Fortum Oyj (FORTUM) Earnings Call Transcript & Summary

[Audio Gap] [Interpreted] physical Annual General Meetings seem to be a mere distant memory as we are now, for the third time, gathering together via remote connections. Although the restrictions on assembly caused by the pandemic were lifted in the past weeks, organizing a physical Annual General Meeting was not an option in the current situation. Instead, we rely on arrangements in compliance with the temporary law. We prioritize the health and safety of shareholders and our personnel. And we do not wish to jeopardize them. Time will tell what form the Annual General Meetings will take in the future. Thursday, the 24th of February of this year, will stay in history books as the day that we will remember for long. The Russian invasion of Ukraine has started changes. And nobody knows what the outcome of those changes will be. The repercussions will be extensive and far reaching. The economic relations between Russia and Europe that were built over a decade are now broken. At Fortum, these past few weeks have been a time of shock, grief and disbelief. The war has caused enormous suffering in Ukraine. And we feel deep compassion towards those who have had to leave their homes and whose daily lives were broken by the battle. The disbelief in Fortum has been further increased by the fact that the company has a long history in energy cooperation as well as extensive business in Russia. As CEO Markus Rauramo already shared in connection to the results publishing for last year, Fortum will not continue its operations in Russia as before. All new investments in Russia have been suspended for the time being. Operations based on fossil fuels will be further reduced in the country and alternatives are being sought as regards to fuels imported from Russia. Once again, the crisis in Ukraine has, in its sinister way, shown the dependencies of the global economy and the role of energy as part of geopolitics. The repeatedly expressed objective of a better self-sufficiency in energy in Europe turned into a concrete challenge overnight. Europe now wants to get rid of any dependence on Russian energy as soon as possible. It is alarming that the situation evolved so quickly. At worst, the uncontrolled breakoff of energy imports accelerated by sanctions and counter-sanctions can lead to a deep energy and economic crisis in Europe. Fuel and electricity prices have been on a steep rise since last summer already. If the period of expensive energy will continue longer, it will inevitably affect competitiveness in European countries, together with the rise of living costs for consumers, which in turn may lead to social unrest. In this situation, we need good collaboration between business life and policymakers on the EU level as well as nationally. Together, we must brace ourselves for various scenarios in short and longer term to keep Europe an appealing domicile for industry in future too and to prevent internal conflicts from breaking our unity. In this situation, it is in Finland's interest to make energy and power generation as diverse as possible. Olkiluoto 3 will bring a strong addition to this package with its CO2-free power generation, which in the longer term will be complemented with the growing wind power production and the extended life cycle of the power plants in Loviisa. The crisis in Ukraine has now accelerated the energy transition in Europe in a way, we could not have foreseen. The self-sufficiency in energy is now as important as clean energy, it's reasonable prices and security of supply. It is clear that we are facing unprecedented investments in energy, both in terms of infrastructure and technological solutions. Taking care of this common task will require a huge amount of competence. It will make use of energy companies that have a track record of their ability to develop new solutions and to take projects from the engineering desk effectively to implementation. I believe that Fortum will be one of these change makers. Fortum's strategy aims at a change towards the cleaner world. And the company is already at present, the third biggest generator of emission-free energy and power. At the same time, Fortum is a significant gas company and one of the pioneers in hydrogen business. Fortum's performance last year speaks for itself. The performance was excellent, the best in history. In a difficult market, the company managed to take advantage of the fluctuations, particularly for some flexible hydropower and stable nuclear power production proved their worth. The subsidiary, Uniper, also performed well and accounted for half of the comparable operating profit in the group. At the same time, Fortum carried out its strategy with determination, and adjusted its businesses to better correspond with its future needs. In many parts of Europe, Fortum has invested in clean power, cleaner gas and solutions that increase flexibility. We can show examples of this, even from the past few weeks. The company recently submitted an application for extending the operating life of the nuclear power plant in Loviisa and announced a significant project for utilizing waste heat by collaborating in a data center project with Microsoft in the capital region. In Germany, the subsidiary Uniper has increased the imports of LNG, and the plans to build a new LNG terminal are resumed. Distinguished shareholders. The presentation of our Board of Directors as well as information on the activities of the Board and its committees in the financial period 2021 are found on our website and in our annual report. The Board's work last year focused on intensifying the cooperation with Uniper. In addition, the Board focused on the reorganization of Fortum's executive management and businesses, for example, through strategic assessment and corporate transactions. Naturally, issues related to the climate change and the close monitoring of the regulatory environment related to those issues were also high up on the Board's agenda. Due to the steep rise in commodity prices, and the market fluctuations, the Board decided in December 2021 to establish a temporary committee for monitoring and controlling the group solvency situation. We also started a temporary committee after the Russian aggression to monitor and assess the impact of the crisis on Fortum. I would like to take the opportunity now to thank the members of the Board of Directors for their active participation in this eventful year. Warm thanks also to Markus Rauramo, Fortum's management team and the whole personnel of the company for their excellent work and results. Ladies and gentlemen, we are facing a great deal of insecurity and hazy outlooks. But I am convinced that we will come out of this turbulence stronger than before. Fortum's foundation is solid, and there is strong demand in society for the competence of the company as well as for the energy it generates. The European energy transition and the security of energy supply needs reliable players like Fortum. Shareholders, with these words, I open the Annual General Meeting of Fortum in 2022. We will move on to item 2, calling the meeting to order. In accordance with the notice of the meeting. Jukka Laitasalo, attorney at law, will chair the meeting.

[Interpreted] Thank you. I thank for the trust and wish the participants of this webcast, welcome on my behalf to follow the Annual General Meeting. We start this meeting in a traditional manner. The meeting will need a secretary. And I call Head of Corporate Legal, Henrik Hinders, to be the Secretary. And we shall next go through certain procedural matters to the course of the meeting as Veli-Matti Reinikkala already stated to this meeting will be organized in line with the so-called temporary law without the actual presence of the shareholders or their proxies. However, it has been possible for the shareholders to participate in the meeting in advance. And they have also been able to -- proposals in advance. And it is possible to follow this meeting via a webcast. But following it does not correspond with actually participating in it because there's no possibility to make proposals to vote or to ask questions. The meeting will be conducted in Finnish. It will be interpreted simultaneously, and it is possible to monitor it through a webcast, simultaneous interpreting over the webcast. Then a couple of words on the document of the AGM, the proposals of the Shareholders' Nomination Board for the Annual General Meeting were released as a stock exchange release as well as on Fortum Corporation website on the 26th of January 2022, and as part of the notice to the Annual General Meeting that was published on the third of March 2022. The financial statements, the remuneration report for the company's governing bodies and the proposals to be discussed at the meeting as well as other documents and information required by the Limited Liability Companies Act item and recorded in the minutes in accordance with the report submitted by Euroclear Finland and also in line with the Limited Liability Companies Act. Under each item on the agenda, the shareholders have also been allowed not to submit a voting instruction. And the company has confirmed that it is not aware of technical or other problems or irregularities connected to the advanced voting or the meeting procedure generally. And the shareholders right to participate and the legality of the counting of votes have been verified in a manner comparable to the procedures followed in ordinary annual general meetings, which will be recorded in the minutes. We move on to item 3, election of persons to confirm the minutes and to verify the counting of votes. In accordance with the temporary law, the notice to the meeting must include the procedure in which the officials are elected. These officials include scrutinizer of the minutes and supervisor of the counting of votes. And as mentioned in the notice to the meeting, the company's Board of Directors has decided that Veli Siitonen shall act as the scrutinizer of the minutes and supervisor of the counting of votes via remote connection. Next, we shall state and record the legality of the meeting. And here, we are dealing with clarifying under this item whether the regulation under the Articles of Association have been complied with. In accordance with Article 12 in Fortum's Articles of Association, the invitation to the meeting must be submitted no earlier than 3 months and no later than 3 weeks prior to the Annual General Meeting by publishing the notice on the company website or into newspapers determined by the Board of Directors. The notice to the Annual General Meeting was published on the company's website meant as a stock exchange release on the third of March 2022. There was no extensive newspaper advertisement, but there was a short ad published in Helsingin Sanomat on the 15th of March 2022. The Articles of Association further defines the locations where the Annual General Meeting can be held. In accordance with the Articles of Association, they are Helsinki, Espoo and Vantaa. Currently, we are having the meeting here at the headquarters of the company in Keilalahdentie, Espoo. Hereby, we can state that the notice to the meeting was released within the time frame required by the Articles of Association, and other provisions have also been considered in setting up the invitation and hence, the Annual General Meeting was considered legally convened and [ carried ]. The notice to the meeting will be annexed to the minutes under this item. We have one more item to deal without -- we start with the actual business of this Annual General Meeting. So we move on to Item 5, recording the attendance at the meeting and adopting the list of votes. And a precondition for using a right to vote in this Annual General Meeting is that the shareholder was registered in the shareholders register maintained by Euroclear Finland on the record date of the AGM, the 16th of March 2022. The holders of nominee registered shares have been able to register by the 23rd of March 2022. And for normal shareholders, that registration deadline was the 21st of March. So there is a temporary registration of nominee registered shareholders. However, that is not quite enough based on legislation. In addition, a requirement for participating in the meeting is that the shareholder who has the right to participate has also voted during the voting -- advanced voting period. And we will record in the minute that altogether, 2,127 shareholders, representing 643,847,069 shares and votes participated in the advanced voting. This corresponds to 72.5% of all the shares and votes in the company. The list of participants will be annexed to the minutes. It shall also be stated that in addition to the shareholders, there are present in this Annual General Meeting, the Chairman of the Board, Veli-Matti Reinikkala; CEO, Markus Rauramo; candidates for the Board, Ralf Christian; and the Chairman of the Nomination Board -- Shareholders' Nomination Board, Maija Strandberg; the company's auditor, Jukka Vattulainen; and Nebahat Albayrak is also present; [indiscernible] and the Secretary and myself as well as technical staff needed to carry out the webcast. So we are all present here at the meeting venue. And next, we shall move on to the actual items on the agenda. And the first item there is the presentation of the financial statements, the consolidated financial statements, the operating and financial review and the auditor's report for the year 2021. This is not a point for a resolution. We will have the resolution on adopting these documents under Item 7. Since there was only advanced participation possible here, the financial statement published on the 3rd of March 2022, the operating and financial review and the auditor's report by Deloitte Oy of the 2nd of March 2022 have been made available on the company's website, and they are now considered to having been presented to the Annual General Meeting. And thus the publication is fulfilled. In addition, we will hear some further information from the CEO of the company. Markus Rauramo will next present a review of the operations of Fortum Group in 2021.

[Interpreted] Thank you, Chairman. Good afternoon, ladies and gentlemen, shareholders. I do welcome you on my behalf in Fortum's Annual General Meeting. As Mr. Reinikkala mentioned in his opening, after Russia attacked Ukraine, the ties between Europe and Russia have broken. Consequently, Fortum cannot continue business as usual either. That is why I wanted to begin my review today with a look at our Russian business. After this, I will address the highlights and performance of 2021, and I will then conclude with our strategy. I would like to start by reiterating that the war in Ukraine is in no way acceptable. We at Fortum are extremely saddened by the human suffering it causes, and we wish that peace would be restored as soon as possible. You can see on the screen a summary of our Russian businesses. Fortum and Uniper have 12 power plants in Russia, of which 6 generate power, but also produce heat to 2 million inhabitants. Most of the plants are located in Western Siberia and in the Urals. We employ some 7,000 people in the plants and their support functions, and they are primarily of Russian nationality. In addition to power generation and heat production, Uniper imports Russian natural gas to Europe. Although our power plants and other businesses in Russia are so far running normally and gas has been flowing to Europe without interruption, the situation can change rapidly, and it is difficult to predict the long-term impact on our business. But what can we say today? We have suspended all new investments in Russia, and we will not provide any new financing to our Russian subsidiaries. On March 7, we communicated the write-down of the Nord Stream 2 gas pipeline project. And we will no longer record the annual interest income of approximately EUR 100 million related to that project. Uniper has, for some time now, prepared for divestment of its Russian subsidiary, Unipro. We will also diversify our fuel supplies. We don't buy coal, pellets nor biomass from Russia for our plants in Espoo and Meri-Pori. And in Loviisa, we are looking for alternatives to Russian nuclear fuel. A new tendering process for nuclear fuel will be on the agenda latest by the time when the operating licenses for Loviisa will be extended. Uniper 2 has announced that it is not renewing its import contract for coal, but is looking instead for alternatives for Russian coal to be used by our power plants in Europe. But it will not be easy nor possible to rapidly seize gas imports from Russia to Central Europe. From a Finnish perspective, it may be difficult to understand the significance of natural gas in Central Europe. In Europe, gas is used almost 50% more than electricity. And about 1/3 of the gas is imported via pipelines from Russia. The imports of pipeline gas is in every way essential to European energy supply and in particular, in Germany. Gas is consumed considerably more than power and the lion's share of that goes to heating and industry. Disturbances in gas supplies would affect people's everyday lives very quickly as higher utility bills and lost jobs. We are continuously discussing with the German government about what we can do to secure their energy supply and how we can contribute to reducing our dependence on Russian imports. As Chairman Reinikkala already said, Uniper will be increasing the imports of LNG to Europe and has resumed the planning of an LNG terminal in German Wilhelmshaven. We have been asked many times, why don't we simply close our businesses in Russia, put up the shutters of the power plants? As always, we have to carefully consider each step we take and weigh our actions against business interest. And we do this also in Russia. As a supplier of power and heat, we have an obligation to supply energy. If Fortum stopped running the plants, the local authorities would seize them and continue to operate them. And at the same time, our local colleagues would be held accountable for suspending production. A possible divestment in a country amidst a war is difficult. And for the time being, it is unclear whether that would even be possible. At any rate under a new law, it would require the approval of the commission of the Russian government. And as I said, in line with Fortum strategy, Uniper had been in the process of divesting its Russian subsidiary well before the war. But now that process is temporarily suspended. We -- so could we just give away the plants? As a listed company, Fortum has to comply with the Limited Liability Companies Act and manage its assets with due diligence. Against that background, the threshold to give up operations for free without compensation is very high. When we look for alternatives concerning our Russian businesses, we need to consider them carefully, taking into account the interest of the company and our customers and also the economic factors. I will now move on to the highlights and results of 2021. Last year, Fortum achieved its all-time best results due to an increase in demand, market volatility and high prices. At the same time, exceptional market developments impacted, in particular, the liquidity requirements of Uniper's gas business. I will come back to this in a while. We complemented our climate targets with the so-called Scope 3 emission reduction target. We are committed to reducing indirect GHG emissions, which are caused mainly by the sale of fuels by 35% of the 2021 level by 2035 at the latest. This target strengthens our commitment of being carbon neutral in all our operations by 2050 at the latest, in line with the goals of the Paris Agreement. In Europe, our target is to reduce emissions from our own production by at least 50% by 2030 compared with 2019 levels and to be carbon neutral in our European operations no later than 2035. Emissions were nevertheless increased last year because power demand was boosted as a result of post-COVID economic recovery. The record high gas prices also influenced the use of power plants in a way that coal fired power was needed more. When we compare the absolute figures, it needs to be remembered that in 2020, Fortum hadn't yet consolidated Uniper in the first quarter, meaning that the 2020 emission figures of Fortum do not include Uniper's emissions for the entire year. We continue to execute our strategy with determination by accelerating the phasing out of coal and investing in clean production. I will come back to these themes later. Climate change is one of the major threats to biodiversity. We have set ourselves a target with Uniper to implement a minimum of 12 relevant voluntary measures that improve biodiversity. We achieved that target and implemented a total of 13 measures, but this will not be enough. In 2022, our goal is to develop a science-based strategy to secure biodiversity. We will do this together with Uniper, and it will cover all our production forms. The COVID measures that we launched in 2020 continue throughout 2021. Our objective being to ensure the health and safety of our employees and contractors and to safeguard business continuity. The effects of COVID for Fortum remains minor. All our power plants continue running reliably, annual outages were successful and a large part of our personnel worked remotely during the entire year. We are now moving to a hybrid model where we alternate working in the office and working at home remotely. Our in-house medical service was able to work throughout the pandemic and was among the largest ones in Finland to offer COVID vaccines to staff. Our own occupational health service played an essential role in effective COVID measures, risk assessment and also in disseminating correct information in a timely manner. Despite the exceptional circumstances, the commitment of our personnel to the company remains stable and at a good level. Safety too remains at a good level. Although we did not achieve our ambitious targets, and that is why we cannot be satisfied, but we will continue doing our utmost to improve safety at work. Our new safety target for total recordable injury frequency is less than one per 1 million work hours by 2025. This target covers both own staff and contractors. We will also focus on reducing severe incidents, the target being zero severe incidents. Fortum is a diverse business. We have approximately 19,000 people working for us around the world. Last year, we participated in a study measuring diversity, equality and inclusiveness in the corporate culture. The results show that 93% of respondents consider these elements as significant competitive factors in future corporate cultures. And 84% found that Fortum has an inclusive corporate culture. Roughly 1/3 did say that we need to improve. And this is what we continue doing this year. Influencing the national and EU-level climate policy is important for us in order to achieve our climate targets and increasing transparency of our lobbying work is an important principle. In December, we published a comprehensive assessment of our lobbying activities and practices with a special focus on climate policy. A central part of that exercise was to assess how well aligned industry associations are with the Paris Agreements. This assessment helps us clarify our lobbying practices and government. And I'm pleased to say that our major stakeholders have welcomed this assessment and found it to be of good quality. We have continued to optimize our business portfolio. Last year, we divested at an amount of EUR 4.1 billion. The largest of this transactions was our 50% share in Stockholm's district heating asset Exergi. Only last week, we agreed to divest our 50% share in Oslo's district heating business for EUR 1 billion. Apart from Oslo, we had carried out a strategic review prior to all these transactions. But an ongoing review does not always lead to the divestment of the business. In early March, we announced that we had decided to suspend the reviews on the strategic alternatives for the Consumer Solutions business and the Polish district heating business because of the highly volatile market environment. We will continue to develop these businesses as part of the group and evaluate alternatives for the decarbonization of the Polish plants. Let me now move on to discussing our financial results. The past year was characterized by extremely volatile commodity markets with unprecedented price levels. The price of gas, in particular, was record high, which helped us achieve excellent results. Our comparable EBITDA was at all-time high. Our comparable operating profit, highest ever, and our comparable earnings per share was the best ever. It is good to remember though that we had sales gains from the divested businesses, and we fully consolidated Uniper for the first time in all quarters last year. I would like to underline once more that the reported net profit was negative -- minus EUR 114 million because of the fluctuations in commodity prices and the related IFRS accounting and the valuation of fair value. Once the prices of commodities rise, the related derivatives are valued at fair value. And this change can now be seen as a negative item in the income statement. But it is all about differences in timing. When the product or commodity, power or gas, is supplied, this negative impact will revert as a positive impact through the income statement. The reported negative net profit is thus not a result of operative reasons. All in all, the result was extremely strong despite the challenging market environment. Our year-end balance sheet was strong. Our target for capital structure, which is measured as the financial debt ratio -- the financial net debt comparable EBITDA ratio has come down significantly. A year ago, the ratio was 2.9x. We have actively strengthened our balance sheet. And at year-end, we achieved a level of 0.2x, well below our target of less than 2x. Thanks to our smaller gearing level, we are now better placed to cope in these uncertain times. I'd like to draw your attention to the total assets, EUR 150 billion, which has almost tripled from that of last year. This is because the value in the balance sheet of derivatives related to the supplies of gas and power raised to a record high level. In the second half of the year, Uniper took several measures to manage market volatility and high commodity prices and to safeguard its liquidity. We announced a significant financing measure in connection of this early January. Fortum backed Uniper with EUR 8 billion intragroup financing consisting of a loan of the parent company and the German state-owned bank KfW granted a EUR 2 billion revolving credit facility. The available liquid funds were EUR 7.6 billion at year-end, and our liquidity remains strong. As a capital-intensive company, Fortum relies on its credit rating, and our goal is to keep our rating at the level of at least BBB. In January of this year, Standard & Poor's and Fitch affirmed Fortum's current rating at BBB. In the wake of the war in Ukraine, Standard & Poor's placed Fortum's rating under the so-called credit watch negative. The underlying reason being the agency's concern of the gas business of Uniper in a situation where gas supplies from Russia to Germany would face significant and long-term disruptions. Standard & Poor's is closely monitoring the development and announced that it will take a decision on the watch in the coming months. Fitch too published an update this month right after Standard & Poor's. Fitch identified the same risk, but considers that the likelihood of such a disruption is small and possible only in the so-called worst-case scenario. Therefore, Fitch maintained the rating of Fortum at the BBB level with a stable outlook. To conclude, I will say some words on dividends. Fortum's dividend policy has been to pay a stable, sustainable dividend increasing over time. Following the solid and regulatory results of 2021 and the outlook for the future, Fortum's Board of Directors is proposing to the Annual General Meeting to pay a dividend of EUR 1.14 per share for the financial year 2021. This proposal is in line with our dividend policy. I would like to add in this context that we are also in favor of Uniper's Board proposal to their Annual General Meeting concerning the payment of dividend. The proposal is to cut the dividend to a minimum in compliance with the German Limited Liability Companies Act and place a stronger focus on safeguarding liquidity and consequent future growth potential. Today, I see no reason why Uniper would not continue paying dividends. In this presentation, I have discussed the key indicators. You can find the balance sheet and the income statement in their entirety in the online version of my presentation. Let us now look at our strategy more closely. Amidst all this turbulence, it is important to look beyond the daily business and assess trends in the longer run. In the past year, our operating environment has been dominated by 4 major trends, which are still valid: firstly, Europe is committed to being a forerunner in reducing greenhouse gasses in all sectors to fight climate change and accelerate energy transition. Sustainable development has become a prerequisite for any business. Secondly, when Europe accelerates the construction of wind and solar power and replaces traditional stable generation with intermittent generation, the need to safeguard the security of supply becomes ever more apparent. Security of supply is not on the agenda of politicians only because of the current crisis, but it is needed to implement the energy transition reliably. Thirdly, as investments to traditional forms of generation are decreasing and old capacities being closed, there is more and more tightness in the market. This development, together with an increase in cost, has led to an elevated price environment, which risks the implementation of an affordable energy transition. And fourthly, in light of the geopolitical transition, it is apparent that we will face high market prices also in the long run. The markets price in more and more uncertainty in the commodities and in turn, appreciate security of supply. The year 2021 showed that as a large power and gas company, we have an important role to play in the European energy transition. As Chairman Reinikkala said in his opening remarks, there's a need for reliable players like us. With a strong balance sheet and resilience, we will be able to make it through this hectic turbulence. Some of our competitors focus solely on the construction of renewable production. We, however, made an informed strategic decision to be a company whose task it is to ensure a swift and reliable transition to a carbon-free economy. We offer our customers and societies reliable, flexible and ever cleaner electricity and gas for the needs of the transitional phase. And this is the mission that we implement already today. The core of our business is our stronghold in hydro and nuclear thanks to which we are the third largest CO2-free power generator in the EU. Our hydro and gas power plants and our gas storage business make us also a relevant provider of flexibility in Europe. It is our objective to reduce CO2 emissions in our business as [ they've got ] profitable growth, but not at the expense of our dividends or economic strength. How are we doing with the implementation of our strategy? We have a long history as a forerunner of clean power generation. In Europe, we are moving fast in decarbonizing our business. In less than a year, we have been able to announce accelerated phaseout of 6 coal-fired power plants in Germany and the U.K. Uniper was successful also in the most recent coal exit auction of coal plants in Germany. The offer of the closure of Staudinger 5 was approved, making Uniper the biggest contributor in these auctions. We are closing more capacity as a result of these auctions than any other company. At the same time, we are increasing our CO2-free power generation. With the commissioning of Olkiluoto 3 this year, we will have 400 megawatts more generation with our share. In addition, we decided to apply for an extension of the lifetime of our fully owned Loviisa nuclear plant until the end of 2050. This is a significant investment in Finland and its impact on the economy and employment is substantial. The Loviisa plant accounts for about 10% of Finnish power generation. Investments in continuing to run the plant and extend its lifetime during the new license from 2027 to 2050 will amount to an estimated EUR 1 billion. Over the past 5 years, Fortum has invested some EUR 325 million in the Loviisa plant. We also focused on investments in the growth of renewables. The joint Fortum-Uniper wind and solar development team launched its first investment project together with the Helsinki City Energy Company, Helen. We will construct 370 megawatts wind parks in Narpes and Kristinestad in Finland. This investment has an estimated value of EUR 360 million. In India, we were successful in auctions, and we are entitled now to build 800-megawatt solar power at a fixed [ traffic ] (sic) [ tariff ]. And in Russia, we won an auction. But as I said earlier, we will not do any new investments in Russia for the time being. In addition, we offer security of supply in different forms to power grid operators and industrial customers. For example, in Scholven in Germany, we will replace the existing fire -- coal-fired power line by a modern combined cycle gas turbine, which in the 2030s, will be running on hydrogen instead of natural gas. The development work on hydrogen and other green -- clean gasses is picking up speed. And our target is to build electrolysis capacity of a total of 1 gigawatt by 2030. To conclude, I would like to say this. Dear shareholders, today, Fortum is a leading European power and gas business. We offer our customers and societies clean energy and sustainable solutions, thus safeguarding a swift and reliable transition to a decarbonized economy. In line with the goals of the Paris Agreement, we intend to be carbon neutral in all our activities by 2050. Our strategy aims not only at accelerating the energy transition, but also add sustainable profits. We achieved good financial results in 2021 in the extremely challenging market environment. We drive the European energy. We invested about EUR 1 billion according to our strategy. We drive the European energy transition by investing in clean electricity, wind, solar, hydro and nuclear power. And to ever cleaner gasses, hydrogen, ammonia, et cetera. I mentioned the Loviisa power plants and our wind. I would also like to mention the cooperation with Microsoft in the Helsinki region. Microsoft will build in Espoo and Kirkkonummi, 2 large data centers and Fortum will use the waste heat in the grid. This would be the biggest ever project in the world, and it will help us decarbonize and give up fossil fuels. We also have a central role in safeguarding the security of supply in Finland as well as in other parts of Europe. And we promote this by, for example, increasing the imports of LNG and by offering grid stability solutions. We are a stable and good dividend and taxpayer here in Finland. The Board of Directors has been very active and contact -- and reacted very quickly. I would like to thank the Chairman, Mr. Reinikkala and the whole Board for their commitment and support in 2021. And I personally and the whole Fortum Group, thank you, shareholders, for your trust you put in our company. Thank you very much.

[Interpreted] Thank you, CEO, Markus Rauramo for presenting the key details of the financial statements and the operations of the company. Under this item, we will also go through the auditor's report, authorized public accountant firm, Deloitte Oy. The company's auditor has given a statement in the auditor's report dated the 2nd of March 2022. He stated the following. In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance and cash flows of the group in accordance with international financial reporting standards as adopted by the EU. And the financial statements give a true and fair view of the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements in Finland. In addition to this statement, Deloitte Oy has made some additional statements. The company supports that the financial statements be adopted and states that the distributable funds and the treatment of them is in compliance with the Limited Liability Companies Act. And Deloitte Oy also supports that the Board of Directors and the President and CEO should be discharged from liability for the financial period audited for them. And hence, the CEO's review, financial statement, the operating review and the auditor's report will be the next to the minutes. We move on to item 7, adoption of the financial statements and consolidated financial statement. And a few words about the voting in general. The voting results will be recorded under each item according to the Limited Liability Companies Act, and they are based on a report submitted by Euroclear Finland. The content of the report is shown on the slides of the webcast as per item. And you can already see the voting result concerning the adoption of the financial statement and the consolidated financial statement. 643,838,664 shares and votes participated in the voting on the adoption of the financial statements, which corresponds to 72.48% of all the shares and votes. 643,509,356 votes were cast in favor of the adoption and 976 votes were cast against it. And it's also possible to abstain from voting and the number of such shares was 328,332. Based on the voting results, the Annual General Meeting has adopted the financial statements for the financial period 2021. Next item. Item 8, resolution on the use of the profit shown on the balance sheet and the payment of dividend. CEO Rauramo presented the key figures. The distributable funds of the parent company at the end of the financial period were some EUR 5.7 billion, including the profit for the financial year 2021, some EUR 1.8 billion. The Board of Directors has proposed that a dividend of EUR 1.14 per share be paid for the financial period 2021, which corresponds to some EUR 1.12 billion in total. The remaining part of the distributable funds shall be retained in the company's unrestricted equity. The dividend shall be paid to shareholders who on the record date of the dividend payment, the 30th of March, so in 2 days, are recorded in the company's shareholders register. The Board of Directors proposes that the dividend be paid on the 6th of April. 643,843,839 shares and votes participated in the voting on the -- this item and 643,283,136 votes were cast in favor of the Board's proposal corresponding to 99.91% of the votes cast. There were 550,244 votes cast against the Board's proposal, and the number of shares that abstained from volume was 10,459. This voting result will be annexed to the minutes. And based on the voting results, the Annual General Meeting has decided in accordance with the Board's proposal on the payment of dividend. We move on to the next item, resolution on the discharge from liability of the members of the Board of Directors and the CEO for the financial period 2021 and the discharge from liability concerns all the people who have been members of the Board during the financial period 2021. These members are Essimari Kairisto, Anja McAlister, Teppo Paavola, Veli-Matti Reinikkala, Philipp Rosler, Annette Stube, Klaus-Dieter Maubach, Matti Lievonen and Luisa Delgado. In addition, discharge from liability also applies to CEO of the company for the whole 2021, Markus Rauramo. I will also refer to the auditors statement where they supported granting discharge from liability. And it should be noted here that persons who are the object of the resolution of discharge from liability have not had a right to vote under this item. 643,714,175 shares and votes participated in the voting on this item. And 99.96% of these votes were in favor of granting discharge, so 643,012,480 votes. And 228,168 votes were against the discharge and the number of shares that abstained from voting was 473,527. Based on this voting result, the Annual General Meeting has decided to grant discharge from liability to persons who acted as members of the Board of Directors or as the CEO during the financial year 2021. So those persons that were just listed before. We now move on one step forward. We are now at Item 10, presentation of the remuneration report for the company's governing bodies. Since 2021, listed companies in Finland have had to publish a remuneration report containing information on the remuneration of the members of the Board of Directors as well as the CEO and the potential Deputy CEO in accordance with the remuneration policy during the previous financial period. A listed company must resolve on adopting the remuneration report in the Annual General Meeting. The resolution of the Annual General Meeting is advisory. The Chairman of the company, Veli-Matti Reinikkala, who is also the Chairman of the Nomination and Remuneration Committee, shall present the remuneration report for the governing bodies of the company.

[Interpreted] Thank you, distinguished shareholders. I shall now go through the remuneration for the management last year. For further information, please see Fortum's Remuneration Statement 2021. The essential remuneration principles and practices. Let's start with that. The remuneration principles that underlie Fortum remuneration were designed to motivate and reward successful activities and conduct in accordance with Fortum's values and leadership principles. These principles apply similarly to the CEO of the company as well as to the whole personnel. The remuneration practices depicted in this image applied to the CEO. The Board's remuneration will be presented later. The CEO's remuneration in Fortum consists of a fixed basic salary, short and long-term incentives as well as pension and other benefits in accordance with the normal market practice. The indicators of the short-term incentive plan are decided annually based on the primary objectives in business. Usually, they are related to the financial result, occupational safety and individual strategic objectives. However, each year, at least 60% of the indicators are based on the key performance indicators. The maximum amount of the short-term incentive plan, i.e., the potential annually payable performance bonuses for the CEO, as for the rest of the executive management, is 40% of the annual salary and with the performance in the target level of 20% of the annual salary. An annual cap can be set to the changing salary items by the decision of the Board of Directors of the company. And currently, the amount of changing salary items must not exceed 120% of the annual base salary. In addition to this, the CEO must accrue and retain Fortum shares in his possession for the amount corresponding to at least 100% of the fixed gross salary payable to him. In Fortum's strategy, the future growth is based on CO2-free power generation and clean gas as well as determined reductions of the emissions of our operations. We also help our customers and society to cut emissions. These strategic objectives are also visible in our remuneration indicators of the long-term incentive plan. In the long-term incentive period of 2020 through 2022, we took for the first time in use, environmental, social and governance-related targets, the ESG. These ESG target of the period is related to the reduction of carbon dioxide emissions as well as to actions to reduce coal-based power generation capacity. From now on, for each long-term remuneration period, we have set ESG targets that are mainly related to the reduction of Fortum's carbon dioxide emissions. Let's next look at the realization of key indicators guiding remuneration. The Board of Directors at Fortum annually defines measures for the short- and long-term incentive plans for the personnel in the company as well as the targets to be set for them. The result of the short-term incentive scheme in 2021 was very good with regard to the financial performance measure, comparable operating profit, and it reached the maximum level. The objective regarding occupational safety, unfortunately, we made clearly under the set target level. The result of the 3-year i.e., years 2019 through '21, long-term incentive period was 46%, and with a maximum level of 100%. The measure in the plan in question was the total shareholder return for Fortum's share compared to European reference companies. The earnings per share was not an indicator contrary to previous years in the program that ended in 2021. This image depicts the realized remuneration of the governing bodies in 2021. The CEO's remuneration consists of the remuneration of Markus Rauramo last year. On the right-hand side of this image, you can see the Board's remuneration consisting of fixed annual fees and meeting fees. The Annual General Meeting decides annually on the Board remuneration. The Shareholders' Nomination Board assessed the remuneration of the members of the Board in comparison to practices in companies of the same size and complexity. The target is competitive remuneration so that we can attract as members, persons who have the competence required for the decision-making concerning the company's strategy, knowledge of the industry as well as international experience. In 2021, the Shareholders' Nomination Board did not reach a unanimous proposal for the remuneration for the Board and consequently did not make a proposal. In accordance with the proposal of the State of Finland, the Annual General Meeting result to keep the Board remuneration unchanged. The remuneration was based on fixed annual fees and meeting fees, both paid in cash. Company shares were not granted to the Board of Directors. The fixed annual fees remained low in comparison to other companies of same size and complexity. However, the Shareholders' Nomination Board agreed to create a step-by-step development plan to bring the fees of the Board to market levels by 2026. Finally, I shall present information on the realized remuneration of other executive management in 2021. As for the CEO, the remuneration of the members in the executive management consists of a fixed basic salary, short and long-term incentives and pension as well as other benefits in accordance with normal market practice. For the personnel, the remuneration consists of short-term incentives, the Fortum personnel fund and competitive employee benefits on top of the basic salary. The long-term incentive plan is also offered to a limited group of key personnel outside of the executive management team. In addition to these, the share savings program, forShares, that is open to almost the whole personnel in Fortum was introduced a few years ago. The program has been very popular from the start and the participation rate for the savings period 2022 rose to 45% from 43% a year ago. This was my review.

[Interpreted] Thank you, Mr. Reinikkala for presenting this report. It has been available on the website since the 3rd of March. So we can say that it has been now presented to the Annual General Meeting. And if we look at the votes, the remuneration report vote. The total number participated in this vote was 643,826,789 shares and vote. In favor, we had 593,718,303 votes. And this represents to about 92.77% of all votes cast. Vote against the report were 46,249,150 votes, which represents approximately 7.23%. Shares abstained was 3,859,336. So based on this result, the AGM has decided to second the remuneration report of the governing bodies of Fortum of 2021. We move on to point 11 about the Board of Directors, 11, 12 and 13. Fortum has a Shareholders' Nomination Board appointed by the Annual General Meeting, whose task it is to prepare and present to the Annual General Meeting its proposals on the election of the members of the Board and the remuneration. I would now like to ask Ms. Maija Strandberg, who is Chair of the Nomination Board to report on how the nomination Board works and present their proposals to the Annual General Meeting on points 11, 12 and 13. Maija Strandberg, the floor is yours.

[Interpreted] Distinguished shareholders, ladies and gentlemen. My name is Maija Strandberg, and I'm the Chair of Fortum Shareholders' Nomination Board. I started in this position in January 2022, and my daily work is in the Prime Minister's office as a senior ministerial adviser in financial affairs in the ownership steering departments. The task of the permanent Nomination Board is to prepare and submit to the Annual General Meeting its proposals on the remuneration number and members of the Board of Directors and also to look for candidates to be appointed to the Board. The 3 largest shareholders of the company are entitled to make the nominations. The Nomination Board consists of appointed representatives of the 3 largest shareholders as per their holding on the 1st of September 2021 being now as follows: Jouko Pölönen, President and CEO of Ilmarinen mutual pension insurance; Risto Murto, President of Varma; and Kimmo Viertola representing the Finnish State, who's Director General of the Ownership Steering Department in the Prime Minister's office. Until -- he was in this position until January 24 and myself from January 25 onwards. The fourth member in the Board has been Veli-Matti Reinikkala, the Chair of Fortum's Board of Directors. This Nomination Board, which was appointed on September 6, '21, met 6 times before this 2022 Annual General Meeting with an attendance rate of 100%. The Nomination Board submitted its proposal to the Annual General Meeting on January 26, 2022. Fortum is applying a diversity policy under which the diversity principles governing the Board of Directors are defined in line with the Finnish corporate governance code. The objective of the Nomination Board is to seek possible new Board members or candidates who meet the requirements of the international nature of the company's business and focusing on the experience as -- at CEO level managerial positions in international businesses and on strong expertise in ESG, energy industry and digitalization. Shareholders, I shall now present our proposal concerning the remuneration of the members of the Board. The Annual General Meeting of 2020 adopted a remuneration policy of the Fortum governing bodies where one central part is the remuneration of the Board of Directors. The Annual General Meeting decides every year in line with the policy on the remuneration of the Board members on the proposal of the Shareholders' Nomination Board. The company also annually publishes a remuneration report, which is adopted by the Annual General Meeting. In the past 10 years, the levels of remuneration of the Board members have seen very minor adjustments while Fortum has become one of the major power generators in Europe. The proposed remuneration that we have prepared in the Nomination Board is part and parcel of a principle decided in the spring of 2021 about aligning the remuneration of Fortum's Board members to market levels as part of a long-term program to increase their remuneration. The Shareholders' Nomination Board is proposing that the annual compensation of the Chair, Deputy Chair and other members of the Board be adjusted as follows: Chair would be paid, EUR 88,800 per year; Deputy Chair, EUR 63,300 a year; and members, EUR 43,100 a year. In addition, the Chair of the Audit and Risk Committee would be paid EUR 63,300 a year, providing he or she does not simultaneously act as Chair nor Deputy Chair of the Board. In addition to this annual compensation, we propose a new element to pay fixed allowances for committee work as follows: Member of the Audit and Risk Committee, EUR 3,000 a year; the Chair of the Nomination and Remuneration Committee, EUR 5,000 a year; a member of the Nomination and Remuneration Committee, EUR 2,000 a year; the Chair of any additional committee set up by Board decision, EUR 5,000 a year; and a member of any additional committee by a Board committee EUR 2,000 a year. In addition, the Shareholders' Nomination Board proposes that the meeting allowance payable to a Board member also for committee meetings be EUR 800 for each meeting or EUR 1,600 in case the member travels for the meeting from his own country of residence. When a member participates in the meeting remotely, all for decisions that are confirmed without convening a meeting, the meeting allowance would be EUR 800. The travel expenses of Board members are compensated in accordance with the company's travel policy. Further, the Shareholders' Nomination Board proposes as a new element that the annual compensation for Board work of the Board members be paid in company shares and in cash so that about 40% of the amount of the annual compensation be payable in shares acquired on behalf and in the name of the Board members, and the remainder in cash. The company will cover the cost and the transfer tax related to the purchase of the company's shares. The shares will be acquired within 2 weeks following the publication of the company's first quarter 2020 interim report. If the share purchase cannot be carried out within the aforementioned schedule due to a reason related to the company or the Board member, the shares will be acquired later or the annual compensation will be paid fully in cash. The meeting allowances and the fixed allowances for committee work are proposed to be paid fully in cash. I will next submit our proposal on the number of members in the board. The proposal of the Shareholders' Nomination Board to the Annual General Meeting 2022 is that the Board of Directors consists of 9 members, including the Chair and Deputy Chair. The Board previously had 7 members. This brings me to our proposal concerning the names of Chair and Deputy Chair and members of the Board. The Nomination Board proposes to the AGM that the following persons be elected to the Board: As Chair, Veli-Matti Reinikkala; as Deputy Chair of the Board, Anja McAlister. And reelected as members Luisa Delgado, Essimari Kairisto, Teppo Paavola, Philipp Rosler, and Annette Stube. And as new members, Ralf Christian and Kimmo Viertola. Ralf Christian is a German citizen, has a Master's degree in Industrial Engineering and has an impressive career in numerous executive positions in Siemens. Before Siemens, he worked as General Manager in General Electric in Spain and in Italy. Kimmo Viertola works as a director general in the ownership steering Department of the Prime Minister's office. Before that, he was a long-serving director at Price Waterhouse and the Finnish Industry Investment Oy. Thank you very much.

Thank you, Maija Strandberg, who just proposed the proposals of the Nomination Board. We will start with the remuneration of Board members. The proposal is included in the notice of this meeting, and it was published in its entirety on the company website. You can see the proposal on our screens here. The proposal shall be annexed to the minutes. I just add that when you read the proposal, Maija Strandberg was referring to meeting allowances. Meeting allowance is EUR 800. There might have been a mishap in reading out this. But the proposal has been sufficiently proposed. We will go on to the results of the vote to shareholders and those who are following. Under this point, there were 643,229,240 (sic) [ 643,829,240 ] shares and votes cast participating. And votes in favor of the Nomination Board's proposal were 643,026,399 shares, which represents 99.88% of votes cast. Votes against, 786,310 and abstentions 16,531. So based on results of this vote, the Annual General Meeting decided to endorse the proposal of the Shareholders' Nomination Board concerning the remuneration of the Board of Directors. Then under Point 12, deciding on the number of members in the Board. Under Article 6 of the Articles of Association, the Board of Directors consist of the Chair, the Deputy Chair and no less than 3 and no more than 8 members. So the number is at least 8 and at the most 10. We heard the Nomination Board propose 9 members, and this is the result of the vote. Very clear, 643,830,362 shares and votes participated of which 643,796,273 votes were in favor of the Board's proposal and votes against 20,074 and abstentions 14,015. Based on the result of the vote, the Annual General Meeting decided to endorse that there will be 9 members in the Board of Directors. And then we will move on to elect the 9 members. Under Article 6 of the Articles of Association, it is the AGM who elects the Chair and Deputy Chair. And I shall read the names once again. As Chair, Reinikkala; Deputy Chair, Anja McAlister. And members, Ralf Christian, Luisa Delgado, Essimari Kairisto, Teppo Paavola, Philipp Rosler and Annette Stube and Kimmo Viertola. And you can find the CVs of all these persons in our investor website. So the result of this vote is as follows: participation, 643,829,064 shares and votes. And in favor of the proposal, 603,956,581. Vote against, 39,202,558 shares. And abstentions 669,925 shares. So based on the result of the vote, the Annual General Meeting decided to endorse the proposal of the Nomination Board and elect Luisa Delgado, Essimari Kairisto, Anja McAlister, Teppo Paavola, Veli-Matti Reinikkala, Philipp Rosler, Annette Stube, Ralf Christian, and Kimmo Viertola to the Board of Directors. And Veli-Matti Reinikkala has been elected Chairman and Anja McAlister as Deputy Chair. Congratulations to all of you. Then we move on to auditor points, first of all, point 14, remuneration of the auditor and then on -- under point 15, electing the auditor. Point 14, remuneration. On the recommendation of the Audit and Risk Committee, the Board of Directors proposes to the Annual General Meeting to pay the auditor as we used to against an invoice, which the company first approves. And we will go to results of the vote. They were all in all, 643,826,061 shares and votes. And to this point -- and in favor of the Board's proposal, the number of votes was 635,625,666 votes, which represents approximately 98.73% of all votes cast. The vote against, 8,169,445 votes and abstentions, 30,950 votes. Based on the result of the vote, the Annual General Meeting decided to adopt the Board's proposal and pay the auditor against their invoice, which the company first approves. Then point 15, Election of the auditor. The -- in line with Article 11 of the Articles of Association, the company shall have one statutory auditor, which will be an audit firm. The term of office of the audit ends at the closure of the first AGM following their election. On the recommendation of the Audit and Risk Committee, the Board of Directors proposes to the Annual General Meeting that the audit firm, Deloitte Oy, be reelected as the statutory auditor, and they have informed that the lead auditor will be Mr. Jukka Vattulainen, an authorized public accountant. The Board also proposes that the Annual General Meeting ask the auditor to give their opinion on discharge to the members of the Board, to the CEO and his potential Deputy. And give an opinion on the Board proposal for the distribution of funds. So the result of the vote. The number of votes given 643,826,005 shares and votes were given. In favor, 634,632,979 votes representing; against, 9,180,201, and abstentions, 12,825 votes. So based on the result of the vote, the Annual General Meeting has decided to adopt the proposal of the Board of Directors and reelect Deloitte Oy as the statutory auditor. The lead auditor is not elected by the Annual General Meeting, but by the audit firm. And then we have 2 authorizations in the agenda, replicates of last years. First, point 16, authorizing the Board to decide on the repurchase of the company's own shares. The Board of Directors has made a proposal, which is equivalent to the authorization granted by the Annual General Meeting of last year. So the Board of Directors has been made public in -- as a stock exchange release, and it is on the website of the company in its entirety, and it will be annexed to the minutes of the meeting. And the content would be the maximum number of owned shares to be repurchased would be 20 million, which corresponds to approximately 2.25% of all the shares of the company. The authorization would only with the unrestricted equity of the company and that could be a Board -- at the price formed in public trading on the date of the repurchase or otherwise at the price formed on the market. That would revoke the authorization of last year to decide on the repurchase of the company's own shares, and it would be valid until the next Annual General Meeting and in no event -- for longer than for a period of 18 months. So the result of the votes as follows: total number of shares and votes cast, 643,828,161 participated. In favor of the Board's proposal, 643,383,797 votes representing -- against 219,128 votes and 225,236 votes abstained. And as this directed authorization requires a qualified majority, 2/3 majority of votes cast and shares represented. These figures -- this requirement is met. So the votes in favor was 99.97%. And of the votes represented, the percentage was 99.93%. So based on these results, the Annual General Meeting has decided to authorize the Board of Directors to decide on the repurchase of the company's own shares in line with the Board's proposal. And we continue to point 17. So as the previous authorization, the other side authorizing the Board to decide on the disposition of the company's own shares. And this is in line with the content of authorization that was given by the annual general meeting last year. Based on this, the number could be -- the maximum of 20 million shares to dispose of and the Board of Directors would decide on the condition of the dispositions, including to whom, at what price and which manner the company's shares would be disposed of. And the dispositions might also be made in derogation to the shareholders preemptive right, meaning as a directed issue. This authorization would cancel the one given by the Annual General Meeting of 2021 to decide on the disposal and would be effective until the next Annual General Meeting, but in any event, no longer than for a period of 18 months. It shall be recorded that the participation was 340 -- 643,825,755 (sic) [ 643,824,755 ] shares and votes. And in favor, we have votes 643,240,150 (sic) [ 643,240,050 ] votes cast, and this corresponds to 99.91% of votes cast and shares represented. Votes against 571,778, represent approximately 0.09% of votes cast and shares represented. Abstentions of 12,927 votes. So based on these results, the Annual General Meeting has decided to authorize the Board of Directors to decide on the disposition of the company's owned shares in line with the Board's proposal. Then we come to the last point on the agenda before closure, which is authorizing the Board to decide on charitable contributions or donations. The Board of Directors proposed to Annual General Meeting that they authorize to decide on contributions of donations at a maximum amount of EUR 500,000 for charitable or equivalent purposes and to decide on the recipients, uses and other terms of those donations and contributions. The authorization would be valid until the next Annual General Meeting. So the result is here. Total vote participated in the vote, 643,827,871 shares and votes. In favor, we had 643,792,110 votes. And votes against, 326 (sic) [ 3,326 ] votes and shares. And abstentions, 32,435 votes. Based on this result, the Annual General Meeting has authorized the Board of Directors to decide on donations and contributions to charitable purposes along the lines of the Board's proposal. Then we have come to the very last meters of our meeting. Closing the meeting is the last point on the agenda. All the points in the notice of this annual general meeting have now been addressed. The minutes of this meeting will be made available to shareholders on the website of Fortum no later than in 2 weeks' time, i.e., by 11th of April 2022. I would like to conclude by thanking the company for this exceptional times organization, those who have been watching the webcast. And I particularly want to thank those shareholders who participated in advanced by voting and all of those who have been online. Thank you for your interest. I hereby call this meeting to an end. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]