Vattenfall Investor presentation - 10 May 2021
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Vattenfall
Investor presentation
10 May 2021
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2
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Vattenfall Investor Presentation
Agenda Speakers
1. Group overview Johan Gyllenhoff
Head of Finance and Group
2. Sustainability is fully integrated in our strategy Treasurer
3. Green financing
4. Financial highlights and hybrid offering
Annika Ramsköld
5. Appendix Head of Sustainability
4
Group overview
This is Vattenfall Activities in the Value Chain Active Inactive
Upstream Production Transmission Distribution Trading Retail Services
Main markets CO2 emissions & Renewable
In Brief 6.8 Million • Sweden capacity
Electricity customers 90 4 000
• Vattenfall is a leading European • Germany
3 500
energy company • Netherlands 3 000
1.8 Million 60
Mtonnes
• We want to make fossil-free living Heat customers • Denmark 2 500
MW
• United Kingdom 2 000
possible within one generation 30 1 500
3.3 Million 1 000
• We are driving the transition to a more Electricity 500
sustainable energy system through growth grid customers 0 0
in renewable production and climate
smart energy solutions for our customers 2.3 Million
Gas customers Installed renewable capacity (MW)
• 100 per cent owned by the Swedish CO2 emissions (Mtonnes)
State 19,859 Electricity generation EBITDA breakdown by
Employees
• Our long-term credit ratings are BBB+ breakdown by technology, 2020 segment, 2020
stable outlook by S&P and A3 negative Wind Customers & Solutions
Distribution
outlook by Moody’s 6%
10% 19%
Nuclear
Fossil 35% Heat 6%
20% SEK
112.8
46.5 bn
TWh 49%
20%
Wind
35%
Hydro Power Generation
6
Vattenfall’s value chain
Production Electricity distribution Sales of electricity, District heating Energy services and
heat and gas decentralised generation
Production from • Guarantees secure supply • Sells electricity, heat and • Drives the transformation Offers energy services
• Hydro via well-functioning gas to consumers and towards fossil-free heating • Heat pumps
distribution networks and business customers and cooling solutions
• Nuclear smart network solutions together with cities • Solar panels
• Focuses on various price
• Coal • Enables customers to feed and service models, and and regions • Charging solutions for
• Natural gas self-generated electricity gives customers the • One of Europe’s electric vehicles
into the grid (“prosumers”) opportunity to reduce their largest producers • Battery storage
• Wind
environmental impact and distributors of
• Solar • Network services
district heating
• Biomass • Smart meters
• Waste Provides marketplaces and
access to marketplaces
Actively phasing out where customers can buy
fossil-based production and sell electricity
7
Significant shift in production portfolio over the past 5 years
The shift has accelerated with large investments in renewables and phase out of fossil production
CAPEX by technology Electricity production mix CO2 emissions
SEK 30.8 bn SEK 33.9 bn 173.0 TWh 112.8 TWh
5.5% 83,8
20.1%
39.6% 48.6% 9.6%
71.7%
3.4% 35.2%
30.5%
22.8%
10.4% 12,1
5.7% 41.2%
19.5% 16.6% 25.3%
2015-16 2021-22 2015 2020 2015 3 2020 4
1 2
Other Hydro Wind Fossil Other11 Hydro Wind Fossil 2
CO2 emissions (Mtonnes)
CO2 emissions (Mtonnes)
Major investments in renewable projects Share of fossil production has been reduced …and with this our CO2 emissions
• Around SEK 23 billion of investments are planned dramatically… We sold the lignite business in 2016, which reduced
for new wind farms, both onshore and offshore • Strong wind growth: 3.5 GW installed capacity; our CO2 footprint dramatically
• Recent milestones: ~ 3 GW under construction and >4 GW in • We continue to identify further actions such as
• Final investment decision for Hollandse Kust development retiring coal fired power plants earlier than
Zuid 1-4 offshore wind farm in the • Increased focus on decentralised production, planned (such as Hemweg-8 in the Netherlands
Netherlands, the world’s largest offshore wind storage and EV charging
farm when commissioned in 2023 and Moorburg in Germany)
• Coal-fired production has been phased out such • We are also phasing out coal from all of our
• Major onshore projects in the Nordics and the as Reuter C in Berlin, Moorburg in Hamburg and
UK (Blakliden & Fäbodberget, South Kyle) operations by 2030, at latest
Hemweg-8 in the Netherlands
• Proof of concept in solar & batteries ready for
scaling up and innovative solutions such as
co-location with wind farms (Haringvliet,
Battery at Pen y Cymoedd)
1 Other includes nuclear, solar & batteries (CAPEX only) & biomass
2 Includes hard coal and gas
4 Pro rata values, corresponding to Vattenfall’s share of ownership
3 Consolidated values for 2015. Consolidated emissions are approximately 0.5% higher 8
than pro rata emissions, corresponding to Vattenfall’s share of ownership
Our milestones towards fossil-free living
within one generation
2023 2024 2025 2026 2030 2035
We provide electric 750 MW of We reduce CO2 Our HYBRIT We reduce CO2 We are not done,
charging for 1 billion additional, flexible intensity by >40% partnership intensity by nearly more to come…
fossil-free kilometers hydro capacity from 2017 produces fossil-free 70% from 2017
annually enables more steel
renewable We generate fossil- We have completely
generation free electricity to phased out coal
power 30 million
homes We operate a bio-
energy carbon
We provide 7 TWh of capture and storage
renewable energy plant
through corporate
PPAs.
9Sustainability is fully
integrated in our strategy
Enable fossil-free living within one generationEurope continues to be a highly attractive growth market
Despite significant ramp-up in renewables, much more growth is expected in the coming decade
Increasing demand and phase-out of coal Double-digit growth across renewable technologies until 20301
gives plenty of room for growth in Europe Europe ROW2
Offshore wind (GW) Onshore wind (GW) Solar (GW)
Increased demand
250 974 2077
driven by 1000 2100
Investment need electrification trend 194
200
750 664
56% 1400 1239
150
79%
91 500 58%
Expected lifetime 100 348
~20-25 years 79%
700
448
250 62%
50 44%
Significant 22
42% 74%
phasing-out 21%
39% 21%
0 0 0 26%
Today ~25 year horizon 2018 2025 2030 2018 2025 2030 2018 2025 2030
Europe 17 GW 46 GW 97 GW 136 GW 279 GW 367 GW 115 GW 255 GW 379 GW
ROW 5 GW 45 GW 97 GW 212 GW 405 GW 588 GW 333 GW 1057 GW 1,555 GW
1 Source: Bloomberg NEF
2 ROW excludes China 11Energy transition to spur dramatic growth in electricity
demand in Sweden
Electrification, growth in renewable production capacity and ageing assets call for large grid investments
Electricity demand set to grow due to Installed wind capacity continues to Existing grid assets are increasingly in
electrification and new electricity grow need of reinvestments
intensive businesses • More and more capacity will be • There was a large build out of grid assets
• Electrification of industry and transports to intermittent and decentralised in 1970-1990. These assets are now
increase total electricity demand • Wind production is set to continue the reaching the age when they need to be
growth in Sweden, mainly in the North and reinvested in
• New businesses such as data centres and
battery factories are also likely to have a off the coast in Southern Sweden which • This is on top of the need to make new
significant impact increases the need for grid capacity investments in the grid to accommodate
more renewable energy and electrification
• Efficiency improvements in the residential
sector only have a small mitigating effect
on total demand
Forecast – Change in electricity demand (Sweden)1 Forecast – wind power generation (Sweden)2 Asset age structure – Vattenfall Eldistribution3
50 140 4 10 years 20 years 30 years
40 120 40 years 50 years
100 3
30
BSEK
TWh
TWh
80
20 2
60
10 40
1
0 20
2020 2025 2030 2035 2040 2045
-10 0 0
2020 2030 2040
Housing Datacenter etc Industry Transportation 1930 1940 1950 1960 1970 1980 1990 2000 2010
1 Source: Nepp, Färdplan för fossilfri el, Aug 2019
2 Source: Svensk vindenergi, Färdplan 2040, Dec 2020
3 Asset 12
base per 2020-01-01A strategy based on an “integrated utility logic”
To enable our goal of fossil-free living within one generation
We believe being active in the whole value chain is strategically important:
It increases our competitive advantage in eg. wind auctions, by
enabling stable revenues through Corporate PPAs with our customers
Access to renewable volumes on the customer side differentiates us
from competitors as fossil-free electricity becomes more scarce
The ability to optimise dispatch across both customer loads and
supply brings optimal value of a total portfolio
Diversifying and reducing total portfolio risk means lower cost of
capital and an ability to take on more debt
13To enable fossil-free living sets a focus on the full value chain
CO2 emissions 2020
Suppliers Own operations Customers
5
Mtonnes
12
Mtonnes
12
Mtonnes
Reducing emissions Climate smart
Supplier dialogues
in line with scientific solutions for homes
and requirements
limits and cities
Lifecycle Growth in renewables City
Assessments partnerships
Reducing emissions
Industry Environmental
from employee
collaborations product offerings
travelling
14Vattenfall’s 2030 emissions targets have been approved by
the Science Based Target initiative (SBTi)
Projected Vattenfall Scope 1 & 2 CO2 intensity vs. SBT scenarios Vattenfall Total 2017 Scope 3 Emissions
16
14
150 2017 2030 target set at 20% reduction by 2030
93 gCO2e, a 38% 12
130 reduction 30% reduction
153 10
MtCO2e
gCO2e / kWh
110 50% reduction in business
8 by 2030 travel by 2030
90 6
70 67 4
50 2
30 0
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Use of sold Fuel- and Waste Capital goods Upstream Other
products energy- generated in transport and
Vattenfall SBT 2° SBT 1.5° SBTi Paris related operations distribution
activities
• Target set for 38% reduction from 2017-2030; more ambitious target • Science-based target set for 20% reduction of emissions from use of
under discussion sold products; more ambitious target under discussion
• New 2025 CO2 intensity KPI set for 86 gCO2e/kWh, in line with • Programmes are in place to reduce emissions in other categories but
1.5°trajectory we have not included them in the target for the sake of simplicity.
• Based on planned coal phase out by 2030 and expansion in wind + • We will focus on further expanding non-fossil heating solutions such as
solar heat pumps, solar thermal, non-fossil gas, and others
• Requires continued successful execution of major projects
15Committed to electrification of society
All sectors need to contribute to the transition and electrification will be a key abatement option for reaching the
national and EU targets by 2030
Total green house gas emissions Transports
Sweden1 (2018) 52 MtCO2e MtCO2e
3 2 1 16
10
7
5 Cars Heavy Trucks Other Road Air,
Transports Railroad,
7 Shipping
16 Industry
64% of total MtCO2e
Emissions 17
5
3
6 3
17
Iron & Steel Cement Refineries Other
Ambitious EU and national targets are forcing emission trajectories downwards. This will accelerate the energy transition and
electrification will be a key abatement option for reaching 2030 targets in transport, industry and heat sectors. In turn, these sectors
drive demand for fossil-free electricity & heat, grid capacity and flexible solutions.
1 Source: Swedish Environmental Protection Agency 16Electricity - from a power source to a source of innovation
Together with our partners, we pave the way for a new generation of transports, industries and materials
Research project for Cooperation in large Feasibility study on Electrification of Co-operation for e-
a carbon dioxide- scale bio-diesel electrified mines and smelters mobility
free steel industry production cement production
Green guaranteed Support of a major Northern Europe’s Powering Storage projects at a
energy delivery enterprise for largest charging sustainable number of wind parks
large customers, battery production network for e- datacenters
e.g. in Sweden vehicles
17Green financing
Future investments focused on renewables
Total capex Growth capex per Growth capex per country
2021-2022 technology 2021-2022 2021-2022
6% 10%
18% 9%
11% 29%
57bn 14% 32bn 32bn
SEK SEK SEK
57%
25%
22%
71%
28%
Growth, 32 bn SEK Wind power, 23 bn SEK Netherlands, 9 bn SEK
Maintenance, 14 bn SEK Electricity distribution, 4bn SEK Denmark, 9 bn SEK
Heat supply, 3 bn SEK UK, 7 bn SEK
Replacement, 10 bn SEK
Other 1, 2 bn SEK Sweden, 4 bn SEK
Empty Empty Germany, 3 bn SEK
Empty
1 Mainly charging solutions, solar and battery projects, decentralised solutions and the
19
Hybrit projectVattenfall’s green bond framework
Use of proceeds - eligible categories with examples of technologies
Renewable energy and related infrastructure Energy efficiency
• Wind energy • Hydro power
• Solar energy • Smart grids/meters
• Biomass • Fossil-free1 district heating and cooling
• Geothermal • Energy recovery
• Hydrogen
Electrification of transport and electrification of heating Industry projects
• Infrastructure for electric vehicles • Activities enabling the transformation to fossil-free1 production
• Power to Heat
1Fossil-free: not depending on fossil fuels for its own operations (e.g. for Vattenfall
20
no fossil fuels for energy generation and no fossil products to customers)Recent investment projects
Kriegers Flak Princess Ariane Hollandse Kust Zuid 1-4 HYBRIT
• Will be Denmark’s largest • Largest onshore wind farm in • Will be the world's largest • Pilot project in collaboration
offshore wind farm the Netherlands offshore wind farm once with SSAB and LKAB for
• Scheduled to be operational • Electricity generated by the completed in 2023 development of a hydrogen-
by end of 2021 wind farm is used to power a • Project without subsidies in the based process for fossil-free
nearby data centre Netherlands steel production
• The wind farm is estimated to
reduce CO2 emissions by 325 • Saving approximately 350 • Renewable output equivalent • If implemented at full scale,
ktonnes per year ktonnes of CO2 emissions per to the annual consumption of HYBRIT has the potential to
year over two million Dutch reduce Sweden’s C02
• Capacity: 605 MW emissions by 10% and
• Completed in 2020 households
• Total investment: 7,600 MDKK Finland’s by 7%
• Capacity: 301 MW • Capacity: 1,500 MW
• Total investment: 858 MSEK
• Total investment: 394 MEUR • Total investment: 2,600 MEUR
Note: See Appendix for more information on the projects 21A leader in the European renewables transition
Strong position within offshore wind and extensive European pipeline ahead
Geographical overview – we develop, construct and operate Competitive landscape – Offshore capacity involved (GW)²
wind and solar farms in our core European markets1
0,0 5,0 10,0 15,0 20,0 25,0 30,0
Sweden
In operation: 328 MW RWE 5,0 13,4 0,9
Under construction: 353 MW Orsted 8,0 9,2 10,3
UK Denmark In development: 193 MW SSE 0,5 11,9 0,0
In operation: 1,083 MW In operation: 802 MW Vattenfall 2,1 8,8 0,0
Under construction: 240 MW Under construction: 605 MW Equinor 1,2 7,6 10,1
In development: 3 600 MW In development: 344 MW 5 Iberdrola 1,5 4,6 14,2
12 EDF 0,7 4,7 2,4
Aberdeen Bay EnBW 0,9 3,9 2,1
Vesterhav Macquarie 0,7 3,9 7,5
Horns Rev 3 Shell 0,8 1,0 7,0
Lillgrund
Sandbank Horns Rev 1
Ormonde Danish Kriegers Flak Operational Pipeline (Europe) Pipeline (Non-Europe)
7 Dan Tysk
² Minority shares included as 100%, sorting based on operational projects and European pipeline
Norfolk Boreas
Alpha Ventus Netherlands Source: 4C Offshore Wind Farm Database
15 In operation: 723 MW
Norfolk Vanguard
Under construction: 1,699 MW Under construction and pipeline1
In development: 57 MW
Kentish Flats
Kentish Flats Extension
Thanet
2 ~ 3 GW > 4 GW ~ 1 GW ~ 200 MW
Offshore wind project Hollandse Kust Germany
in operation Zuid 1-4
In operation: 658 MW Wind projects
Offshore wind project in Wind projects Solar projects Batteries
under
construction/development NoordzeeWind in development in development pipeline
construction
Number of onshore wind
farms country-wide
22
1 As of December 2020Financial highlights and
hybrid offeringFinancial targets
Targets over a business
Financial targets cycle1 FY 2020 FY 2019 Comment
Return on capital employed decreased to 5.8%,
Return on capital employed: which is below the target of 8%, mainly owing to
Profitability 5.8% 8.5%
≥8%2 impairment losses related to the Moorburg power
plant in Hamburg
FFO/adjusted FFO/adjusted net debt increased to 28.8% in 2020,
Capital structure net debt: 28.8% 26.5% mainly owing to lower adjusted net debt resulting
22%–27% from higher cash flow from operations
The Annual General Meeting decided on a dividend
Dividend:
of SEK 4 billion equivalent to 62% of profit for the
Dividend policy 40%–70% of the year’s profit SEK 4.0 bn SEK 3.6 bn
year attributable to the owner of the parent
after tax
company for 2020
1 5–7 years
2 The key ratio is based on average capital employed 24Credit ratings overview
Long term rating: A31 Long term rating: BBB+1
Short term rating: P-2 Short term rating: A-2
Outlook: Negative Outlook: Stable
Latest publication: 4 February 2021 Latest publication: 4 February 2021
• “Most of Vattenfall’s operating segments were overall stable and the • “Vattenfall managed to keep its operating performance relatively
company showed a high degree of resiliency throughout 2020. “ unchanged in 2020 compared with 2019, despite record low power
• “The company's overall solid credit metrics were supported by a prices, which we view as a support for the current rating.”
combination of (1) resiliency in its EBITDA generation (2) the • “Profitability continues to be underpinned by its diversified earnings
company's decision to halve its dividend payment last year (3) a very base, with increased contributions from the heat business divisions
favorable movement in margins calls affecting working capital, which partly offsetting the lower contribution from its power generation
subsequently improved the company's reported net debt figure (inflow segment, which was also supported by hedges in place.”
of SEK 12.6 billion during last year, whereas 2019 saw an outflow of
• “We anticipate that Vattenfall will gradually benefit from a recovery of
SEK 20.7 billion).”
Nord pool system spot prices in the Nordic region.”
• “We expect Vattenfall's credit metrics to weaken in 2021 as power • “Although a continued stronger-than-expected financial risk profile
prices remain at low levels and with the company having locked in could lead to upside rating pressure, we believe that Vattenfall's credit
69% of its Nordic output for the year at €28/ MWh (against achieved ratios will soften over 2021-2022. This is because investments are set
prices of €31/ MWh during 2020). In addition, Vattenfall's heavy to increase to about SEK 57 billion over 2021 and 2022, up from SEK
capital expenditure programme - amounting to net expenditures of 23.6 billion in 2020.”
SEK 57 billion over 2021 and 2022 - will weaken free cash flows in
the current year.”
1 Rating factors in a one notch uplift given that Vattenfall is 100% owned by the Swedish state 25Transaction rationale
Supports commitment to solid investment grade rating. Replacement of existing SEK 6bn
NC2022 hybrid securities and further strengthening of the balance sheet
Issuance under our Green Bond Framework reinforces sustainability commitment connected
to funding activities
Provides cost efficient non-dilutive equity-like capital to support our fossil-free living within
one generation strategy
26Green Hybrid Structural Overview
Issuer ▪ Vattenfall AB (publ)
Issuer Ratings* ▪ A3 (Negative) by Moody’s / BBB+ (Stable) by S&P
Expected Instrument Ratings* ▪ Baa2 by Moody’s / BB+ by S&P
Ranking ▪ Direct, unsecured and subordinated, ranking senior to any share capital and pari passu with Vattenfall’s outstanding hybrids
Expected Equity Credit ▪ 50% with Moody’s (Basket C) until Year [52] / 50% with S&P (Intermediate) until Year [7]
Currency / Size ▪ SEK benchmark
Maturity Date ▪ [●] 20[83]([62] years) / [7] NC [●] 20[28]
First Reset Date ▪ [●] 20[28] (Year [7])
Tranche FRN FXD
▪ On any date in the 6-month period prior to and including the 20[28] Call Date ([●] May 20[28]) and ▪ On any date in the 6-month period prior to and including the First Reset Date ([●] May 20[28]) and
Optional Redemption every quarterly Interest Payment Date thereafter, at par, together with any Arrears of Interest and any every annual Interest Payment Date thereafter, at par, together with any Arrears of Interest and any
other accrued and unpaid interest other accrued and unpaid interest
▪ 3mSTIBOR + Margin (initial credit spread + any relevant step-up(s)) ▪ [•]% fixed rate until the First Reset Date, payable annually in arrear on [●] May in each year
Coupon ▪ Coupons payable quarterly in arrear on [●] February, [●] May, [●] August and [●] November in each ▪ Reset on the First Reset Date and every 5 years thereafter to the then prevailing 5 Year SEK Mid-
year Swap Rate + Margin (initial credit spread + any relevant step-up(s))
▪ 25bps on [●] May 20[33] (Year [12]) (the “20[33] Step-up Date”)
Coupon Step-up Dates
▪ Additional 75bps on [●] May 20[48] (Year [27]) (the “20[48] Step-up Date”)
▪ At the Issuer’s sole discretion at any time
▪ Arrears of Interest will be cumulative and compounding
▪ Arrears of Interest may be paid (in whole or in part) at any time but will be mandatorily payable (in whole only) (i) on any Interest Payment Date in respect of which the Issuer does not elect to defer, (ii) on the date on
which the Capital Securities are redeemed or repaid; and (iii) upon any of the following events (subject to customary carve-outs):
Optional Interest Deferral a. Declaration or payment of any distribution or dividend or any other payment made by the Issuer on its share capital or any other obligation of the Issuer which ranks or is expressed by its terms to rank
junior to the Capital Securities or by the Issuer or any subsidiary of the Issuer, as the case may be, on any Parity Securities;
b. Redemption, repurchase, repayment, cancellation, reduction or other acquisition by the Issuer or any subsidiary of the Issuer of any shares of the Issuer or any other obligation of the Issuer which ranks
or is expressed by its terms to rank junior to the Capital Securities; and/or
c. Redemption, repurchase, repayment, cancellation, reduction or other acquisition by the Issuer or any subsidiary of the Issuer of any Parity Securities,
▪ Vattenfall will have the right to redeem all of the Capital Securities at any time upon the following events:
a. Tax Deductibility Event / Rating Methodology Event - at 101% until 6 months prior to the 20[28] Call Date (FRN tranche) / 6 months prior to the First Reset Date (FXD tranche), at par thereafter
Special Redemption Events
b. Substantial Repurchase Event (≥75%) / Withholding Tax Event – at par
c. Make-whole – at the make-whole redemption amount
▪ Subject to applicable law, no Holder may exercise, claim or plead any right of set-off, compensation or retention in respect of any amount owed to it by the Issuer in respect of, or arising under or in connection with,
No Set-Off
▪ the Capital Securities and each Holder shall, by virtue of its holding, be deemed to have waived all such rights of set-off, compensation or retention
Substitution & Variation ▪ Yes, in lieu of redemptions upon a Tax Deductibility Event, Rating Methodology Event or Withholding Tax Event; subject to certain preconditions (including terms not materially less favourable to Holders)
Replacement Language ▪ Intention-based (non-binding), subject to customary carve-outs
Denominations ▪ SEK 2,000,000 + SEK 1,000,000
Governing Law ▪ Swedish law
▪ The Issuer intends to allocate an amount equal to the net proceeds of the issue of the Capital Securities to the financing or refinancing of a portfolio of new or existing Eligible Green Projects that meet the
Use of Proceeds
requirements of the Issuer’s Green Bond Framework available on its website, as applicable from time to time
Listing ▪ Nasdaq Stockholm
* Rating at the time of issuance. A security rating is not a recommendation to buy, sell or hold securities and should be evaluated
independently of any other rating. The rating is subject to revision or withdrawal at any time by the assigning 27
rating organization. Please refer to the Prospectus for full Terms & ConditionsDebt repurchase / Tender Offering
▪ SEK 3bn Fixed Rate Reset ▪ SEK 3bn Floating Rate Reset
Description
Capital Securities due 2077 Capital Securities due 2077
Summary
ISIN ▪ XS1205627547 ▪ XS1205625251
▪ Interest Payment Date falling in
Vattenfall has invited holders of its
First Call Date ▪ 19 March 2022 outstanding SEK Fixed and Floating Rate
March 2022 (21 March 2022)
Outstanding Principal Reset Capital Securities to tender such Notes
▪ SEK 3,000,000,000 ▪ SEK 3,000,000,000
Amount for cash
Purchase Price ▪ 102.16% ▪ 101.52%
• The rationale of the tender offer, and the
Amount subject to the
▪ Any and all intended new notes, is to optimise Vattenfall’s
Offer
cost of debt and balance sheet structure and
▪ If 80% or more of the principal amount of the notes has been repurchased enable investors to free up cash to invest in
Clean-up and cancelled, Vattenfall may redeem all of the remaining notes at their the New Capital Securities
principal amount with accrued and unpaid interest.
• Vattenfall intends to cancel any notes
▪ When considering allocations in the new notes, Vattenfall may give
preference to holders of the SEK Subordinated Capital Securities who have
purchased pursuant to the offer
Priority Allocations
validly tendered or given a firm intention to tender their holdings pursuant to
the tender offer • The tender offer commences on 10 May 2021
▪ Lucid Issuer Services Limited
and will expire on 20 May 2021, with
Tender Agent ▪ Tel: +44 20 7704 0880 settlement expected on 26 May 2021
▪ Email: vattenfall@lucid-is.com
Dealer Managers ▪ Citi, SEB and Swedbank
28Vattenfall key highlights
BBB+ stable outlook
by S&P and A3 100% Owned by
negative outlook by Swedish State
Moody’s
A leading European Stable and predictable
energy company with cash flow from
activities across the electricity distribution
value chain and district heating
Experienced player in
Leading towards renewables and one
sustainable production of the leaders in wind
power generation
Significant growth in
A significant
renewable production
transformation has
and climate smart
already happened
energy solutions
29Appendix
Financial overview
Vattenfall Q1 Results 2021
Financial highlights
Key data Key developments
SEK bn Q1 2021 Q1 2020
Net Sales 45.9 48.2 • Net sales decreased by SEK 2.2 bn to SEK 45.9 bn
mainly due to negative currency effects (-1.8 bn).
EBITDA 17.7 16.9 Lower sales volumes in the Netherlands and the
Underlying operating profit (EBIT) 12.1 10.2 B2B segment in France had an additional impact
EBIT 13.4 12.3
• Underlying EBIT increased by SEK 1.9 bn mainly
due to higher achieved prices, higher hydro power
Profit for the period 10.4 6.9 generation and higher realised trading result.
Funds from Operations (FFO) 14.0 12.2
Higher contribution from Heat also had a positive
impact, mainly due to the closure of Moorburg
Cash flow operating activities 11.1 -8.5
• Profit for the period increased to SEK 10.4 bn. The
Net debt 43.9 81.6 increase stems in addition to the increase in
underlying operating profit, from higher returns from
Adjusted net debt 112.2 148.3
the Nuclear Waste Fund
Adjusted net debt/EBITDA1 (times) 2.4 3.2
• ROCE was 5.9% mainly due to impairments made
Financial targets in 2020
ROCE1 (≥8%) 5.9 9.4 • FFO/Adjusted net debt (AND) increased to
32.8%, driven primarily by a decrease in AND. The
FFO/adjusted net debt1 (22-27%) 32.8 25.2 decrease mainly stems from positive cash flow after
investments which was supported by SEK 25 bn in
positive working capital flows (mainly margin calls)
1 Last 12-month values 32Development of underlying EBIT Q1 2021
Increase from Power Generation, Heat and Customers & Solutions
Change in Q1 2021 vs. Q1 2020 Breakdown per operating segment Highlights
SEK bn SEK bn
• Customers & Solutions: More customers in
Underlying EBIT 2020 10.2 12.1 Germany and lower temperatures in the
1.2
Nordics
Customers & Solutions 0.2
10.2 • Power Generation: higher achieved prices,
Customers & Solutions 1.0 higher hydro generation and higher realised
earnings from trading. Partly countered by
Power Generation 1.8 lower nuclear power generation due to
6.3 closure of Ringhals 1
Wind -0.4 Power Generation 4.6 • Wind: low wind speeds and more
maintenance work
Heat 0.5 • Heat: lower opex and depreciation due to
closure of Moorburg and higher heat sales
Wind 2.1 1.8 because of lower temperatures and a
Distribution -0.3 growing customer base. New plant Marzahn
Heat 0.9 1.4 and Lichterfelde fully in operation also
Net other effects 0.1 contributed
Distribution 2.1 1.8 • Distribution: lower margin in the Swedish
Underling EBIT 2021 12.1 -0.5 -0.4 operations due to lower prices in the local
Other
Q1 2020 Q1 2021
network
33Cash flow development Q1 2021
Higher working capital mainly due to seasonal effects within Customers & Solutions and Heat
SEK bn
17.7 -1.1
-1.2
0.1 -1.6
14.0 -2.9
11.1 -2.3
8.8 -3.1
-0.1 5.7
EBITDA Tax paid Interest Capital Other1 FFO Change Cash Maintenance Free Growth Divestments, Cash flow
paid/received, gains/ in WC flow from and cash flow investments net before
net losses, net operating replacement financing
activities investments activities
Main effects
• Change in working capital mainly driven by change in operating receivables and operating liabilities attributable to seasonal effects in the Customers &
Solutions and Heat operating segments (SEK -5.4 bn), changes related to CO2 emission allowances (SEK -2.6 bn) and an increase in inventories (SEK -
0.4 bn). Partly countered by the net change in margin calls (SEK 4.9 billion)
• Growth investments mainly related to wind power
1 ”Other” includes non-cash items included in EBITDA, mainly changes in fair value of
34
commodity derivativesDebt maturity profile1
SEK bn 31 Mar. 31 Dec.
2021 2020
20,5
Duration (years) 4.7 3.8
Average time to maturity (years) 6.5 5.1
Average interest rate (%) 2.8 3.4
Net debt (SEK bn) 43.9 48.2
Available group liquidity (MSEK) 43.3 50.8
10,2 Undrawn committed credit facilities
9,0 20.5 23.1
(MSEK)
7,0
6,0 6,1
5,2 5,2 5,2 5,5
3,8
Cumulative maturities excl. undrawn back-up facilities
1,0
0,2 0,3 0,0 0,0 2021- 2024- From
2023 2026 2027
2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041
Debt incl. hybrid capital 17.3 15.5 31.9
Hybrid capital (first call date) Debt (excl. hybrid cap) Undrawn back-up facilities % of total 27% 24% 49%
1 Short term debt (Repo’s and Commercial paper: 8.9), loans from associated companies,
minority owners, margin calls received (CSA) and valuation at fair value are excluded. Currency
35
derivatives for hedging debt in foreign currency are included.Price hedging
Vattenfall continuously hedges its future electricity generation through sales in the forward and futures markets. Spot prices
therefore have only a limited impact on Vattenfall’s earnings in the near term
Estimated Nordic1 hedge ratio (%) and indicative prices Achieved prices2 - Nordic portfolio
69% Q1 2021 Q1 2020 FY 2020
33 27 31
56%
Sensitivity analysis – Continental3 portfolio
Market +/- 10% price impact on future profit
25% quoted before tax, MSEK4
Observed yearly
2021 2022 2023
volatility
Electricity +/- 251 +/- 417 +/- 1,574 20% - 27%
2021 2022 2023 Coal -/+ 42 -/+ 30 -/+ 14 19% - 21%
Average Gas -/+ 39 -/+ 106 -/+ 774 19% - 28%
indicative Nordic 28 28 26
hedge prices in CO2 -/+ 33 -/+ 55 -/+ 396 50% - 51%
EUR/MWh
1Nordic: SE, DK, FI 3Continental: DE, NL, UK.
4 The denotation +/- entails that a higher price affects operating profit favorably, and -/+ vice 36
2Achieved prices from the spot market and hedges. Includes Nordic (SE, DK, FI) hydro,
nuclear and wind power generation versaLiquidity position
Facility size,
Group liquidity SEK bn Committed credit facilities EUR bn SEK bn
Cash and cash equivalents 18.2 RCF (maturity Nov 2023) 2.0 20.5
Short term investments 29.3 Total undrawn 20.5
Reported cash, cash equivalents & short 47.5
term investments
Debt maturities2 SEK bn
Unavailable liquidity1 -4.2 Within 90 days 0
Available liquidity 43.3 Within 180 days 2.0
1 German nuclear ”Solidarvereinbarung” 1.2 SEK bn, Margin calls paid (CSA) 2.1 SEK bn,
Insurance “Provisions for claims outstanding” 0.8 SEK bn
2 Excluding loans from minority owners and associated companies 37Breakdown of gross debt
Total debt: SEK 91.8 bn (EUR 9.0 bn)
External market debt: SEK 80.1 bn (EUR 7.8 bn)
Debt issuing programmes Size (EUR bn) Utilization (EUR bn)
EMTN 42% EUR 10bn Euro MTN 10.0 3.4
EUR 4bn Euro CP 4.0 1.0
Hybrid capital 21%
Total 14.0 4.4
Loans from minority shareholders 12%
Commercial paper / Repo 10%
Lease 7%
• All public debt is issued by Vattenfall AB
Margin calls (CSA) 4% • The main part of debt portfolio has no currency exposure that
has an impact on the income statement. Debt in foreign
Bank loans 2% currency is either swapped to SEK or booked as hedge against
net foreign investments.
Other liabilities 1% • No structural subordination
Loans from associated companies 0%
1 EMTN= Euro Medium Term Notes 38Reported and adjusted net debt
Reported net debt 31 Mar. 31 Dec. Adjusted net debt 31 Mar. 31 Dec.
(SEK bn) 2021 2020 (SEK bn) 2021 2020
Hybrid capital -19.7 -19.3 Total interest-bearing liabilities -91.8 -104.8
Bond issues and liabilities to credit institutions -40.8 -49.6 50% of Hybrid capital 9.9 9.7
Commercial papers and Repos -8.9 -13.3 Present value of pension obligations -40.4 -43.8
Liabilities to associated companies -1.0 -0.7 Wind & other environmental provisions -10.9 -10.6
Liabilities to minority shareholders -10.8 -10.9 Provisions for nuclear power (net) -36.4 -37.8
Lease liabilities -6.4 -6.0 Margin calls received 3.3 4.1
Other liabilities -4.2 -4.9 Liabilities to minority owners due to consortium
10.8 10.9
agreements
Total interest-bearing liabilities -91.8 -104.8
= Adjusted gross debt -155.5 -172.3
Reported cash, cash equivalents & short-term
47.5 56.2
investments Reported cash, cash equivalents
47.5 56.2
& short-term investments
Loans to minority owners of foreign subsidiaries 0.4 0.4
Unavailable liquidity -4.2 -5.4
Net debt -43.9 -48.2
= Adjusted cash, cash equivalents & short-term
43.3 50.8
investments
= Adjusted net debt -112.2 -121.5
39Operating segment overview FY 2020
Operating segments Customers & Solutions Power generation
We report our operations broken down by the Responsible for sales of electricity, gas and Responsible for Vattenfall’s hydro and nuclear
Group’s operating segments: Customers & energy services in all of Vattenfall’s markets power operations, maintenance services
Solutions, Power Generation, Wind, Heat, and • A market leader in Sweden with nearly 900,000 business, and optimisation and trading
Distribution. The operating segments reflect our electricity contracts operations, including certain large business
Business Area organisational structure except for • A market leader in the Netherlands with 3.8 customers
the Power Generation segment, which is divided million electricity and gas contracts • Operates a portfolio with 5.5 GW4 nuclear
into the Generation and Markets Business Areas • Leading position as electricity supplier in Berlin capacity and 11.5 GW hydro power capacity
and Hamburg across Sweden, Finland and Germany
• Challenger position in sales of electricity in • One of Europe’s largest providers of fossil-free
Number of Employees as of 31 Denmark, Finland and France and in France also electricity, with 39.7 TWh from hydro power and
December 20201 of gas 39.3 TWh from nuclear power
• Operates 22,400 EV charging points in Sweden, • Provides professional asset optimisation services
Germany and the Netherlands and market access, and a leading player in PPA
Customers and Solutions 2,971 markets in northwest Europe
Power Generation 7,474
Wind 1,104
Underlying Operating Profit3: SEK 2,146 mn Underlying Operating Profit: SEK 14,670 mn
Heat 3,213 (8% of total) (54% of total)
External Net Sales: SEK 84,661 mn External Net Sales: SEK 36,597 mn
Distribution 2,366 (53% of total) (23% of total)
EBITDA: SEK 2,832 mn EBITDA: SEK 23,144 mn
(6% of total) (49% of total)
Other2 2,731
1 Full-time equivalents
2 Pertains mainly to Staff Functions and Shared Service Centres
3 Numbers reflect FY 2020 40
4 Excluding Ringhals 1 nuclear reactor that was closed at the end of 2020Operating segment overview FY 2020 (Cont’d)
Wind Heat Distribution
Responsible for development and operation of Responsible for Vattenfall’s heat operations Responsible for Vattenfall’s electricity
Vattenfall’s wind farms as well as large-scale including sales, decentralised solutions and distribution operations in Sweden, Germany
and decentralised solar power and batteries gas-fired condensing (Berlin) and the UK
• One of the largest producers of offshore wind • One of Europe’s leading providers of district • Leading operator of regional electricity
power in the world heating in large metropolitan areas with distribution grids and top-3 position in local grids
• One of the largest producers of onshore wind approximately 1.8 million end customers in Sweden
power in Denmark and the Netherlands • Strong partnerships with cities for realisation of • Approximately 3.3 million business and
• Strong wind power pipeline with 3 GW under their carbon reduction plans, supported by a track household customers in Sweden and Berlin,
construction and over 4 GW in development record of fulfilling previous reduction targets Germany
• Front-runner in innovative solutions in solar & • Heat production and distribution systems used as • Unit for operation and ownership of new grids in
batteries, such as colocation with wind farms and platforms to integrate other energy solutions, e.g. the UK established in 2017 has now been
shared infrastructure cooling, EV charging solutions, wind and solar awarded its first three contracts.
Underlying Operating Profit1: SEK 3,970 mn Underlying Operating Profit: SEK 978 mn Underlying Operating Profit: SEK 5,325 mn
(15% of total) (4% of total) (20% of total)
External Net Sales: SEK 6,901 mn External Net Sales: SEK 13,538 mn External Net Sales: SEK 16,970 mn
(4% of total) (9% of total) (11% of total)
EBITDA: SEK 9,482 mn EBITDA: SEK 2,644 mn EBITDA: SEK 8,713 mn
(20% of total) (6% of total) (19% of total)
1 Numbers reflect FY 2020
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