Vattenfall Group presentation 2014

Group Presentation 2014

March 2014

2 | Group Presentation 2014

Content

1 Vattenfall key data, owner’s assignment and history

2 Financial and sustainability targets

3 Organisational structure

4 Strategic focus areas

5 Investment plan

6 Generation volume and capacity per region

This is Vattenfall

• One of Europe’s largest electricity producers

• 100%-owned by the Swedish state

• Main markets: Nordic countries, Germany, Netherlands

• Vattenfall also has operations in:UK (mainly within wind power)

• Main products:Electricity, Heat, Gas

• Operations span the entire energy value chain:Production, Distribution, Trading, Sales and energy advice


Key data 2013


Key facts

Net sales 171,684 MSEK

(19,379 MEUR*)

Underlying operating profit 27,900 MSEK

(3,149 MEUR*)

Reported operating profit -6,453 MSEK

(-728 MEUR*)

Electricity generation 181.7 TWh

Sales of electricity 203.3 TWh

Sales of heat 30.2 TWh

Sales of gas 55.8 TWh

Number of employees (FTE) 31,819

Number of customers:

Electricity 6.2 million

Gas 1.9 million

Electricity network 4.3 millionExchange rate EUR/SEK 8.8591. Values in EUR shown only to facilitate comparisons between SEK and EUR

Electricity generation

Vattenfall produces electricity and heat from six energy sources:

Hydro Nuclear Coal Wind Biomass Gas


Articles of association and core values

The object for the Company’s activities is to generate a market rate of return by operating a commercial energy business that enables the company to be among the leaders in developing environmentally sustainable energy production.

The owner’s assignment Core values

Safety

Performance

Cooperation

History of Vattenfall


2010–2013Consolidation phase

2000–2009Major expansion in Europe

1950–2000Organic growth and national market deregulation

1909Founding of The Swedish StatePower Board

1951Inauguration of Harsprånget,

A hydro power plant in Sweden

1970–1980Construction of 12 nuclearreactors in Sweden

1999–2009Acquisitions in Germany,Poland and the Netherlands

2010Inauguration of UK offshorewind farm Thanet

2011–2012Divestments of non-core operationsin Belgium, Finland and Poland

1909–1916First large hydro power plants:

Porjus, Olidan, Älvkarleby, Sweden

1909–1950Part of developing the Swedish energy system

From a domestic Swedish hydro power generator to an European energy company

Financial targets and outcome 2013


Metric Target Outcome FY 2013

Return on Capital Employed (ROCE)

9%-2.1%

(9.2% excl. IAC*)

Net debt/Equity 50-90% 81.8%

FFO/Adjusted net debt 22-30% 19.6%

Dividend pay-out 40-60% Zero dividend pay-out

* IAC = items affecting comparability

Sustainability targets and outcome 2013


Metric Target Outcome FY 2013

Lower CO2 exposureVattenfall will reduce the company’s CO2 exposure to 65 million tonnes by 2020 from

93.7 million tonnes in 2010.

CO2 emissions in 2013 totalled 88.4 million tonnes.

Growth in renewable electricity generation

Vattenfall’s rate of growth of installed renewable capacity will be higher than the average rate of growth for ten defined countries in northern and central Europe. The target pertains to new, renewable capacity in the form of solar power, wind power and biomass. Hydro power is not included.

Vattenfall’s growth rate was 9.1%.

Estimated growth rate for the defined reference countries is 11-15%

Energy efficiencyVattenfall’s short-term target for 2014 is to save an average of 1 GWh per day, for a total of 365 GWh in 2014.

Decision made for target for 2014.

Nordic• Sticking to harmonized EU approach to

energy market regulation market provides the investment incentives

• Distributed generation and demand side participation less cost competitive in the Nordics compared with Continental

• General oversupply and low prices on the continent increasingly affecting Nordic market

Vattenfall has reorganized the Group into two regions

Continental/UK• Increasingly national approach to

energy market regulation regulator provides the investment incentives

• Energiewende (Germany)• New Energy Deal (Netherlands)• Energy Market Reform (UK)

• Increased cost competitiveness of solar energy and demand side participation in Germany. Change is faster than expected

• Effective 1 January 2014 the Group was reorganized in two regions: Nordic and Continental/UK

• The new organisational structure enables the regions to focus on their respective topics and opens up for opportunities for risk-sharing in the Continental operations over time


Organisational structure as from January 2014


CEO

Nordic Continental/UK

Wind

Distribution Distribution

Sales Sales

Hydro Mining & Generation

Ringhals Heat

Forsmark Renewables

Decomm. & Waste Nuclear

Projects

Corporate Staff Functions

Asset Optimization and Trading

Chief Financial Officer

Operations Support

Vattenfall’s five strategic focus areas


• Work for a more efficient electricity market. Encourage the development of interconnectors.

• Manage implications of the EU Water Directive.

• Renewables growth

• Optimise the operational lifetime of existing nuclear power

reactors.

Strong Nordic

Position

• Rate of growth of new installed capacity to be higher than the average rate of growth for ten defined countries in northern and central Europe. This must be balanced against limited financial resources and a growing surplus capacity in the Nordic market.

Reduce CO 2 exposure from 88.4 billion tonnes in 2013 to 65 billion tonnes by 2012:

• Partnering/risk sharing

• Co-firing of biomass with coal

• Fuel switching.

• Lower operating hours in fossil plants due to more renewables

Vattenfall aspires to be perceived as a “Smart Energy Enabler” - meeting changing customer demands by developing current downstream business and prudently developing new profitable business models.

• Reduce cost level by a further SEK 4.5 billion by 2015.

• Continue to pursue Operational Excellence.

• Optimise maintenance investments.

• Divest or decommission non- core/non-performing assets.

Growth in renewables

Define measures to

reduce Vattenfall’s

CO2 exposure

Offer smart and

sustainable energy

solutions

Stronger focus on

Operational Excellence and cost-

cutting

Sustainable Heat and Electricity Production

Sustainable Consumption

Sustainable Financial Performance

1 2 3 4 5

Investment plan 2014-2018

Electricity networks

Heating networks

Gas storage

IT


Generation volume and installed capacity per region


Group total generation (2013) Electricity 181.7 TWhHydro 35.6 TWhNuclear 51.9 TWhFossil 87.9 TWhWind 3.9 TWhBiomass, waste 2.4 TWhHeat 30.2 TWh(Gas sales 55.8 TWh)

Continental

/UK

20 374

14%0%

81%

4% 1%

Nordic

18 732

45%

37%

13%3% 2%

HydroNuclearFossilWindBiomass, waste

Continental

/UK

89

3% 0%

92%

2% 2%

Nordic

93

35%

56%

6% 2%

Electricity generation, TWh

Electricity capacity, MW

Heat

Electricity

Gas

Continental/UKNordic

Volume, TWh

Vattenfall Group presentation 2014

Presentations & Public Speaking

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