58 53 33 35 26 14 17 21 27 30 30 0 - of sales % 1.1 0.9 0.5 0.5 0.3 0.3 0.2 0.2 0.4 0.5 0.5 0.5 0.5

#XGTCIGPWODGTQHGORNQ[GGUVQVCN(QTVWO 19,003 17,461 16,220 14,803 14,053 13,343 12,859 10,026 8,910 8,304 14,077 13,278 11,156 #XGTCIGPWODGTQHGORNQ[GGUEQPVKPWKPIQRGTCVKQPU 8,592 8,939 8,910 8,304 14,077 13,278 11,156

 (%,7'$LVGHğQHGDV2SHUDWLQJSURğWFRQWLQXLQJRSHUDWLRQV'HSUHFLDWLRQDPRUWLVDWLRQDQGLPSDLUPHQWFKDUJHV$FFRUGLQJWR)LQQLVK$FFRXQWLQJ6WDQGDUGV )$6 VKDUHRISURğWRIDVVRFLDWHGFRPSD- QLHVZDVLQFOXGHGLQRSHUDWLQJSURğW,QFDOFXODWLQJ(%,7'$SUHVHQWHGXQGHU)$6VKDUHRISURğWRIDVVRFLDWHGFRPSDQLHVKDYHEHHQH[FOXGHGLQŋ  5HWXUQRQHTXLW\IRUFRQWLQXLQJRSHUDWLRQVIRULVFDOFXODWHGEDVHGRQSURğWIRUWKHSHULRGIURPFRQWLQXLQJRSHUDWLRQVGLYLGHGE\WRWDOHTXLW\DWWKHHQGRIWKHSHULRG3URğWIRUWKHSHULRGIURP GLVFRQWLQXHGRSHUDWLRQVKDVEHHQVXEWUDFWHGIURPWRWDOHTXLW\RQ'HFHPEHU  *HDULQJLVGHğQHGDVLQWHUHVWEHDULQJQHWGHEWRYHUVKDUHKROGHUVłHTXLW\SOXVQRQFRQWUROOLQJLQWHUHVWV,QŋQRQFRQWUROOLQJLQWHUHVWVLQFOXGHGWKHSUHIHUHQFHVKDUHVDPRXQWLQJWR(85ELO- OLRQFDUU\LQJğ[HGLQFRPHGLYLGHQGRISHUFHQWLVVXHGE\)RUWXP&DSLWDO/WG  ,QDGGLWLRQWRFDVKGLYLGHQG)RUWXPGLVWULEXWHGDSSUR[LPDWHO\RI1HVWH2LO&RUSRUDWLRQVKDUHVDVGLYLGHQGLQ  %RDUGRI'LUHFWRUVłSURSRVDOIRUWKH$QQXDO*HQHUDO0HHWLQJRQ0DUFK 6HH'HğQLWLRQVRINH\ğJXUHVRQSDJHVDQG FORTUM FINANCIALS 2010 KEY FIGURES 131

6KDUHNH\ğJXUHV Change FAS FAS FAS FAS FAS FAS IFRS IFRS IFRS IFRS IFRS IFRS IFRS 10/09 EUR or as indicated 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 % 'CTPKPIURGTUJCTGVQVCN(QTVWO 0.27 0.41 0.55 0.57 0.79 0.91 1.48 1.55 1.22 1.74 1.74 1.48 1.46 –1 'CTPKPIURGTUJCTGEQPVKPWKPIQRGTCVKQPU ------0.79 1.01 1.22 1.74 1.74 1.48 1.46 –1 'CTPKPIURGTUJCTGFKUEQPVKPWGFQRGTCVKQPU ------0.690.54-----

&KNWVGFGCTPKPIURGTUJCTGVQVCN(QTVWO - - 0.55 0.57 0.78 0.90 1.46 1.53 1.21 1.74 1.74 1.48 1.46 –1 &KNWVGFGCTPKPIURGTUJCTGEQPVKPWKPIQRGTCVKQPU ------0.78 1.00 1.21 1.74 1.74 1.48 1.46 –1 &KNWVGFGCTPKPIURGTUJCTGFKUEQPVKPWGFQRGTCVKQPU ------0.680.53-----

%CUJƃQYRGTUJCTGVQVCN(QTVWO 1.01 0.67 0.54 1.43 1.60 1.86 2.06 1.61 1.31 1.88 2.26 2.55 1.62 –36 %CUJƃQYRGTUJCTGEQPVKPWKPIQRGTCVKQPU --1.44 1.46 1.31 1.88 2.26 2.55 1.62 –36

'SWKV[RGTUJCTG 5.06 6.00 6.32 6.49 6.97 7.55 8.65 8.17 8.91 9.43 8.96 9.04 9.24 2

&KXKFGPFRGTUJCTGVQVCN(QTVWO1) 0.13 0.18 0.23 0.26 0.31 0.42 0.58 1.12 1.26 1.35 1.00 1.00 1.00 2) 0 &KXKFGPFRGTUJCTGEQPVKPWKPIQRGTCVKQPU ------0.58 0.73 0.77 - - - &KXKFGPFRGTUJCTGCFFKVKQPCNKPCPF FKUEQPVKPWGFQRGTCVKQPUKP ------0.54 0.53 0.58 - - -

Payout ratio total Fortum, % 46.3 43.4 41.9 45.6 39.2 46.2 39.2 72.3 103.3 4) 77.6 4) 57.5 67.6 68.5 2) Payout ratio continuing operations, % ------57.43) 59.8 4) 44.3 4) --- 2C[QWVTCVKQCFFKVKQPCNFKXKFGPFKPCPF FKUEQPVKPWGFQRGTCVKQPUKP ------100.0 3) 43.4 4) 33.3 4) ---

&KXKFGPF[KGNF 2.5 4.0 5.3 5.5 5.0 5.1 4.37.15.84.46.65.34.4 2)

2TKEGGCTPKPIUTCVKQ 2' 18.5 10.9 7.9 8.3 7.9 9.0 9.2 10.2 17.7 17.7 8.8 12.8 15.4 5JCTGRTKEGU #VVJGGPFQHVJGRGTKQF 5.03 4.50 4.35 4.75 6.25 8.18 13.62 15.84 21.56 30.81 15.23 18.97 22.53 #XGTCIGUJCTGRTKEG 5.66 4.76 4.18 4.79 5.87 6.94 10.29 13.87 20.39 23.57 24.79 15.91 19.05 .QYGUVUJCTGRTKEG 4.86 4.24 3.50 4.05 4.75 5.66 7.45 10.45 15.71 20.01 12.77 12.60 17.18 *KIJGUVUJCTGRTKEG 6.05 5.80 4.94 5.70 6.52 8.75 13.99 16.90 23.48 31.44 33.00 19.20 22.69

/CTMGVECRKVCNKUCVKQPCVVJGGPFQHVJGRGTKQF'74OKNNKQP 3,949 3,532 3,456 4,017 5,286 6,943 11,810 13,865 19,132 27,319 13,519 16,852 20,015 6TCFKPIXQNWOGU5) 0WODGTQHUJCTGUUJCTGU 17,643 112,398 93,900 134,499 251,216 270,278 478,832 900,347 830,764 787,380 628,155 580,899 493,375 +PTGNCVKQPVQVJGYGKIJVGFCXGTCIGPWODGTQHUJCTGU 2.2 14.3 11.9 16.8 29.7 31.9 59.2 103.2 94.3 88.5 70.8 65.4 55.5

0WODGTQHUJCTGUUJCTGU 784,783 784,783 845,609 845,609 845,776 849,813 867,084 875,294 887,394 886,683 887,638 888,367 888,367 0WODGTQHUJCTGUGZENWFKPIQYPUJCTGUUJCTGU NA NA 794,571 NA NA NA NA NA NA NA NA NA NA #XGTCIGPWODGTQHUJCTGUUJCTGU 784,783 784,783 787,223 798,346 845,642 846,831 852,625 872,613 881,194 889,997 887,256 888,230 888,367 &KNWVGFCFLWUVGFCXGTCIGPWODGTQHUJCTGUUJCTGU - - 787,223 798,308 851,482 858,732 861,772 887,653 886,929 891,395 887,839 888,230 888,367

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2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010 Fortum's total power and heat Fortum's total power and heat generation in EU and Norway sales in EU and Norway Power generation 69J 55.5 52.3 54.4 52.2 52.6 49.3 53.7 Electricity sales '74OKNNKQP 2,017 2,002 2,437 2,370 2,959 2,802 3,110 Heat generation 69J 25.4 25.1 25.8 26.1 25.0 23.2 26.1 Heat sales '74OKNNKQP 809 867 1,014 1,096 1,157 1,095 1,309

Fortum's total power and heat Fortum's total power and heat generation in Russia sales in Russia Power generation 69J ----11.616.016.1 Electricity sales '74OKNNKQP ----332390505 Heat generation 69J ----15.325.626.0 Heat sales '74OKNNKQP ----141219287

Fortum's own power generation by Fortum's total power sales by source, total in the Nordic area area *[FTQRQYGT 69J 19.1 21.2 19.8 20.0 22.9 22.1 22.0 (KPNCPF 69J 31.1 26.0 29.6 29.0 28.7 26.1 30.7 Nuclear power 69J 25.8 25.8 24.4 24.9 23.7 21.4 22.0 5YGFGP 69J 27.6 30.4 28.5 27.6 28.5 26.9 28.3 6JGTOCNRQYGT 69J 9.5 4.2 9.0 6.2 5.0 4.6 8.3 Russia 69J ----14.819.518.7 Total 69J 54.4 51.2 53.2 51.1 51.6 48.1 52.3 1VJGTEQWPVTKGU 69J 3.6 3.3 3.5 3.1 3.0 3.2 3.2 Total 69J 62.3 59.7 61.6 59.7 75.0 75.7 80.9 Fortum's own power generation by source, total in the Nordic area Fortum's total heat sales by area *[FTQRQYGT % 35 42 37 39 44 46 42 (KPNCPF 69J 10.5 9.8 10.7 11.1 10.8 8.0 9.6 Nuclear power % 47 50 46 49 46 44 42 Russia 69J ----15.325.626.8 6JGTOCNRQYGT % 18 8 17 12 10 10 16 5YGFGP 69J 9.6 9.5 9.3 9.2 9.1 9.8 10.9 Total % 100 100 100 100 100 100 100 2QNCPF 69J 0.4 1.1 3.6 3.5 3.6 3.7 4.0 1VJGTEQWPVTKGU 69J 3.3 3.4 3.2 3.3 3.4 3.5 3.6 Power generation capacity by division Total 69J 23.8 23.8 26.8 27.1 42.2 50.6 54.9 Power MW 10,003 9,540 9,560 9,575 9,709 9,728 Heat MW 1,278 1,373 1,360 1,213 1,446 1,600 Volume of distributed electricity Russia MW ---2,7852,7852,785 in distribution networks Total MW 11,281 10,913 10,920 13,573 13,940 14,113 (KPNCPF 69J 6.2 6.3 7.7 9.2 9.3 9.4 10.0 5YGFGP 69J 14.2 14.4 14.4 14.3 14.0 14.0 15.2 Heat production capacity by division Norway 69J 2.1 2.2 2.3 2.3 2.3 2.3 2.5 Power MW 250 250 250 250 250 250 Estonia 69J 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Heat MW 9,757 10,633 10,973 10,218 10,284 10,448 Total 69J 22.7 23.1 24.6 26.0 25.8 25.9 27.9 Russia MW - - - 13,796 13,796 13,796 Total MW 10,007 10,883 11,223 24,263 24,330 24,494 FORTUM FINANCIALS 2010 KEY FIGURES 133

2SHUDWLRQDONH\ğJXUHVVHJPHQWV &RPSDUDEOHRSHUDWLQJSURğWE\VHJPHQW EUR million 2004 2005 2006 2007 2008 2009 2010 $VIURP)RUWXPDSSOLHV,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ6WDQGDUGV ,)56 IRU Power 730 854 985 1,095 1,528 1,454 1,298 WKHDQQXDODQGLQWHULPUHSRUWV7KHDQQXDOUHSRUWLQFOXGHGRQHFRPSDULVRQ\HDU Heat 207 253 253 290 250 231 275 ZKLFKZDVUHVWDWHGWR,)566HJPHQWQXPEHUVDUHSUHVHQWHGEDVHGRQO\RQ,)56 Distribution 240 244 250 231 248 262 307 Electricity Sales 23 30 –4 –1 –33 22 11 IRUFRPSDULVRQSXUSRVHVEHFDXVHLQWKHWUDQVLWLRQWR,)56UHSRUWDEOHVHJPHQWVZHUH Russia ----–92–208 UHGHğQHGDQGVHJPHQWUHSRUWLQJDVVXFKZDVUHDVVHVVHG 1VJGT –52 –47 –47 –51 –56 –61 –66 )ROORZLQJWKHDFTXLVLWLRQRIWKH5XVVLDQFRPSDQ\2$2)RUWXP)RUWXPFKDQJHG %QORCTCDNGQRGTCVKPIRTQƂV 1,148 1,334 1,437 1,564 1,845 1,888 1,833 LWVVHJPHQWUHSRUWLQJGXULQJ&RPSDULVRQQXPEHUVIRUŋZHUHUHVWDWHG Non-recurring items 18 30 61 250 85 29 93 LQ 1VJGTKVGOUCHHGEVKPIEQO- parability 29 –17 –43 33 33 –135 –218 ,Q2FWREHU)RUWXPUHVWUXFWXUHGLWVRUJDQLVDWLRQLQWRIRXUEXVLQHVVGLYLVLRQV 1RGTCVKPIRTQƂV 1,195 1,347 1,455 1,847 1,963 1,782 1,708 DQGIRXUVWDIIIXQFWLRQVLQRUGHUWRLQFUHDVHWKHRUJDQLVDWLRQłVHIğFLHQF\SHUIRUPDQFH DFFRXQWDELOLW\DQGVLPSOLFLW\7KHEXVLQHVVGLYLVLRQVDUH3RZHU+HDW5XVVLDDQG(OHFWULF- 'HSUHFLDWLRQDPRUWLVDWLRQDQGLPSDLUPHQWFKDUJHVE\VHJPHQW

LW\6ROXWLRQVDQG'LVWULEXWLRQ7KH(OHFWULFLW\6ROXWLRQVDQG'LVWULEXWLRQ (6' FRQVLVWV EUR million 2004 2005 2006 2007 2008 2009 2010 RIEXVLQHVVDUHDV'LVWULEXWLRQDQG(OHFWULFLW\6DOHV IRUPHU0DUNHWV 7KHUHSRUWDEOH Power 104 112 108 103 97 93 100 VHJPHQWVXQGHU,)56KDYHEHHQUHQDPHGFRUUHVSRQGLQJO\ Heat 124 123 144 163 169 162 187 7KHUHRUJDQLVDWLRQGLGQRWOHDGWRDFKDQJHLQ)RUWXPłVH[WHUQDOğQDQFLDOUHSRUWLQJ Distribution 133 145 147 162 165 164 178 VWUXFWXUHDVWKHUHSRUWDEOHVHJPHQWVKDYHUHPDLQHGWKHVDPH+RZHYHUWKHUHKDYHEHHQ Electricity Sales 16 15 19 11 7 6 2 Russia - - - - 67 75 86 VRPHPLQRUFKDQJHVWRWKHFRPSRVLWLRQRIWKHVHJPHQWVWKDWKDYHWDNHQHIIHFWIURPWKH 1VJGT 11 12 11 12 10 10 10 EHJLQQLQJRI-DQXDU\7KHFKDQJHVKDYHDOVREHHQUHĠHFWHGLQWKHğJXUHV Total 388 407 429 451 515 510 563 &KDQJHVUHODWHPDLQO\WRWKHWUDQVIHURIWKH3RZHUGLYLVLRQłV3RZHU6ROXWLRQVEXVLQHVV DUHDWR5XVVLDDQG+HDWGLYLVLRQVDVZHOODVWKHHVWDEOLVKPHQWRIWKHFHQWUDOLVHG7UDGLQJ 6KDUHRISURğWRIDVVRFLDWHVDQGMRLQWYHQWXUHVE\VHJPHQW DQG,QGXVWULDO,QWHOOLJHQFHXQLW EUR million 2004 2005 2006 2007 2008 2009 2010 )RUIXUWKHULQIRUPDWLRQVHH1RWH6HJPHQWUHSRUWLQJRQSDJH Power –21 –21 –9 –23 26 –35 –25 Heat 15 11 23 24 12 30 31 6DOHVE\VHJPHQW Distribution 16 20 15 18 16 10 19 EUR million 2004 2005 2006 2007 2008 2009 2010 Electricity Sales 0110501 Power 2,084 2,058 2,439 2,350 2,892 2,531 2,702 Russia ----19208 QHYJKEJKPVGTPCN 128 –97 –133 323 0 254 –281 1VJGT 2 44 39 222 48 –4 28 Heat 1,025 1,063 1,268 1,356 1,466 1,399 1,770 Total 12 55 69 241 126 21 62 QHYJKEJKPVGTPCN 49 –12 –32 38 0 23 –8 Distribution 707 707 753 769 789 800 963 QHYJKEJKPVGTPCN 10 –8 8 9 10 13 18 &DSLWDOH[SHQGLWXUHE\VHJPHQW Electricity Sales 1,387 1,365 1,912 1,683 1,922 1,449 1,798 EUR million 2004 2005 2006 2007 2008 2009 2010 QHYJKEJKPVGTPCN 92 –101 149 155 177 67 158 Power 84 83 95 93 134 96 97 Russia ----489632804 Heat 123 124 184 309 408 358 304 QHYJKEJKPVGTPCN ------Distribution 106 115 183 236 296 188 213 1VJGT 90 91 78 81 83 71 51 Electricity Sales 101083310 QHYJKEJKPVGTPCN 93 –63 62 72 82 –5 169 Russia ----256215599 Eliminations –1,458 –1,407 –1,959 –1,760 –2,005 –1,447 –1,792 1VJGT 12 14 15 14 11 4 9 Total 3,835 3,877 4,491 4,479 5,636 5,435 6,296 Total 335 346 485 655 1,108 862 1,222 134 KEY FIGURES FORTUM FINANCIALS 2010

*URVVLQYHVWPHQWVLQVKDUHVE\VHJPHQW 'HğQLWLRQVRINH\ğJXUHV EUR million 2004 2005 2006 2007 2008 2009 2010 Power 23 45 5 52 0 57 25 Heat 53 87 589 18 23 1 1 '$+6&# 'CTPKPIUDGHQTGKPVGTGUV = 1RGTCVKPIRTQƂV &GRTGEKCVKQPCOQTVKUCVKQPCPF Distribution 0-1301050 VCZGUFGRTGEKCVKQPCPFCOQTVKUCVKQP KORCKTOGPVEJCTIGU Electricity Sales 0-600-- Russia 103 2 140 245 1,492 3 - Comparable EBITDA = EBITDA – items affecting comparability 1VJGT 0-401111 Total 179 134 910 317 1,516 67 27 Items affecting comparability = 0QPTGEWTTKPIKVGOU QVJGTKVGOUCHHGEVKPIEQORCTCDKNKV[

1HWDVVHWVE\VHJPHQW %QORCTCDNGQRGTCVKPIRTQƂV = 1RGTCVKPIRTQƂVsPQPTGEWTTKPIKVGOUsQVJGTKVGOU EUR million 2004 2005 2006 2007 2008 2009 2010 affecting comparability Power 5,804 5,493 5,690 5,599 5,331 5,494 5,806 Heat 2,440 2,551 3,407 3,507 3,468 3,787 4,182 Non-recurring items = /CKPN[ECRKVCNICKPUCPFNQUUGU Distribution 3,091 3,021 3,412 3,239 3,032 3,299 3,683 Electricity Sales 194 228 176 247 188 125 210 1VJGTKVGOUCHHGEVKPIEQORCTCDKNKV[ = +PENWFGUGHHGEVUHTQOƂPCPEKCNFGTKXCVKXGUJGFIKPIHW- Russia 151 153 294 456 2,205 2,260 2,817 VWTGECUJƃQYUYJGTGJGFIGCEEQWPVKPIKUPQVCRRNKGF 1VJGT 220 447 835 1,237 796 382 29 CEEQTFKPIVQ+#5CPFGHHGEVUHTQOVJGCEEQWPVKPI QH(QTVWOoURCTVQHVJG(KPPKUJ0WENGCT9CUVG(WPF Total 11,900 11,893 13,814 14,285 15,020 15,347 16,727 YJGTGVJGCUUGVKPVJGDCNCPEGUJGGVECPPQVGZEGGFVJG TGNCVGFNKCDKNKVKGUCEEQTFKPIVQ+(4+%KPVGTRTGVCVKQP 5HWXUQRQQHWDVVHWVE\VHJPHQW

EUR million 2004 2005 2006 2007 2008 2009 2010 (WPFUHTQOQRGTCVKQPU ((1 = 0GVECUJHTQOQRGTCVKPICEVKXKVKGUDGHQTGEJCPIGKP Power 12.6 14.3 17.5 19.2 29.6 24.5 19.5 working capital Heat 9.8 11.6 9.6 9.3 8.9 7.9 8.4 %CRKVCNGZRGPFKVWTG = %CRKVCNKUGFKPXGUVOGPVUKPRTQRGTV[RNCPVCPFGSWKR- Distribution 8.1 8.8 8.4 7.7 8.1 8.7 9.7 OGPVCPFKPVCPIKDNGCUUGVUKPENWFKPIOCKPVGPCPEG Electricity Sales 25.2 17.4 –1.6 6.9 –14.0 28.9 38.4 RTQFWEVKXKV[ITQYVJCPFKPXGUVOGPVUTGSWKTGFD[ Russia - - - 66.3 –3.7 0.0 2.4 NGIKUNCVKQPKPENWFKPIDQTTQYKPIEQUVUECRKVCNKUGFFWTKPI VJGEQPUVTWEVKQPRGTKQF/CKPVGPCPEGKPXGUVOGPVU &RPSDUDEOHUHWXUQRQQHWDVVHWVE\VHJPHQW GZRCPFVJGNKHGVKOGQHCPGZKUVKPICUUGVOCKPVCKPWU- CIGCXCKNCDKNKV[CPFQTOCKPVCKPUTGNKCDKNKV[2TQFWEVKX- EUR million 2004 2005 2006 2007 2008 2009 2010 KV[KORTQXGURTQFWEVKXKV[KPCPGZKUVKPICUUGV)TQYVJ KPXGUVOGPVUoRWTRQUGKUVQDWKNFPGYCUUGVUCPFQT Power 12.0 14.9 17.4 18.9 28.0 26.4 22.3 VQKPETGCUGEWUVQOGTDCUGYKVJKPGZKUVKPIDWUKPGUUGU Heat 9.3 11.0 9.2 9.2 7.3 7.3 7.7 .GIKUNCVKQPKPXGUVOGPVUCTGFQPGCVCEGTVCKPRQKPVQH Distribution 8.3 8.6 8.3 7.6 8.2 8.6 9.3 VKOGFWGVQNGICNTGSWKTGOGPVU Electricity Sales 17.1 16.4 –0.8 –0.6 –15.3 18.6 9.3 Russia - - - 0.0 –3.8 0.0 0.7 )TQUUKPXGUVOGPVUKPUJCTGU = +PXGUVOGPVUKPUWDUKFKCT[UJCTGUUJCTGUKPCUUQEKCVGF EQORCPKGUCPFQVJGTUJCTGUKPCXCKNCDNGHQTUCNGƂPCP- EKCNCUUGVU+PXGUVOGPVUKPUWDUKFKCT[UJCTGUCTGPGVQH $YHUDJHQXPEHURISHUVRQQHO ECUJCPFITQUUGFYKVJKPVGTGUVDGCTKPINKCDKNKVKGUKPVJG 2004 2005 2006 2007 2008 2009 2010 CESWKTGFEQORCP[ Power 4,588 4,374 4,147 3,475 3,591 2,068 1,891 Heat 1,605 2,186 2,345 2,302 2,422 2,652 2,482 2TQƂVHQTVJG[GCT 4GVWTPQPUJCTGJQNFGTU GSWKV[ = Z Distribution 995 1,008 983 1,060 1,222 1,166 1,098 6QVCNGSWKV[CXGTCIG Electricity Sales 682 745 825 936 766 629 538 Russia ----5,5666,1704,555 2TQƂVDGHQTGVCZGU KPVGTGUVCPF 1VJGT 722 626 610 531 510 593 592 QVJGTƂPCPEKCNGZRGPUGU 4GVWTPQPECRKVCNGORNQ[GF = Z Total 8,592 8,939 8,910 8,304 14,077 13,278 11,156 %CRKVCNGORNQ[GFCXGTCIG FORTUM FINANCIALS 2010 KEY FIGURES 135

2TQƂVDGHQTGVCZGUEQPVKPWKPIQRGTCVKQPU KPVGTGUVCPF +PVGTGUVDGCTKPIPGVFGDV 0GVFGDV'$+6&#EQPVKPWKPI = 4GVWTPQPECRKVCNGORNQ[GFEQPVKPWKPI QVJGTƂPCPEKCNGZRGPUGUEQPVKPWKPIQRGTCVKQPU operations = Z 1RGTCVKPIRTQƂVEQPVKPWKPIQRGTCVKQPU  operations, % %CRKVCNGORNQ[GFEQPVKPWKPIQRGTCVKQPUCXGTCIG &GRTGEKCVKQPCOQTVKUCVKQPCPFKORCKTOGPVEJCTIGU continuing operations +PVGTGUVDGCTKPIPGVFGDV 1RGTCVKPIRTQƂV 5JCTGQHRTQƂV NQUU KPCUUQEKCVGF %QORCTCDNGPGVFGDV'$+6&# = EQORCPKGUCPFLQKPVXGPVWTGU continuing operations Comparable EBITDA continuing operations Return on net assets, % = Z 0GVCUUGVUCXGTCIG 1RGTCVKPIRTQƂV +PVGTGUVEQXGTCIG = %QORCTCDNGQRGTCVKPIRTQƂV 5JCTGQHRTQƂV NQUU KP 0GVKPVGTGUVGZRGPUGU CUUQEKCVGFEQORCPKGUCPFLQKPVXGPVWTGU CFLWUVGFHQT +#5GHHGEVUCPFOCLQTUCNGUICKPUQTNQUUGU +PVGTGUVEQXGTCIGKPENWFKPIECRKVCNKUGF 1RGTCVKPIRTQƂV Comparable return on net assets, % = Z = %QORCTCDNGPGVCUUGVUCXGTCIG borrowing costs 0GVKPVGTGUVGZRGPUGUECRKVCNKUGFDQTTQYKPIEQUVU

%CRKVCNGORNQ[GF = 6QVCNCUUGVUsPQPKPVGTGUVDGCTKPINKCDKNKVKGUsFGHGTTGF #XGTCIGPWODGTQHGORNQ[GGU = $CUGFQPOQPVJN[CXGTCIGHQTVJGYJQNGRGTKQF VCZNKCDKNKVKGUsRTQXKUKQPU

Net assets = 0QPKPVGTGUVDGCTKPICUUGVU KPVGTGUVDGCTKPICUUGVU 2TQƂVHQTVJGRGTKQFsPQPEQPVTQNNKPIKPVGTGUVU TGNCVGFVQVJG0WENGCT9CUVG(WPFsPQPKPVGTGUV 'CTPKPIURGTUJCTG '25 = DGCTKPINKCDKNKVKGUsRTQXKUKQPU PQPKPVGTGUVDGCTKPI #XGTCIGPWODGTQHUJCTGUFWTKPIVJGRGTKQF CUUGVUCPFNKCDKNKVKGUFQPQVKPENWFGƂPCPEGTGNCVGF KVGOUVCZCPFFGHGTTGFVCZCPFCUUGVUCPFNKCDKNKVKGU 0GVECUJHTQOQRGTCVKPICEVKXKVKGU HTQOHCKTXCNWCVKQPUQHFGTKXCVKXGUYJGTGJGFIG %CUJƃQYRGTUJCTG = CEEQWPVKPIKUCRRNKGF #XGTCIGPWODGTQHUJCTGUFWTKPIVJGRGTKQF

Comparable net assets = 0GVCUUGVUCFLWUVGFHQTPQPKPVGTGUVDGCTKPICUUGVU 5JCTGJQNFGTU GSWKV[ CPFNKCDKNKVKGUCTKUKPIHTQOƂPCPEKCNFGTKXCVKXGUJGFIKPI 'SWKV[RGTUJCTG = HWVWTGECUJƃQYUYJGTGJGFIGCEEQWPVKPIKUPQV 0WODGTQHUJCTGUCVVJGGPFQHVJGRGTKQF CRRNKGFCEEQTFKPIVQ+#5 &KXKFGPFRGTUJCTG Payout ratio, % = Z +PVGTGUVDGCTKPIPGVFGDV = +PVGTGUVDGCTKPINKCDKNKVKGUsNKSWKFHWPFU 'CTPKPIURGTUJCTG

+PVGTGUVDGCTKPIPGVFGDV &KXKFGPFRGTUJCTGEQPVKPWKPIQRGTCVKQPU Gearing, % = Z Payout ratio continuing operations, % = Z 6QVCNGSWKV[ 'CTPKPIURGTUJCTGEQPVKPWKPIQRGTCVKQPU

&KXKFGPFRGTUJCTG 6QVCNGSWKV[KPENWFKPIPQPEQPVTQNNKPIKPVGTGUVU 'SWKV[VQCUUGVUTCVKQ = Z &KXKFGPF[KGNF = Z Total assets 5JCTGRTKEGCVVJGGPFQHVJGRGTKQF

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6TCFKPIXQNWOGU = 0WODGTQHUJCTGUVTCFGFFWTKPIVJGRGTKQFKPTGNCVKQP VQVJGYGKIJVGFCXGTCIGPWODGTQHUJCTGUFWTKPIVJG RGTKQF 136 FORTUM FINANCIALS 2010 3DUHQWFRPSDQ\ğQDQFLDOVWDWHPHQWV )LQQLVK*$$3 )$6

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EUR million Note 2010 2009 EUR million Note 2010 2009 Sales 2 67 61 SHAREHOLDERS' EQUITY AND LIABILITIES 1VJGTKPEQOG 3 12 8 Employee costs 4 –35 –41 Shareholders' equity 10 &GRTGEKCVKQPCOQTVKUCVKQPCPFYTKVGFQYPU –9 –10 5JCTGECRKVCN 3,046 3,046 1VJGTGZRGPUGU –55 –58 5JCTGRTGOKWO 2,822 2,822 1RGTCVKPIRTQƂV –20 –40 4GVCKPGFGCTPKPIU 3,164 2,854 (KPCPEKCNKPEQOGCPFGZRGPUGU 5 385 580 2TQƂVHQTVJGRGTKQF 1,028 1,198 2TQƂVCHVGTƂPCPEKCNKVGOU 365 540 Total shareholders' equity 10,060 9,920 Group contributions 1) 812 792 2TQƂVDGHQTGKPEQOGVCZ 1,177 1,332 Provisions for liabilities and charges 0 0 +PEQOGVCZGZRGPUG 6 –149 –134 2TQƂVHQTVJGRGTKQF 1,028 1,198 LIABILITIES Non-current liabilities  7D[DEOHSURğWVWUDQVIHUUHGIURP)LQQLVKVXEVLGLDULHV 'ZVGTPCNKPVGTGUVDGCTKPINKCDKNKVKGU 11 5,650 5,266 Interest-bearing liabilities to group companies 11 1,360 1,438 +PVGTGUVDGCTKPINKCDKNKVKGUVQCUUQEKCVGFEQORCPKGU 11 213 199 %DODQFHVKHHW 1VJGTPQPEWTTGPVNKCDKNKVKGU 8 12 &GHGTTGFVCZNKCDKNKVKGU - 33 EUR million Note 2010 2009 Total non-current liabilities 7,231 6,948 ASSETS Current liabilities Non-current assets 7 'ZVGTPCNKPVGTGUVDGCTKPINKCDKNKVKGU 11 803 780 Intangible assets 10 14 6TCFGCPFQVJGTRC[CDNGUVQITQWREQORCPKGU 12 79 43 2TQRGTV[RNCPVCPFGSWKROGPV 13 11 6TCFGCPFQVJGTRC[CDNGUVQCUUQEKCVGFEQORCPKGU 12 3 5 +PXGUVOGPVUKPITQWREQORCPKGU 15,645 15,965 6TCFGCPFQVJGTRC[CDNGU 12 448 158 +PVGTGUVDGCTKPITGEGKXCDNGUHTQOITQWREQORCPKGU 1,961 698 Total current liabilities 1,333 986 +PXGUVOGPVUKPCUUQEKCVGFEQORCPKGU 0 0 Total liabilities 8,564 7,934 +PVGTGUVDGCTKPITGEGKXCDNGUHTQOCUUQEKCVGFEQORCPKGU 1 1 Total equity and liabilities 18,624 17,854 1VJGTPQPEWTTGPVCUUGVU 4 4 &GHGTTGFVCZCUUGVU 3 3 Total non-current assets 17,637 16,696

Current assets 1VJGTTGEGKXCDNGUHTQOITQWREQORCPKGU 8 823 819 1VJGTTGEGKXCDNGUHTQOCUUQEKCVGFEQORCPKGU 8 0 0 1VJGTTGEGKXCDNGU 8 48 125 %CUJCPFECUJGSWKXCNGPVU 9 116 214 Total current assets 987 1,158 Total assets 18,624 17,854 FORTUM FINANCIALS 2010 PARENT COMPANY FINANCIAL STATEMENTS, FAS 137

&DVKĠRZVWDWHPHQW 3DUHQWFRPSDQ\QRWHVWR 1 EUR million 2010 2009 2 %CUJƃQYHTQOQRGTCVKPICEVKXKVKGU WKHğQDQFLDOVWDWHPHQWV 3 2TQƂVHQTVJGRGTKQF 1,028 1,198 4 Adjustments: 5 +PEQOGVCZGZRGPUG 149 134 1 $FFRXQWLQJSROLFLHVDQGSULQFLSOHV 6 Group contributions –812 –792 7 Finance costs - net –385 –580 7KHğQDQFLDOVWDWHPHQWVRI)RUWXP2\MDUHSUHSDUHGLQDFFRUGDQFHZLWK)LQQLVK$F- 8 &GRTGEKCVKQPUCOQTVKUCVKQPCPFYTKVGFQYPU 9 10 FRXQWLQJ6WDQGDUGV )$6  9 1RGTCVKPIRTQƂVDGHQTGFGRTGEKCVKQPU –11 –30 10 11 1.1 6DOHV 0QPECUJƃQYKVGOUCPFFKXGUVKPICEVKXKVKGU –6 0 12 +PVGTGUVCPFQVJGTƂPCPEKCNKPEQOG 44 23 6DOHVLQFOXGHVDOHVUHYHQXHIURPDFWXDORSHUDWLRQVDQGH[FKDQJHUDWHGLIIHUHQFHVRQ 13 +PVGTGUVCPFQVJGTƂPCPEKCNGZRGPUGURCKFPGV –239 –282 WUDGHUHFHLYDEOHVOHVVGLVFRXQWVDQGLQGLUHFWWD[HVVXFKDVYDOXHDGGHGWD[ 14 &KXKFGPFKPEQOG 920 1,147 )TQWREQPVTKDWVKQPTGEGKXGF 792 757 2WKHULQFRPH 4GCNKUGFHQTGKIPGZEJCPIGICKPUCPFNQUUGU 282 612 1.2 +PEQOGVCZGURCKF –160 –66 2WKHULQFRPHLQFOXGHVJDLQVRQWKHVDOHVRIWDQJLEOHDVVHWVDQGVKDUHKROGLQJVDVZHOODV Funds from operations 1,622 2,161 DOORWKHURSHUDWLQJLQFRPHQRWUHODWHGWRWKHVDOHVRISURGXFWVRUVHUYLFHVVXFKDVUHQWV

&GETGCUGKPETGCUGKPQVJGTUJQTVVGTOTGEGKXCDNGU 9 13 1.3)RUHLJQFXUUHQF\LWHPVDQGGHULYDWLYHLQVWUXPHQWV +PETGCUGFGETGCUGKPQVJGTUJQTVVGTORC[CDNGU 277 –11 7UDQVDFWLRQVGHQRPLQDWHGLQIRUHLJQFXUUHQFLHVKDYHEHHQYDOXHGXVLQJWKHH[FKDQJH %JCPIGKPYQTMKPIECRKVCN 286 2 Net cash from operating activities 1,908 2,163 UDWHDWWKHGDWHRIWKHWUDQVDFWLRQ5HFHLYDEOHVDQGOLDELOLWLHVGHQRPLQDWHGLQIRUHLJQ FXUUHQFLHVRXWVWDQGLQJRQWKHEDODQFHVKHHWGDWHKDYHEHHQYDOXHGXVLQJWKHH[FKDQJH %CUJƃQYHTQOKPXGUVKPICEVKXKVKGU UDWHTXRWHGRQWKHEDODQFHVKHHWGDWH([FKDQJHUDWHGLIIHUHQFHVKDYHEHHQHQWHUHGLQ %CRKVCNGZRGPFKVWTGU –8 –4 WKHğQDQFLDOQHWLQWKHLQFRPHVWDWHPHQW #ESWKUKVKQPQHQVJGTUJCTGU –1 –1 )RUWXP2\MHQWHUVLQWRGHULYDWLYHFRQWUDFWVPDLQO\IRUKHGJLQJIRUHLJQH[FKDQJHDQG 2TQEGGFUHTQOUCNGUQHƂZGFCUUGVU 1 0 LQWHUHVWUDWHH[SRVXUHV 2TQEGGFUHTQOUCNGUQHUJCTGUKPCUUQEKCVGU 4 0 %JCPIGKPKPVGTGUVDGCTKPITGEGKXCDNGUCPFQVJGTPQPEWTTGPVCUUGVU –1,262 274 'HULYDWLYHVXVHGWRKHGJHEDODQFHVKHHWLWHPVHJEDQNDFFRXQWVORDQVRUUHFHLYDEOHV Net cash used in investing activities –1,266 269 DUHYDOXHGHPSOR\LQJWKHH[FKDQJHUDWHTXRWHGRQWKHEDODQFHVKHHWGDWHDQGJDLQVRU ORVVHVDUHUHFRJQLVHGLQWKHLQFRPHVWDWHPHQW7KHLQWHUHVWHOHPHQWRQIRUZDUGFRQWUDFWV %CUJƃQYDGHQTGƂPCPEKPICEVKXKVKGU 642 2,432 LVDFFUXHGIRUWKHSHULRG 2SWLRQSUHPLXPVDUHWUHDWHGDVDGYDQFHVSDLGRUUHFHLYHGXQWLOWKHRSWLRQPDWXUHV %CUJƃQYHTQOƂPCPEKPICEVKXKVKGU 2TQEGGFUHTQONQPIVGTONKCDKNKVKGU 721 1,606 DQGDQ\ORVVHVRQRSWLRQVHQWHUHGLQWRRWKHUWKDQIRUKHGJLQJSXUSRVHVDUHHQWHUHGDV Payment of long-term liabilities –855 –2,497 DQH[SHQVHLQWKHLQFRPHVWDWHPHQW %JCPIGKPUJQTVVGTONKCDKNKVKGU 282 –692 ,QWHUHVWLQFRPHRUH[SHQVHIRUGHULYDWLYHVXVHGWRKHGJHWKHLQWHUHVWUDWHULVNH[SR- 2TQEGGFUHTQOUVQEMQRVKQPUGZGTEKUGF - 3 VXUHLVDFFUXHGRYHUWKHSHULRGWRPDWXULW\DQGLVUHFRJQLVHGDVDQDGMXVWPHQWWRWKH &KXKFGPFURCKF –888 –888 LQWHUHVWH[SHQVHRIWKHOLDELOLWLHV 0GVECUJWUGFKPƂPCPEKPICEVKXKVKGU –740 –2,468

Net increase(+) / decrease(–) in cash and cash equivalents –98 –36 1.4,QFRPHWD[HV ,QFRPHWD[HVSUHVHQWHGLQWKHLQFRPHVWDWHPHQWFRQVLVWRIDFFUXHGWD[HVIRUWKHğ- %CUJCPFECUJGSWKXCNGPVUCVVJGDGIKPPKPIQHVJGRGTKQF 214 250 QDQFLDO\HDUDQGWD[DGMXVWPHQWVIRUSULRU\HDUV %CUJCPFECUJGSWKXCNGPVUCVVJGGPFQHVJGRGTKQF 116 214 Net increase(+) / decrease(–) in cash and cash equivalents –98 –36

138 PARENT COMPANY FINANCIAL STATEMENTS, FAS FORTUM FINANCIALS 2010

1.53URSHUW\SODQWDQGHTXLSPHQWDQGGHSUHFLDWLRQ 4 7KHEDODQFHVKHHWYDOXHRISURSHUW\SODQWDQGHTXLSPHQWFRQVLVWVRIKLVWRULFDOFRVWV (PSOR\HHFRVWV OHVVGHSUHFLDWLRQDQGRWKHUGHGXFWLRQV3URSHUW\SODQWDQGHTXLSPHQWDUHGHSUHFLDWHG EUR million 2010 2009 XVLQJVWUDLJKWOLQHGHSUHFLDWLRQEDVHGRQWKHH[SHFWHGXVHIXOOLIHRIWKHDVVHW 2GTUQPPGNGZRGPUGU 9CIGUUCNCTKGUCPFTGOWPGTCVKQPU 28 32 7KHGHSUHFLDWLRQLVEDVHGRQWKHIROORZLQJH[SHFWHGXVHIXOOLYHV +PFKTGEVGORNQ[GGEQUVU %XLOGLQJVDQGVWUXFWXUHV ŋ\HDUV Pension costs 5 5 0DFKLQHU\DQGHTXLSPHQW ŋ\HDUV 1VJGTKPFKTGEVGORNQ[GGEQUVU 1 2 2WKHULQWDQJLEOHDVVHWV ŋ\HDUV 1VJGTRGTUQPPGNGZRGPUGU 1 2 Total 35 41

1.63HQVLRQH[SHQVHV Salaries and remunerations 6WDWXWRU\SHQVLRQREOLJDWLRQVDUHFRYHUHGWKURXJKDFRPSXOVRU\SHQVLRQLQVXUDQFH 2TGUKFGPVCPF%'1 2 2 1) SROLF\RU*URXSłVRZQSHQVLRQIXQG3D\PHQWVWR*URXSłVSHQVLRQIXQGDUHUHFRUGHG $QCTFQH&KTGEVQTU 0 0 LQWKHLQFRPHVWDWHPHQWLQDPRXQWVGHWHUPLQHGE\WKHSHQVLRQIXQGDFFRUGLQJWRWKH 5WRGTXKUQT[$QCTF 0 0 Total 2 2 DFWXDULDODVVXPSWLRQVSXUVXDQWWRWKH)LQQLVK(PSOR\HHVł3HQVLRQ$FW  7KH3UHVLGHQWDQG&(2RIWKHFRPSDQ\FKDQJHG0D\7KHVDODULHVDQGUHPXQHUDWLRQWR WKH3UHVLGHQWDQG&(2LVLQSUHVHQWHGIRUWKHIRUPHU&(2-DQXDU\ŋ$SULODQGWKHQHZ&(2 1.7/RQJWHUPLQFHQWLYHVFKHPHV 0D\ŋ'HFHPEHU &RVWVUHODWHGWRWKH)RUWXPORQJWHUPLQFHQWLYHSODQVDUHDFFUXHGRYHUWKHSODQSHULRG DQGWKHUHODWHGOLDELOLW\LVERRNHGWRWKHEDODQFHVKHHW )RUWKH3UHVLGHQWDQG&(2WKHUHWLUHPHQWDJHLV7KHSHQVLRQREOLJDWLRQVDUHFRYHUHG HLWKHUWKURXJKLQVXUDQFHFRPSDQLHVRUWKURXJKWKH)RUWXP3HQVLRQ)XQG 1.83URYLVLRQV 6HHDOVR1RWH3HQVLRQREOLJDWLRQVRQSDJHLQWKH&RQVROLGDWHGğQDQFLDOVWDWHPHQWV )RUHVHHDEOHIXWXUHH[SHQVHVDQGORVVHVWKDWKDYHQRFRUUHVSRQGLQJUHYHQXHWRZKLFK )RUWXPLVFRPPLWWHGRUREOLJHGWRVHWWOHDQGZKRVHPRQHWDU\YDOXHFDQEHUHDVRQDEO\ 2010 2009 DVVHVVHGDUHHQWHUHGDVH[SHQVHVLQWKHLQFRPHVWDWHPHQWDQGLQFOXGHGDVSURYLVLRQV Average number of employees 305 422 LQWKHEDODQFHVKHHW 5 )LQDQFLDOLQFRPHDQGH[SHQVHV 2 6DOHVE\PDUNHWDUHD EUR million 2010 2009 &KXKFGPFKPEQOGHTQOITQWREQORCPKGU 920 1,147 EUR million 2010 2009 +PVGTGUVCPFQVJGTƂPCPEKCNKPEQOGHTQOITQWREQORCPKGU 27 60 (KPNCPF 61 57 9TKVGFQYPUQHRCTVKEKRCVKQPUKPITQWREQORCPKGU –320 –320 1VJGTEQWPVTKGU 6 4 +PVGTGUVCPFQVJGTƂPCPEKCNKPEQOG 1 4 Total 67 61 'ZEJCPIGTCVGFKHHGTGPEGU –8 –7 +PVGTGUVCPFQVJGTƂPCPEKCNGZRGPUGUVQITQWREQORCPKGU –20 –28 +PVGTGUVCPFQVJGTƂPCPEKCNGZRGPUGU –215 –276 3 2WKHULQFRPH Total 385 580 6QVCNKPVGTGUVKPEQOGCPFGZRGPUGU EUR million 2010 2009 Interest income 28 63 )CKPQPUCNGUQHUJCTGJQNFKPIU 4 0 +PVGTGUVGZRGPUGU –230 –299 4GPVCNCPFQVJGTKPEQOG 8 8 Interest net –202 –236 Total 12 8 :ULWHGRZQVRISDUWLFLSDWLRQVLQJURXSFRPSDQLHVLVUHODWHGWRVKDUHVLQ)RUWXP+HDW DQG*DV2\:ULWHGRZQVLVDFRQVHTXHQFHRIUHFHLYHGGLYLGHQGV FORTUM FINANCIALS 2010 PARENT COMPANY FINANCIAL STATEMENTS, FAS 139

,QYHVWPHQWV 6 ,QFRPHWD[H[SHQVH Receivables 1 Shares in Receivables Shares in from Other Group from Group associated associated noncurrent 2 EUR million 2010 2009 EUR million companies companies companies companies assets Total 3 6CZGUQPTGIWNCTDWUKPGUUQRGTCVKQPU –62 –72 1 January 2010 16,365 698 0 1 4 17,068 4 6CZGUQPITQWREQPVTKDWVKQPU 211 206 #FFKVKQPU 1) -1,263- - -1,263 5 Total 149 134 Disposals - -00006 31 December 2010 16,365 1,961 0 1 4 18,331 7 %WTTGPVVCZGUHQTVJGRGTKQF 181 166 8 %WTTGPVVCZGUHQTRTKQTRGTKQFU 0 2 Accumulated depreciation 9 %JCPIGUKPFGHGTTGFVCZ –32 –34 1 January 2010–400----–400 10 Total 149 134 +ORCKTOGPVEJCTIGU –320----–32011 Accumulated depreciation 12 31 December 2010 2) –720----–720 13 14 7 1RQFXUUHQWDVVHWV Carrying amount 31 December 2010 15,645 1,961 0 1 4 17,611 ,QWDQJLEOHDVVHWV  $GGLWLRQVUHJDUGLQJVKDUHVFRPSULVHDFTXLVLWLRQVRIVKDUHVDQGFDSLWDOFRQWULEXWLRQV Intangible  :ULWHGRZQVRISDUWLFLSDWLRQVLQJURXSFRPSDQLHVLVUHODWHGWRVKDUHVLQ)RUWXP+HDWDQG*DV EUR million assets total 2\:ULWHGRZQVLVDFRQVHTXHQFHRIUHFHLYHGGLYLGHQGV Cost 1 January 2010 34 #FFKVKQPU 2 Disposals –3 8 2WKHUFXUUHQWUHFHLYDEOHV Cost 31 December 2010 33

EUR million 2010 2009 Accumulated depreciation 1 January 2010 20 1VJGTEWTTGPVTGEGKXCDNGUHTQOITQWREQORCPKGU Disposals –1 6TCFGTGEGKXCDNGU 8 17 &GRTGEKCVKQPHQTVJGRGTKQF 4 1VJGTTGEGKXCDNGU 812 792 Accumulated depreciation 31 December 2010 23 #EETWGFKPEQOGCPFRTGRCKFGZRGPUGU 3 10 Total 823 819 Carrying amount 31 December 2010 10 Carrying amount 31 December 2009 14 1VJGTEWTTGPVTGEGKXCDNGUHTQOCUUQEKCVGFEQORCPKGU 6TCFGTGEGKXCDNGU 0 0 3URSHUW\SODQWDQGHTXLSPHQW Advances 1VJGTEWTTGPVTGEGKXCDNGU Buildings Machinery paid and and and construction 6TCFGTGEGKXCDNGU 0 0 EUR million structures equipment in progress Total 1VJGTTGEGKXCDNGU 0 1 Cost 1 January 2010 1 26 4 31 #EETWGFKPEQOGCPFRTGRCKFGZRGPUGU 48 124 #FFKVKQPU 0336Total 48 125 Disposals 0 –1 0 –1 Cost 31 December 2010 1 28 7 36

Accumulated depreciation 1 January 2010 0 20 - 20 9 &DVKDQGFDVKHTXLYDOHQWV Disposals 0 –1 - –1 &GRTGEKCVKQPHQTVJGRGTKQF 04 -4EUR million 2010 2009 Accumulated depreciation 31 December 2010 0 23 - 23 %CUJCVDCPMCPFKPJCPF 116 104 $CPMFGRQUKVU - 110 Carrying amount 31 December 2010 1 5 7 13 Cash and cash equivalents 116 214 Carrying amount 31 December 2009 16411 140 PARENT COMPANY FINANCIAL STATEMENTS, FAS FORTUM FINANCIALS 2010

([WHUQDOLQWHUHVWEHDULQJOLDELOLWLHVGXHDIWHUğYH\HDUV 10 &KDQJHVLQVKDUHKROGHUVłHTXLW\ EUR million 2010 2009 $QPFU 1,553 1,550 .QCPUHTQOƂPCPEKCNKPUVKVWVKQPU 254 321 Share Share Share Retained EUR million capital issue premium earnings Total 1VJGTNQPIVGTONKCDKNKVKGU 630 751 Total equity 31 December 2009 3,046 0 2,822 4,052 9,920 Total 2,437 2,622 %CUJFKXKFGPF ---–888 –888 2TQƂVHQTVJGRGTKQF ---1,028 1,028 2WKHULQWHUHVWEHDULQJOLDELOLWLHVGXHDIWHUğYH\HDUV Total equity 31 December 2010 3,046 0 2,822 4,192 10,060 EUR million 2010 2009 Interest-bearing liabilities to group companies 17 17 Total equity 31 December 2008 3,044 0 2,822 3,742 9,608 +PVGTGUVDGCTKPINKCDKNKVKGUVQCUUQEKCVGFEQORCPKGU 213 199 5VQEMQRVKQPUGZGTEKUGF 20 - -2Total 230 216 %CUJFKXKFGPF - - - –888 –888 2TQƂVHQTVJGRGTKQF ---1,1981,198 Total equity 31 December 2009 3,046 0 2,822 4,052 9,920 12 7UDGHDQGRWKHUSD\DEOHV

EUR million 2010 2009 EUR million 2010 2009 &KUVTKDWVCDNGHWPFU&GEGODGT 4,192 4,052 6TCFGCPFQVJGTRC[CDNGUVQITQWREQORCPKGU 6TCFGRC[CDNGU 9 1 1VJGTNKCDKNKVKGU 70 42 #EETWCNUCPFFGHGTTGFKPEQOG 0 0 11 ,QWHUHVWEHDULQJOLDELOLWLHV Total 79 43

([WHUQDOLQWHUHVWEHDULQJOLDELOLWLHV 6TCFGCPFQVJGTRC[CDNGUVQCUUQEKCVGFEQORCPKGU 6TCFGRC[CDNGU - 0 EUR million 2010 2009 #EETWCNUCPFFGHGTTGFKPEQOG 3 5 $QPFU 4,231 3,642 Total 3 5 .QCPUHTQOƂPCPEKCNKPUVKVWVKQPU 595 866 1VJGTNQPIVGTOKPVGTGUVDGCTKPIFGDV 824 758 6TCFGCPFQVJGTRC[CDNGU Total long-term interest-bearing debt 5,650 5,266 6TCFGRC[CDNGU 7 7 %WTTGPVRQTVKQPQHNQPIVGTODQPFU 223 500 1VJGTNKCDKNKVKGU 8 2 %WTTGPVRQTVKQPQHNQCPUHTQOƂPCPEKCNKPUVKVWVKQPU 45 0 #EETWCNUCPFFGHGTTGFKPEQOG 433 149 Commercial papers 534 250 Total 448 158 1VJGTUJQTVVGTOKPVGTGUVDGCTKPIFGDV 1 30 Total short-term interest-bearing debt 803 780 6QVCNGZVGTPCNKPVGTGUVDGCTKPIFGDV 6,453 6,046 13 &RQWLQJHQWOLDELOLWLHV 0DWXULW\RIH[WHUQDOLQWHUHVWEHDULQJOLDELOLWLHV EUR million 2010 2009 EUR million 2010 2011 803 1PQYPDGJCNH 2012 504 1VJGTEQPVKPIGPVNKCDKNKVKGU 5 5 2013 522 1PDGJCNHQHITQWREQORCPKGU 2014 1,152 Guarantees 751 648 2015 1,035 1PDGJCNHQHCUUQEKCVGFEQORCPKGU CPFNCVGT 2,437 Guarantees 300 518 Total 6,453 1PDGJCNHQHQVJGTU Guarantees 0 1 Contingent liabilities total 1,056 1,172 FORTUM FINANCIALS 2010 PARENT COMPANY FINANCIAL STATEMENTS, FAS 141

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EUR million Q1/2009 Q2/2009 Q3/2009 Q4/2009 2009 Q1/2010 Q2/2010 Q3/2010 Q4/2010 2010 Sales 1,632 1,194 1,046 1,563 5,435 1,947 1,295 1,152 1,902 6,296 EBITDA 721 499 414 658 2,292 861 490 452 468 2,271 %QORCTCDNGQRGTCVKPIRTQƂV 602 400 316 570 1,888 651 339 302 541 1,833 1RGTCVKPIRTQƂV 599 375 286 522 1,782 724 351 312 321 1,708 5JCTGQHRTQƂVNQUUQHCUUQEKCVGUCPFLQKPVXGPVWTGU –33 29 3 22 21 16 15 10 21 62 Finance costs - net –32 –49 –47 –39 –167 –27 –34 –37 –57 –155 2TQƂVDGHQTGKPEQOGVCZ 534 355 242 505 1,636 713 332 285 285 1,615 +PEQOGVCZGZRGPUG –111 –61 –39 –74 –285 –130 –61 –45 –25 –261 2TQƂVHQTVJGRGTKQF 423 294 203 431 1,351 583 271 240 260 1,354 2TQƂVHQTVJGRGTKQFPQPEQPVTQNNKPIKPVGTGUVU –17 –5 8 –25 –39 –24 –8 7 –29 –54 2TQƂVHQTVJGRGTKQFQYPGTUQHVJGRCTGPV 406 289 211 406 1,312 559 263 247 231 1,300

Earnings per share, basic, EUR 0.46 0.32 0.24 0.46 1.48 0.63 0.30 0.27 0.26 1.46 Earnings per share, diluted, EUR 0.46 0.32 0.24 0.46 1.48 0.63 0.30 0.27 0.26 1.46

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EUR million Q1/2009 Q2/2009 Q3/2009 Q4/2009 2009 Q1/2010 Q2/2010 Q3/2010 Q4/2010 2010 Power 688 608 572 663 2,531 769 597 584 752 2,702 Heat 514 250 177 458 1,399 651 301 220 598 1,770 Distribution 229 176 168 227 800 280 200 196 287 963 Electricity Sales 469 298 272 410 1,449 637 327 305 529 1,798 Russia 186 138 111 197 632 244 169 137 254 804 1VJGT 19 19 16 17 71 51623751 0GVVKPIQH0QTF2QQN5RQVVTCPUCEVKQPU1) –358 –212 –200 –325 –1,095 –683 –261 –264 –528 –1,736 Eliminations –115 –83 –70 –84 –352 44 –54 –49 3 –56 Total 1,632 1,194 1,046 1,563 5,435 1,947 1,295 1,152 1,902 6,296  6DOHVDQGSXUFKDVHVZLWK1RUG3RRO6SRWDUHQHWWHGRQ*URXSOHYHORQDQKRXUO\EDVLVDQGSRVWHGHLWKHUDVUHYHQXHRUFRVWGHSHQGLQJRQLI)RUWXPLVDQHWVHOOHURUQHWEX\HUGXULQJDQ\SDUWLFXODUKRXU

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EUR million Q1/2009 Q2/2009 Q3/2009 Q4/2009 2009 Q1/2010 Q2/2010 Q3/2010 Q4/2010 2010 Power 415 340 308 391 1,454 424 271 267 336 1,298 Heat 114 26 –13 104 231 132 33 –12 122 275 Distribution 81 54 47 80 262 102 53 61 91 307 Electricity Sales –2 6 7 11 22 –13 10 11 3 11 Russia 6 –14 –20 8 –20 16 –9 –16 17 8 1VJGT –12 –12 –13 –24 –61 –10 –19 –9 –28 –66 %QORCTCDNGQRGTCVKPIRTQƂV 602 400 316 570 1,888 651 339 302 541 1,833 Non-recurring items 4107 82946 4 36 7 93 1VJGTKVGOUCHHGEVKPIEQORCTCDKNKV[ –7 –35 –37 –56 –135 27 8 –26 –227 –218 1RGTCVKPIRTQƂV 599 375 286 522 1,782 724 351 312 321 1,708 7KHğUVWDQGODVWTXDUWHUVRIWKH\HDUDUHXVXDOO\WKHVWURQJHVWTXDUWHUVIRUSRZHUDQGKHDWEXVLQHVVHV 4XDUWHUO\LQIRUPDWLRQIURPWRLVDYDLODEOHRQ)RUWXPłVZHEVLWHZZZIRUWXPFRPLQYHVWRUVğQDQFLDOLQIRUPDWLRQ 91%

Emerging economies, SPENT MONEY such as China and India, ON TECHNOLOGY

experience explosive IN EMERGING middle-class growth and consumers are MARKETS IN 2009 eager to spend their newly gained disposable income on consumer technologies. According to a recent study, 91% MEGATREND: of people in emerging NEW CONSUMER markets spent money on ASPIRATIONS technology in 2009. FORTUM ANNUAL REPORT 2010 147 Corporate Governance

9GNNFGƂPGFCPFVTCPURCTGPVEQTRQTCVGIQXGTPCPEG RTQXKFGUCUVTWEVWTGHQTTGURQPUKDNGXCNWGQTKGPVGF RGTHQTOCPEGCPFUWRGTXKUQT[HWPEVKQPUQHVJGEQORCP[ +VKUCPKORGTCVKXGVJCVYQTMUHQTVJGDGPGƂVQH(QTVWOoU UJCTGJQNFGTUƂPCPEKCNOCTMGVUDWUKPGUURCTVPGTU employees and the public.

The Board of Directors’ as well as the &RGH,QWKHIROORZLQJ\RXZLOOğQG President and CEO’s responsibility for Fortum’s Corporate Governance State- the administration and management of ment, as recommended in the Corporate the company is regulated in the Finnish Governance Code, as well as information Companies Act, which is supplemented on management remuneration, followed by the Finnish Corporate Governance by the biographical presentations.

Insider administration at Fortum is presented on the web at WWW.FORTUM. COM/INSIDERADMINISTRATION

The right of shareholders to make decisions over company matters is excercised in the Annual General Meeting, held once a year. 148 CORPORATE GOVERNANCE FORTUM ANNUAL REPORT 2010 Corporate Governance Statement

The company complies with the Finnish kets Act as well as the appropriate Finan- %QTRQTCVGIQXGTPCPEGCV(QTVWOKUDCUGFQPVJG Corporate Governance Code. In addition, cial Supervision Authority’s standards laws of Finland, the company’s Articles of Association Fortum complies with the rules of NAS- and NASDAQ OMX Helsinki Ltd’s rules. DAQ OMX Helsinki Ltd, where it is listed, 7KHFRPSDQ\łVRSHUDWLQJDQGğQDQFLDO CPFVJG(KPPKUJ%QTRQTCVG)QXGTPCPEG%QFGYJKEJ and the rules and regulations of the UHYLHZUHSRUWDQGSDUHQWFRPSDQ\ğQDQ- entered into force in October 2010. This Corporate Finnish Financial Supervisory Author- cial statements are prepared in accord- ity. Fortum’s headquarters is located in ance with the Finnish Accounting Act )QXGTPCPEG5VCVGOGPVJCUDGGPRTGRCTGFRWTUWCPVVQ Espoo, Finland. and the opinions and guidelines of the 4GEQOOGPFCVKQPQHVJG%QFGCPF%JCRVGT5GEVKQP Finnish Accounting Board. The auditor’s The Corporate Governance Code is available on UHSRUWFRYHUVWKHRSHUDWLQJDQGğQDQFLDO QHVJG5GEWTKVKGU/CTMGVU#EV6JG%QTRQTCVG)QXGTPCPEG the website of the Securities Markets Association UHYLHZUHSRUWFRQVROLGDWHGğQDQFLDO 5VCVGOGPVKUKUUWGFUGRCTCVGN[HTQOVJGEQORCP[oU ZZZFJğQODQGğ  statements and the parent company ğQDQFLDOVWDWHPHQWV QRGTCVKPICPFƂPCPEKCNTGXKGY )RUWXPSUHSDUHVFRQVROLGDWHGğQDQ- cial statements and interim reports Organisation of the group in accordance with the International The decision-making bodies managing Financial Reporting Standards (IFRS), as and overseeing the group’s administra- adopted by the EU, the Securities Mar- tion and operations are the Annual

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Divisions Power Heat Russia Electricity Division Division Division Solutions and Distribution Division

Reporting segments Power Heat Russia Distribution Electricity Sales FORTUM ANNUAL REPORT 2010 CORPORATE GOVERNANCE 149

General Meeting of Shareholders, the be delivered at least nine days before the will be determined on the basis of the Supervisory Board, the Board of Direc- record date of the General Meeting of ownership information registered in the tors with its two Committees and the Shareholders, as referred to in the Sec- book-entry system. In case an owner is 6*'&76+'51(6*'#007#. 3UHVLGHQWDQG&KLHI([HFXWLYH2IğFHU tion 2, Sub-section 2 Chapter 4, of the required under the Securities Markets )'0'4#./''6+0)+0%.7&' (CEO) assisted by the Fortum Manage- Companies Act. Act to report certain changes in owner- ment Team. The Board of Directors The Annual General Meeting is held VKLS ZKHQĠDJJLQJE\VKDUHKROGHULV › #FQRVVJGƂPCPEKCNUVCVGOGPVUCPFVJG supervises the performance of the com- once a year, at the latest in June. An required), for example when the owner- EQPUQNKFCVGFƂPCPEKCNUVCVGOGPVU › Decide on the treatment of the distrib- pany, its management and organisation. Extraordinary General Meeting of Share- ship is distributed among various funds, utable funds The Supervisory Board, the Board of holders shall be held whenever the Board the ownership will be counted as one › Elect the members of the Supervisory Directors and the Fortum Management RI'LUHFWRUVRU6XSHUYLVRU\%RDUGğQGV holding. if the owner so requests, by noti- Board and the Board of Directors Team are separate bodies, and no person cause for such a meeting or when provi- fying the Board of Directors in writing no › Decide on the discharge from liability serves as a member of more than one of sions of the law rule that such a meeting later than on 29 October. for the Supervisory Board, the Board of them. must be held. The Nomination Committee is con- Directors and the President and CEO Day-to-day operational responsibility vened by the Chairman of the Board › Decide on the remuneration of the Supervisory Board, the Board of Direc- at the group level rests with the Presi- Shareholders’ Nomination of Directors, and the Committee will tors and the remuneration for the dent and CEO assisted by the Fortum Committee choose a Chairman from among its own auditor Management Team, and at division level By decision of Fortum’s Annual Gen- members. The Committee shall give its › Elect the auditor. with each division head assisted by a eral Meeting 2010, a Shareholders’ proposal to the Board of Directors of the management team. Nomination Committee was appointed company at the latest by 1 February pre- to prepare proposals concerning Board ceding the Annual General Meeting. General Meeting of Shareholders members and their remuneration for In November 2010, the following The right of shareholders to make deci- the following Annual General Meeting. persons have been appointed to Fortum 6*'/#+06#5-51(6*' sions over company matters is exercised The Nomination Committee consists of Shareholders’ Nomination Commit- at an appropriately convened General the representatives of the three main tee: Pekka Timonen, Director General, 572'48+514;$1#4&#4'61 Meeting of Shareholders by those share- shareholders and, in addition, as expert 3ULPH0LQLVWHUłV2IğFH2ZQHUVKLS › Oversee the company’s administration holders present, or by their authorised member the Chairman of the Board of Steering Department; Harri Sailas, CEO, by the Board of Directors representatives. In accordance with Directors. Ilmarinen Mutual Pension Insurance › 5WDOKVKVUUVCVGOGPVQPVJGƂPCPEKCN the Articles of Association and Finnish The three shareholders whose shares Company, and Mikko Koivusalo, Invest- UVCVGOGPVUQRGTCVKPICPFƂPCPEKCN review and the auditor’s report to the Corporate Governance Code, a notice to represent the largest number of the votes ments Director, Varma Mutual Pension Annual General Meeting convene the General Meeting of Share- of all shares in the company on the 1st Insurance Company. The Chairman › Discuss proposals by the Board of holders is issued by the Board of Direc- day of November preceding the Annual of Fortum’s Board of Directors, Matti Directors in matters concerning a tors. The notice is delivered no more General Meeting will have the right to Lehti, serves as the Committee’s expert substantial reduction or expansion of company’s operation or an essential than three months and no less than appoint the members representing the member. change to company’s organisation. three weeks before the General Meeting shareholders. Should a shareholder not In its meeting on 1 February 2011, of Shareholders by publishing the notice wish to use its right to nominate, this the Shareholders’ Nomination Commit- in two newspapers chosen by the Board right will be passed on to the next biggest tee decided to propose to the Annual of Directors. However, the notice shall shareholder. The largest shareholders General Meeting, which will be held 150 CORPORATE GOVERNANCE FORTUM ANNUAL REPORT 2010

31 March 2011, that Sari Baldauf be Supervisory Board a maximum of 12 members; in February for the administration of the Group and elected as Chairman and Christian The Supervisory Board is responsible for 2011 there were 10 members. The Super- for ensuring that the business complies Ramm-Schmidt as Deputy Chairman, overseeing that the shareholders’ inter- visory Board meetings are also attended with the relevant laws and regulations, and that members Esko Aho, Ilona ests are safeguarded. by three employee representatives who including the Finnish Companies Act, Ervasti-Vaintola and Joshua Larson The members of the Supervisory are not members of the Supervisory Fortum’s Articles of Association, the be re-elected. Matti Lehti and Birgitta Board, its Chairman and Deputy Chair- Board. More than half of the Supervisory instructions given by the General Meet- Johansson-Hedberg have stated that they man are elected at the Annual General Board’s members must be present to ing of Shareholders and the guidelines are no longer available for election. The 0HHWLQJIRUDRQH\HDUWHUPRIRIğFH constitute a quorum. In 2010, the Super- issued by the Supervisory Board. The Shareholders’ Nomination Committee $SHUVRQZKRKDVUHDFKHGWKHDJHRI visory Board met 6 times. %RDUGRI'LUHFWRUVFRPSULVHVğYHWR proposes that Minoo Akhtarzand and years may not be elected as a member of eight members who are elected at the Heinz-Werner Binzel be elected as new the Supervisory Board. The Supervisory Board of Directors Annual General Meeting for a one-year members of the Board of Directors. Board comprises a minimum of six and The Board of Directors is responsible WHUPRIRIğFHZKLFKH[SLUHVDWWKHHQG

FORTUM’S SUPERVISORY BOARD IN 2010 FORTUM’S BOARD OF DIRECTORS 2010

Attendance Attendance in the Attendance in in the Board Board Comittee Name Born Education Occupation the meetings Name Born Education Occupation meetings meetings Chairman 1950 MSc (Soc.Sc) Member of Parliament 5/6 Chairman 1947 PhD (Econ.) Non-executive director 11/11 The Nomination and Markku Laukkanen Matti Lehti Remuneration Com- Debuty Chairman 1962 PhD Member of Parliament 4/6 mittee, 5/5 Sanna Perkiö Deputy Chairman 1955 MSc (Econ.) Non-executive director 11/11 The Nomination and Martti Alakoski 1953 Union Chairman 5/6 Sari Baldauf Remuneration Com- mittee, 5/5 Tarja Filatov 1963 Member of Parliament 4/6 Esko Aho 1954 MSc (Pol. Sc.) 'ZGEWVKXG8KEG2TGUKFGPV%QTRQ- 11/11 The Nomination and Sampsa Kataja 1972 LL.M Member of Parliament 5/6 rate Relations and Responsibil- Remuneration Com- Kimmo Kiljunen 1951 PhD (Pol.Sc) Member of Parliament 6/6 ity, Nokia Corporation mittee, 5/5 Katri Komi 1968 MSc (Agriculture Member of Parliament 4/6 Non-executive director and Forestry) Ilona Ervasti- 1951 LL. M, Trained Group Chief Counsel, 11/11 The Nomination and 8CKPVQNC on the bench Principal Attorney, Secretary of Remuneration Com- Panu Laturi 1972 MSc (Pol.Sc) Secretary General, Green League 6/6 (1 of Finland the Board of Directors of Sampo mittee , 4/4, Plc, Member of the Group The Audit and Risk Juha Mieto 1949 Member of Parliament 5/6 Executive Committee Committee, 1/1 (2 Jukka Mäkelä (1 1960 MSc (Eng) Member of Parliament 4/4 Non-executive director Helena Pesola 1947 MSc (Soc.Sc) Director, KELA 6/6 Birgitta Johansson-1947 Bachelor of Non-executive director 11/11 The Audit and Risk Hedberg Art, Master of Committee, 5/6 Psychology

1) Jukka Mäkelä has resigned from his duties on Fortum’s Supervisory Board as of 19 October 2010. He then started in (1 his new position as the mayor of the City of Espoo. Joshua Larson 1966 Master of Inter- Private investor and consultant 7/7 The Audit and Risk national Affairs, Non-executive director Committee, 5/5 The employee representatives on Fortum’s Supervisory Board were Jouni Koskinen, Kari Ylikauppila and Sebastian Elg. Bachelor in Rus- sian language Christian Ramm- 1946 B. Sc (Econ.) Senior Partner of Merasco 11/11 The Audit and Risk Schmidt Capital Ltd. Committee, 6/6 Non-executive director

1) New member as of 25 March 2010 2) Member until 25 March 2010 150 corporate governance FORTUM annual report 2010 fortum annual report 2010 corporate governance 151

31 March 2011, that Sari Baldauf be Supervisory Board a maximum of 12 members; in February for the administration of the Group and of the first Annual General Meeting fol- further develop the work of the Board. elected as Chairman and Christian The Supervisory Board is responsible for 2011 there were 10 members. The Super- for ensuring that the business complies lowing the election. More than half of the The assessment process analyses the Ramm-Schmidt as Deputy Chairman, overseeing that the shareholders’ inter- visory Board meetings are also attended with the relevant laws and regulations, The main tasks of the Board Assessment of the Board of members must be present to constitute efficiency of the work, the size and com- and that members Esko Aho, Ilona ests are safeguarded. by three employee representatives who including the Finnish Companies Act, of Directors: Directors’ work: a quorum. A person who has reached the position of the Board, the preparation of Ervasti-Vaintola and Joshua Larson The members of the Supervisory are not members of the Supervisory Fortum’s Articles of Association, the age of 68 cannot be elected to the Board the agenda, and the level and openness be re-elected. Matti Lehti and Birgitta Board, its Chairman and Deputy Chair- Board. More than half of the Supervisory instructions given by the General Meet- ›› Strategic development and steering of ›› The Board of Directors conducts an of Directors. of discussions, as well as the members’ the company’s business and fields of annual self-assesment. Johansson-­Hedberg have stated that they man are elected at the Annual General Board’s members must be present to ing of Shareholders and the guidelines activity In 2010, the Board of Directors met ability to contribute to an independent are no longer available for election. The Meeting for a one-year term of office. constitute a quorum. In 2010, the Super- issued by the Supervisory Board. The 11 times. In addition to steering and judgement. ›› Ensuring that the business complies Shareholders’ Nomination Committee A person who has reached the age of 68 visory Board met 6 times. Board of Directors comprises five to with the relevant rules and regulation, supervising the company’s operational proposes that Minoo Akhtarzand and years may not be elected as a member of eight members who are elected at the the company’s Articles of Association and financial development, the main The Board Committees Heinz-Werner Binzel be elected as new the Supervisory Board. The Supervisory Board of Directors Annual General Meeting for a one-year and guidelines given by the Supervi- items during the year were Fortum’s The Board of Directors has appointed an sory Board members of the Board of Directors. Board comprises a minimum of six and The Board of Directors is responsible term of office, which expires at the end strategy, business plan, financial posi- Audit and Risk Committee as well as a ›› Defining the dividend policy tion, performance target setting as well Nomination and Remuneration Commit- ›› Ensuring that the accounting and Procedures of Board meetings: financial administration are arranged as risk management and policy and tee, both with at least three members. appropriately ›› The Board convenes according to a financial reporting. Main items also The members of these committees are Fortum’s supervisory board in 2010 Fortum’s Board of Directors 2010 ›› Appointing the top management previously agreed schedule to discuss included investments and divestments all members of the Board of Directors. specified themes and other issues as well as Russian operations. The Board Members are appointed for a one-year ›› Reviewing the central risks and whenever considered necessary Attendance Attendance in the instructing the President and CEO also dealt with issues relating to sustain- term of office, which expires at the end Attendance in in the Board Board Comittee concerning the risks ›› The Chairman decides on the agenda Name Born Education Occupation the meetings Name Born Education Occupation meetings meetings based on proposals by the other able business development and manage- of the first Annual General Meeting fol- ›› Confirming the annual business plan Chairman 1950 MSc (Soc.Sc) Member of Parliament 5/6 Chairman 1947 PhD (Econ.) Non-executive director 11/11 The Nomination and members of the Board, the President ment performance and remuneration. lowing the election. All the members of Markku Laukkanen Matti Lehti Remuneration Com- ›› Deciding performance targets for the and CEO, and the secretary to the The members of the Board of Direc- the Board of Directors have the right to company and the management Board Debuty Chairman 1962 PhD Member of Parliament 4/6 mittee, 5/5 tors are all, with the exception of Ilona participate in the committee meetings. Sanna Perkiö Deputy Chairman 1955 MSc (Econ.) Non-executive director 11/11 The Nomination and ›› Approving interim reports, consoli- ›› The Chairman shall convene a dated financial statements, and oper- meeting to deal with a specific item, if Ervasti-Vaintola (dependent on the com- The secretary to the Board of Directors Martti Alakoski 1953 Union Chairman 5/6 Sari Baldauf Remuneration Com- mittee, 5/5 ating and financial review and parent requested by a member of the Board pany, interlocking control relationship), acts as the secretary to the committees. Tarja Filatov 1963 Member of Parliament 4/6 company financial statements or the President and CEO Esko Aho 1954 MSc (Pol. Sc.) Executive Vice President, Corpo- 11/11 The Nomination and independent of the company and its sig- The Board has approved written charters Sampsa Kataja 1972 LL.M Member of Parliament 5/6 rate Relations and Responsibil- Remuneration Com- ›› Taking care of the duties of the ›› The Board deals with the reports of the nificant shareholders. The President and for the committees. ­company’s Board of Directors ­specified Kimmo Kiljunen 1951 PhD (Pol.Sc) Member of Parliament 6/6 ity, Nokia Corporation mittee, 5/5 Board committees and the President CEO, the Chief Financial Officer and the in the Companies Act and in the and CEO Katri Komi 1968 MSc (Agriculture Member of Parliament 4/6 Non-executive director General Counsel (being the secretary to The main contents of the charters for the Board ­Articles of Association ›› Materials shall be delivered to the and Forestry) Ilona Ervasti- 1951 LL. M, Trained Group Chief Counsel, 11/11 The Nomination and the Board) attend Board meetings. Other Committees are outlined on page 152. Vaintola on the bench Principal Attorney, Secretary of Remuneration Com- ›› Deciding on major investments, divest- members five days before meetings. Panu Laturi 1972 MSc (Pol.Sc) Secretary General, Green League 6/6 (1 ments and business arrangements Fortum Management Team members of Finland the Board of Directors of Sampo mittee , 4/4, Plc, Member of the Group The Audit and Risk ›› Electing members to the Board attend as required to provide informa- Juha Mieto 1949 Member of Parliament 5/6 Executive Committee Committee, 1/1 (2 Committees tion to the Board or upon invitation by The Audit and Risk Committee (1 Non-executive director Jukka Mäkelä 1960 MSc (Eng) Member of Parliament 4/4 ›› Reporting on the remuneration of the the Board. The Audit and Risk Committee assists Helena Pesola 1947 MSc (Soc.Sc) Director, KELA 6/6 Birgitta Johansson-1947 Bachelor of Non-executive director 11/11 The Audit and Risk company management at the Annual Hedberg Art, Master of Committee, 5/6 General Meeting, as appropriate. The Chairman of the Board, together the Board of Directors in fulfilling its Psychology with the President and CEO, prepares the supervisory responsibilities in accord- 1) Jukka Mäkelä has resigned from his duties on Fortum’s Supervisory Board as of 19 October 2010. He then started in Joshua Larson (1 1966 Master of Inter- Private investor and consultant 7/7 The Audit and Risk items for discussion and to be decided ance with the tasks specified for audit his new position as the mayor of the City of Espoo. national Affairs, Non-executive director Committee, 5/5 upon at the Board of Directors’ meetings. committees in the Finnish Corporate The employee representatives on Fortum’s Supervisory Board were Jouni Koskinen, Kari Ylikauppila and Sebastian Elg. Bachelor in Rus- The Board of Directors has approved Governance Code. sian language a working order to govern its work. The Audit and Risk Committee Christian Ramm- 1946 B. Sc (Econ.) Senior Partner of Merasco 11/11 The Audit and Risk Schmidt Capital Ltd. Committee, 6/6 annually reviews its charter, approves Non-executive director The main contents of the Board of Directors’ the internal audit charter and the working order are presented on the left. internal audit plan and carries out a self- 1) New member as of 25 March 2010 assessment of its work. Furthermore, the 2) Member until 25 March 2010 Committee meets the external auditors The Board of Directors conducts an regularly to discuss the audit plan, audit annual self-assessment in order to reports and audit findings. 152 CORPORATE GOVERNANCE FORTUM ANNUAL REPORT 2010

6*'6#5-5+06*'%*#46'41( 6*'6#5-5+06*'%*#46'41( #7&+6#0&4+5-%1//+66'' 01/+0#6+10#0&4'/70'4#6+10 +0%.7&' %1//+66''+0%.7&' › Monitoring the reporting process of › Discussing, assessing and giving The Audit and Risk Committee and Remuneration Committee. The Com- ƂPCPEKCNUVCVGOGPVU proposals on the Group’s, and its reports on its work to the Board of PLWWHHPHWğYHWLPHVGXULQJ2WKHU management’s, pay structures and › 5WRGTXKUKPIVJGƂPCPEKCNTGRQTVKPI Directors regularly after each meeting. regular participants at the Committee process bonus and incentive systems After the Annual General Meeting meetings were the President and CEO, › /QPKVQTKPIVJGGHƂEKGPE[QHVJG › Monitoring the functioning of the company’s internal control, internal bonus systems to ensure that the in March 2010, the Board elected among Senior Vice President, Corporate Human audit, if applicable, and risk manage- management’s bonus systems will itself Birgitta Johansson-Hedberg as the Resources, and General Counsel as the ment systems advance the achievement of the company’s objectives and are based on Chairman and as members Joshua Lar- secretary to the Committee. › Reviewing the description of the main personal performance son and Christian Ramm-Schmidt to the The Nomination and Remuneration features of the internal control and risk management systems in relation to the › Evaluating the performance and the Audit and Risk Committee. Ilona Ervasti- Committee reports on its work to the ƂPCPEKCNTGRQTVKPIRTQEGUUYJKEJKU remuneration of the President and CEO Vaintola was a member until the Annual Board of Directors regularly after each included in the company’s Corporate and executives reporting directly to the General Meeting 2010. meeting. President and CEO Governance Statement The Committee met six times in The main items during the year › As far as nomination and remunera- › Monitoring the statutory audit of the 2010. Also regularly participating in the included the top management perfor- ƂPCPEKCNUVCVGOGPVUCPFEQPUQNKFCVGF VKQPSWGUVKQPUCTGEQPEGTPGFRTGRCTKPI ƂPCPEKCNUVCVGOGPVU nomination and remuneration issues Committee’s meetings were external mance evaluations and compensation and proposals to the Board concerning DXGLWRUV&KLHI)LQDQFLDO2IğFHU &)2  issues, including incentive programme › Evaluating the independence of the the President and CEO and the UVCVWVQT[CWFKVQTQTCWFKVƂTORCTVKEW- management directly reporting to the Head of Internal Audit, Corporate Con- and performance target-setting for the larly the provision of related services to President and CEO troller and General Counsel as the Sec- management. the company to be audited › Assisting the Board in reporting on retary to the Committee as well as other › Preparing through the Board a remuneration at the Annual General parties invited by the Committee. President and CEO proposal for resolution on the election Meeting, as necessary. of the auditor for the shareholders’ The main items during the year The role of the President and CEO is to consideration at the Annual General included reviewing the interim reports, manage the Group’s business and admin- Meeting WKHğQDQFLDOVWDWHPHQWVLQWHUQDODXGLW istration in accordance with the Finnish › Reviewing the Corporate Governance Statement and risk management reports and poli- Companies Act and related legislation cies as well as the corporate governance and the instructions from the Board of › /QPKVQTKPIVJGƂPCPEKCNRQUKVKQPQHVJG company statement, monitoring of certain impor- Directors. Tapio Kuula, MSc (Eng), MSc › Approving the operating instructions tant projects and issues, preparing a (Econ), born 1957, has been the President for internal audit recommendation for the election of the and CEO since May 2009. › Reviewing the plans and reports of the external auditor, as well as regulatory The President and CEO is supported internal audit function compliance. by the Fortum Management Team. The › Being in contact with the auditor and performance of the President and CEO is reviewing the reports that the auditor prepares for the Committee. 7KH1RPLQDWLRQDQG5HPXQHUDWLRQ evaluated annually by the Board of Direc- Committee tors. The evaluation is based on objective After the Annual General Meeting in criteria that include the performance March 2010, the board elected among of the company and the achievement of itself Matti Lehti as the Chairman and goals previously set for the President as members Esko Aho, Sari Baldauf and and CEO by the Board’s Nomination and Ilona Ervasti-Vaintola, to the Nomination Remuneration Committee. FORTUM ANNUAL REPORT 2010 CORPORATE GOVERNANCE 153

Fortum Management Team and opera- Fortum and Fortum’s over 25% holding in Central Chamber of Commerce. The Control environment tional organisation TGC-1. Electricity Solutions and Distribu- auditor is elected by the Annual General Fortum has an internal control frame- The Fortum Management Team cur- tion Division is responsible for Fortum’s 0HHWLQJIRUDWHUPRIRIğFHWKDWH[SLUHV work supporting the execution of the rently consists of nine members, includ- electricity sales and distribution activi- DWWKHHQGRIWKHğUVW$QQXDO*HQHUDO strategy and ensuring regulatory compli- ing the President and CEO to whom ties. The division consists of two busi- Meeting following the election. ance. The values and Code of Conduct set the members of the Management Team ness areas: Distribution and Electricity Fortum Corporation’s Annual Gen- the foundation for the internal control report. The General Counsel acts as the Sales. The staff functions are Finance, eral Meeting on 25 March 2010 elected framework. The framework consists of Secretary to the Management Team. The Corporate Relations and Sustainability, Authorised Public Accountant Deloitte group-level structures, corporate-level Management Team meets regularly on Corporate Human Resources, Corporate & Touche Oy as auditor, with Authorised processes as well as business and support a monthly basis. In addition, there are Strategy and R&D. Public Accountant Jukka Vattulainen process-level controls. The Audit and meetings dealing with strategy and busi- having the principal responsibility. Risk Committee, appointed by the Board ness planning, as well as performance Internal audit of Directors, has oversight over risk reviews and people issues such as man- Fortum’s Corporate Internal Audit is Internal control and risk manage- management within the Group. Corpo- agement reviews. responsible for assessing and assuring ment systems rate Risk Management, an indepen dent The Fortum Management Team the adequacy and effectiveness of inter- Fortum’s Board of Directors approves function headed by the Chief Risk sets the strategic targets, prepares the nal controls in the company. Further- the Corporate Risk Policy, which sets 2IğFHULQWKH&)2łV2IğFHLVUHVSRQVLEOH Group’s annual business plans, follows more, it evaluates the effectiveness and the objective, principles and division of for reporting risk exposures on weekly up on the results, plans and decides HIğFLHQF\RIYDULRXVEXVLQHVVSURFHVVHV responsibilities for risk management and monthly basis to the CFO and the on investments, mergers, acquisitions the adequacy of risk management, and, activities within the Group as well as President and CEO as well as regularly to and divestments within authorisation. e.g., compliance with laws, regulations GHğQHVWKH)RUWXPULVNPDQDJHPHQW the Audit and Risk Committee. It is also Each member of the Management Team and internal instructions. The Standards process. The Fortum risk management responsible for maintaining the compa- is responsible for the key day-to-day for the Professional Practice of Internal process is also embedded in the internal ny’s risk management framework. In the operations and the implementation of Audit form the basis for its work. control framework, and the process ğQDQFLDOUHSRUWLQJSURFHVVWKHRZQHU operational decisions in their respective Corporate Internal Audit is inde- level internal control structure has been ship of the overall control structure is in organisations. pendent of the divisions and other units created by using a risk-based approach. the Corporate Accounting and Control The business divisions of Fortum are at Fortum. It reports to the Audit and The same approach is also used for the unit headed by the Corporate Controller Power, Heat, Russia, and Electricity Solu- Risk Committee of the Board of Direc- ğQDQFLDOUHSRUWLQJSURFHVV)RUWXPłV DVSDUWRIWKH&)2łVRIğFH tions and Distribution. Power Division tors and administratively to the CFO. The internal control framework includes consists of Fortum’s power generation, purpose, authority and responsibility main elements from the framework Risk assessment physical operation and trading as well of Corporate Internal Audit is formally introduced by the Committee of Spon- As part of the Fortum risk management as expert services for power producers. GHğQHGLQLWVFKDUWHU7KHFKDUWHUDQG soring Organisations of the Treadway SURFHVVDOVRULVNVUHODWHGWRğQDQFLDO Heat Division consists of combined heat the annual audit plan are approved by Commission (COSO). UHSRUWLQJDUHLGHQWLğHGDQGDQDO\VHG and power generation, district heating the Audit and Risk Committee. annually. Additionally, all new risks are and cooling activities and business to analysed and repaired as they have been business heating solutions. Russia Divi- External audit Read more about Fortum’s risk management LGHQWLğHG%XVLQHVVULVNVDUHUHSRUWHG sion consists of power and heat genera- The company has one auditor, which process and largest risks on pages 51–56 and 81–89. thoroughly in connection with the tion and sales in Russia. It includes OAO VKDOOEHDQDXGLWğUPFHUWLğHGE\WKH planning process and the follow-up is 154 CORPORATE GOVERNANCE FORTUM ANNUAL REPORT 2010

(1467/o5+06'40#.%10641.(4#/'914-

integrated to operational management through regular reporting. The control Board level Control environment risk assessment has been the basis for creating the process-level internal con- trol framework and the same applies to the control points to prevent errors LQWKHğQDQFLDOUHSRUWLQJSURFHVV7KH Corporate results of the control risk assessment governance and the process level controls have been reported to the Audit and Risk Com- mittee. The control framework has been FKDQJHGGXULQJWRUHĠHFWWKHQHHGV of the new organisation and for the pur- Peerfoormance pose of ensuring that a project has been Group management level managementt Information established to systematically go through and communication (President and process the controls in different organisations. (1 CEO / FMT ) Organisation, › Sttrrategy proceesss legal structures, Control activities › BBusiness planninng Risk Fortum’s organisation is decentralised responsibilities, › MManagement repportiing management and a substantial degree of authority limits of FMMT (1 meetinggs › and responsibility has been delegated to authority Performance revieewws › the divisions in form of control respon- Inndiviv dual discusssions › sibilities even though some areas like › Investment processs commodity market risk control has been Operations level Follow-up more centralised in the organisation. & Corporate functions (e.g., business control, Each division has its own staff and other internal and resources. Control activities are applied external audit) in the business processes and, from a ğQDQFLDOUHSRUWLQJSHUVSHFWLYHWKH\ Business and support processes ensure that potential errors or deviations are prevented, discovered and corrected. The Fortum policy structure ensures that governance around all activities exists. ,QğQDQFLDOUHSRUWLQJWKH&RQWURO- Values and Code of Conduct ler’s manual sets the standards. The Corporate Accounting and Control 1) Fortum Management Team FORTUM ANNUAL REPORT 2010 CORPORATE GOVERNANCE 155

XQLWGHğQHVWKHGHVLJQRIWKHFRQWURO Information and communication practices is shared to ensure uniform mance Management process. Financial points, and internal controls cover the The Controller’s manual including application of the processes. Investor performance is ultimately reviewed by HQGWRHQGğQDQFLDOUHSRUWLQJSURFHVV Accounting manuals, Investment manual Relations and Financial Communica- the Audit and Risk Committee and Board However, the part of the organisation and reporting instructions as well as tions together with Accounting and of Directors. responsible for performing the controls poli cies are stored on intranet sites Control maintain the instructions for The Performance Reviews have a is also responsible for the effectiveness of accessible by all people involved in the UHOHDVLQJğQDQFLDOLQIRUPDWLRQ monitoring role also in ensuring that the controls. There are transaction pro- ğQDQFLDOUHSRUWLQJSURFHVV3URFHVVHV the internal controls are functioning. cess level controls and periodic controls. and related documentation have been Follow-up As part of the Fortum internal control The periodic controls are linked to the developed in many areas during 2010. Financial results are followed up in framework, all divisions are accountable monthly and annual reporting process Additionally, Corporate Accounting and the monthly reporting. In addition, the for assessing the effectiveness of the and include reconciliations and analyti- Control and Risk Management functions quarterly Performance Review meetings controls they are responsible for. For the cal reviews to ensure the correctness of regularly arrange meetings in which with Group and division manage ment ğQDQFLDOUHSRUWLQJSURFHVVGLYLVLRQDQG ğQDQFLDOUHSRUWLQJ information around the processes and are embedded in the Fortum Perfor- corporate-level controller teams are responsible for this assessment. Addi- tionally, Corporate Risk Management also has monthly meetings covering control issues with divisions’ risk control units. Also Corporate Internal Audit’s (1467/2'4(14/#0%'/#0#)'/'06241%'55 DJHQGDLQFOXGHVDUHDVUHODWHGWRğQDQ- cial reporting, and internal controls are always reviewed in these audits. In addi- tion, control maturities are followed up with regular assesments.

WWW.FORTUM.COM/GOVERNANCE Division roles Division target Read more about Fortum’s corporate Corporate Division Continuous and expectations setting and governance online. strategy business plan follow-up on divisions incentives 156 CORPORATE GOVERNANCE FORTUM ANNUAL REPORT 2010 Remuneration

Remuneration at Fortum is directed by attract and commit key resources in all 6JG(KPPKUJ%QTRQTCVG)QXGTPCPEG%QFG the Group’s remuneration principles countries where Fortum operates. The 2010 requires that Fortum Corporation issues and Fortum’s general remuneration and package offers employees a competitive EHQHğWVSUDFWLFHV:KHQGHWHUPLQLQJ base salary. In addition to a salary, other a remuneration statement regarding the UHPXQHUDWLRQWKHFRPSDQ\łVğQDQFLDO UHOHYDQWEHQHğWVDVZHOODVFKDOOHQJLQJ performance and external market data, short-term and long-term incentive salaries and other remuneration paid by particularly the remuneration for simi- schemes are offered. lar positions among peer companies, are EQORCP[(WTVJGTOQTGKP5GRVGODGT taken into consideration. The Board of Short-term incentives the Cabinet Committee on Economic Policy, Directors approves the remuneration Fortum’s short-term incentive scheme, principles at the Group level and decides i.e., bonus system, supports the realisa- TGRTGUGPVKPIVJG5VCVGQYPGTKUUWGFIWKFGNKPGU on the bonus targets and the remunera- WLRQRIWKH*URXSłVğQDQFLDOSHUIRUPDQFH tion of senior executives. Remuneration targets, values and structural changes. QPTGOWPGTCVKQPCPFRGPUKQPDGPGƂVU of the members of the Supervisory Board The system ensures that the perfor- QHOCPCIGOGPVKPEQORCPKGUYKVJ5VCVG and the Board of Directors is decided by mance targets of individual employees the Annual General Meeting of Fortum align with the targets of the division ownership. Fortum takes into account both the Corporation. and the Group. All Fortum employees, Fortum offers a competitive com- with the exception of certain personnel Code and the guidelines in its remuneration. pensation package for senior executives groups in Poland and Russia, are covered and other management. The aim is to by the bonus system. The Board of Directors decides on the bonus criteria for senior executives (the President and CEO and other members of Fortum’s Management Team). The amount of each senior executive’s bonus REMUNERATION PAID TO THE FORTUM MANAGEMENT TEAM LVGHSHQGHQWRQWKH*URXSłVğQDQFLDO

Salaries and fringe Performance performance and on their own success Salaries and fringe Performance Total 2009 (2 DGPGƂVU(2 bonuses 2009 (2 Total 2010 EUR DGPGƂVU bonuses 2010 in reaching personal targets. The maxi- mum bonus for a senior executive is 40% President and CEO (1 911,545 744,838 237,510 134,327 1,149,055 879,165 of the person’s annual salary including Other Management Team members (1 2,481,935 1,910,665 581,743 503,848 3,063,678 2,414,513 IULQJHEHQHğWV The bonuses of the division heads, who are all members of the Fortum 1) Additionally, the President and CEO had a calculatory gross income of EUR 306,601 based on February 2010 share delivery from the 2004–2009 share plan. The corresponding DJJUHJDWHGğJXUHIRUWKHRWKHUPHPEHUVRIWKH)RUWXP0DQDJHPHQW7HDPZDV(857KHVHVKDUHVZHUHJUDQWHGLQVSULQJDIWHUWKHHDUQLQJSHULRGZLWKWKHYDOXHQRW Management Team, are determined on exceeding the participants’ one year salary. The shares were delivered after the three-year lock-up period. the basis of the division’s performance 2) Figures for 2009 are comparable with the 2010 Management Team composition. For a more detailed breakdown see page 99–100. DQGWKH*URXSłVğQDQFLDOSHUIRUPDQFH During the annual performance discus- FORTUM ANNUAL REPORT 2010 CORPORATE GOVERNANCE 157

sion held at the beginning of the year, Fortum’s share bonus system is the division head and his superior, the divided into six-year share plans, within REMUNERATION AND TERMS OF EMPLOYMENT OF PRESIDENT AND CEO TAPIO KUULA President and CEO, agree on the criteria which participants have the opportunity used to assess the personal performance to earn company shares. A new plan com- 5CNCT[CPFHTKPIGDGPGƂVU $CUGUCNCT['74OQPVJ#FFKVKQPCNN[HTGGECTDGPGƂVCPFOQDKNGRJQPG of the executive. mences yearly, if the Board so decides. DGPGƂVCUHTKPIGDGPGƂVU The Board of Directors assesses the Each share plan begins with a three- performance of the President and CEO calendar-year period, during which The bonus can be earned annually based on the criteria approved by the Board on an annual basis. participants may earn share rights if Short-term incentive of Directors. The maximum level is 40% of the annual salary including fringe system (bonus) DGPGƂVU#PPWCNUCNCT[ VKOGUVJGUCNCT[RCKFKP&GEGODGTQHVJG[GCTKP In 2010, the bonuses paid to the Man- the earnings criteria set by the Board of SWGUVKQP agement Team, including the President 'LUHFWRUVDUHIXOğOOHG$IWHUWKHHDUQLQJ Long-term According to Fortum management’s current share bonus system. The maxi- DQG&(2DPRXQWHGWR(85 period has ended and the relevant taxes incentive system mum value of shares (before taxation) cannot exceed the annual salary of the which is 0.23% of the total remuneration and other employment-related expenses (share bonus) President and CEO. paid by the Fortum Group. have been deducted from the gross value Retirement age is 63. The President and CEO’s supplementary pension is a of the earned share rights, participants FGƂPGFEQPVTKDWVKQPRGPUKQPRNCPCPFVJGCPPWCNEQPVTKDWVKQPKUQHVJG Former President and CEO’s bonuses are paid the net balance of the earned Pension CPPWCNUCNCT[6JGCPPWCNUCNCT[EQPUKUVUQHVJGDCUGUCNCT[HTKPIGDGPGƂVUCPF bonus. If the President and CEO’s contract is terminated before retirement age, Former President and CEO Mikael rights in the form of shares. The earning he/she is entitled to retain the funds that have accrued in the pension fund. Lilius retired on 1 January 2010. He was period is followed by a subsequent lock- The notice period for both parties is six months. If the company terminates the entitled to the bonus for 2009 and to the up period, during which participants contract, the President and CEO is entitled to the salary of the notice period Termination of contract share bonus earned up to the end of the cannot transfer or dispose of the shares. CPFVQUGXGTCPEGRC[GSWCNVQOQPVJUoUCNCT[ employment relationship. The bonus If the value of the shares decreases or paid to him was EUR 239,544 and the increases during the lock-up period, the VKDUHERQXV(857KHERQXVHV potential loss or gain is carried by the ZHUHSDLGLQWKHğUVWTXDUWHURI participants. The maximum value of shares (before taxation) to be delivered Long-term incentives to a participant after the earning period The purpose of Fortum’s long-term cannot exceed the participant’s one-year incentive system, i.e. share bonus system, salary. is to support the achievement of the Fortum’s current long-term incentive Pensions the share bonus system are not included Group’s long-term targets by committing V\VWHPIXOğOVWKHUHFRPPHQGDWLRQVRI Fortum’s Finnish executives participate LQWKDWGHğQLWLRQ)LQQLVKSHQVLRQOHJLV key individuals. The Board of Direc- State-owned companies and the Cor- in the Finnish TyEL pension system, ODWLRQRIIHUVDĠH[LEOHUHWLUHPHQWIURP tors chooses the Fortum management porate Governance Code 2010 for listed ZKLFKSURYLGHVIRUDUHWLUHPHQWEHQHğW DJHWRDJHZLWKRXWIXOOSHQVLRQ members entitled to participate in the companies. based on years of service and earnings restrictions. share bonus system. The Board can also and in accordance with the prescribed Retirement age for Fortum’s Presi- exclude individual participants from Read more about the incentive plans in the statutory system. Under the Finnish dent and CEO is 63 and for other mem- the system. Participation in the system Financial Statements, Note 30 on page 113. SHQVLRQV\VWHPHDUQLQJVDUHGHğQHG bers of the Fortum Management Team precludes the individual from being a as base pay, annual bonuses and taxable 60–63. For the President and CEO and member in the Fortum Personnel Fund. IULQJHEHQHğWVEXWJDLQVUHDOLVHGIURP for some other executives, the maximum 158 CORPORATE GOVERNANCE FORTUM ANNUAL REPORT 2010

pension can be 60% of the salary, with Remuneration of Supervisory are not given the opportunity to partici- Remuneration of Board members the pension insured by an insurance Board members pate in Fortum’s bonus or share bonus (YHU\%RDUGPHPEHUUHFHLYHVDğ[HG company, and for some executives the Every Supervisory Board member systems, nor does Fortum have a pension monthly fee and a meeting fee. The meet- maximum is 66% of the salary, with the UHFHLYHVDğ[HGPRQWKO\IHHDQGDPHHW- plan that they can opt to take part in. ing fee is also paid for committee meet- pension insured and paid by Fortum’s ing fee. The representatives of person- 7KHUHPXQHUDWLRQFRQğUPHGE\WKH ings and is paid in double to a member Pension Fund. The Fortum Pension Fund nel groups receive only a meeting fee. Annual General Meeting on 25 March who lives outside Finland in Europe and was closed in 1991. Members are entitled to travel expense 2010 for the members of the Supervisory in triple to a member living elsewhere compensation in accordance with the Board is presented on the next page. outside Europe. The members are enti- Read more about pension systems used in For- company’s travel policy. With the excep- tled to travel expense compensation in tum in the Financial Statements, Note 36 on page tion of the personnel group representa- accordance with the company’s travel 120 and in the Sustainability Report 2010. tives, members of the Supervisory Board policy. are not paid a salary by Fortum and they

SHARE RIGHTS DELIVERED OR GRANTED TO THE MANAGEMENT SHARE BONUS SYSTEMS

Plans 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (1 (2 Name Year 2010 Year 2011 05–10 123456 Tapio Kuula 8,422 24,639 06–11 123456 Anne Brunila -2,49107–12 123456 Alexander Chuvaev - 12,586 08–12 12345 Mikael Frisk 6,041 8,984 09–13 12345 10–15 123456 Timo Karttinen 5,166 9,173 Juha Laaksonen 7,014 11,684 Per Langer 2,989 6,691 Earning period Maria Paatero-Kaarnakari 2,539 4,767 -6,137 Matti Ruotsala Lock-up period

The table above shows the number of shares delivered or to be delivered to the President and CEO and other Fortum Share delivery Management Team members under the long-term incentive plans. In spring 2011, there will be deliveries of two share plans: the 2005–2010 plan and the 2008–2012 plan. Shares delivered under the 2008–2012 plan will be subject to a two-year lock-up period under which they cannot be sold or transferred to a third party. In the table above, share amounts to be delivered under the 2008–2012 plan are estimated and the actual number of shares will be determined at the time of delivery in spring 2011. $FFRUGLQJWRWKH&DELQHW&RPPLWWHHłV(FRQRPLF3ROLF\WKHWRWDOWD[DEOHJURVVYDOXHRIWKHEHQHğWDULVLQJIURPWKH VKDUHVGHOLYHUHGWRDSDUWLFLSDQWFDQQRWH[FHHGWKHSDUWLFLSDQWłVRQH\HDUVDODU\LQFOXGLQJIULQJHEHQHğWV6KDUHV GLVFORVHGGRQRWUHĠHFWWKLVOLPLWDWLRQZKLFKZLOOEHDSSOLHGDWWKHWLPHRIGHOLYHU\ 1) Actual numbers of shares delivered 2) Estimated total number of shares based on the 2005–2010 and the 2008–2012 plans FORTUM ANNUAL REPORT 2010 CORPORATE GOVERNANCE 159

Board members are not paid a salary by Fortum and they are not given the TOTAL COMPENSATION FOR BOARD OF DIRECTORS opportunity to participate in Fortum’s Board service Total compensation Board service Total compensation bonus or share bonus schemes, nor does in 2010 in 2010, EUR in 2009 in 2009, EUR Fortum have a pension plan that they Matti Lehti, Chairman 1 Jan. – 31 Dec. 75,600 1 Jan. – 31 Dec. 70,520 can opt to take part in. Sari Baldauf, Deputy Chairman 1 Jan. – 31 Dec. 58,800 1 Jan. – 31 Dec. 41,480 7KHUHPXQHUDWLRQFRQğUPHGE\WKH Annual General Meeting on 25 March Esko Aho 1 Jan. – 31 Dec. 45,000 1 Jan. – 31 Dec. 43,200 2010 for the members of the Board of +NQPC'TXCUVK8CKPVQNC 1 Jan. – 31 Dec. 45,000 7 Apr.– 31 Dec. 43,200 Directors is presented below. Birgitta Johansson-Hedberg 1 Jan. – 31 Dec. 52,800 1 Jan. – 31 Dec. 49,200 Joshua Larson 25 Mar.– 31 Dec. 46,391 N/A N/A Christian Ramm-Schmidt 1 Jan. – 31 Dec. 45,600 1 Jan. – 31 Dec. 43,200 Peter Fagernäs N/A N/A 1 Jan. – 7 Apr. 21,475 Marianne Lie N/A N/A 1 Jan. – 7 Apr. 16,788

COMPENSATION FOR BOARD SERVICE TOTAL COMPENSATION FOR SUPERVISORY BOARD SERVICE

Supervisory Board Total compensation Superversiory Board Total compensation EUR/year/meeting Year 2010 Year 2009 service in 2010 in 2010, EUR service in 2009 in 2009, EUR Chairman 66,000 66,000 Markku Laukkanen, Chairman 1 Jan. – 31 Dec. 13,000 1 Jan. – 31 Dec. 13,000 Deputy Chairman 49,200 49,200 Sanna Perkiö, Deputy Chairman 1 Jan. – 31 Dec. 8,000 1 Jan. – 31 Dec. 8,000 Member 35,400 35,400 Martti Alakoski 1 Jan. – 31 Dec. 7,000 1 Jan. – 31 Dec. 7,000 Meeting fee 600 600 Tarja Filatov 1 Jan. – 31 Dec. 6,800 1 Jan. – 31 Dec. 5,300 Sampsa Kataja 1 Jan. – 31 Dec. 7,000 1 Jan. – 31 Dec. 6,600 Kimmo Kiljunen 1 Jan. – 31 Dec. 7,200 1 Jan. – 31 Dec. 6,600 Katri Komi 1 Jan. – 31 Dec. 6,800 1 Jan. – 31 Dec. 6,800 COMPENSATION FOR SUPERVISORY BOARD SERVICE Panu Laturi 1 Jan. – 31 Dec. 7,200 1 Jan. – 31 Dec. 6,600 Juha Mieto 1 Jan. – 31 Dec. 7,000 1 Jan. – 31 Dec. 7,000 EUR/month/meeting Year 2010 Year 2009 Jukka Mäkelä 1 Jan. – 19 Oct. 5,800 1 Jan. – 31 Dec. 6,800 Chairman 1,000 1,000 Helena Pesola 1 Jan. – 31 Dec. 7,200 1 Jan. – 31 Dec. 5,300 Deputy Chairman 600 600 Rakel Hiltunen N/A N/A 1 Jan – 7 Apr. 1,700 Member 500 500 Meeting fee 200 200 160 CORPORATE GOVERNANCE FORTUM ANNUAL REPORT 2010 Board of Directors

Matti Lehti Sari Baldauf Esko Aho

ō Chairman, born 1947,947, ō Deputy Chairman, born 1955, ō Born 1954, Master off PhD (Econ) MSc, Business Administration Political Sciences ō Chairman of the ō Member of the Nomination and ō Member of the Nomination and Remuneration Committee Nomination and Remuneration Committeemmittee Remuneration Committee

Main occupation: Main occupation: Main occupation: Non-executive Director Non-executive Director 'ZGEWVKXG8KEG2TGUKFGPV%QTRQTCVG4GNCVKQPUCPF Responsibility, Nokia Corporation. Member of the Primary work experience: Primary work experience: Group Executive Board. r Chancellor of the Helsinki School of Economics r Nokia Corporation, several senior executive posi- r President and CEO and Chairman of the Board, tions. Member of the Group Executive Board. Primary work experience: TietoEnator Corporation, Tietotehdas Oy and r President of Sitra, the Finnish Innovation Fund TietoGroup Key positions of trust: r Prime Minister of Finland r Deputy Managing Director, Rautakirja Oy r Member of the Board of CapMan Plc, F-Secure r Member of Parliament Corporation, Daimler AG and Hewlett-Packard r Leader of the Centre Party Key positions of trust: Company r Lecturer at Harvard r Chairman of the Foundation for Economic r Member of the Board of Finnish Business and Education 2QNKE[(QTWO'8#CPF(KPNCPFoU%JKNFTGPCPF;QWVJ Key positions of trust: r 8KEG%JCKTOCPQHVJG*GNUKPMK5EJQQNQH'EQPQOKEU Foundation r 8KEG%JCKTOCPQHVJG$QCTF6GEJPQNQI[+PFWUVTKGU Foundation r Chairman of Savonlinna Opera Festival of Finland (2009) r 8KEG%JCKTQH+%%9QTNF(KPNCPFCPFOGODGTQH+%% Independent member of Fortum’s Board of Independent member of Fortum’s Board of Directors World Council (2009) Directors since 2005. since 2009. r Board Member of Technology Academy, Finland (2009) Fortum shareholding on 31 Dec. 2010: 2,000 Fortum shareholding on 31 Dec. 2010: 2,300 r Member of the Board of Directors of Russian (31 Dec. 2009: 2,000) (31 Dec. 2009: 2,300) 8GPVWTG%QORCP[ s

Independent member of Fortum’s Board of Directors since 2006.

Fortum shareholding on 31 Dec. 2010: 0 (31 Dec. 2009: 0) FORTUM ANNUAL REPORT 2010 CORPORATE GOVERNANCE 161

Ilona Ervasti-Vaintolatola Birgitta Joshua Larson ChristianC Ramm-Schmidt Johansson-Hedberg ō Born 1951, LL.M., ō Born 1966, Master of ōō Born 1946, BSc (Econ) Trained on the benchh ō Born 1947, Bachelor of Art,Art, International Affairs, ōō Member of the Audit ō Member of the Nominationnation Master of Psychology Bachelor in Russian and Risk Committee and Remuneration ō Chairman of the Audit andand language Committee Risk Committee ō Member of the Audit and Risk Committee

Main occupation: Main occupation: Main occupation: Main occupation: Group Chief Counsel, Principal Attorney, and Non-executive Director Private investor and consultant Senior Partner of Merasco Capital Ltd. Secretary of the Board of Directors of Sampo plc, Member of the Group Executive Committee Primary work experience: Primary work experience: Primary work experience: r President and CEO of Lantmännen r Senior Managing Director, IFC Alemar, CEO r President of Baltic Beverages Holding Ab (BBH) Primary work experience: r President and CEO of Foreningssparbanken r Managing Director, The Carlyle Group, Moscow r Chairman of the Board of Baltika Breweries, r Chief Counsel and member of the Board, r Resident Director for Scandinavia, Wolters Kluwer r Executive Director, Head of Russian Operations, Russia r Mandatum Bank plc Director, Partner, Morgan Stanley, Moscow r President of Fazer Biscuits Ltd., Fazer Choco- r Mandatum & Co Ltd Head of Financial Law Key positions of trust: r Executive Director, Co-Head of Russian Business, lates Ltd., Fazer Confectionery Group Ltd. Department, r Chairman of the Board of Umeå Universitet and Goldman Sachs International, London and r Director, ISS ServiSystems Oy r Legal counsel of Union Bank of Finland Ltd Pocketstället AB Moscow r Director, Rank Xerox Oy r Member of the Board of Sveaskog, Key positions of trust: Finansinspektionen, NAXS, Rieber&Son ASA, Key positions of trust: Key positions of trust: r Member of the Board of Fiskars Corporation 5XGTKIGU4CFKQ8GEVWTC%QPUWNVKPICPF r Member of the Board of Directors of Kora r Member of the Board of Boardman Oy (2004–2010) and Finnish Literature Society (2005–) the Forest Company Limited. Group (2006 – 2007), Bank Alemar, IFC Alemar r Chairman of Legal Committee at the Central Cham- and Alemar Asset Management (2006 – 2008), Independent member of Fortum’s Board of ber of Commerce of Finland (2005–2010) Independent member of Fortum’s OAO Apteka Holdings (2004 – 2006), and OAO Directors since 2006. Board of Directors since 2004. Cherkizovo Agro-Industrial Complex (2002 – 2004) Non-independent from the company (interlocking Fortum shareholding on 31 Dec. 2010: 2,250 EQPVTQNTGNCVKQPUJKR CPFKPFGRGPFGPVQHUKIPKƂECPV Fortum shareholding on 31 Dec. 2010: 900 Independent member of Fortum’s Board of (31 Dec. 2009: 3,500) shareholders. Member of Fortum’s Board of Directors (31 Dec. 2009: 900) Directors since 2010. since 2008. Fortum shareholding on 31 Dec. 2010: 0 Fortum shareholding on 31 Dec. 2010: 4,000 (31 Dec. 2009: N/A) (31 Dec. 2009: 4,000) 162 CORPORATE GOVERNANCE FORTUM ANNUAL REPORT 2010

Group Management Timo Karttinen ō Executive Vice President, Electricity Solutions and Distri- bution Division; Country respon- sible for Finland and Norway Anne Brunila since 2009 ō Born 1965. MSc (Eng) ō Executive Vice President, Corporate Relations andd ō Member of the Management Sustainability, since 2009 Team since 2004 ō Born 1957. DSc (Econ) ō Employed by Fortum since 1991 ō Member of the Management Team since 2009 ō Employed by Fortum since 2009 Previous positions: r (QTVWO%QTRQTCVKQP5GPKQT8KEG President, Corporate Development, 2004 Previous positions: r Fortum Power and Heat Oy, Business Tapio Kuula r Finnish Forest Industries Federation, President and CEO, 200606 Unit Head, Portfolio Management and r Ministry of Finance, several positions, 2002 Trading, 2000 r The Bank of Finland, Advisor to the Board, 2002 r (QTVWO2QYGTCPF*GCV1[8KEG ō President and CEOO r European Commission, Advisor, 2000 President, Electricity Procurement and since 2009 r The Bank of Finland, several positions, 1992 Trading, 1999 ō Born 1957. MSc r +OCVTCP8QKOC1[8KEG2TGUKFGPV (Eng), MSc (Econ) Key positions of trust: Electricity Procurement, 1997 ō Member of the r KONE Oyj, Member of the Board Management Teamm r Sampo Oyj, Member of the Board Mikael Frisk Key positions of trust: since 1997 r Aalto University Foundation, Member of the Board r (KPITKF1[L8KEGEJCKTOCPQHVJG$QCTF ō Employed by r The Research Institute of Finnish Economy ETLA, Member of the Board r Gasum Oy, Member of the Supervisory Board Fortum since 199696 r (KPPKUJ$WUKPGUUCPF2QNKE[(QTWO'8#/GODGTQHVJG$QCTF ō Senior Vice President, Corporate r Confederation of Finnish Industries, r World Business Council of Sustainable Development, Council member Human Resources, since 2001 Member of the Trade Policy Committee r Finnish Energy Industries, Member of the Board ō Born 1961. MSc (Econ) and Energy Committee ō Member of the Management Team

Fortum shareholding on 31 Dec. 2010: 0 (31 Dec. 2009: 0) since 2001 Previous positions: Fortum shareholding on 31 Dec. 2010: ō Employed by Fortum since 2001 r (QTVWO%QTRQTCVKQP5GPKQT8KEG 48,962 (31 Dec. 2009: 43,796) President, 2005 r Fortum Power and Heat Oy, President, 2000 Aleksander Chuvaev Previous positions: r Power and Heat Sector, Fortum Oyj, r 0QMKC/QDKNG2JQPGU8KEG2TGUKFGPV*4 President 2000 Global Functions, 1998 ō Executive Vice President, Russia r Fortum Power and Heat Oy, Executive r 0QMKC/CKNNGHGT8KEG2TGUKFGPV*4 Division; General Director of OAO Fortum; 8KEG2TGUKFGPV Lausanne, Switzerland, 1993 Country responsible for Russia since 2009 r +OCVTCP8QKOC1['ZGEWVKXG8KEG r Nokia NCM Division, HR Development ō Born 1960. MSc (Eng) President, Member of the Board, Manager, 1992 ō Member of the Management Team since 2009 Member of the Management Team, 1997 r Oy Huber Ab, HR Development Manager, ō Employed by Fortum since 2009 1990 Key positions of trust: r 8CTOC/WVWCN2GPUKQP+PUWTCPEG%QO- Key positions of trust: Previous positions: pany, Chairman of the Supervisory Board r Talentor Group Oy, Member of the Board r GE Oil & Gas, Regional Executive Director, Russia and r Lappeenranta University of Technology, r Staffpoint Oy, Member of the Board Member of the Board CIS, 2009 r SUEK, Investment Development Director, Russia 2008 r 'CUVQHƂEGQH(KPPKUJ+PFWUVTKGU1[ Fortum shareholding on 31 Dec. 2010: r JSC Power Machines, Managing Director, Russia, 2006 Member of the Board 30,000 (31 Dec. 2009: 31,642) r Northern Dimension Business Council, r GE Oil & Gas, Regional General Manager, Russia, 2006 Co-chairman r ,5%1/<%JKGH1RGTCVKQPU1HƂEGT4WUUKC r GE, various positions in the USA and Canada, 1999 Fortum shareholding on 31 Dec. 2010: r Solar Turbines Europe S.A., various positions in Europe 81,569 (31 Dec. 2009: 73,147) and the USA, 1991 Fortum shareholding on 31 Dec. 2010: 0 (31 Dec. 2009: 0) FORTUM ANNUAL REPORT 2010 CORPORATE GOVERNANCE 163

Per Langer Matti Ruotsala

ō Executive Vice President, Heat Division; Country ō Executive Vice President, Power responsible for Sweden, Poland and the Baltics since 2009 Division since 2009 ō Born 1969. MSc (Econ) ō Born 1956. MSc (Eng) ō Member of the Management Team since 2009 ō Member of the Management Team ō Employed by Fortum since 1999 since 2009 ō Employed by Fortum since 2007

Previous positions: r Fortum Power and Heat Oy, President of Heat, 2007 Previous positions: r Fortum Power and Heat Oy, President of Portfolio Management and r Fortum Power and Heat Oy, President of Trading, 2004 Generation, 2007 r Fortum Corporation, managerial positions, 1999 r 8CNVTC.VF/CPCIKPI&KTGEVQT r Gullspång Kraft, managerial positions 1997 r #)%1%QTRQTCVKQP8KEG2TGUKFGPV r -QPGETCPGU2NE%JKGH1RGTCVKPI1HƂEGT %11  Key positions of trust: and Deputy to CEO, 2001 r AS Fortum Tartu, Supervisory Board Chairman r Konecranes Plc and Kone Corporation, several senior and managerial positions, 1982 Fortum shareholding on 31 Dec. 2010: 8,478 (31 Dec. 2009: 5,489) Key positions of trust: r Kemijoki Oy, Chairman of the Board r PKC Group Oyj, Chairman of the Board r 6GQNNKUWWFGP8QKOC1[L%JCKTOCPQHVJG$QCTF Juha Laaksonen r Halton Group Ltd, Member of the Board

Fortum shareholding on 31 Dec. 2010: 0 ō Executive Vice President and (31 Dec. 2009: 0) &KLHI)LQDQFLDO2IğFHUVLQFH 2000 ō Born 1952. BSc (Econ) ō Member of the Management Team since 2000 ō Employed by Fortum since Maria Paatero-Kaarnakari 1979 ō Senior Vice President, Corporate Strategy and R&D since 2009 Previous positions: ō Born 1955. MSc (Eng) r (QTVWO%QTRQTCVKQP%QTRQTCVG8KEG ō Member of the Management Team since 2007 President, M&A, 2000 ō Employed by Fortum since 1985 r (QTVWO1KN)CU1['ZGEWVKXG8KEG President, Finance & Planning, 1999 r Neste Oyj, CFO 1998 Previous positions: r (QTVWO%QTRQTCVKQP5GPKQT8KEG2TGUKFGPV%QTRQTCVG5VTCVGI[ Key positions of trust: r (QTVWO%QTRQTCVKQP8KEG2TGUKFGPV%QTRQTCVG&GXGNQROGPV r Sato Oyj, Chairman of the Board r Neste Oyj, Manager, Strategic Planning 1998 r Kemira Oyj, Member of the Board r Neste Polyester Inc, USA, Business Development Manager, 1997 r Kemijoki Oy, Member of the Supervi- r Neste Group, various managerial positions 1985 sory Board Fortum shareholding on 31 Dec. 2010: 5,083 (31 Dec. 2009: 4,044) Fortum shareholding on 31 Dec. 2010: 34,241 (31 Dec. 2009: 27,227) 164 FINANCIAL INFORMATION IN 2011 FORTUM CORPORATION Financial information in 2011

Fortum publishes three interim reports in 2011: ō4RQ$SULO ō4RQ-XO\ ō4RQ2FWREHU The reports are published at approxi- DOWNLOAD INVESTOR mately 9:00 EEST in Finnish and English, and are available on Fortum’s INFORMATION FROM website at www.fortum.com/investors. WWW.FORTUM.COM Fortum’s management hosts regular press conferences, targeted at analysts and the media. A webcast of these con- ferences is available online at 2010 ININTOTO www.fortum.com. Management also A NEEWW gives interviews on a one-on-one and Fortum Corporation DDEECACADEDE Financial year 2010 group basis. Fortum observes a silent A Conference Call R Report ep 2 February 2011 Annual R Annual nn period of 30 days prior to publishing its A Report Annual ua Report Report Ann nual Annual Reportal rt results. An rt al nu po Repor

Annual General Meeting, Financial March 31 Interim report Interim report statements Interim report January- release, January-March, September, Annual report, January-June, February 2 April 28 October 20 week 10 July 19

2011 Jan Feb March Apr May June July Aug Sep Oct Nov Dec 2012 Investor information

Annual General Meeting Payment of dividends Fortum share basics Investor relations at Fortum The Annual General Meeting of Fortum The Board of Directors proposes to the Listed on NASDAQ OMX Helsinki Sophie Jolly, Vice President, Corporation will be held on Thursday, Annual General Meeting that Fortum Trading ticker: FUM1V Investor Relations 31 March 2011, starting at 15:00 EET at Corporation pay a cash dividend of EUR Number of shares, 1 February 2011: tel. +358 (0) 10 453 2552 Finlandia Hall, address: Mannerheimin- 1.00 per share for 2010, totalling EUR 888,367,045. fax +358 (0) 10 452 4176 tie 13 e, Helsinki, Finland. The reception 888 million based on the number of Sector: Utilities e-mail: [email protected] of shareholders who have registered for registered shares as of 1 February 2011. the meeting will commence at 14:00 EET. The possible dividend-related dates plan- 2UGHULQJğQDQFLDOLQIRUPDWLRQ Rauno Tiihonen, Manager, ned for 2011 are: Financial documents can be obtained Investor Relations ō([GLYLGHQGGDWH$SULO from Fortum Corporation, Mail Room, tel. +358 (0) 10 453 6150 ō5HFRUGGDWHIRUGLYLGHQGSD\PHQW POB 1, FI-00048, FORTUM, Finland, fax +358 (0) 10 452 4176 5 April 2011 and tel. +358 (0)10 452 9151, e-mail: e-mail: [email protected] ō'LYLGHQGSD\PHQWGDWH$SULO [email protected] Investor information is available online at www.fortum.com/investors 90 Investor information online minutes

Investor information The Fortum corporate website was ranked In 90 minutes, as number one of the stock-listed Nordic companies in the Hallvarsson&Halvarsson the sun gives out Webranking 2010 survey. Among the European the same amount FRPSDQLHV)RUWXPZDVUDQNHGğIWK of energy to the Annual Reports and interim earth as the world’s reports including webcasts population uses in Calendar with coming events one year. ANNUAL REPORT 2010 Glossary with energy units, Graphic design and illustrations: Neutron Design VRPHLQGXVWU\VSHFLğFDQG Production and coordination: Miltton Oy ğQDQFLDOWHUPLQRORJ\ Photographs:)GVV[KOCIGU EQXGT (QTVWO s  %QTDKU  6QOK2CTMMQPGP   6WQOQ/CPPKPGP s 6QRK5CCTK  Paper: +PXGTEQVG%TGCVQI)CNGTKG#TV/CVVI Printing: Lönnberg Oy 2011 FORTUM CORPORATION

This Annual Report communicates our commitment 2010 Report Annual to excellent performance and continuous operational Annual Report 2010 improvement. Fortum enters the new decade with a 2010 renewed strategy and an evolved corporate culture that support growth.

Read how we are responding to future challenges FORTUM IN 2010 01 FORTUM FINANCIALS 2010 34 Fortum in brief 02 1RGTCVKPICPFƂPCPEKCNTGXKGY  Group business structure 03 %QPUQNKFCVGFƂPCPEKCNUVCVGOGPVU  and staying on top of development in a world where Sales and production 04  0QVGUVQVJGEQPUQNKFCVGFƂPCPEKCNUVCVGOGPVU  Market position 05  -G[ƂIWTGU  the balance in the global economy is quickly shifting Financial summary 06  2CTGPVEQORCP[ƂPCPEKCNUVCVGOGPVU (#5   Fortum in 2010 08 Proposal for the distribution of earnings 142 away from developed economies. Rapid population #WFKVQToUTGRQTV  CEO’S INTERVIEW 10 Statement by the Supervisory Board 144 growth is increasing the demand for energy and Strategy 16 3WCTVGTN[ƂPCPEKCNKPHQTOCVKQP  MARKET DEVELOPMENT 18 CORPORATE GOVERNANCE 146 growing environmental problems are requiring Investments and research & development 24 Corporate Governance Statement 148 Remuneration 156 SUSTAINABILITY 28 Board of Directors 160 more and more sustainable energy solutions that Group Management 162 Report XWLOLVHQDWXUDOUHVRXUFHVHIğFLHQWO\ Financial information in 2011 164 Report

Report Report Annual In addition to the Annual Report, Fortum Report Annual publishes a Sustainability Report for 2010. Report Annual Annual The report follows the Global Reporting Report Annual Fortum Corporation Initiative‘s (GRI) G3 Guidelines. -GKNCPKGOGPVKG'URQQ^21$^(1467/^(+0.#0& Report Annual VGN   ^HCZ   ^YYYHQTVWOEQO Report Domicile Espoo, Business ID 1463611-4 Report Annual

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