Sale of Fortum s electricity distribution business in Sweden

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Sale of Fortum’s electricity

distribution business

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Disclaimer

This presentation does not constitute an invitation to underwrite, subscribe for,

or otherwise acquire or dispose of any Fortum shares.

Past performance is no guide to future performance, and persons needing

advice should consult an independent financial adviser.

Any references to the future represent the management’s current best

understanding. However the final outcome may differ from them.

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Fortum’s mission and strategy

Strategy

Fortum’s purpose is to create energy that improves life for present and future generations. We provide sustainable solutions for society and deliver excellent

value to our shareholders. Mission

Build on the strong Nordic core

Create solid earnings growth in Russia

Build a platform for future growth

Strong competence in CO₂-free hydro and nuclear, efficient CHP production and energy markets

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Fortum’s Distribution business divestment

• Fortum sells its electricity distribution

business in Sweden to a consortium consisting of Första AP-Fonden, Tredje AP-Fonden and Folksam from Sweden and Borealis Infrastructure Management Inc.

• Total consideration SEK 60.6 billion on a

debt- and cash-free basis

– Corresponding to EUR 6.6 billion

• Fortum’s Distribution business divestment

now concluded

• Fortum is looking for growth

• Sweden is our home market

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Distribution business in Sweden sold for approx. EUR 6.6 billion

EUR SEK

Total consideration ~6.6 bln ~60.6 bln

Sales gain ~4.4 bln ~40 bln

Sales gain per share ~5 euro

• Subject to regulatory approvals and customary closing conditions • Closing estimated during the second quarter 2015

• Approx. 390 employees will transfer after closing with the existing terms of employment

Divestment of distribution in Finland, Norway and Sweden TOTAL

Total consideration ~EUR 9.3 billion

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Key facts about the Distribution business in Sweden

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2014

Customers 906,000

Electricity network, km 71,000 Volume of distributed electricity, TWh 13.7

EUR million

SEK billion

Sales 634 5.8

Comparable operating profit 235 2.1

Comparable EBITDA 365 3.3

Net assets (at period end) 2,615 24.6

Capital expenditure 134 1.2

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Buyers with more than 20 years of experience of infrastructure

and strong presence in Sweden

• Extensive experience and competence, long-term commitment to infrastructure

and customer service

• Members have over 20 years of combined experience in the acquisition and

management of infrastructure assets

• Strong Swedish presence, with 50% of the shares owned by local members

• Development of the business as a core business

• Customer relationships continue as before

Consortium members:

• Första AP-Fonden (AP 1)

12.5%

• Tredje AP-Fonden (AP 3)

20.0%

• Folksam

17.5%

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Customer relationships continue as before

• Distribution customer position

continues the same

– Regulated by the Swedish Energy Market Directorate (Ei)

– Licenced business

• Fortum will continue as electricity

supplier to retail customers

– 1.3 million retail customers in the Nordic countries – The largest electricity retailer

– New products and services for the

management of electricity consumption and energy saving

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Change in ownership – Distribution personnel view

• Some 390 Fortum employees will

move with the business with existing

terms

• Long-term commitment from the buyer

to develop as a core business

• Buyer has extensive experience in the

management of electricity networks

• Strong domestic presence in the

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Sweden continues to be important part of Fortum’s home market

1,139 4,615 Other thermal Hydro Nuclear CHP 3,279 Wind 30 Nordic power generation capacity 9,501 438 Nordic MW 3,088 1,820 30 12 Sweden MW Hydro Nuclear Wind Other

Power generation capacity, total 4,950

1,526 1,460 438 1,127 0,4 Hydro Nuclear CHP Other thermal Wind

Power generation capacity, total 4,551 Heat production capacity, total 1,936

Finland MW

Number of employees in Sweden approx. 640

Number of electricity sales

customers in the Nordics 1.3 million,

nearly half of them in Sweden Fortum Värme MW

CHP electricity 627 Heat

production capacity, total

3 636

Number of employees in Fortum Värme appr. 700

AB Fortum Värme samägt med Stockholms Stad is a joint venture with City of Stockholm

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Fortum continues according to its strategy

Strategy

Fortum’s purpose is to create energy that improves life for present and future generations. We provide sustainable solutions for society and deliver excellent

value to our shareholders. Mission

Build on the strong Nordic core

Create solid earnings growth in Russia

Build a platform for future growth

Strong competence in CO₂-free hydro and nuclear, efficient CHP production and energy markets

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L o w E ff ici e n cy Hi g h E ff ici e n cy

High Emissions Emission free

Solar based production with high overall system efficiency

Traditional

energy production Exhaustible fuels that burden the environment

Coal Gas Oil

Advanced

energy production Energy efficient and/or low-emission production Nuclear today Nuclear tomorrow CHP CCS Geothermal Hydro Wind Sun Ocean Bio Storage Active Consumer Demand Response Interconnectors Smart applications 12

All rights reserved by Fortum Corporation and shall be deemed the sole property of Fortum Corporation and nothing in this slide or otherwise shall be construed as granting or conferring any rights, in particular any intellectual property rights

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Our strategic route

14 Birka Energi 50% → 100% Østfold Shares in Lenenergo Shares in Hafslund Gullspång Neste Divestment of non-strategic heat business Oil business spin-off 2007 Skandinaviska Elverk Länsivoima 45% → 65% Birka Energi 50% Fortum 50% Stockholm Gullspång merged with Stockhom Energi

E.ON Finland TGC-10 District heating in Poland → Divestment of Fingrid shares Divestment of heat operations outside of Stockholm Divestment of electricity distribution and heat businesses TGC-1 established Divestment of Lenenergo shares Divestment of electricity distribution business 1996 IVO Fortum Divestment of small scale hydro 2012 2008 2006 1997 Lenenergo shares → Stora Kraft Länsivoima →100% 2000 Elnova 50% → 100% 2003 2005 2011 Divestment of

Grangemouth power plant

2014

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Research and development supporting business

• New solutions for electricity customers

– E.g. Fortum Fiksu: online optimisation of heating

• New solutions in district heating

– Demand side management

– Open district heating network

• Bio-oil CHP+ concept: renewable energy

and flexibility

• Nuclear R&D:

Nures® – purifying radioactive liquids

• Solar power plans: Pilots in India

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0 200 400 600 800 1 000 1 200 DEI

RWE Drax SSE CEZ E.ON

Va tte nfa ll EDP Enel Edipower EnBW Gas Natu ral Fenosa _{GDF SU} EZ Dong E ner gy For tum tot al Iberdrola PVO EDF Verbund Fortum EU Statkraft 64 g CO₂/kWh electricity, 2013 2014

64% of Fortum's total power generation CO2-free

94% of Fortum’s power generation in the EU CO2-free

Close to 100% of the ongoing investment program in the EU CO₂-free

Average 328 g/kWh

200

Fortum's carbon exposure among the lowest in Europe

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Note: : Fortum’s specific emissions of the power generation in 2014 in the EU were 39 g/kWh and in total 177 g/kWh. Only European generation except “Fortum total“ which includes Russia.

Source:

PWC & Enerpresse, December 2014 Climate Change and Electricity, Fortum