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Presentation of Vattenfall's full year 2015 results

Presentation of Vattenfall's full year 2015 results

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Vattenfall Full year 2015 results
Magnus Hall, CEO and Ingrid Bonde, CFO
Presentation 3 February 2016
Highlights and key figures
Vattenfall Full Year 2015 Results | Presentation | 3 February 20162
2015 Highlights 2015 Key Figures
 Portfolio transformation
− Commissioning of new wind parks
− Divestment of all fossil-based power
plants in Denmark
− Divestment process for German lignite
 Expansion of partnering strategy in
wind
− Skandia in SE onshore
− AMF in UK offshore (Ormonde)
 Successful cost reductions
− Approx. 30% cost base reduction vs.
2010
 Consequences of low prices and new
regulatory requirements
− Decision to close down Ringhals 1 and
2 in 2020 and 2019 respectively
− Impairments of SEK 36.8 billion
SEK bn FY 2015 FY 2014
Net Sales 164.5 165.9
Underlying EBIT 20.5 24.1
EBIT -23.0 -2.2
Profit after tax -19.8 -8.3
ROCE, % -8.2 -0.7
ROCE excl. IAC, % 7.4 8.2
FFO/adj. net debt % 21.1 20.3
The Board proposes zero dividend for 2015
Continued pressure on conventional power generation
Vattenfall Full Year 2015 Results | Presentation | 3 February 20163
Electricity futures Spot power price average Commodity prices
10
15
20
25
30
35
40
45
50
55
60
2013 2014 2015
EEX 2016 EEX 2017 ICE 2016
ICE 2017 NPX 2016 NPX 2017
EURMWh
5
15
25
35
45
55
65
2013 2014 2015
EPEX APX NordPool
EUR/MWh
0
5
10
15
20
25
30
35
40
45
30
40
50
60
70
80
90
100
110
120
2013 2014 2015
Coal (USD/t), API2, Front Year
Oil (USD/bbl), Brent Front Month
Emission allowances CO2 (EUR/t), Dec 09-12
Gas (EUR/MWh), NBP, Front Year
USD EUR
• Nordic spot prices 29% lower vs 2014, mainly due to high precipitation
• German and Dutch spot prices approx. 3% lower vs 2014
• Electricity futures prices lower in all of Vattenfall’s markets
• Lower prices on oil (Brent crude), coal and gas. Higher prices on CO2
emission allowances
Vattenfall increased generation from renewables in 2015
Vattenfall Full Year 2015 Results | Presentation | 3 February 20164
Electricity generation
• Total electricity generation output almost
unchanged compared to 2014
• Significant increase in wind power
generation (+40%) with the new wind
farms DanTysk (DE), Clashindarroch
(UK), repowering of Klim (DK) and the
extension of Kentish Flats (UK)
• Slight increase in fossil based generation
following the commissioning of the
Moorburg power plant
• Flexible hydro power stands strong with
increased production in 2015 due to
higher precipitation
• Nuclear generation decreased, mainly due
to extended outages at Ringhals 2 and
Forsmark 3
24
34
50
83
2
6
39
42
84
0
10
20
30
40
50
60
70
80
90
TWh
Biomass,
waste
WindHydroNuclearFossil
FY 2015: 173 TWh
FY 2014: 173 TWh
Regulatory developments clearly support the energy transformation
whilst more clarity is still needed for German nuclear
Vattenfall Full Year 2015 Results | Presentation | 3 February 201655
Structural reforms to
strengthen the EU ETS
system
• Market Stability Reserve (MSR) to be in place by 1 January 2019
• Legislative proposal to further revise the EU ETS directive currently
in the legislative process
German nuclear
provisions – debate on
fund or foundation
• Following the outcome of the stress test for nuclear provisions, a
Commission has been established to investigate solutions to secure
availability of sufficient funds if and when needed
• A final recommendation is expected by end of February 2016
COP21 Climate
Agreement
• International Climate Agreement reached in Paris at COP21
• Reflections at national level on accelerated phase-out of coal (NL,
DE) and at EU level on increasing ambition level of 2030 targets
Sweden’s future energy supply – towards 100% RES
Vattenfall Full Year 2015 Results | Presentation | 3 February 20166
Large hydro
resources
Land and
wind
resources
Forest
(net growth)
Sweden has important
natural resources The path is crucial for cost efficiency and competitiveness
1. Invest in new capacity when it is rational
A transformation that occurs at a rate allowing technical and assets exchange when it is
economically rational will become far less costly than if you are forced to ”replace
prematurely”.
2. Utilize the expected cost reduction for new technology
The cost for new technology – wind, solar, storage, smart grids etc. - is expected to
decrease. A gradual investment rate is expected to require less investments.
3. Utilize the low marginal production cost (excl. tax) in existing nuclear power
Existing nuclear power has a significantly lower total cost per kWh than the total cost for
new capacity in all currently known technologies. The total cost for nuclear power is
approx. 25 öre, excl. tax, compared to the current cost of wind power of approximately
50 öre. Every TWh not produced from existing nuclear power, but from new wind power
entails an increased cost - ceteris paribus - of in total SEK 250 million/year for “Sweden
AB”. Operation of existing reactors according to the current plan allows Sweden to use
25 years to implement the transformation to a renewable system.
4. Align incentives and policies with the requirements of the energy system
A capacity deficit will occur significantly earlier than an energy deficit.
5. Work actively towards a close Nordic cooperation around security of supply
A close cooperation will decrease the need for capital investments (in the strategic
reserve), thus increasing competitiveness.
6. Work actively towards a well-developed transmission grid in Sweden,
Scandinavia and Europe
A well-developed transmission grid reduces the need for capital investments (in the
strategic reserve) significantly, thus increasing competitiveness.
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Presentation of Vattenfall's full year 2015 results

  • 1. Vattenfall Full year 2015 results Magnus Hall, CEO and Ingrid Bonde, CFO Presentation 3 February 2016
  • 2. Highlights and key figures Vattenfall Full Year 2015 Results | Presentation | 3 February 20162 2015 Highlights 2015 Key Figures  Portfolio transformation − Commissioning of new wind parks − Divestment of all fossil-based power plants in Denmark − Divestment process for German lignite  Expansion of partnering strategy in wind − Skandia in SE onshore − AMF in UK offshore (Ormonde)  Successful cost reductions − Approx. 30% cost base reduction vs. 2010  Consequences of low prices and new regulatory requirements − Decision to close down Ringhals 1 and 2 in 2020 and 2019 respectively − Impairments of SEK 36.8 billion SEK bn FY 2015 FY 2014 Net Sales 164.5 165.9 Underlying EBIT 20.5 24.1 EBIT -23.0 -2.2 Profit after tax -19.8 -8.3 ROCE, % -8.2 -0.7 ROCE excl. IAC, % 7.4 8.2 FFO/adj. net debt % 21.1 20.3 The Board proposes zero dividend for 2015
  • 3. Continued pressure on conventional power generation Vattenfall Full Year 2015 Results | Presentation | 3 February 20163 Electricity futures Spot power price average Commodity prices 10 15 20 25 30 35 40 45 50 55 60 2013 2014 2015 EEX 2016 EEX 2017 ICE 2016 ICE 2017 NPX 2016 NPX 2017 EURMWh 5 15 25 35 45 55 65 2013 2014 2015 EPEX APX NordPool EUR/MWh 0 5 10 15 20 25 30 35 40 45 30 40 50 60 70 80 90 100 110 120 2013 2014 2015 Coal (USD/t), API2, Front Year Oil (USD/bbl), Brent Front Month Emission allowances CO2 (EUR/t), Dec 09-12 Gas (EUR/MWh), NBP, Front Year USD EUR • Nordic spot prices 29% lower vs 2014, mainly due to high precipitation • German and Dutch spot prices approx. 3% lower vs 2014 • Electricity futures prices lower in all of Vattenfall’s markets • Lower prices on oil (Brent crude), coal and gas. Higher prices on CO2 emission allowances
  • 4. Vattenfall increased generation from renewables in 2015 Vattenfall Full Year 2015 Results | Presentation | 3 February 20164 Electricity generation • Total electricity generation output almost unchanged compared to 2014 • Significant increase in wind power generation (+40%) with the new wind farms DanTysk (DE), Clashindarroch (UK), repowering of Klim (DK) and the extension of Kentish Flats (UK) • Slight increase in fossil based generation following the commissioning of the Moorburg power plant • Flexible hydro power stands strong with increased production in 2015 due to higher precipitation • Nuclear generation decreased, mainly due to extended outages at Ringhals 2 and Forsmark 3 24 34 50 83 2 6 39 42 84 0 10 20 30 40 50 60 70 80 90 TWh Biomass, waste WindHydroNuclearFossil FY 2015: 173 TWh FY 2014: 173 TWh
  • 5. Regulatory developments clearly support the energy transformation whilst more clarity is still needed for German nuclear Vattenfall Full Year 2015 Results | Presentation | 3 February 201655 Structural reforms to strengthen the EU ETS system • Market Stability Reserve (MSR) to be in place by 1 January 2019 • Legislative proposal to further revise the EU ETS directive currently in the legislative process German nuclear provisions – debate on fund or foundation • Following the outcome of the stress test for nuclear provisions, a Commission has been established to investigate solutions to secure availability of sufficient funds if and when needed • A final recommendation is expected by end of February 2016 COP21 Climate Agreement • International Climate Agreement reached in Paris at COP21 • Reflections at national level on accelerated phase-out of coal (NL, DE) and at EU level on increasing ambition level of 2030 targets
  • 6. Sweden’s future energy supply – towards 100% RES Vattenfall Full Year 2015 Results | Presentation | 3 February 20166 Large hydro resources Land and wind resources Forest (net growth) Sweden has important natural resources The path is crucial for cost efficiency and competitiveness 1. Invest in new capacity when it is rational A transformation that occurs at a rate allowing technical and assets exchange when it is economically rational will become far less costly than if you are forced to ”replace prematurely”. 2. Utilize the expected cost reduction for new technology The cost for new technology – wind, solar, storage, smart grids etc. - is expected to decrease. A gradual investment rate is expected to require less investments. 3. Utilize the low marginal production cost (excl. tax) in existing nuclear power Existing nuclear power has a significantly lower total cost per kWh than the total cost for new capacity in all currently known technologies. The total cost for nuclear power is approx. 25 öre, excl. tax, compared to the current cost of wind power of approximately 50 öre. Every TWh not produced from existing nuclear power, but from new wind power entails an increased cost - ceteris paribus - of in total SEK 250 million/year for “Sweden AB”. Operation of existing reactors according to the current plan allows Sweden to use 25 years to implement the transformation to a renewable system. 4. Align incentives and policies with the requirements of the energy system A capacity deficit will occur significantly earlier than an energy deficit. 5. Work actively towards a close Nordic cooperation around security of supply A close cooperation will decrease the need for capital investments (in the strategic reserve), thus increasing competitiveness. 6. Work actively towards a well-developed transmission grid in Sweden, Scandinavia and Europe A well-developed transmission grid reduces the need for capital investments (in the strategic reserve) significantly, thus increasing competitiveness.
  • 7. Difficult to motivate the required investments in Swedish nuclear for continued long-term operations 22 25 7 0 5 10 15 20 25 30 35 öre/kWh -31% RevenueCost 32 * Swedish nuclear capacity tax is based on installed capacity (not production volume) **Avg. market spot price in SE3 Last Twelve Months. Actual revenue from spot varies and depends on current market situation Will be closed by 2020 Ringhals 70% VF, 30% Uniper c.4 GW Oskarshamn 54.5% Uniper, 45.5% Fortum c.2 GW Forsmark 66% VF, 22% Fortum, 10% Uniper, 2% Skellefteå Kraft c.3.3 GW • Forsmark and Ringhals require strategic investments the coming 5-year period to ensure a 60 year operating life-time. • Investments include the ”Fukushima” measures of independent core cooling and replacement of the instrumentation and control (I&C) platform Swedish nuclear reactors Approx. nuclear cost per kWh & Revenue Needs investment Other production cost Capacity tax* Elspot** Closed Vattenfall Full Year 2015 Results | Presentation | 3 February 20167
  • 8. Wind is one of the main focus areas in Vattenfall with partnering as a key enabler for growth Vattenfall Full Year 2015 Results | Presentation | 3 February 20168 Ormonde (150MW) VF 51%, AMF 49% Four Swedish onshore windparks (141 MW)* VF 50%, Skandia 50% One of the largest players in northwestern Europe • +1,800 MW installed capacity (pro rata, incl. DanTysk) • Number 2 in offshore with recent win at HR3 • Increasing external recognition on position and performance Strong platform and track record to build on • Construction continuously improves time and budget performance • Generation well equipped: Operating Model, Operational Centre, Operational practices • Sound LEC** approach implemented and proven performance in HR3 tender Successful partnerships in 2015 Our position in wind Business Area Wind has an solid starting point for a strong market performance *Hjuleberg, Höge Väg, Juktan and Högabjär-Kärsås ** Levelized Cost of Energy
  • 9. Vattenfall is developing new business opportunities in energy solutions, including the start of its first UK solar power project Vattenfall Full Year 2015 Results | Presentation | 3 February 20169 Parc Cynog in Wales, UK Key facts Project specifications • Capacity: 5 MW (18,860 solar panels) • Annual output sufficient to supply 1,441 British households • Next to wind farms Pendine and Parc Cynog • In operation at the end of March 2016 Principle of combined PV and wind farm • High synergies (roads, land lease, network connection) • Cost saving • Save time (no waiting for network connection) • Joint feed-in leads to more balanced feed-in profile, hence network stability increases New business opportunities will be developed particularly within solar, decentralized generation and electric vehicles
  • 11. FY 2015 Financial highlights Vattenfall Full Year 2015 Results | Presentation | 3 February 201611 SEK bn FY 2015 FY 2014 Net Sales 164.5 165.9 EBITDA 32.8 41.0 Underlying EBITDA (excl. items affecting comparability) 40.0 43.6 EBIT -23.0 -2.2 Underlying EBIT (excl. items affecting comparability) 20.5 24.1 Financial items, net -5.2 -6.0 Profit after tax -19.8 -8.3 Cash flow (FFO) 29.0 32.1 Operating cash flow (after change in working capital) 40.9 40.1 Net debt 64.2 79.5 Adjusted net debt 137.6 158.3 FFO/Adjusted net debt (%) 21.1 20.3 Adjusted net debt/EBITDA (times) 4.2 3.9
  • 12. Items affecting comparability SEK bn Q4 2015 Q4 2014 FY 2015 FY 2014 Capital gains 0.1 0.1 0.3 3.2 Capital losses -0.1 -0.2 -0.4 -0.2 Impairment losses -0.3 -0.1 -36.8 -23.8 Reveresed impairment losses - - 0.5 - Provisions -2.1 -0.1 -6.0 -5.7 Unrealised changes in the fair value of energy derivatives 0.5 -0.7 1.5 0.8 Unrealised changes in the fair value of inventories -0.4 - -0.7 0.1 Restructuring costs -0.1 -0.2 -1.2 -0.8 Other IACs -0.4 - -0.8 - Total -2.8 -1.2 -43.5 -26.3 Vattenfall Full Year 2015 Results | Presentation | 3 February 201612 • Impairment losses in 2015 of SEK 36.8bn mainly relate to items in Q2: • Ringhals 1 and 2 nuclear reactors (SEK 17.0bn) • Lignite assets in Germany (SEK 15.2bn) • Moorburg power plant, Hamburg (SEK 4.0bn) • Provisions in 2015 of SEK 6.0bn mainly relate to higher provisions for nuclear power and for mining operations in Germany, and environment related provision for hydro power in Germany
  • 13. Development of underlying EBIT FY 2015 Vattenfall Full Year 2015 Results | Presentation | 3 February 201613 0.2 Sales business 0.1 Electricity distribution 1.0 Generation volumes 0.4 Production margins -4.6 Underlying EBIT FY 2014 24.1 20.5 Underlying EBIT FY 2015 -0.7 OtherOperating costs SEK bn
  • 14. Underlying EBIT per operating segment Vattenfall Full Year 2015 Results | Presentation | 3 February 201614 SEK bn FY 2015 FY 2014 Q4 2015 Q4 2014 Customers & Solutions 1.4 1.0 0.1 0.4 Power Generation 12.4 15.6 3.6 4.0 Wind 1.5 1.7 0.6 1.1 Heat 1.7 2.4 0.3 1.2 Distribution 5.5 4.4 1.7 1.5 Other* -1.9 -1.0 -0.1 -0.1 Eliminations ̶ ̶ 0.2 0.2 Total 20.6 24.1 6.4 8.3 * Other pertains mainly to all Staff functions including Treasury activities and Shared Service Centres
  • 15. Cash flow development FY 2015 Vattenfall Full Year 2015 Results | Presentation | 3 February 201615 25.0 Maintenance investments -15.9 Cash flow from operating activities 40.9 14.5 Divestments, net Cash flow before financing activities 2.3 Growth investments -12.8 Free cash flow SEK bn
  • 16. Capital expenditures Vattenfall Full Year 2015 Results | Presentation | 3 February 201616 SEK bn FY 2015 FY 2014 Change % Q4 2015 Q4 2014 Change % Electricity generation 16.7 17.9 -6.7 4.1 6.0 -31.7 CHP/Heat 3.3 3.7 -10.8 1.3 1.5 -13.3 Electricity networks 4.7 5.0 -6.0 1.8 2.1 -14.3 Other 4.0 2.4 66.7 1.2 0.2 - TOTAL 28.7 29.0 -1.0 8.4 9.8 -14.3 - of which maintenance and replacement 15.9 16.9 -5.9 5.3 6.2 -14.5 - of which growth 12.8 12.1 5.8 3.1 3.6 -13.9 • The majority of growth investments pertain to investments within wind power.
  • 17. Investment plan 2016-2017 Vattenfall Full Year 2015 Results | Presentation | 3 February 2016 3 4 4 2 5 15 1347 1 Biomass, waste Hydro power Nuclear power Gas Hard coal Lignite Wind power Investments by type of fuel 34 Non- production related investments Total Investments Total Investments 2016-2017: SEK 47bn Maintenance investments (27.9) Replacement investments (2.7) Growth investments (16.8) 9% 11% 37% 38% Group (IT) (0.4) Finland (0.1) Denmark (1.9) Netherlands (4.2) Great Britain (5.2) Sweden (17.4) Germany (18.2) 62% 7% 36% Geographical split (SEK bn) Growth investments by technology (SEK bn)* Investment split by type (SEK bn) * Growth investments in this pie chart relate to electricity and heat generation amounting to SEK 15.5bn 1717 Hard coal (0.4) Gas (0.5) Wind power (14.4) Biomass, waste (0.2) 3% 3% 93% 1%
  • 18. Current year Current year +1 Current year +2 Ratio Price Year Ratio Price Year Ratio Price Year Dec 2012 100% 55 2013 77% 52 2014 44% 50 2015 Dec 2013 100% 50 2014 95% 44 2015 56% 40 2016 Dec 2014 99% 45 2015 87% 39 2016 55% 36 2017 Dec 2015 95% 39 2016 79% 35 2017 57% 33 2018 Development of hedge ratios and hedge prices Vattenfall Full Year 2015 Results | Presentation | 3 February 201618 5051 75 53 6867 59 7273 52 84 94 Current year+2Current year+1Current year FY 2012 FY 2015FY 2014FY 2013 Current year Current year +1 Current year +2 Ratio Price Year Ratio Price Year Ratio Price Year Dec 2012 75% 45 2013 51% 42 2014 50% 41 2015 Dec 2013 67% 40 2014 68% 39 2015 53% 37 2016 Dec 2014 73% 36 2015 72% 34 2016 59% 32 2017 Dec 2015 94% 32 2016 84% 31 2017 52% 30 2018 Hedge ratios - Nordic Hedge ratios – Continental Europe 44 77 100 56 95 100 55 87 99 57 79 95 Current year Current year+1 Current year+2 FY 2015FY 2013 FY 2014FY 2012 % % Note: hedge ratios in % and hedge prices in EUR/MWh
  • 19. Financial and sustainability targets Vattenfall Full Year 2015 Results | Presentation | 3 February 201619 Financial metrics Target Outcome FY 2015 Outcome FY 2014 Return on Capital Employed (ROCE) (Return on capital employed excl. items affecting comparability) 9.0% -8.2% (7.4%) -0.7% (8.2%) Net debt/Equity 50-90% 55.4% 61.9% FFO/Adjusted net debt 22-30% 21.1% 20.3% Dividend policy (% of profit after tax) 40-60% zero* zero Sustainability metrics & targets (-2015) Outcome FY 2015 Outcome FY 2014 Reduce CO2 exposure to 65 Mtonnes by 2020 (93.7 Mtonnes in 2010) 83.5 Mtonnes** 82.3 Mtonnes Growth in renewable electricity generation capacity to be higher than the average rate of growth for ten reference countries 13.4% 6.3% (Preliminary growth rate for reference countries: 9.1%) Energy efficiency to save 440 GWh in 2015 1,066 GWh 435 GWh * The Board proposes a zero dividend for 2015 ** Consolidated values. Value for 2015 is preliminary.
  • 20. New strategic objectives and targets Magnus Hall, CEO and Ingrid Bonde, CFO
  • 21. Energy you want 21 • Large-scale, centralized production • Wholesale-focus • 50% fossil power From a ”traditional utility”… • Customer focus • Growth in renewables drives decentralization • Heat as a strong business opportunity • Partnering becomes more important • Climate friendly large-scale production with high efficiency • Lean and agile organization ...to capturing the business opportunities in the transformation Vattenfall Full Year 2015 Results | Presentation | 3 February 201621 Vattenfall’s strategy means a shift from a traditional utility to capturing the business opportunities in the transformation
  • 22. Our vision and strategic objectives Vattenfall Full Year 2015 Results | Presentation | 3 February 201622 Vattenfall’s vision is to be a dedicated partner to its customers and society at large, providing convenient and innovative energy solutions. Vattenfall aims to be a leader in sustainable production, ensuring reliable and cost-efficient energy supply. Vattenfall is committed to be climate neutral by 2050. We call this Energy You Want
  • 23. Selected key actions Vattenfall Full Year 2015 Results | Presentation | 3 February 201623
  • 24. New strategic targets valid as of 2016 Vattenfall Full Year 2015 Results | Presentation | 3 February 201624  Six strategic targets to year 2020 better reflect Vattenfall’s strategic objectives  Three sustainability targets are integrated in the new strategic targets  Four financial targets are set by the owner (ROCE; FFO/adjusted net debt; Debt/equity ratio; Dividend policy) of which ROCE is included below 1. Customer engagement, NPS (Net Promoter Score): +2 NPS relative Leading towards Sustainable consumption Leading towards Sustainable production 2. Commissioned renewables capacity: ≥2,300 MW 3. Absolute CO2 emissions: ≤21 Mtonnes* High performing operations 4. ROCE: ≥9% Empowered and engaged organisation 5. Safety as LTIF (Lost Time Injury Frequency): ≤1,25 6. Employee Engagement Index: ≥70% Strategic objectives Strategic targets to 2020 *Assumes significant structural changes
  • 26. Development of underlying EBIT Q4 2015 Vattenfall Full Year 2015 Results | Presentation | 3 February 201626 SEK bn -0.3 Sales business Underlying EBIT Q4 2015 6.4 -0.2 OtherElectricity distribution 0.2 Generation volumes 0.6 Production margins -2.4 Underlying EBIT Q4 2014 8.2 Operating costs 0.2
  • 27. Q4 2015 Financial highlights Vattenfall Full Year 2015 Results | Presentation | 3 February 201627 SEK bn Q4 2015 Q4 2014 Net Sales 45.5 48.7 EBITDA 8.8 12.1 Underlying EBITDA (excl. items affecting comparability) 11.4 13.2 EBIT 3.7 7.0 Underlying EBIT (excl. items affecting comparability) 6.4 8.2 Financial items, net -1.2 -1.6 Profit after tax 2.5 3.9 Cash flow (FFO) 9.4 12.5 Operating cash flow (after change in working capital) 9.6 14.3 Net debt 64.2 79.5 Adjusted net debt 137.6 158.3 FFO/Adjusted net debt (%) 21.1* 20.3* Adjusted net debt/EBITDA (times) 4.2* 3.9* * Last twelve months
  • 28. Debt development Vattenfall Full Year 2015 Results | Presentation | 3 February 201628 0 20 40 60 80 100 120 140 160 180 200 31.12.2015 30.09.2015 30.06.2015 31.03.2015 31.12.2014 30.09.2014 30.06.2014 31.03.2014 31.12.2013 30.09.2013 30.06.2013 31.03.2013 31.12.2012 30.09.2012 30.06.2012 31.03.2012 31.12.2011 30.9.2011 30.6.2011 31.3.2011 Net debt Gross debt Adjusted net debt Net debt decreased by SEK 15.3bn compared with 31 December 2014. Adjusted net debt decreased by SEK 20.7bn, compared with 31 December 2014. For the calculation of adjusted net debt, see slide 32. SEK bn
  • 29. Continued strong liquidity position December 2015 Vattenfall Full Year 2015 Results | Presentation | 3 February 201629 Group liquidity MSEK Cash and cash equivalents 12,351 Short term investments 31,905 Reported cash, cash equivalents & short term investments 44,256 Unavailable liquidity* -6,813 Available liquidity 37,443 Debt maturities** MSEK Within 90 days 12,976 Within 180 days 14,130 Committed credit facilities Facility size MSEK RCF (maturity Dec 2020) 2,000 MEUR 18,379 Total undrawn 18,379 * German nuclear ”Solidarvereinbarung” 3,128 MSEK, Margin calls paid (CSA) 2,679 MSEK, Insurance” Provisions for claims outstanding” 1,001 MSEK and Margin accounts 5 MSEK ** Excluding loans from minority owners and associated companies.
  • 30. Breakdown of gross debt as of 31 December 2015 Total debt : SEK 111bn (EUR 12bn) External market debt: SEK 95bn Vattenfall Full Year 2015 Results | Presentation | 3 February 201630 Debt issuing programmes Size (MEUR) Utilization (MEUR) EUR 15bn Euro MTN 15,000 6,041 EUR 2bn Euro CP 2,000 376 SEK 15bn Domestic CP 1,632 0 Total 18,632 6,417 • All public debt is issued by Vattenfall AB • The main part of debt portfolio has no currency exposure that has an impact on the income statement. Debt in foreign currency is either swapped to SEK or booked as hedge against net foreign investments • No structural subordination 5% Hybrid capital 56% 17% Bank loans and others Margin calls (CSA) 5% Loans from minority shareholders 12% Loans from associated companies 2% Commercial paper 3% EMTN
  • 31. Debt maturity profile* Vattenfall Full Year 2015 Results | Presentation | 3 February 20163131 31 Dec 2015 31 Dec 2014 Duration (years) 3.9 2.8 Average time to maturity (years) 8.1 5.6 Average interest rate (%) 3.9 3.6 Net debt (SEK bn) 64.2 79.5 Available group liquidity (SEK mn) 37,443 37,796 Undrawn committed credit facilities (SEK mn) 18,379 18,786 0 10,000 20,000 30,000 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 Capital Securities Maturity profile Undrawn back-up facilities MSEK * Loans from associated companies, minority owners, margin calls received (CSA) and valuation at fair value are excluded and currency derivatives for hedging debt in foreign currency are included
  • 32. Reported and adjusted net debt Vattenfall Full Year 2015 Results | Presentation | 3 February 201632 Reported net debt (SEK billion) Dec 31 2015 Dec 31 2014 Hybrid capital -18.5 -9.4 Bond issues and commercial papers and liabilities to credit institutions -68.9 -72.5 Present value of liability pertaining to acquisition of subsidiaries - -19.3 Liabilities to associated companies -2.8 -2.6 Liabilities to minority shareholders -13.0 -12.4 Other liabilities -7.3 -9.8 Total interest-bearing liabilities -110.6 -125.9 Reported cash, cash equivalents & short-term investments 44.3 45.1 Loans to minority owners of foreign subsidiaries 2.1 1.4 Net debt -64.2 -79.5 Adjusted net debt (SEK billion) Dec 31 2015 Dec 31 2014 Total interest-bearing liabilities -110.6 -125.9 50% of Hybrid capital 9.3 4.7 Present value of pension obligations -38.9 -45.3 Mining & environmental provisions -19.1 -14.5 Provisions for nuclear power (net) -32.9 -33.7 Margin calls received 5.3 7.0 Liabilities to minority owners due to consortium agreements 11.9 11.6 = Adjusted gross debt -175.0 -196.1 Reported cash, cash equivalents & short-term investments 44.3 45.1 Unavailable liquidity -6.8* -7.3* = Adjusted cash, cash equivalents & short-term investments 37.4 37.8 = Adjusted net debt -137.6 -158.3 * Of which: German nuclear ”Solidarvereinbarung” 3.1, Margin calls paid (CSA) 2.7, Insurance “Provisions for claims outstanding” 1.0
  • 33. Discount rates used in calculation of provisions as of December 2015 Vattenfall Full Year 2015 Results | Presentation | 3 February 201633 Type of provision Discount rate Inflation rate Real discount rate Nuclear, Germany 4.0% 3.0% 1.0% Nuclear, Sweden 4.0% 2.0% 2.0% Type of provision Discount rate Pensions, Germany 2.25% Pensions, Sweden 3.25%
  • 34. Nuclear provisions as per 31 Dec 2015 Vattenfall Full Year 2015 Results | Presentation | 3 February 201634 Reactor Net capacity (MW) Start (year) Vattenfall share (%) Vattenfall provisions, SEKbn (IFRS accounting) Vattenfall provisions, SEKbn (pro rata) Sw nuclear waste fund (Vattenfall pro rata share) Ringhals 1 879 1976 70.4 Ringhals 2 809 1975 70.4 Ringhals 3 1,070 1981 70.4 Total Ringhals: 21,892 Total Ringhals: 21,892 1) Ringhals 4 942 1983 70.4 Forsmark 1 984 1980 66.0 Forsmark 2 1,120 1981 66.0 Total Forsmark: 19,431 Total Forsmark: 12,824 Forsmark 3 1,170 1985 66.0 Total Sweden 6,974 - 41,5532) 34,9462) 28,650 3) Brunsbüttel 771 1977 66.7 18,664 12,443 Brokdorf 1,410 1986 20.0 0 4,225 Krümmel 1,346 1984 50.0 10,788 10,788 Stade4) 640 1972 33.3 0 1,942 Total Germany 4,167 - - 29,452 29,398 Total SE & DE 11,141 71,005 64,344 1) Vattenfall is 100% liability of Ringhals decommissioning, while owning only 70.4% 2) Total provisions in Sweden (IFRS accounting) include provisions of SEK 230mn related to Ågesta 3) Vattenfall’s share of the Nuclear Waste Fund (book value). IFRS consolidated value is SEK 34,172mn 4) Stade is being dismantled
  • 35. Ongoing process to divest lignite assets • On 22 September Vattenfall announced the next step in the lignite sales process by publicly inviting potential bidders to state their interest in acquiring Vattenfall’s German lignite assets • By 20 October Vattenfall has received statements of interest from a number of potential bidders • Qualification process is now ongoing • Vattenfall’s ambition is to reach an agreement in H1 2016 Vattenfall Full Year 2015 Results | Presentation | 3 February 201635
  • 36. Overview of Vattenfall’s lignite operations Operating opencast mine areas Recultivation areas Approved mining fields Continuation Future fields Lignite-fuelled power plants Refining plant Central railway operation VEM Brandenburg Bagenz-Ost Spremberg-Ost Schwarze Pumpe Spree Guben Cottbus Forst/ Lausitz Spremberg Weißwasser Hoyerswerda Reichwalde mine Republic of Poland Jänschwalde mine Welzow-Süd mine Nochten mine Boxberg power plant Jänschwalde power plant Jänschwalde Storage site Landmark „Spreyer Höhe“ Saxony Welzow-Süd, partial section II Mining field 2 Nochten, Cottbus-Nord mine Jänschwalde-Nord * Outside of the Lusatian portfolio Lignite production 60-65mn tonnes/a Installed power plant capacity 8,095 MWgross Jänschwalde 3,000 MW Schwarze Pumpe 1,600 MW Boxberg 2,575 MW Lippendorf R* (Vattenfall share) 920 MW Electricity generation approx. 55 TWh/a Vattenfall Full Year 2015 Results | Presentation | 3 February 201636
  • 37. Impairment history 2009-2015 (1) Vattenfall Full Year 2015 Results | Presentation | 3 February 201637 Impairments SEK billion Germany 46.5 - Transmission (2010) 5.1 - Thermal assets 29.5 - 2011(Assets) 0.3 - H1 2013 (Assets) 4.3 - Q3 2014 (Assets) 5.7 - Q2 2015 (Assets) 19.2 - Nuclear assets 10.5 - 2011 (Assets) 10.5 - Other assets 1.4 - Q2 2013 (Assets) 0.1 - Q3 2014 (Assets) 1.1 - Q2 2015 (Wind power assets, other assets) 0.2
  • 38. Impairment history 2009-2015 (2) Vattenfall Full Year 2015 Results | Presentation | 3 February 201638 Impairments SEK billion Netherlands 52.3 - Thermal assets 30.6 - 2010 (Goodwill) 4.3 - 2011 (Assets, Goodwill) 0.4 - 2012 (Assets, Goodwill) 8.6 - H1 2013 (Assets) 14.7 - Q3 2014 (Assets) 2.6 - Trading 16.5 - H1 2013 (Goodwill) 6.5 - Q3 2014 (Goodwill) 10.0 - Other assets 5.2 - 2010 (Assets) 1.7 - H1 2013 (Assets, Goodwill) 1.5 - Q2 2014 (Assets) 1.9 - Q4 2015 (Assets) 0.1
  • 39. Impairment history 2009-2015 (3) Vattenfall Full Year 2015 Results | Presentation | 3 February 201639 Impairments SEK billion Nordic 25.6 - Renewable assets 1.4 - Q3 2014 (Assets) 1.4 - Thermal assets 7.2 - 2009 (Assets) 4.1 - H1 2013 (Assets) 3.0 - Q4 2015 (Assets) 0.1 - Nuclear assets (Q2 2015) 17.0 Other (mainly UK) 2.7 Total impairments 2009 – H1 2015 127.1 Reversed impairment losses -3.5 Total impairments, (net, incl. reversed impairment losses) 2009 – H1 2015 123.6 Poland (2011, 2012, 2013; Shares in Enea S.A.) – accounted for as financial expense 2.4 Liberia (2012, biomass project) – of which 0.8 accounted for as financial expense 1.3 Total impairments, (incl. Poland and Liberia) 2009 – H1 2015 127.3