Fortum Oyj (HEL:FORTUM)

CMD 2020

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Dec 3, 2020

Welcome to Fortum's first ever Virtual CMD twenty twenty also on my behalf. It would have been really great to have you here all physically to be able to interact, talk, mingle, have coffee on the breaks. But I'm anyway delighted to have you all online. And as Singular said, this way, we can interact even with more people, hopefully, next time physically. Of course, the arrangement today together has been extensive, and more than 400 people have been involved in that. Andreas and I talk on a daily basis, and we have become very close colleagues. And it would have been great to do the CMD from the same place with Andreas, with Timo, but we put safety first. Ingela mentioned the disclaimers, please have a look at them. As the title of my presentation says, our strategy is all about driving a fast and reliable transition to a carbon neutral economy. In my presentation, I will first discuss how Energy's transition is proceeding in terms of emissions and the demand of electricity and hydrogen. I will then walk you through our group's strategy, how we are positioned and how we will measure our success. Then I will discuss the individual strategic priorities and our plans to execute. And finally, I will touch upon the key enablers of our strategy. The megatrends are connected and are driving the transition towards carbon neutrality. The most powerful of the megatrends and the one requiring the most urgent attention is climate change. Global CO2 emissions have grown approximately five gigatons per decade, at least for the two last decades. Paris Agreement signed five years ago was an important milestone to tackle this challenge and combat climate change. The transition to low or zero carbon world presents new opportunities for us. Wind and solar will be the cheapest way to generate electricity replacing energy system. Digital ization enables better optimization of assets, increasing short term flexibility for security of supply and digitally connected active customers. Industrial customers will need scalable competitive solutions to decarbonize their own operations. Shift towards waste prevention and recycling continues to intensify. Waste to energy will have a relevant role to play, especially especially in areas suitable for district heating. Carbon can become a valuable material and feedstock instead of being a problem. The climate change is a huge challenge for all of us, but there are great opportunities for companies like Fortum who have the capabilities, the power and the commitment to drive this change. We are well positioned for this, and I will present you how. What you see here is EU 27 greenhouse gas emissions in CO2 equivalent from years 1990 to year 02/1950. Europe has reduced emissions successfully from 1990 to 2020, but we can see that the pace is not enough and should be tighter than what is indicated by the earlier targets for 2030 and 02/1950. In Fortum, we have for years been pushing for more ambitious ETS tightening and broadening the ETS to cover also other sectors than it does today. We are now actually very pleased that EU is proposing to tighten its 2030 and 2050 emission targets to minus 55 in 2030 and net neutral in 02/1950. We support wholeheartedly the tighter targets and tighter ETS. Europe is also phasing out massive amounts of coal, lignite and nuclear. And just it is also obvious that it's not enough to clean only the energy sector, as you can see from the slide, but also industrial processes, heating and transport need to be cleaned up from emissions to reach carbon neutrality. With regards to gas, Europe actually uses today more gas than electricity. And some of these sectors are hard to directly electrify. And this will mean also a huge need for clean gas. Renewables will enable making the gas clean, but then the further need for renewables expansion will be massive. So as the decarbonization is advancing, demand for clean electricity and increasingly clean gas will grow significantly. I will look at some scenarios momentarily. As the world gets more electrified, and that happens with renewables, more security of supply and flexibility will be needed across different durations. Batteries aggregated demand response will cover short term flexibility needs, but hydrogen, in addition to hydro reservoirs, is the only truly scalable solution for seasonal storage and strategic resiliency. Overall, also to be socially successful, the energy transition in Europe must balance sustainability, affordability and security of supply. Here, we see what the previous development could do to power and hydrogen demand. This is an illustrative net zero scenario from IHS Markit, And the power and hydrogen demand are interlinked and lead to net zero emissions. The previous page will have a massive impact on the power demand. Electrification and increase in usage of clean hydrogen will massively increase the demand for power. Some estimates say that the demand of power will double. This chart actually says that the increase could be more than 100%, 133%, so more than double from 2,800 terawatt hours to 6,600 terawatt hours per year. It is good also to remember the lifetime of power generation assets. Wind and solar have roughly a lifetime of twenty five, thirty years nuclear, sixty years. Thermal is going away from Europe. It will be phased out at least in fossil format. Hydropower has the longest lifetime. So most of the power capacity running today in Europe will not run-in 2,050. This means that the power generation capacity to be built by 2050 will just be massive. Renewables are expected to capture a very big part of this growth. And the European renewables market is expected to grow massively in 2020, 02/1930. It is clear that the CO2 in a CO2 free electricity system, all existing CO2 free power, including hydropower and nuclear power, will be critically important, especially as so much conventional baseload and flexible capacity will be phased out. A net zero scenario means also a massive increase in the demand of hydrogen. Hydrogen can be produced with CO2 free power and can be used directly to replace fossil gas or developed further to other clean gases, ammonia, synthetic methane. In the market scenario, hydrogen could grow 27 fold to 3,000 terawatt hours annually, really picking up after 02/1930. But this also implies that natural gas demand is being well supported in the medium term. As massive amounts of coal, lignite and nuclear are being phased out quickly in Europe, the only assets that can replace the energy quickly in the short term are gas fired assets and natural gas will have also a role in producing carbon free hydrogen. Of course, there will be several scenarios and alternatives and time will tell how the world will develop. But we believe that the world and Europe are going to this direction and something like this will happen. Now that I have set the scene, I move over to our strategy. To start with, the previous scenario is an opportunity for us. After transforming Fortum over the last six years, investing in clean energy, circular economy solutions and acquiring Uniper, we are very well positioned for the European energy transition in clean energy, gas solutions and sustainable materials. With this, we are now the third largest CO2 free power generator in Europe with a sizable portfolio in renewables, solar and wind. We are a leading European provider of gas safeguarding both flexibility and security of supply for the energy system and the customers. We are a provider of decarbonization and environmental solutions for customers and society. We are committed to phasing out coal fired power generation by 2035 in Europe with 7.8 gigawatts already. Co related businesses are the smallest share and they will, over time, further diminish. As a part of the strategy update, we redefined our purpose, replacing the previous vision and mission statements to state. Our purpose is to drive the change for a cleaner world. We are securing a fast and reliable transition to a carbon neutral economy by providing customers and societies with clean energy and sustainable solutions. To me, this resonates perfectly with our competencies and geographical presence, the carbon reduction scenarios and European and Paris Agreement ambitions. Great alignment. On this purpose, we build our strategy and its execution going forward. I will walk through our four strategic priorities and start from the middle with clean energy and gas. To start with, we have significant flexible and reliable CO2 free power generation in hydropower and nuclear. We increased our CO2 free power production by 60% with the acquisition of Uniper, and we will take steps to strengthen our performance further. We have also built a strong platform in solar and wind and our target is to grow that further significantly. The second priority in the middle is to leverage our strong position in gas to enable the energy transition. With our sizable flexible gas asset portfolio, we can provide security of supply and flexibility for the power system now and in the future. We are a huge wholesale player in gas and provide secure supply of gas for heat, power and industrial processes. This is an area where clean gas and hydrogen will play an increasing role in the future as is also thought by EU, Germany, France, Spain, other large European countries who are neutral. We will phase out an exit goal, and this is taking place with big and fast steps already. We will transform and develop our gas fired generation assets towards clean gas and hydrogen, and this movement of the whole gas ecosystem is taking place already across our value chain. On the right hand side, we will partner with industrial and infrastructure customers. We will provide solutions for energy and flexibility, for example, to TSOs, industrial customers, enabling the deep integration of renewables into the energy system. We will provide waste to energy solutions to the societies we are working with already today. We will provide thermal, nuclear and other energy services to our customers. And in all of the above areas, we will utilize our front runner position in hydrogen. We will move towards a cleaner world and create value through these four strategic priorities. We have defined new targets to measure our progress, success and value creation. These targets are disciplined, ambitious, evolving and aligned together with Uniper. I'm very happy about these new targets. They are ambitious. They will not be easy to reach. But they set an ambition level which is in line with our values and with our purpose. On the ESG front, we have set ourselves new climate targets, which are aligned with Uniper. Our group will be carbon neutral latest by 2050 and European generation at latest already by 02/1935. We have also set an intermediate target to reduce CO2 emissions in our European generation at least 50% already in 02/1930. These are not easy targets, but some things like thermal exposure and developing renewables. We have tightened our safety target as the safety of our personnel is our highest priority. Our new safety target is recordable incident frequency to be below one by 2025. It is tighter and it is more forward looking than before. This is important as the safety is the foundation for successful business performance. And I know that Andreas couldn't agree with me more on this point. This is something Uniper has been pursuing already earlier. I still go back to the climate targets. As I said here, we are aligned with the goals of the Paris Agreement, and we will be carbon neutral in 02/1950. There are several ways to follow emission reductions and science based targets is one of those ways. But if we would take science based targets in use now, that would give an indication of how our fleet and business plans would develop during the coming years. We have several options and alternatives to reduce our emissions and that is why for now, we do not want to disclose our business plan for the next five fifteen years. Then moving over to financial targets. We have reviewed our financial targets, and we target our financial net debt to EBITDA to be below 2x. We have set new hurdle rates for new investments separately for different investment types. Also closely related, not a direct financial target, but very important, is that we aim to have a rating of at least BBB flat. This is very important for us as we are operating in a capital intensive business with massive investment opportunities and also as the trading business requires a strong counterparty rating. We, of course, follow very closely how the rating agencies are measuring the different metrics and we look at the financial net debt, we look at the economic net debt and calculate the ratios accordingly. What I would underline here is that for us, the BBB flat rating is important and that is what we are targeting. We have also updated our fair valuations and timing differences in our business may impact our net profit levels in the short term. We have updated our dividend policy to aim at stable and over time increasing dividend. Further to the dividend, Fortum's Board aims to propose a dividend of 1 point euros 1 per share for the year 2020 to the upcoming Annual General Meeting next spring. Our aim is to increase the dividend going forward. It is good to note that this only applies to Fortum. Uniper has its own dividend policy. However, the financial targets apply to the whole Fortum Group and inside that, Uniper has also its own financial targets. Timo will elaborate more on the financial targets and the dividend. On shareholder value creation. As a listed company, our aim is, of course, to maximize our owners' wealth. We have done that in the past and we are also continuing to do that also in the future. We will continue our work on portfolio optimization and delivering value from our investments. We will get benefits from cooperation with Uniper with gradual impact and reaching the expected annual benefits of €100,000,000 from the year 2025. Once again, these are demanding targets, but they do set the ambition level, which is in line with our values and purpose. When we then look at the implications of the four strategic priorities to our portfolio, the picture is clear and dynamic. The core of our business is the strong flexible hydro and baseload nuclear, increasingly clean gas fired generation and gas midstream business. These businesses are good cash flow generators and they put us in a strong position in the European energy transition. We will grow in Renewables, Onshore Wind and Solar, Clean Gas and Industrial and Infrastructure Solutions. The businesses on the right hand side for Strategic Transformation include both those we are committed to exit in line with decarbonization like coal and those we have placed under strategic review like the district heating businesses in Poland, Baltics and Sweden. Today, we announced the review of our Consumer Solutions business. The Consumer Solutions business has performed extraordinarily well. It has had 12 quarters of EBITDA improvement and a strong track record of efficiency and value added product sales. However, as our new strategy focuses primarily on CO2 free power and increasingly clean gas, we have identified Consumer Solutions as a business that could have higher growth and value potential with an alternative ownership structure. This strategic review on its own part underlines our commitment to a continuous portfolio optimization and value creation. When I put these scenarios and our strategy on a time line, we can see three phases. In the first phase, from 2014 to 2020, we went through a major transformation. We divested businesses worth €10,000,000,000 invested in recycling and waste solutions, biomass and waste fired combined heat and power, created a substantial renewable platform and acquired Uniper. This all put us in a leading position in European Clean Power and Gas. In the second phase, in 2021 to 2022, we will have the full step up in group EBITDA through the Uniper acquisition. We will secure our balance sheet and a rating of at least BBB flat. We will further detail our strategy and first investments and target to increase our dividend. In the third phase from 2023 to 2025, our focus is on reaching the benefits from the cooperation, benchmark level operational excellence, ensuring our position and growing in the strategic areas and targeting a growing dividend. Timing of the growth phase will depend on several factors, including market conditions and development, asset rotation and balance sheet strength. Eventually, the CapEx will naturally also depend on any potential future acquisitions, including if and how we decide to pursue the minority stake in Uniper. And on this point, just to repeat, we have ruled out a DPLTA or squeeze out at least until the end of year 2021. Then I will go through our strategy priority by priority, but also please keep in mind that Andreas will come back to many of these points in his presentation, go deeper into those and Timo will talk about the financial targets and our financial shape. Starting from our own transformation. In Europe, we are targeting carbon neutrality in our generation by 2035 at the latest. We have now set also an intermediate target to reduce our European emissions by at least 50% by 02/1930. In our City Solutions and Generation segments, we have some coal left and this is either in reserve or producing mainly district heating in combined heat and power plants. Uniper, on its part, has already laid out and published an ambitious plan for a phase out in coal in Europe. All these are included in the graph on this slide. By 02/1930, the only coal capacity there will be left in our portfolio in Europe is Datton IV with 1.1 gigawatts of capacity. As the newest and most efficient coal fired plant in Germany, Dattens decommissioning is defined in the German coal exit law. The German coal exit is proceeding rapidly and compared with the plan that Uniper announced earlier, our plants are now even more rapid. The eight seventy five megawatt Heiden plant was just selected in the recent auction and will stop commercial operations at the end of this year, five years ahead of the earlier announced schedule. On the group level globally, we have now set the target to be carbon neutral by 2050 at the latest, in line with the Paris Agreement. I'm very happy about this, and I'm very happy about the intermediate targets. We supply significant flexible and reliable CO2 free power in Europe and strengthening and growing our CO2 free power generation is at the core of our strategy. With the consolidation of Uniper, Fortum Group is now the third largest CO2 free power generator in Europe, third largest. Our hydropower in The Nordics and Germany and our nuclear power generation in The Nordics produce approximately 70 terawatt hours of emission free power every year. Also, we have a growing gigawatt scale portfolio of solar and wind in The Nordics, in Russia and in India. Now is the time to align and cooperate with Uniper to deliver on the €6,500,000,000 Uniper investment, creating shareholder value for both companies from optimization of our clean power and the new growth in renewables. We have complementary operations together with Uniper in hydro, nuclear and power trading in The Nordics. We will ensure value creation through benchmark operations, maintaining high quality assets and continuous portfolio optimization in nuclear and hydro. Optimization of our hydro and trading activities as one team is a top priority to us. To achieve our targets in Nordic Hydro, we aim to have one team in Nordic Hydro and physical trading optimization, and we will now start building the concrete model for this. This work is planned to be led by Fortum and Tina Twomel. Accelerating growth in wind and solar renewable power generation is our primary focus for new growth until 2025. We aim to accelerate our growth in renewable power generation and target to build 1.52 gigawatts of new solar and wind capacity by 2025. Europe will be our main geographical focus with growth potential to be considered also in other geographies such as India and Russia where we already have large renewables activity through our joint ventures. In the next few years, it is important to have a common team to develop sites and build a sizable pipeline of renewable projects. Investments into RES projects can be done as build, operate, transfer or on the balance sheet of either company Uniper or Fortum based on the project specific investment decisions. To result in a meaningful contributor to the group's EBITDA by 2025, a sizable part of the investment is aimed to be on the balance sheet. In Russia, we also aim to develop our portfolio towards renewable power generation over time. We aim to have one development team in renewables development in Europe. The lead for developing the proposal for the model is with Uniper and David Bryson. The rationale for this is that as you see earlier in the presentation, the growth potential in renewables in Europe is massive. And this is why Uniper has the geographical presence, It has the sites. It has the infrastructure, assets and development experience and resources. Fortum has, of course, a very experienced res team in The Nordics. And the purpose of the One Team approach is to make full use of the combined presence and competencies. The third strategic priority is leveraging our strong position in gas to enable the energy transition to take place. Our role and opportunity in gas in the context of the energy transition is twofold. First, we provide security of supply and flexibility to the power system. With Uniper, Fortum Group is a significant provider of flexible gas fired generation. These flexible gas assets play a critically important role in maintaining security of power supply and thus support further growth in intermittent renewable generation. The value of gas fired power generation will increase in coming years as Europe is phasing out vast amounts of coal and nuclear capacity. And in the midterm, only gas assets can quickly respond to the need of energy. DSOs will need to secure flexibility as renewable penetration increases and the supply of baseload power is reducing. We will optimize and maintain our flexible gas fired power generation, ensuring value creation through benchmark operations. In the longer term, we aim to decarbonize our gas fired power generation, for example, through hydrogen conversion, CCS, CCU, carbon capture and storage, carbon capture utilization, and we are mapping the clean gas readiness of our assets and our whole gas ecosystem. Andreas will give more detail on this point in his presentation. Secondly, we will secure the supply of gas for heat, power and industrial processes. Natural gas is a transitional fuel in the transformation towards decarbonized economy as Europe is closing coal and nuclear capacity. Uniper is one of the largest providers of gas for energy and industrial customers in Germany and Europe with decades of experience. We aim to further optimize our solid position in gas midstream, meaning long term gas supply contracts, gas storage, trading, B2B sales and LNG in Continental Europe. Europe uses 5,000 terawatt hours of gas, more than electricity. To reach carbon neutrality, also the gas needs to be clean. Our strong role in the gas midstream business puts us in a good position to succeed in providing clean hydrogen and other clean gas solutions in the future. On our fourth strategic priority, I would like to talk a bit about hydrogen economy, how we see it developing and how we see Fortum fitting in the picture. Again, Andreas will tell more about the hydrogen business and the details, but I would also like to open up a bit how we see our future here. There will be several areas where we could benefit and where our combined assets and expertise will be needed and will be valuable. Firstly, we can be a hydrogen producer, leveraging the expertise from Uniper's first mover position in green hydrogen production and our combined CO2 free generation fleets. Secondly, we will use our existing customer channels to build partnerships and create industrial offtake for clean hydrogen. Thirdly, the coming hydrogen economy and decarbonization in general will require thousands of terawatt hours of CO2 free electricity, which we are in a good position to provide to third parties from current and future assets. Utilizing our combined competencies, from example, asset development, trading, sales and project management. Last but not least, a large scale hydrogen economy will partly build on existing midstream gas assets in our portfolio, such as gas storages. Especially the salt cavern gas storages are suitable for providing that flexibility that the hydrogen system will require going forward. EU and large European countries have set very ambitious targets for the hydrogen economy. As the hydrogen economy emerges, it is important to promote and participate in shaping a clear framework and regulatory support to commercially scale up hydrogen in Europe. It is also clear that all clean gas and hydrogen can't be produced in Continental Europe where it is needed. Hydrogen production needs vast amounts of CO2 free energy, which means large land areas and a lot of fresh water. Just as a wild idea, when we look around the map from Continental Europe and Germany, Nordics actually have these qualities and could have a potential in the future to generate big amounts of clean energy and clean hydrogen and export it, for example, via a potential pipeline to Continental Europe. Coming back to today's reality, currently, we have over 500 megawatts of project prospects in Europe, and we aim to explore these opportunities also with a one team approach. We will now start building the concrete model for this and we plan that Uniper and Andreas Schierenbeck would lead this work. The logic for this lead role is that Uniper has invested in clean and hydrogen development for a decade and has substantial gas business with the assets, supplier and customer relationships. Fortum has developed competencies in hydrogen and we would naturally combine our resources for the best results. We will also provide decarbonization and environmental solutions to industrial and infrastructure customers. We have a long and strong track record in providing good and sustainable solutions for our commercial, municipal and TSO customers. These include, for example, grid stability services to TSOs, waste to energy and recycling solutions as well as digital and low carbon solutions for industrial customers. We leverage our strong competencies and existing customer base to ensure our customers' market channels for power generation and gas help to manage market exposures with long term contracts. All these development and growth projects have naturally to be in line with set climate targets and the decarbonization ambition. In addition to benchmark level operations, value from cooperation and operational excellence, we will use our competencies to add value with growth CapEx. Indicatively, as you can see on the slide, we are looking to invest €3,000,000,000 in growth in 2021, 2025. The largest part, 50% to 60%, will be in renewables, in onshore wind and solar. 10% to 20% will go to hydrogen and clean gas development, with emphasis in the later years. 20% to 30% will be in Environmental and Security of Supply Solutions. Around 10% will go to Venturing, Innovation and Digitalization. Again, CapEx allocation will depend on market conditions, further potential asset rotation and our balance sheet to ensure that we maintain our rating of at least BBB flat. This is very important for us. There are some legacy projects in the first years well aligned with our strategy. Otherwise, the CapEx will happen more towards the end of the strategy period. Timo will further elaborate on next year's CapEx in his presentation. Before I wrap up, I want to lift up the enablers, which I think are important for successful implementation of our strategy. In order to succeed, to achieve the goals we have set for ourselves, we need people. We need people who are motivated and encouraged with open leadership. We need development, but we need development with focus. We need benchmark operational efficiency and asset quality, operational excellence and cost competitiveness. And we need to actively shape the regulatory agenda and engage in a dialogue with the society. We are in a good position, but we have a much broader portfolio and more activities than either Fortum or Uniper alone had before. In order to succeed, we need to be future oriented. We need to be brave to take hard choices and decisions on our portfolio. We need to be selective. We need focus. And we need to be very, very efficient. So to summarize my presentation, The megatrends are supporting us. Demand for power and clean gas will potentially increase massively. Our strategy is aligned with the Paris Agreement. We will be carbon neutral by 02/1950. We are well positioned. We have the right assets. We are in the right places and we have the right competencies. We have good potential to succeed and be a champion of the energy transition, but it will require razor sharp implementation and execution. I promise you that my team, the Holfortum Group, Andreas, Timo and I will do everything to succeed, bring results, deliver value to you now and in the future. Thank you. Thank you, Markus. Okay. As we have seen, CO2 free power, renewables and clean gas will play a significant heating. I am happy we can predict the future demand with the help of AI, measurements from space, or even use end to end smart operations. So with scale, we can actually do things that otherwise really wouldn't be possible. Hello, everybody, and welcome from my side as well. I'm really happy that I can present today the Uniper strategy at the Capital Market Day. And of course, as Markus already mentioned, it would be great that I would have joined you in Helsinki and Espoo to presenting and mingle with you and talking before and after the presentation. But unfortunately, we all know what is happening at the moment in the world. Health and safety goes first. That's one of our mottoes in our DNA at Uniper. So I appreciate the way that we are doing it digitally. And of course, in the joint question and answer, I'm looking forward with Marcos and with Timo to answer all your questions. But first, let me come to Uniper and what we are bringing to the table. Uniper, as a glance, is what I'd like to show you on the first slide. Our business is power generation, commodity trading, energy storages, sales and services. And even if we are a relatively young company, as we are a spin off of another company, we're looking back at more than one hundred years of experience. Last year, we generated around €863,000,000 EBIT. And our portfolio consists of around 34 gigawatts of generation capacity for electrical energy, around 400 terawatt hours of long term contracts where we are buying gas, around 2,000 terawatt hours of trading. That's an equivalent of around hydro assets and, of course, coal fired assets. As already mentioned, our history is a rather short one on the revenue of Uniper. As we started our life as a company in 2015 as a spin off of another big utility in Germany, I think the first phase of Uniper started. And we call that internally and externally, the tightening the chip phase. As we all know, spin offs are happening quite frequently in our industry and other industries, and we all know how this works. Normally, the spun off company gets not everything what it wanted and normally have to start with clearing the house and tightening the ship, as we called it. So in the first phase, between 2015 and 2017, we optimized our cash positions. We streamlined our portfolio. We secured our rating, which is adamantly important for our trading activities. And we increased the transparency, what is Uniper? What is it doing? And why it's good maybe to invest in us? In the second phase, we called it settings with sales. In the years 2018 to 2019, we improved our operations. The growth in security and supply was initiated. We put our big legacy projects into the homestretch, which was mainly Darton 4 and Beresovskaya Three. And of course, we wanted to create delivery of track record that we do what we are saying. And I think if you look at the curves of the TSR, the shareholder return, it has shown that we have done the right thing. A 200% improvement in TSR for a company in such a short time is definitely achievement. And of course, the other line shows you the CO2 reduction achieved at that time, more than 36%, which is probably in correlation with the share price as well. But if you have tightened the ship and selling the sales, then of course, it was time for create a new strategy. Because if you are a sailor, you know if you don't know where you want to go, every event is wrong. So if you have to set a course, you have to finally find where you want to go. And carbon neutrality in Europe is definitely an issue which is not new to us. We knew the discussions, and of course, we adapted to that and stated already in our strategy in spring that we want to be carbon neutral in Europe by 02/1935. Of course, we have created a very valuable brand already. In the world of utilities, we are number eight according to Brand Finance for a young company, definitely achievement. We have chosen the best employer amongst the German utilities, and we are very proud about our lower drift rate. But one thing is clear. In a nutshell, our new strategy, as we have indicated that and communicated that in spring this year, was we want to generate more electrical energy or more energy with less CO2. And actually, if you want to dig into that, how we are doing that, then you can imagine UniPaper as a company which sits on three pillars. We have the European generation, have the global commodities, the trading businesses and the Russian power. All three parts are roughly contributing onethree of EBIT to our results. Sometimes one year, one more than the other, but over time, it's balancing out. For example, we are investing into efficiency improvements in the capacity scheme. Today, I can report that we have done in the last months our homework and aligning the sustainability targets with Fortum. We can commit now to a further 50% emission reduction by 02/1930, as Markus already highlighted. And we will start next year to look into the Scope three targets for the global commodities. These indirect targets are a little bit more tricky. We are digging into it. And as a Russian business, we are focusing on the renewables and the capacity scheme. If you look at the Russian markets, the capacity scheme where we're mainly playing is definitely looking to building renewables over time, and we will invest here as well. Furthermore, we will implement the TCFD framework for CO2 reporting and sustainability reporting, which is a mild year endeavor. It's not an easy thing to do. And of course, we are committing to be carbon neutral by 2050 in line with the Paris Agreement. If you're looking into our strategy, let me structure our strategy in three phases: the European and coal generation the gas generation and midstream business and the carbon free generation. And along these three buckets, I want to give you a little bit more details and insights what we are doing and where we are standing. Let's start with the European and coal generation. As already stated, we started 2016 as a kind of brand new and at the same time old company because we started with a lot of CO2 emissions in coal assets, lignite and hard coal. In 2016, our starting point was 44,000,000 tonnes of CO2 as a starting point. From 2016 to 2019, we reduced it by 50%, mainly by exiting five gigawatts of fossil capacity at Benelux, Germany and France. These efforts were mainly driven from performance points of view. We looked at our housekeeping assets, which were not really in the money, were spun off. It was more driven by performance, not so much by CO2. From today on, from 2019 to 02/1930, we are committing to a further reduction by 50% from 22,000,000 tonnes to 11,000,000 tonnes. And this will be mainly driven by strategy considerations, coal exit and other measures to achieve that target. And then from 2030 to 02/1935, to becoming CO2 neutral, with greener gases, clean gases, hydrogen and so on. This is not an easy undertaking, especially not for a company with such a strong history in coal assets. This is something what we have done for years. And of course, we have to take into account a few number of national coal exit plans. The U. K. Is committed to exit under 2025, maybe even 2024. The Netherlands set the date around 2029. Germany, 02/1938. And you see on the right side the updated chart already how our time schedule looks like. Markus mentioned already that a couple of days before we auctioned Heiden into the National Coal Exit Scheme, we were successful, and we will take out eight seventy five megawatts at the end of this year from commercial operations. This plant was originally dedicated to run five further years under 2025. So we are definitely completely serious of our coal exit. And we are proud that we were successful on that. But on the other hand, we are dealing here with 60 employees, which suddenly faced the fact that the future has become faster and more accessible than we saw before. Nevertheless, we continue on that. Another example is, for instance, Skopar. Skopar is the last lignite plant we have. Actually, we have sold it to a market player, which will close in 2021. Normally, it was not our intention to sell assets to source the CO2 issue. We were prepared to convert that asset into gas and into hydrogen ultimately, but political pressure was not allowing that. So we decided then we're not the best owner. Schorven, Willemsafen, Staudinger V will be closed down in the next couple of years so that at 2025, with the exception of Maas Flaktor three and Dartran four, we will have closed all these locations. Dartran 4 is the most modern and the newest coal fired station in Germany. And by law, it will be the last one which will be closed by law. And of course, you could think that closing stations which are burning coal or lignite becoming a liability because we have to do a decommissioning. We have to do other things with that to maintain it. But actually, let me explain you that I have a different view on that. I think these liabilities are actually opportunities. Let me just give you two examples. For instance, Scholven is for generating some energy for one of our biggest customer in Germany, which is now taking over from Dartmouth, is now able to be converted from coal to gas, provide district heating and other energy sources for an industrial customer there, which will go out of service, but it's near Frankfurt. Frankfurt is a banking area, has the biggest Internet hub in Germany, and data centers are highly sought after. There's simply no space for them. And for data center, you need not only space, you need as well energy. And this site is well suited for a huge data center with their own energy supply, exactly where our customers are needing that. And we are looking into these areas. And all the other sites have development plans, what we can do with these assets actually, what we can develop, looking for new technology, and we will come to a number of couple of examples furthermore. Let's switch to the second bucket, the gesture generation and gas midstream. Uniper is a strong player in the gas market. We have not only nine gigawatts of gas assets for the production of heat and electrical energy all across Europe. We as well have some investments into gas infrastructure and gas storage. We have a share in Nord Stream two. We have a share in BBL, which connects Netherlands with Great Britain and others, as you see on the right side. We have gas storage in an area of nearly 8,000,000,000 cubic meters. In Germany alone, it makes us the biggest player here. And of course, we cover the whole value chain. From buying energy over long term contracts, transporting it, helping LNG supply, we're owning and operating two ships, which have already this year shipped more than 200 cargoes of LNG, rigors capacities of nearly five bcm per year. We have gas storage, as already mentioned. We have customers. We are supporting with that sales business. So we're covering the whole value chain. That's a great preparation for what is the future from our point of view. And we're using that not only to continue on this value chain, but as otherwise, to expand. For instance, St. Jordan converting from coal to gas, I think that's a no brainer. On the other hand, if you're looking at our gas assets in Killing Home and Grain, we just won a six year contract to deliver innovative grid services, actually inertia, which enables more green energy to flow into the network in Great Britain and stabilize the frequency or on Ulching 6, building for the TSO, a new gas power plant in the next couple of months to stabilize the frequency and the power supply in the South Of Germany. And of course, we know that we have to decarbonize our gas assets as well. Our project, we called it making net of these assets. And the good news is that all our gas turbines are able to burn hydrogen, sometimes at 30%, sometimes at 100. And we're looking into the world what is necessary, what does it cost you and how long will it take to convert these assets in a short or long term from 0% to maybe 100% hydrogen. And furthermore, Siemens Energy is a provider of hydrolysis technology to generate hydrogen as well. But let's take a step back. What is it what is driving us or driving the whole society? I think we all stated that Paris Agreement means 02/1950, we have to decarbonize our society. The Green Deal is supporting that. But what is the picture? You see in the middle that the CO2 emissions from us' society are significant. And actually, the energy sector has already contributed quite a lot. From 1990 to today, the energy sector has lowered their emissions by nearly 35%. So we have done as an industry our share. But even if we would be at zero, there would be still more than 70% of CO2 emissions still in the society because industry, transportation and buildings have done definitely something, but not enough to bring us even near to our long term target. And I think these sectors cannot be left alone. We need sector coupling. We need to help them because some areas in these sectors can be easily decarbonized by more electrical energy, as Markus highlighted already. But there are some parts of in that value chain which cannot be decarbonized with pure electrical energy. And for that, hydrogen plays a good role. First of all, it can be stored, it can be transported and it can be produced in a renewable way. But if you're talking about hydrogen, then of course, it's a little bit of a big story. Hydrogen is called the champagne of energy, and it was not my definition of that. But actually, I would agree with that. Champagne means it's expensive, has a good taste and it's not an abundance available. And exactly, that's the truth for hydrogen. Germany has put forward a green hydrogen plan with investing GBP 5,000,000,000 into hydrolysis of five gigawatts up to 02/1930. Besides the same time, Germany is expecting a demand in 2030 of 90 terawatt to 100 terawatt hours of hydrogen. Of course, it's not a wonder because Germany is importing energy. Around 70% of the primary energy is imported. And without lignite, it will be even 83%. So of course, sun and wind in Germany will not be enough to make us our target. So we definitely have a gap for more than seventy, seventy five terawatt hours going forward from 02/1930. So it has to be imported. And if you have to import it, then of course, there's another challenge. Markus started to highlight that as well. If you're talking about green hydrogen, we need renewable energy from wind and from solar. Then, of course, we need hydrolysis to generate from water, hydrogen. And then we have green hydrogen. So we need to ramp up the renewable energy sources quite dramatically, quite dramatically. And on the other hand, we have to deal with sweet water or clear water. So a factor between 101 kilogram of hydrogen is nearly 10 to water sources. So there are some definitely some challenges there. And on the other hand, we want to decarbonize the society as fast as possible. So probably we should not wait until we have enough renewable available. So that's why we are betting at Uniper as well on different colors of hydrogen. And only to mention two, turkeys and blue hydrogen is generated in a way where no CO2 is emitted to the atmosphere. In the case of blue hydrogen, CCS is used to use the CO2 to put it underground with a proven technology, which is available and acceptable in most parts of the world, but not in Germany. And Turkeys, where with pyrolysis, black carbon is separated from methane generating hydrogen and carbon. All these sources will be needed at least for a transitional period until 2030 and maybe longer, and that's why the gas business is a good starting point to enter the hydrogen business as well. With our infrastructure, our trading skill, if we accept the fact that importation is necessary, it's a great starting point. We know the players. We know the value chain. We know how to transport. We know how to store, how to distribute, how to decarbonize other sectors. And that's a great position to be in at the moment. We're not talking about it, we are doing it. And if you look at our pipeline, I think we have quite an impressive picture here. We started with the first hydrogen production in a small tryout in Faroekenhagen already in 2012. In 2015, we added the first artificial and green messenger generation in Feichenhagen. In Hamburg, the yellow dots, there's a power to gas installation where we're using green energy to produce hydrogen for transportation reasons already since years. But Lauptchert, an industrial park. And all the other projects you see in Great Britain, where we can play with blue hydrogen as well. All our sites at Grain or Maasflakte have some potential and connection with hydrogen. And you will see more and more of these projects coming up additionally to the importation business. I think it's a great pipeline. We are developing it. And I will just come to another example. But of course, it means as well that the investment for the next couple of years will be significant, and the payback will be a little bit later. But if we're not joining the story now, like in the sustainable business of solar and wind, we will not wipe the efforts and the fruits in a couple of years. But let me pick out one specific project, Perstop in Sweden. Perstop is a chemical company and at Parstorp in Sweden since 1884, they are producing chemical ingredients for other customers. And they have not done it in a so much sustainable way, and they're just preparing to do that. And that's one of the benefits of the collaboration with because we would have known not known that customer probably, but Fortum knows that customer. And they were in the process to provide renewable energy and wastewater treatment for that customer. And then the idea sparked up, let's add some hydrolysis and generate hydrogen and oxygen together, together with biogas, biogas, methane and start the methanol production and per stop to make that as a sustainable approach. So they are just doing what we are asking, the sector of coupling and combining hydrogen and other processes to make their process renewable. And we will supply to them around 3,500 tonnes per annum in hydrogen, not taking into account the oxygen, and they will reduce their greenhouse reduction by more than 500,000 tonnes. I think that's a great example what kind of difference can be made if we are working together and how serious the industry is about the effort to switch to the hydrogen economy. Let me come to the last part, the carbon free generation. Well, I think it's not a secret. Normally, Uniper has classified as a, yes, coal acid generator, black, a lot of CO2. But yes, we still have as well CO2 free power generation. It's mostly overlooked, but we have it. We have around 1.4 gigawatts of nuclear exposure. We are running the Oskar seven-three plant together in a joint venture with Fortum since decades already. And we have around 3.6 gigawatts of hydro assets in Sweden and in Germany. And of course, it makes sense that we are combining our efforts in The Nordics with Fortum because we have a bigger exposure there. On the other hand, we reported already in spring, you have to back up the power you are selling with hard assets. And we are taking off in the time line up to twenty twenty three more than five terawatt hours in secured contracts, mainly in Spain and in Portugal. But of course, we want to do a little bit more. And this one team approach, as mentioned with Markus, we are looking to develop renewable generation on our own premises in our own thing. It sounds a little bit interesting why we are joining this party now where the peak seems to be over or just starting, so what we are bringing to the table. And actually, we are bringing quite a lot to the table. If you want to build renewable energy generation, I think you need a couple of things. You need funds, okay? Money is available today. You need experience. And we are now getting access to the Fortum colleagues and to the Fortum experience, which we haven't had before. They learned their lesson. That is great that we can now work together. But the biggest problem in this area is normally space, finding a suitable piece of land. Then, of course, getting the permitting right. Converting a rural area into an energy park is not an easy undertaking in Germany. And if you have that, you need a good connection because you have to deliver the energy somewhere. And actually, if you look at from a different angle, you need has a lot of these plots, not only from the coal exit, but other plots in areas we have. We have space there. Normally, have enough space that we can build 100 or 200 megawatt peak installations there. And we have the permitting because these sites have an industrialized assets already. And normally, communities knows us because we have been there or we are there since decades. And guess what? Every site which has space and a permit and was a former power station has a grid connection. Of course, it's there. And even more, normally, you have cooling power and cooling water, so you have water there as well. So you have even excess or the possibility to think about green hydrogen. And if you see at the maps in U. K. And in Germany, just to show you a few examples, we have a lot of these locations. They are a good suitable. We have maybe overlooked it in the past a little bit because, yes, we have looked at liabilities probably as well before we made our mind up and said, look, actually, that's a big asset. And our commitment now is that up to 2025, in the short term, we will develop up to one gigawatt of renewable power on our own sites, all these things I just explained. And after 2025, with adjacent space and with more areas coming up due to the cold exit, expand that '88. So we're maintaining it since nearly thirty years, making sure everything is in order and watching how the lake is filling with water. And actually, we have another task for the next twenty years to continue with that process, to give it back to nature. But of course, you can just sit there and watch like the lake is filled with water. You can say, look, what can we do with that? And we came up with one of our biggest customers, Deutsche Bahn, which is where we are the biggest supplier of energy to them, to say, look, what can we do to decarbonize your energy sources? And we came up together with them with the idea and said, hey, why not install on that lake a twenty- to 40 megawatt floating voltaic system? If the lake is growing, we can add even more. We have the grid connection. We have the space. We have the permitting. We have the customer connection. And as we were talking with Deutsche Bahn about that, they came up with this idea, hey, what about hydrogen? Can you put a hydrologist in the installation there? Because we need hydrogen as well. And we said, yes, why not? That's exactly what we are doing. We have the space. We have the water. Have the energy. If you need hydrogen, we can supply with that. And we have a lot of these lakes and of these sites, grid connections so that we are, from my point of view, very well situated and positioned to make a difference here and developing our own renewed portfolio. And with that, let me conclude. We call our vision Empowering Energy Evolution. And every word on that vision has, of course, a meaning. Energy evolution because we believe in evolution, not in revolution. We will evolve from what we are today to renewable power generator over time. We have committed to CO2 targets. We are doing the coal exit and we're converting the sites we have from coal or lignite and doing other things with that. The picture on the left shows here Willemshaven, one of the power stations which will go out of service latest by 2022. We're looking if we can develop that site because actually, it's the harbor to an LNG terminal or an hydrogen terminal. It has deepwater access. It has access to a gas storage at nearby, which can be used for hydrogen or for natural gas. We have a gas network connection already nearby. We even have a hydrogen pipeline connection partnership and a joint venture together with Salzgitter Renus. Salzgitter is one of the biggest steel producers in Germany, and we are trying with them how we can use hydrogen to reduce iron ore directly. This is one of the biggest CO2 problems in the world and in Germany. The process of making steel with coal is emitting a lot of CO2. With that, we have a direct emission a direct reduction, and we can speed up that process. As well, we are working together with other partners like EWE in the area to arrange a new hydrogen infrastructure. They are a big player there in distribution hydrogen. We can store hydrogen there nearby. We know them for a long time as well. So from that point of view, empowering means together with our customers and other customers, starting the energy evolution over the years, decarbonizing our business and the society and fulfilling our own goals and commitments. With that, I'm looking quite positive into the future. I cannot say anything about the year ending. So from that point of view, tuned. But with that, I want to conclude my presentation. MPower Energy Evolution, that's what we are doing, and I hope I could convince you that we have just much more potential as everybody thought. Thank you very much. Thank you so much, Andreas, for sharing the insights into Uniper. So we have now heard about the joint strategy, Fortum's financial targets, our joint climate targets and now then had a closer look, especially on our leading position in gas, including the prospects for hydrogen. Let's now focus on the more detailed financial aspects and targets for the Fortum Group. After the last short video, which is on Renewables, I am pleased to welcome our acting CFO, Timo Kartinen, to join us online to discuss the financial implications of our strategy. Horton's solar business was restarted ten years ago. After acquiring our first solar power plant in India, we've been developing more every year towards gigawatt scale today and beyond. Solar power is already the cheapest and cleanest form of electricity almost everywhere and thus growing rapidly. It will be the world's largest power source in the 2030s. With our shared ownership model, we can release capital to be invested in renewable energy. European wind power is estimated to be tripled by 2030 for the most to be enabler of the renewable growth in Europe until the end of the life cycle of the wind park. We have chosen India and Russia for our solar investment so far as they provide growth opportunities in the long term and the need for renewable energy is obvious. I'm really proud of our team being part enabling the change towards renewable energy. Ladies and gentlemen, welcome to this digital edition of Portum's Capital Markets Day on my behalf as well. As Markus already discussed, Fortum has been going through a sizable transformation during past years. We have released capital from well developed assets that have at high multiples, offered low growth opportunities to us and also low synergies to other our businesses. Our target has been to make the company ready for the future, create and crystallize value and also increase our cash flows. The divestments we have done among others 2014, 2015, the distribution networks, some smaller assets and capital rotations during the period and a couple of well developed district heating operations during this year in Finland. We have also ongoing strategic reviews in our Polish and Baltic distributing operations and in the 50% ownership stake in Stockholm XOC. And as Markus told, we have today announced the strategic review in our Consumer Solutions operations. The major transformative acquisition during the period has been to become the majority owner in Uniper. And that is transforming Fortum to a leading and power and gas company. During the period, we have also created a platform for renewables investments. We have built wind in Nordics and Russia and solar in Russia and in India. We have also strengthened our position in recycling and waste solutions. All in all, with this transformation, we are now well positioned for the energy transition. We are the third largest CO2 free power generator in Europe. We are a significant provider of flexible gas fired power generation. We are a major provider and trader and optimizer of gas for Europe's energy and industrial customers. As we have already heard many times, we have an early mover advantage in hydrogen, and we are offering versatile solutions to our customers. How has this transformation then been visible in our EBITDA development? The major drivers for our EBITDA during the period on top of the transformation itself have obviously been changes in market conditions in our main markets that have then been visible in our cheap prices and volumes. All in all, we have divested about €12,000,000,000 worth of assets and businesses during the period with the average EV per EBITDA multiple of 17, and we have invested approximately €11,000,000,000 with the average multiple of seven. So this portfolio transformation and most notably, of course, through the consolidation of Uniper has more than offset the declines in some of our main markets and also the impact of the divestments and enabled us to achieve a stepwise increase in our EBITDA. When you look at the chart, it's important to remember that the light green bars here are actual reported numbers and the dark green bars are offered here as an indication only, so not as a guidance. They are sell side consensus estimates for our this year and next year EBITDA. And the reason we show them is that currently we don't have a twelve month period or full calendar year with Uniper consolidated. So, we are this way indicating the stepwise EBITDA growth. All in all, we have strong track record in portfolio rotation and business transformation. And with our new strategy, we have clear focus towards decarbonization, CO2 free electricity, clean and efficient gas solutions and a clear path forward. Both Markus and Andreas have already discussed quite a lot about the market drivers and our profitability drivers, but I will still highlight key issues here. Starting from the power market, EU inside the EU coal capacities are being closed and also nuclear in some countries. This obviously means that the supply to the power markets is declining. On the other hand, renewables continue to increase and grow and their share of the power market is also continuing to increase. This all plays positively to the importance of the gas fired generation, which is providing security of supply and flexibility to the power markets, enabling more renewables and also replacing some of the capacities being closed. Commodity prices will continue to be important, notably gas and CO2. And I think it's fair to say that the CO2 price should continue its increase in order to support the decarbonization targets of EU. Inside the European power market, the increasing interconnections between Nordics and to the Continental Europe and The U. K. Continue to be important, because they are offering an efficient route for Nordic hydro and also wind export, especially during years like current year when there is a lot of hydro available in The Nordics. But then also on the other hand, they are offering backup power to Nordics during drier periods. For the gas market, one important point inside EU is that the European domestic gas production is continuing its decline, which increases the importance of gas imports. Gas demand continues its volatility partly because of short term weather, but also because of changes in the power market and the increasing importance of the gas fired generation. And all this both volatility and the decrease of the domestic gas production should play positively into the importance of the gas storage. Then if we look at our profitability drivers, let's first start with our indicative EBITDA market exposure pie chart, which is there on the bottom right hand side of the page. You can see that we have roughly even fifty-fifty split between merchant and non merchant EBITDA market exposure, the non merchant part including various types and lengths of contracted businesses and the merchant part, including our spread businesses and then the biggest part there, which is roughly onethree of the overall market exposure, maybe a bit more than onethree is the outright position, our CO2 free generation hydro and nuclear. There obviously, the market prices and our production volumes continue to be decisive, but there very important also is our hedging performance. We have been able to hedge with relatively good prices, especially during this year as we have reported and high hedge levels. And we have continued our target and tradition to reduce the short and medium term volatility in our cash flows through our efficient hedging performance. The increasing importance of gas fired generation is playing directly to the opportunity of capturing the merchant upside in those capacities. And as already discussed by both Markus and Andreas, we have the coal exit path and then we also have the target to extract value from all those sites that we have available. Andreas also discussed quite a lot about the gas midstream business. But as said, the long term contracts there, they are offering a long term safe and secure and large volume supply of gas to European gas users. And that continues to be important, especially as the domestic gas production is decreasing. Gas storage is benefiting from the market changes and it plays a vital role, for instance, to smooth the impacts of the difference between summer and winter gas usages. In our Russian power generation, the capacity is built originally for the CSAs or capacity supply agreements. Those agreements are gradually ending and those power plants are shifting to more annual based CCS capacity payment schemes, where these CCS prices are on a significantly lower level. But on the other hand, they have also been on an increasing trend lately. And as discussed, the renewable capacities continue to attract still higher capacity supply agreements in Russia. On top of all this, which is related to our existing businesses, obviously then the investments and the growth based on our strategy will be an important driver in the future. Financial targets focus on and communicate about financial strength, value creation through investments and shareholder remuneration through dividends. We have adjusted and updated our targets as we are going through the transformation described. We have predefined our leverage target, set new return targets and hurdle rates for new investments and also updated our dividend policy. Our long term leverage target financial net debt to comparable EBITDA below 2% to reflect the changes in group structure and our new strategy. We have also redefined our debt during this year and we are using the financial net debt in this leverage target definition. We continue our strong commitment to maintain the rating of at least BBB flat in order to preserve financial flexibility and good access to capital markets. Rating agencies are using a number of metrics as basis of their rating evaluations, and we are following those metrics as closely now as we are deleveraging. The driving factor here is to keep the BBB flat rating, and we are committed to do that. If you look at our reported numbers, the last twelve months comparable EBITDA at the end of third quarter approximately 1,700,000,000.0 is not reflecting the full level going forward as we have only two quarters of Uniper consolidated there and actually the two seasonally weakest quarters. So we continue to keep our house in order, run sound businesses and target a balance sheet that meets our rating criteria and is also suitable for our businesses. To strengthen our balance sheet, we are focusing on our portfolio optimization and prioritizing our capital expenditure and focusing on cash flow. We are confident that with the measures we have at our disposal, we can strengthen our balance sheet and to get our rating to be stable in due course. Long term, it's also good to note and remember that our strategy and described by both Markus and Andreas, our targets are to decarbonize, to increase renewable capacities in our businesses, to invest in clean hydrogen, also to seek contracted businesses where beneficial for us and obviously to continue to hedge and reduce the volatility in our outright positions. So we target that also these strategic changes over time will reduce the overall risk level in our portfolio and therefore support our rating requirements. We have a solid financial position, 2,500,000,000.0 liquid funds and available credit facilities of €5,100,000,000 Our group loans all in all totaling 9,200,000,000.0 at the end of third quarter and the financial net debt at €7,100,000,000 We have only limited near term maturities. The most of the current year short term debt is not expected to have any cash flow impact as it is including collateral arrangements that are booked as a short term debt. We have target to use green bonds, sustainable bonds going forward to finance, green investments according to our strategy. And, our funding needs obviously are then subject to the decisions we are making in the ongoing strategic reviews. We are, setting new targets for new investments, and we are also introducing a new hurdle rate concept for these investments. As a basis, there is naturally cost of capital, which is capturing the normal country and business characteristics of the investments. On top of that, there is a fixed markup lower if it's a green investment and higher otherwise. And then we will be making a case by case evaluation depending on if there would be other return requirements for the investment. This is replacing the previous return on capital employed return target that we had for our whole balance sheet. We have a substantial amount of derivatives in our balance sheet that are fair valued at each balance sheet date, and they are causing volatility both for the balance sheet and then also to income statement and would be causing a similar volatility also to a return on capital employed type of measure, which would therefore then not be a good representation of the underlying profitability. These new targets are also more forward looking as they indicate how we are targeting to develop our businesses going forward according to our strategy. We are also giving guidance for next year's capital expenditure including maintenance and excluding acquisitions, which is estimated to be on €1,400,000,000 level. The split between maintenance and growth is roughly fifty-fifty and this is including approximately 900,000,000 expenditure in the Uniper segment and approximately $500,000,000 in test of Fortum. We started Fortum Uniper cooperation in August, as already described. Teams from both companies have made a tremendous effort in looking for and identifying business benefits. In addition to monetary benefits, also qualitative safety and environmental actions and benefits have been in focus. The cash impact on a consolidated group basis out of these business benefits is estimated to be approximately €100,000,000 annually. And we are expecting that more than €50,000,000 so more than half of these benefits would be coming in the third and ramping up during the first three years, and we would be reaching the full €100,000,000 level in 2025. Examples of these cooperation areas as both Markus and Andreas already discussed about is the one of those is the Nurik Hydro and physical trading operations then also nuclear operations and nuclear decommissioning thermal services for both our own power plants and also external customers and then economies of scale in IT and indirect procurement. So really, a tremendous amount of work and effort has been put to this, and I'm really happy. And this has been really a good result. Our updated dividend policy is to pay a stable, sustainable and over time increasing dividend. If you look at the right hand side, we have been paying a flat €1.1 dividend during the past years, and our payout ratio has been varying between 24196%. So it's clear that the payout ratio that was in the previous dividend policy has not been any helpful guidance for annual dividend levels as the annual net profits have fluctuated and caused this fluctuation in the payout ratio. And that's the reason why we have removed the payout ratio from the policy. Then as Markus already discussed, to remunerate our shareholders and share the value that has been created in the business operations, we are also indicating a small increase of the dividend. By noting that our Board is aiming to propose a dividend for the year 2020 payable next spring of €0.12 a share with the aim according to the dividend policy to increase the dividend going forward. We are offering an increase in EBITDA from the transformation, and we are flagging that the Fortum Uniper cooperation is starting to bring benefits. With the new strategy, we have clear targets to decarbonize and clear path for clean investments. And over time, we believe that this could also contribute to reduce our risk profile. We have strong commitment to maintain our rating of at least BBB flat. And all in all, I am sure that Fortum, together with Uniper, is truly well positioned for the energy transition. Thank you. Thank you, Timo. And this now concludes our presentation. Before we go into the Q and A session, we will have a short fifteen minute break. We are somewhat ahead of schedule and will return back at three Finish time. And Markus, Timo and Andreas will then be here to discuss with you. We have earmarked one hour for the Q and A and look forward to the discussions. Please note that the Q and A session is dedicated to investors and analysts. For questions from the media, there will be a separate media call shortly after the Q and A the CMD. For those of you who have registered for the Q and A session, in case you are not already in Teams, during the break, please make sure that you now sign in through the Teams link that has been sent to you. So thank you, and see you in fifteen minutes at 03:00. Welcome back. Hope you had a nice short break. We are now ready to begin the Q and A session. And we're delighted to have Markus, Timo and Andreas here with us to run the discussion with If you would like to ask a question, please use the raise your hand feature in Teams and Mons, who will be moderating the whole session, will invite you one by one. Due to the limited amount of time and large amount of participants in the Q and A, we allow one question at a time. And in the end, if there is still time, then you can come back for more questions. I now hand over to Mons to start. Thank you, Inge. So now we start the Q and A session, and I would please like to remind you to unmute your microphone before you ask a question. We will start with Vincent Eyal from JPMorgan. Vincent, please go ahead. Marcus and Justin, Amy Miller. I want to talk a bit about cooperation with Uniper. You've been talking about one team. It's great to see a constructive relationship, joint presentation, and our first synergy estimates at $100,000,000 per annum. But could you be kind to provide a bit more color on the top two, three projects, which we expect to contribute to this goal, really, you know, give us more specific ways for us to understand where they're coming. Obviously, training and optimization on hydro is is is very broad. I think it would be very helpful for us to understand all of that, to understand the difficult piece potentially you have to overcome and the limitations you have given the current structure. So if I ask you one question, then we'll be on the synergy space. My colleagues here, Andreas and Timo, You're looking very good and strong. So just checking that we can hear all hear each other. And feel free to chip in. Maybe I take one step back with the cooperation with Uniper. So thank you for the observations. I agree with that for both companies. We have identified way more than 100 potential areas where we can create benefits. And this is where we stand right now with the 100,000,000 identified benefits in 2025 with the intermediate target in 2023. So there's a lot of granularity behind us. These numbers are basically bottom up built. They have been, to a certain extent, sanitized and vetted, but a lot more work needs to be done. So we really pushed as hard as we could until this point, but actually the work will not stop here. I can take a practical example of the hydro optimization. This is something we have spoken about a lot earlier as well. We are operating in the same country, in the same rivers. This is an area where tighter cooperation could bring benefits using the flexibility, using the optimization of the production. How this will how and what will happen then very concretely, that is exactly what now lead, in this case, TINA. But of course, in tight cooperation with David Bryson, we'll now work to make a concrete proposal. If it would have any if these proposals have implications on people, managerial relationships and so on, then there is work to do on things like CODI termination, MBL, YT in Finland, CODI termination in Germany, etcetera. So that's why at this stage, we're giving an idea what is the magnitude that this could be. And once we take things to a concrete level, then we actually have to have concrete actionable plans and go through the appropriate processes. Another area, which I did refer to, is the cooperation in areas like eNEXT and analog and services, where we do have industrial customers, which either of us has been serving, maybe both of us have been serving. And we can already now cross fertilize this relationship and find actually cases from our existing customers and new customers. Fortum, now we bring the leader in clean hydrogen development into the picture. So our credibility boasts through this massively. But here are a couple of examples, but I hope you get the flavor on what is the magnitude. Then the spirit, I still have to talk about the spirit. People are working so hard. So you almost have to hold people back because they're really working evenings, weekends, stretching themselves. And I see this positive spirit, the excitement here. And then but then we need to take decisions also, okay, so we identify a large pool of activities, then we just need to decide which of these will really move the needle, which of these we take forward. But this start has been positive. I don't know, Andreas, Timo, if you want to add some color here. Yes, I can easily do that. I think there are some very concrete examples we have identified rather early, like joint purchasing of IT licenses, which is saving GBP 1,000,000 here and there or nuclear decommissioning in Sweden, where we are in the lead and driving the business where Fortum can provide services. Things if you're just talking, you'll find things. But the biggest thing Ben already mentioned by Mark was PellStop, for instance, or other projects we are developing together. And you will learn more as we are going forward. But I think for the beginning, for the first couple of months, I have to say, it was the great work of the teams. There are a lot of people involved. And I agree with Marcos. Sometimes, they were working too hard. And especially the home office situation has a tendency that you don't get really the feedback from the people. Then sometimes, have to call them a little bit back, which is good from my point of view. But stay tuned. I think there's more to come. Thanks, Lisette. Thank you. Then our next question comes from Sam Arie from UBS. Sam, please go ahead. Thank you. Can you hear me okay? I hear some feedback on the line. We can we can hear you well, Sam. I think, Sam, you went on mute. Sorry, I'm dialed in through the audio line. I was trying to get rid of the echo. Let me try again. Thank you for the presentation. Lots of helpful new information. I think if I have to choose just one question I wanted to ask. The reason I ask, I suppose, is on my estimates, 3,000,000,000 of growth CapEx, maybe 25% NPV to CapEx ratio, which is typical of what we're seeing in the sector, is maybe going to bring a euro per share to the valuation. I'm not clear if it would even offset the dilution from the disposals. So then earnings really the future of earnings depends on what happens to power prices and you see the problem. So I'm just wondering if you could talk about any upside to the CapEx plan. Thank you. Yes. So very good question. Timo, myself, Andreas, we all put all kinds of disclaimers around the €3,000,000,000 As would be typical from my point of view, how we communicate is if we say something, it should be a middle of the road type of estimate or communication. So this is based on the current view of the world. If things turn out to be less good, then the number could be smaller. If things are better, things are developing faster, market is more supportive of us, then this number could be bigger. I think the key point here is that it gives an idea of the magnitude. So it's EUR 3,000,000,000, it's not EUR 1,000,000,000, it's not EUR 10,000,000,000. That gives an idea. And that has a lot of meaning also for us for the internal resourcing. I also mentioned that this number is subject to the asset rotation. So of course, if we successfully release capital otherwise, which we have shown to be doing in the past, then that may increase our investment possibilities. But here, we're really laying the foundation. We're saying that these are the growth areas. This is where our resources, where our activities will be. Then it's not so difficult actually to scale up if there is more potential to do so. Then let's see how the also the various clean gas, hydrogen renewables schemes play out. So of course, our target is to have the strong BBB flat rating, but also to bring the risk levels down. So going more towards contracted business flows capacity. This is something also we got to Uniper, so relatively less exposure to the Nordic outright position. So moving towards a direction where there would be possibility for CapEx. Then CapEx is not the only thing and investments that would bring business results for us. The other part, which we all emphasized quite a lot is the benefits from cooperation, but also operational excellence, cost efficiency being very, very effective. So when we think about what is our internal communication, it is the focus, it is efficiency and then selectively using the CapEx. And the right to use the CapEx has always to be earned. I think we're also being careful not to overestimate when we talk about, for example, strategic reviews. So we are not before we really see results, we're not going to either spend that type of capacity. The one last thing I'd mention is that we have also been doing strategic reviews or divesting businesses where we see that the potential for future growth is starting to taper out. What we are doing now is we are putting CapEx into areas which do have a long term future for them, future with growth potential with further growth potential on the platform that we will now be building. So I'm actually very happy if we can do that in the future. I hope this gives us a flavor on what we're thinking. Middle of the road proportionate to what the business situation is laying a good foundation. Yes. Maybe, Markus, let me add to that. At Uniper, of course, we were looking at the CapEx as well. And from that point of view, just let me add that, of course, we have an asset rotation as well at Uniper. We are not talking too much about it, but there's a good opportunities coming up. We are prepared to rotate assets out if they are, from our point of view, not strategic anymore or we think it's a good possibility at the moment to invest into other businesses. So I think we are well prepared to find the right opportunities and to attract when needed. Then if you're wondering behind the camera, why am I looking down? So actually, I look down, I see Andreas and Timo. I feel we're present. We're like in the same room even if we're not, but I'll look into the camera. Okay. So our next question then comes from Pasi Wajsenen from Nordea. Pasi, please go ahead. Thanks. This is Pasi Baisnek from Nordea, and thanks for the presentation. Actually, coming back to this previous question, I was also wondering where the actually the growth in your earnings is is coming in the midterm because the two investments in in wind and probably to hydrogen is not able to help in in in in next three or five years period. And and the divestments are going to be a pretty kind of a big on that period. But related to that, actually, I would like to ask that you actually said that you don't want to set the science based carbon intensity target on a group level because you don't actually want to reveal your business plan going forward. I guess that could mean that something bigger is still actually going on in the background and what that would be. For example, is the Unipro divestment still one option and what other options you still have which actually are not yet related to your strategy update in the midterm? Thanks. Okay. So still continuing on the CapEx. Looking at what we have done in the past, so Johan Soujarwempa, the grid business divestments, we divested actually with very high margin. We had in the grid business, we had EBITDA of around 500,000,000 with a very big CapEx need as well. So the free cash flow was very thin. We invested the biggest part of that money actually into Uniper with three times the EBITDA level and actually CapEx that is then commensurate base CapEx commensurate with depreciation in the company. So a huge cash flow expansion that we did. Another thing I'd note there is that on the list of assets under strategic review is, for example, Stockholm Exergi, where we only record our share of the net profit of the company. So we are not recording any EBITDA from that business. Then regarding the science based targets, the point there is that, first of all, I would say that we are now aligned with our targets with the Paris Agreement. Comparing at many let's say, I cannot say that this is an exactly comparable peer, but when I look at other companies with similar portfolios than we have, then we have set targets Scope one, Scope two, Scope three, decarbonized 02/1950. Compared to our asset base today, I think we're running a very ambitious decarbonization timetable given also that this is not just a question of closing down businesses without any consequences. We talk about security or supply. We talk about the social consequences, keeping the lights on in the society and finding then new use for the sites at the same time. With regards to why the science based targets are not working for us, then that would mean that we would exactly have to plot actually on a time line and say what will happen, phasing out gigawatts of emitting capacity with a very, very tight timetable. So we have really put our heart and mind into the decarbonization. And you know from our environmental disclosures from both companies that we have been extremely diligent reporters also of our environmental performance historically. And of course, we will continue to do so and take this area very seriously. Thank you. Then our next question comes from Wanda Cervenoska from Credit Suisse. Wanda, please go ahead. Hi. Thank you very much for taking taking my question. The question is on the carbon footprint. 70% of your carbon footprint sit in Russia. So is there any target for a carbon reduction in Russia? And I noticed, basically, in the press release, you said that you want to over time reduce your fossil exposure in Russia. So how can you do it without basically selling the assets? And then the I haven't seen any targets on on the carbon footprint in Russia. And my question is by 02/1950, probably most of the power plants in Russia will be decommissioned. So any comments on that one would be very helpful. Yes. So in Russia, we have actually done huge steps historically to reduce the carbon footprint. Both Uniper and E. ON before that actually and Fortum have invested billions into decarbonizing the Russian energy system. I would say that in comparison with the whole Russian energy system, we have been the front runners of decarbonization. If you have visited the sites that where we built CSA capacities and have done modernizations of the plants, we have been replacing units that were built oldest ones, in the 1920s not 2020s, but 1920s, 1930s. We have upgraded the systems to being almost very largely, 80%, 90% to gas fired. So comparing to the old very inefficient coal fired units, fleets our are now mostly gas. So we invested in the best available technology given the Russian energy market system and regulation. We have been frontrunners after that actually in setting a very ambitious agenda to grow in renewables, which is little more than 1.8 gigawatts of wind licenses where wind assets are to be built now during this running five years. Some of it has been built already and some is coming. Examples of what we have done in the past in addition to what I said are then the same kind of capital asset rotation that I pointed out in other areas. Uniper did a major step with the divestment of Jusno Ruskoye. We have divested Tawalsk power plant, so asset rotation for us in Russia is rather normal. But at this point, we do not have such situations or plans that we could be announcing right now. But the direction is that our investments will be targeted mostly towards renewables and then gradually shifting down the thermal exposure in Russia. I think a very important difference to note between Europe the European and Russian system is that Europe has set the coal phaseout timelines country by country. Russia is committed to Paris Agreement actually already some time ago, but there isn't a definite time line. There isn't an emission trading system either that would basically support a market driven or regulation driven phase out at the moment. But going forward, we will shift the asset base towards the renewables. Another thing is that in any case, the Russian system has to then figure out how is, for example, heat produced in the district heating systems. We are heating two men, Chelyabinsk, with 1,000,000 plus population residents. So there has to be something else, support for biomass, waste to energy, some have one of The U. S. And the best asset in Russia, yes? Andreas? Yes. Yes. Let me add to that. Of course, Markus was elaborating quite a lot about that. And from that point of view, not much to add. Just give you some concrete measures. Unipro will, of course, decarbonize the asset structure over time as well, mainly by modernization of old assets. As we have done it before, we have participated in the last auction for capacity payments, and it looks like that we have one at Sogutskaya, another 800 megawatt block for modernization. It was today in the Russian press. And of course, we will participate in the CSA auctions for renewables as well because this is the way how the Russian energy system seems to steer in that direction. And of course, since Unipro is always following these capacity payments, naturally, we will decarbonize our footprint over time. Otherwise, I think Markus has hit all the points. There's nothing to add from my side. Okay. If I may, just a very quick follow-up because I don't really understand. Potom has now one of the best, the most efficient assets in Russia, and still 70% of your footprint of carbon footprint sits in Russia. Even if you grow renewables, the absolute carbon emission will not decline. So how can you decarbonize Russia? Actually, already elaborated in my earlier answer to that. But over time, in order for the Russian system to decarbonize, then I think one key question for Russia will be that what kind of a system will incentivize other fuels than fossil fuels. Because if you look at how district heating is produced in Europe with low carbon intensity, then it's heat pumps, heat offtake, waste to energy, biomass firing, multi fuel firing. But this is all supported either by making fossil fuels less competitive or then through end support schemes for other fuels. Without any kind of support, then the situation is different. Okay. Thanks a lot. And our next question comes from Artem Beretsky, SEB. Artem, please go ahead. Yes. Hi, this is Adem from SEB. I would like to come back the topic of gross CapEx of €3,000,000,000 by 2025 and looking at key components there. So you're indeed looking at investments within this kind of huge mega trends like renewables, hydrogen, also recycling, waste to energy, and so on. Do you see that you have enough scale, to basically generate, so let's say, industry leading returns, within these areas? Because, other utility companies have been making, much bigger investments within these areas? And maybe just on this kind of €3,000,000,000 number, what are you basically assuming there in terms of potential further capital recycling or strategic reviews on your table? I know that potential outcomes could be swinging this number quite a lot. Yes. So I would answer this way that I think we have the scale. So the scale we need is to be able to operate in the hundreds of megawatts per auction. If you're in that scale, then you're in if it's onshore wind or solar. That is the industrial scale where people are operating. It can be auctions. It can be other type of setting with PPA and so on. But this is the scale where it can be meaningful because then if we start to talk about gigawatts or multiple or tens of gigawatts, you will not find this kind of concentration in any case of energy. When we think about the point use of energy and the point generation of energy, then the units, let's say, if you look at our conventional generation fleet, the units are 200, 300, 500, 1,000 megawatts, but rarely more than that. Okay, Russia, again, an exception, but those are huge markets and huge concentrations of energy consumption as well. Why I think we so what validates? What do I mean that we can be competitive? We have we know that we have faced cutthroat competition, for example, in India. We have competed against 30 to 40 competitors in the auctions, and we have won. Why we have won? Because we have had the scale and we have had the competencies to audit our suppliers, to do the land surveys, to do basically utilize the competence we have already from conventional generation, combined heat and power and others, and utilize that in the different parts of the value chain. So the answer is yes. I do believe this is the scale required. The advantage is also that if, let's say, if you're operating in a market of tens of gigawatts and you have to build many gigawatts, then you end up actually taking average returns. So when we are in the some gigawatts scale, then we can also be a bit more selective. We don't have to participate in everything when you will just actually result in average returns. Andreas pointed out to the sites that Uniper has. So that obviously is an advantage when you have sites which have the infrastructure. So you will have a head start from that point of view, just as an example of what we could have differently. And then we are actually close, of course, because we would be building on sites that were close to energy consumption in the first place, then we have an advantage of being close to where the energy is consumed. Thank you. Then Maybe let me add to that. I think from my point of view, there are three things. First of all, with Hydrogen, we see a ramp up phase. And at the moment, I think it's important that we're looking where we are investing and which parts. I know I see there are big numbers flying around, but I would say looking carefully in which part of the value chain we are investing and why and what whether the whole market will develop, at some point, we are well positioned. So I expect there are bigger CapEx numbers in a couple of years or maybe not now. I think it's now important to play in all areas. On the other hand, the hydrogen business can be as well a kind of non CapEx play. If you look from our global commodities, if we are dealing with them, we are buying it. We are having international origination, we are transporting it, we are trading it. We don't need immense sums of CapEx on that because this is exactly what we are doing. We are just trading a different commodity. So don't look only at our CapEx number in that regard. And from renewables, I think Markus was already hitting the right point. We have already the land to develop renewables. We don't need to invest in buying land, which is not easy to achieve at the moment. So probably, we can achieve with the same amount of CapEx compared to others. And on the I think you had a question on the how contingent is the CapEx plan on the asset success of the asset rotation. That I mentioned already. So the CapEx will depend on the markets, on our business performance, our own efficiency availability, CapEx and the capital rotation. But I think, again, the question is the magnitude. Maybe this is a good point to, in any case, just highlight that what we anyway need to balance now and in the future is the balance sheet strength, our desire to pay a stable and increasing dividend and then the CapEx. So these three need to be in balance. What we are targeting is the access to capital. We want to be able to pay a stable and growing dividend as we have today indicated, and then we want to invest into the future. So these go hand in hand. We will all the time be balancing this equation. And then I really like actually, personally, I have to say, I like our attitude the way then I mean the company, how we have been doing the being ready to rotate capital when you have good businesses. When businesses are flourishing and when they are doing well, then we're ready to release capital and invest in a new future. I think this is really critical now when we see such a change in front of us with the energy transition. We need to be ready to be brave, but then, of course, we'll be very diligent on the financials as well. And our next question comes from Antti Goskiwari of Danske Bank. Antti, please go ahead. Thank you. Hope you can hear me well. A question on synergies with Uniper, the 100,000,000 that you guided. Now you have described several operational synergies. I was just wondering what type of a scenario for a company structure that includes. For example, is it truly one company with one headquarter? Is it including all the potential that's out there? Or should we see this as a target that could evolve over time with potential changes in the company structure, for example? The assignment for the teams was to work with the current setup we have. So we are not here for the 100,000,000, we are not assuming changes in the company structure. The way I look at our group is that we are one Fortum Group, where we have five segments, and Uniper is one of those segments. Of course, it's a very special segment because it is by far the largest of all, And it is a separate listed company with a substantial minority, 25% other owners. It has its own governance, Andreas, and the Board of Management and the Supervisory Board. So as you can as you heard from the examples that Andreas spoke about that I have lifted up, these are operational that can be done within the current governance limits, which we are very, very well aware of. With regards to the situation where we are, so like I said, we are fully consolidating Uniper in the Fortum numbers. And as Fortum management, we are responsible for the whole group. We have also communicated that there will be no domination agreement or squeeze out at least until the 2021. So this is basically the situation where we approach the cooperation benefits from. All right. Thanks for the clarification. And our next question comes from Ruda Schumacher Sosjian. Ruda, please go ahead. My question is on your coal phase out target in Europe by 02/1935. Admittedly, you do say latest, but essentially, my question is why wait so It's not that coal plants are very profitable. As c two prices continue to rise, that is unlikely to improve in the future. I realized that it may be different. It's very efficient, and it has contracted volumes. But why not accelerate the phase out and tick more ESG boxes earlier? It's not like it's going to hurt profitability too much, Or are you actually under an obligation to keep the plants available to run to the record? Okay. I'm happy to start. And Andreas, of course, is closer to the main coal phase out. But just to clarify here, and sorry if we have been unclear, but the 2035 target is actually carbon neutrality. So the actually, the coal part, that's very well defined. And everything else except Dutton in our European fleet on coal will be out by 02/1930. So Finland, Espoo, we are taking coal out 2025 U. K. 2025 Netherlands, 2019 and everything else in Germany except Dutton actually very quickly. So well, your point about the call, I think our direction shows this and the national decisions. So the point is actually that this concerns our whole carbon footprint. So being carbon neutral means that we need to find a way for the clean gas. And this is then a lot trickier because Europe's 5,000 terawatt hour use of gas is something that clearly needs to be cleaned up for the decarbonization of Europe, but there are also technological hurdles to do that. And the gas the good gas assets we have, they will be elemental for the flexibility and storage and seasonal storage in Europe. But I'll let Andreas to elaborate more. Yes. Thank you for that, for the question. I think let me add two things from that. First of all, as a utility, I think our plan to ramp down coal is quite steep and fast. Normally, are building power plants to run them for thirty or forty years or even longer. And now in five years, we are completely closing down nearly all assets. In 2025, we have no U. K. Assets burning coal anymore. We will have no German asset burning coal except Darton IV and Maasflagt in The Netherlands. So with two assets left after 2025, we have to state as well, it's a kind of special situation. Maasflagt has long running customer contracts in the Rotterdam area, which is not a completely merchant power plant. And Darton IV is not merchant neither. So the question about earnings about Darton IV and coal prices is some a little bit not relevant for that because we have two long running customer contracts, twenty five and thirty years for Darton IV, which is producing power and has to deliver against these contracts. So it's not merchant. It's not that we have a kind of tricky situation there. It comes from Piotr Dycelovski from Citi. Please go ahead. Hi. Thank you for the presentation. I would like to ask you whether you can compare attractiveness of spending €3,000,000,000 on the growth CapEx and the returns on it compared to the option of buying out minorities at Uniper for Yes. Thank you for the question. I think the key thing for us is that we have laid out the strategic path for our company. What we are facing is the energy transition, and the possibilities arising from that. This is very important. So we're setting the scene, giving the magnitude of where we would be investing. Then whether or not we would be increasing the ownership in Uniper is indeed a separate consideration. I think what is really important is that this is now the focus and the direction for our company. And this is something that we need 20,000 people really to focus on, pursuing the growth, pursuing the transformation that is happening. And then the ownership within the group and ownership amounts, those are a separate issue that, of course, as you said, we need to separately evaluate. But I repeat that the direction where we are heading, that is intact. And then the second part of this question, can you afford delivering you the two elements of the growth CapEx as well as the Uniper acquisition given your disposals that you're actually doing and your leverage ratios? As I said when in my presentation, when talking about the CapEx that the €3,000,000,000 CapEx would, of course, be contingent upon any acquisitions, including potential increase in Uniper ownership. So and good to remember, by the way, now when a little bit separately on the €3,000,000,000 growth CapEx. So in addition to that, of course, we are spending a rather substantial amount of maintenance and replacement CapEx. So the total CapEx over this period will be larger. But then as I said, this then doesn't assume acquisitions. So of course, acquisitions may change the picture also otherwise. They may bring earnings quickly, and they may be even accretive to the CapEx power. Let's see what kind of opportunities arise. Maybe on that acquisition note as well, we're a little bit trying to kind of put some kind of a scale on what we're planning to do. And I wouldn't at all rule out that in order to achieve our goals, It may also include acquisitions, renewables. It may acquisitions on the clean gas ecosystem and so on. So I don't think these two are either mutually exclusive. The point is that these are the the areas. This is this, I think, for Europe is going to be this is something that Europe has to think carefully about. We spoke elaborately now for a couple of hours about where the world is heading. We want to support the EU. We want to support Paris Agreement targets. What we are concerned about in taxonomy is that we do not want to see, for example, CO2 free power being put in a disadvantageous position because it's something and not something else, but still CO2 free. This is what we have been really advocating that taxonomy should be really based on what we are trying to achieve, which is the decarbonization coupling of the sectors. And to make the point clear, the taxonomy should not put hydropower or nuclear power in a disadvantageous position against other CO2 free production. How it will impact how the taxonomy will impact things? One thing I can think about is the cost and availability of financing. So depending on how the taxonomy turns out in the end, that may have impact on the cost of capital, for example, and multilateral institutions, EIBs, IFCs, others, possibility to lend money to projects. So this is something where a dialogue between industry politics and the whole financing sector has to be. I really call for keeping kind of a clear idea of what is it that we want to achieve and then draft the taxonomy accordingly. But it could have an impact on cost of money and availability of money. Having said that, you saw from Timo's presentation, we have good access to capital, smooth maturity curve, little maturities in any given year, 2,000,000,000 of cash, euros 5,000,000,000 of undrawn credit facilities and the comparable cost of debt at the moment comparing to where we have historically been is extremely low. So even from last year's levels when we issued €2,500,000,000 of bonds with average coupon of 1,400,000,000.0 we have come down from that level still massively. So let's see what the taxonomy brings. I hope it will be balanced against the targets. Then and another point, then tightening regulation. Like I said in my presentation, we very much support tightening the European ETS. We think it's a good thing that is if we want to bring down emissions and we want to do it efficiently, we should not be talking about individual power plants on national level. We should have a European wide and rather globally comprehensive emission trading system. But in any case, Europe, tighten the ETS, tighten the linear reduction factors. We need tightening compared to where we have been before. We have been a strong advocate of that. And we need other sectors to be included also in the ETS to make it effective. If and when national decisions are being made, for example, Germany, Netherlands, U. K. To phase out individual assets or asset classes, then we need to really make sure that also the comparable amount of emission allowances are taken out of circulation because otherwise the ETS will not function as it should. But we are very much for it. Actually, we are well positioned. So we I think both as human beings, as Europeans and but also for our business, tighter regulation is good. We it would be good for us and we call for it. That is the right thing to do. So our next question comes from Sofia Savantidou of Exane. Sofia, please go ahead. Yes, good afternoon. Thank you for the presentation. Hopefully, can all hear me. I have a question on your dividend policy. I understand that you have removed payout from the policy. However, for us, from the outside, usually payout number is quite a good way to understand if a dividend is sustainable or not over the long term. And obviously, part of your policy for the dividend is that it is stable, growing, but also sustainable as well. So so my question is, would you would you expect at some point that that payout to be to what is considered the most sustainable level in the sector, so somewhere between 70 to 80%? And if we are not to look at the payout at all, what would you advise us to look at to determine if the dividend is sustainable? Hi, Sofia. Thank you for the question. Absolutely, you brought up the right thing, sustainable. And this is something over the years, this is the feedback we have got from the markets consistently. Of course, investors would like to have an increasing return, stable return and increasing return, but no one has ever asked us to pay an unsustainable dividend. And that's the point with the payout ratio. So we're looking for a payout ratio or payout that would enable us to have the strong rating, enable us to invest in the future growth, but then also to balancing these two things and resulting in an over time increasing dividend. Then we need to and I've highlighted and Timo highlighted some of the points that have impacted our thinking. And it is the fact that when we have previously, we have communicated based on pure EPS, like no adjustments made. Now with our business structure, there will be probably more volatility in the pure net profit and thus the EPS. So we need to look at the at what is actually the underlying profitability and cash profitability and then pay a sustainable dividend that is balancing the two other factors, the balance sheet and the CapEx. So we will be looking at something that where we can spend money on keeping balance sheet in shape, invest in the CapEx and then have an over time increasing dividend, which, of course, means that we cannot pay out more than we earn after all of these other components. Timur, you want to add something here? You're a master of this side. No. I think it was covering the main point. Of course, the technical reason for removing the payout, as you said, is that the net profit has been fluctuating and because of the change of the business structure, so it could be volatile also in the future. So that on a yearly basis, it has not been helpful as guidance. If I can have a quick follow-up on that. In the past, Uniper had used a cash flow metric in order to get around this volatility, so some sort of, operating free cash flow number. Fortum consider that? Is that a way to for us to be able to see what the underlying profitability or cash generation of the business is? This is the guidance today that or the dividend policy that we are now stating. Like I said, overtime sustainable means that you're not overpaying, you're not underpaying, but keep the dividend at the limit where you can target the stability and increase. But an explicit cash flow guidance we are not giving now. Maybe Andreas, if you want to say on Uniper's thoughts around the dividend. Yes. Of course, I can shortly pick it up. Thank you for the question. I think we changed our argumentation for the dividend last year because there was a scheme that we have increased our dividends 25% year over year, which clearly is not sustainable if you're going into eternity. So we went to a fixed dividend payout, so we are targeting next year a payout of around €500,000,000 Small to be seen in relation to our adjusted net income. It's not really the same scheme, but I think we found it more intelligent going forward with fixed dividend and guiding that than all the other KPIs. And of course, I think we will continue with that scheme for the time being. Okay. Thank you. Then we have a next question from Lawson Steel from Berenberg. Lawson, please go ahead. Yes. Thank you. Hi, everybody, and thank you for the presentation. My question really is around the CapEx growth, and it has many parts to it. First of all, I look at your chart, you're going to be spending about 60% on renewables. So I'd like to understand where that might be. Obviously, of that 1.5 gigawatts to two gigawatts by twenty twenty five, one gigawatt is from Uniper, that's mostly in Germany, maybe a bit in Russia. But is the remainder 1.5 to one gigawatts at the 40 parent level I'm interested in? And you say that the other 35% is well, another 35% or so is hydrogen and environmental and security supply solutions. So I'm interested to know when that contributes. And then just a small one, is that €700,000,000 per annum maintenance, well, the €700,000,000 maintenance in 2021, is that what we should expect going forward through to 2025? Thank you. Yes. Maybe I'll let Timo take the maintenance level, but that, of course, depends then on how our asset portfolio is developing. And when we are phasing out assets, the comparable number will not remain the same. With regards to renewables, the natural platform that we have is the Continental European presence. Andreas presented the possibilities there. And then we have created a strong presence in The Nordics. We have been building renewables also in our joint venture platforms and capital rotation platforms in India and Russia. These are the areas right now, but we could look at other markets. But of course, these markets would provide already definitely sufficient demand for this type of asset growth and CapEx. Then with regards to the clean gas, hydrogen, industrial and infrastructure solutions, what actually, what we are doing as we speak is we are investing in renewables, but Uniper is investing in the grid services for TSOs. That is happening as we speak, has participated successfully in the tenders there. We need to take a position in clean hydrogen and clean gases. So we are preparing that we could be investing there. But the reality is that if we compare what is the size of like industrial scale electrolysis, we talk about some megawatts or tens of megawatts. So it's more like laying the foundation at this moment, but we want to do it also broadly because we need to see where the ecosystem is developing and where we will then take positions in the hydrogen ecosystem. And in comparison, then when we are building renewables or when we're building grid service gas turbines, we talk about 100 plus megawatts today. So the scale is rather different. This means that the clean gas part will start to pick up once the technology and the support schemes, tariff schemes are developing. And we want to be in a good position to be able to participate in this. The numbers that EU, Germany, France, Spain have been flagging are massive because the need to create the clean gas ecosystem is really a big and serious one. Yes, thanks. About the maintenance CapEx line, we don't really now have an indication for further years out than next year. But I think that if you look at the combined reported or, of course, separately reported maintenance and replacement CapEx numbers of Fortum and Uniper in the past and add them together, I think that the 700,000,000 is a bit on the high side compared to the average for the previous years. So that's just one data point. I think also that next year's maintenance CapEx, we have some like some hydro dam long term maintenance projects that are active next year. We have some increases in those. But obviously, those kind of long term fluctuations will happen in the future as well. But at this point, I don't have sort of more precise answer to the further out years maintenance CapEx than this. Great. Thank you. And then we still have one final question from Deepa Venkateswaran from Bernstein. Deepa, please go ahead. Thank you. My question is also on renewables. So I was a bit confused with the previous answer. So the 1.5 to two gigawatts, just to confirm, does that include the one gigawatt that Andrea showed in his slide, or is this separate? And secondly, to your question, Andrea, obviously, if I looked at just that map, there were 50 odd sites. So the average size of each site is 20 or 40 megawatts. I mean, those will be fairly small renewable installations and may not have the best solar or wind condition. So I was just wondering, you know, you know, are you are you what what technology will you be focusing on these sites? And, you know, does that put you at a disadvantage with very small wind farms and so on? Thank you. I can take the first one and certainly have a view on the second one, but I'll let Andreas take that one. So when I spoke about to 1.5 to two, that's the total. Uniper has the potential, Andreas indicated, and then we'll see how all this plays out. I'm actually happy because in addition to what Andrea showed, we have the potential strategically get funding in the group. Let me add to that. I think what I showed on the slides, the small example of 20 to 40 megawatts electric was just a showcase in the Slide four project. Of course, the other sites have much more potential like that. Take a normal site for our former coal fired plant, there was a storage area for coal. You easily talk about 100, 150 megawatts peak electric. Like in Wilhelmshaven, where we're checking just the possibility. So from that point of view, you need maybe 10 sites, good sized sites to even achieve a gigawatt or more. So from that point of view, I just wanted to showcase a little bit that if you think a little bit out of the box, you'll find potential in these sites where nobody has seen potential before. That open pit lignite mine, which is becoming a lake, is just sitting there and not doing anything. But if you put some floating solar on it, it becomes a business, and it's definitely contributing to our strategy. So from that point of view, don't worry. I think we will get to the one gigawatt in 2025 and even to more after that. And may I ask a follow-up on just which entity will invest? Is it Fortum or Uniper? Just I mean, obviously, it's relevant for Uniper analyst. Yes. No. I'm sorry. I spoke spoke at the same time. So can you repeat the question? Sorry. I just wanted to check which entity within the Fortum Group will be investing in European renewables. Will it be partially split between Uniper and then your other operations? Or is it all going to be funneled through Uniper? Yes. What I said in my presentation is that we aim for a one team model where there's one development team that can develop projects and then Uniper or Fortum can invest in the projects. But it also it can be on balance sheet or it could be build, operate, transfer. I think the question you asked is a very good one, and that actually illustrates the in a way, the challenges and the dynamics. So this is just going to be a huge question for Europe. When you phase out tens of gigawatts of capacity in these places actually that Andreas was talking about, you will have big holes where energy is needed and you don't have a lot of space. Europe is densely populated. It's not easy to find big areas where you could fit 100, 200, 300 megawatt parks. So some of these may be small, but they may be in places where the energy is actually very valuable. On the other hand, we also have the possibility that we are in places like Russia, we are in places like the Nordics, where then there is space, there is fresh water, but we are not then we are not close to where the energy is used if we start really massively adding up. So then the question, I come back to just this kind of high flying idea that I spoke about earlier, maybe then rather than transporting electricity, then you convert Nordic electricity into clean gas and then the potential to move gas as an energy transferer is much, much bigger. And Europe has the functioning gas infrastructure, but it's struggling with having an expanding electricity transmission infrastructure. It's not easy, but the gas infrastructure is there already. Just leaving this with you as a teaser. And I think, Amans, this was our final question. So then I hand over to Ingil. Yes. Thank you. We didn't have any more hands raised on team. So thank you all very much for your questions and for the discussion. Thank you to Markus, to Andreas and to Timo. And that concludes our Q and A session. And before we close, may I, Markus, ask for your concluding words? Thank you, Ingela. Thank you, everyone, on the line. Excellent timing on questions. So we said we're going to have a one hour Q and A session. And I don't know if Morse was moderating this more than what the impression is. But anyway, we're closing within one hour. Thank you, Vincent, Sam, Basi, Wanda, Sofia, Deepa, Artem, Antti, Lueder, Johanna, everyone and everyone else for participating virtually. I almost felt like we were here together. Unfortunately, we are not and everyone else on the line. This actually enabled us to have more people participating, but I can really say it would have been so much nicer to be here with you and to also have the discussions outside of the event. I really look forward. That's the part I have been missing most, actually seeing you and visiting our sites, visiting the people, making my weekly trips to Dusseldorf to see Andreas also. If I may conclude with then thanking Andreas for the huge effort for this event, your great presence here and the great work that you and the Uniper team have done. Timo, for your very, very strong presentation and being the great support as acting CFO for me during these months. I can say that we are very pleased with the achieved strategic alignment together with Uniper so far, and now we will continue this work. This cooperation is showing encouraging potential and significant financial benefits of €100,000,000 in 2025. And like I said before, we have had over 400 people participating in this work. It's really a great start and a good foundation. The energy transition is a huge opportunity for us. Together with Uniper and with our competencies, we are really well positioned to drive the energy transition and benefit from it. Our climate targets aligned with Paris Agreement show that we have high ambitions for this transformation to happen. We are really serious about our environmental targets. With the solid financial position, we are now aiming to deliver sustainable financial performance and, over time, increasing returns to our shareholders, our dear audience. Again, I promise you that our team, Andreas, Timo and myself, will bring results and deliver value to you now and in the future. Thank you very, very much for participating, and goodbye. So with this, we have come to the end of our twenty twenty Virtual Capital Markets Day. Thanks for participating. We hope that you found this valuable. And from all of of us here, we wish you all the best for the remaining weeks of 2020. And most of all, stay healthy and safe. Thank you and goodbye.

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