Fossil-free living within one generation Vattenfall AB Group - PowerPoint PPT Presentation

Fossil-free living within one generation Vattenfall AB – Group presentation 2020

Agenda Section Page Introduction Vattenfall 3 This is Vattenfall Vattenfall’s Group executives Vattenfall’s value chain Market trends Strategy 8 Strategy & strategic targets Investment plan 2019-2020 Financials 13 Financial targets Financial highlights 2018 Sustainability 16 UN’s sustainable development goals Impact our CO 2 emissions throughout the value chain Attractive partner Operating segments 21 Introduction operating segments Customers & Solutions Power Generation Wind Heat Distribution 2

Introduction Vattenfall 3

This is Vattenfall Basic facts Key data Location of our operations and major plants • One of Europe’s largest SEK bn FY 2019 FY 2018 Wind Nuclear producers of electricity and Biomass Coal Net sales 166.4 152.1 Harsprånget Hydro Solar heat Underlying operating profit 1 25.1 19.9 Gas District heating • 100% owned by the Swedish Largest facilities are marked with a circle Operating profit (EBIT) 22.1 17.6 state Stornorrfors • Main products: electricity, heat, Profit for the period 14.9 12.0 gas and energy services Return on capital employed, % 8.5 7.0 Forsmark • Main markets: Sweden, Return on capital employed Uppsala 9.6 7.9 Germany, Netherlands, excl. items affecting comp., % Denmark and the UK Funds from operations/ 26.5 20.7 • Almost 20,000 employees adjusted net debt, % Ringhals Horns Rev 3 TWh FY 2019 FY 2018 Sandbank DanTysk Electricity generation 130.3 130.3 Amsterdam Berlin Pen y Cymoedd Moorburg Customer sales, electricity 119.0 119.2 Thanet Customer sales, heat 17.1 18.3 60.7 2 Customer sales, gas 59.2 1 Operating profit excluding items affecting comparability 4 2 The value has been adjusted compared with information previously published in Vattenfall’s financial reports

Vattenfall Group executives President and CEO Magnus Hall CFO Functions Legal & CEO office Anna Borg Anne Gynnerstedt Strategic Development Human Resources Andreas Regnell Kerstin Ahlfont Communications Karin Lepasoon Operating Segment Operating Segment Operating Segment Operating Segment Operating Segment Heat Customers & Solutions Wind Power Generation Distribution 3 BA Heat BA Customers BA Wind BA Generation BA Markets BA Distribution Tuomo & Solutions Gunnar Torbjörn Niek den Annika Viklund Hatakka 1 Hollander 2 Martijn Hagens Groebler Wahlborg 3 The electricity distribution operations are regulated by the Swedish Electricity Act 1 Tuomo Hatakka will retire at the end of 2020. 2 Niek den Hollander has decided to leave Vattenfall and will stay on until 31 March 2020. (Ellagen) and the German Energy Industry Act (Energiewirtschaftsgesetz), and are 5 unbundled from Vattenfall’s other operations.

Vattenfall’s value chain Production Electricity distribution Sales of electricity, District heating Energy services & heat and gas decentralised generation • Guarantees secure • Sells electricity, heat • Drives the Production from Offers energy services • Hydro supply via well- and gas to consumers transformation towards • Heat pumps functioning distribution and business fossil-free heating and • Nuclear • Solar panels networks and smart customers cooling solutions • Coal • Charging solutions for network solutions • Focuses on various together with partners, • Natural gas electric vehicles cities and regions • Enables customers to price and service • Battery storage • Wind • One of Europe’s feed self-generated models, and gives • Network services • Solar electricity into the grid customers the largest producers and • Smart meters • Biomass (“prosumers”) opportunity to distributors of district • Waste Provides marketplaces • Flexibility services to understand and reduce heating their environmental and access to both electricity Actively phasing out marketplaces where impact producers and fossil-based production customers can buy and consumers to optimise sell electricity network functionality 6

Our beliefs about the future 1 2 3 4 5 6 Cost efficiency Sustainability is Further Digitalization of New To best serve the the business – electrification is a the entire energy and competencies, needs of and a key enabler of value chain is speed in learning competitiveness customers, the prerequisite for fossil-free living required to is a prerequisite and diverse and ability to deliver access to and, given the leverage flexibility inclusive teams for value creation simple solutions and growth. customers, pace required, and serve are critical in the in an increasingly competence and demand for fossil- customers in a energy transition . complex energy investors. free electricity fossil free, robust landscape is and infrastructure and cost efficient required. will increase energy system. significantly.

Strategy 8

Four strategic focus areas become five A strategy for leading the energy transition 9

Strategy and strategic targets Outcome of our strategic targets in 2019 Strategic targets to 2020 FY 2019 Comments Customer engagement, Net Promoter Improved performance by Vattenfall Score relative (relative customer +1 and peers satisfaction): +2 Commissioned new renewables capacity Commissioning of Horns Rev 3 1 226 MW 2016-2020: ≥2,300 MW (407 MW) and Slufterdam (29 MW) Absolute CO 2 emissions, pro rata: ≤21 19.3 1 Mtonnes Lower coal-fired generation Mtonnes Higher gross margin in Power Return On Capital Employed (ROCE): 8.5% Generation and capital gain ≥8% (Hamburg) Unsatisfactory level, major ongoing Lost Time Injury Frequency (LTIF): ≤1.25 2.1 efforts Employee Engagement Index: ≥70% 69% Strong improvement 1 Including the heat operations in Hamburg, which have been sold and where emissions 10 amounted to 1.1 Mtonnes during the period January-September.

Our milestones towards fossil-free living within one generation 2020 2023 2025 2030 2035 Fossil-free energy We provide electric Coal is phased out We are not done, We generate fossil-free more to come… solutions available charging for half a electricity to power 30 from all our heat for all our customers million cars million homes operations Our operations in 10 GW of third party We pilot 100 MW of Our emissions are the Netherlands are renewables capacity green hydrogen gas reduced by 40%, in coal-free under management line with required level production from fossil- free electricity to limit global warming 600 MW additional, to below 2˚C flexible hydro The Nordic production capacity enables fleet is free from fossil more renewable fuels generation 11

Investment plan 2020-2021 Total capex Growth capex per Growth capex per country 2020-2021 technology 2020-2021 2020-2021 3% 9% 16% 8% 11% 8% 37% 58bn 35bn 35bn 11% 12% SEK SEK 23% SEK 61% 70% 31% Growth, 35bn SEK Netherlands, 13bn SEK Wind power, 25bn SEK Maintenance, 13bn SEK Heat grids, 4bn SEK Denmark, 11bn SEK Replacement, 9bn SEK Distribution grids, 3bn SEK Sweden, 4bn SEK 1 New businesses, 3bn SEK UK, 4bn SEK Solar energy & batteries, 1bn SEK Germany, 3bn SEK 1 Mainly decentralised solutions, energy storage, e-mobility and initiatives like HYBRIT 12

Financials 13

Financial targets Financial Targets over a Outcome Comment business cycle 1 targets 2019 Profitability Return on capital 8.5% 2 The return on capital employed employed: ≥8% was 8.5% (7.0%). Higher gross margin in operating segment Power Generation and capital gain from divestment of district heating operations in Hamburg contributed positively Capital FFO/adjusted 26.5% FFO/adjusted net debt increased to structure net debt: 26.5% (20.7), mainly due to higher 22% – 27% EBITDA as a result of higher achieved prices in operating segment Power Generation and lower paid tax Vattenfall’s Board of Directors revised its Dividend Dividend: 3.6 billion 40% – 70% of the policy SEK previous dividend proposal for 2019 year’s profit from SEK 7,245 million to SEK 3,623 after tax million. The proposal was adopted by the Annual General Meeting 1 5 – 7 years 14 2 The key ratio is based on average capital employed

Financial highlights 2019 Earnings Adjusted net debt 26.5% 25.1 20.7% 22.1 19.9 17.6 14.9 12.0 132.0 112.3 FY 2018 FY 2019 FY 2018 FY 2019 Underlying EBIT (SEK bn) Profit for the year (SEK bn) FFO/Adjusted net debt (%) EBIT (SEK bn) Adjusted net debt (SEK bn) • Underlying EBIT increased by SEK 5.2 bn to SEK 25.1 bn. Higher contribution from Power Generation and Wind was partly offset by lower contribution from Distribution due to the storm ”Alfrida”, higher transmission costs and depreciation • EBIT increased by SEK 4.5 bn to SEK 22.1 bn and Profit for the year increased by SEK 2.9 bn to SEK 14.9 bn • Adjusted net debt increased by SEK 19.7 bn, mainly due to negative cash flow after investments, implementation of IFRS 16 Leases, dividends as well as higher provisions for pensions and nuclear power • FFO/Adjusted net debt at 26.5% was at the upper level of the target range of 22-27% • Return on capital employed (ROCE) at 8.5% was above the target of 8% 15

Sustainability 16