- 1. Year-End Report 2013 Higher underlying operating profit
impairment losses in second quarter had negative effect on profit
for full year JanuaryDecember 2013OctoberDecember 2013Net sales
rose 2.6% to SEK 171,684 million (167,313).Net sales were
essentially unchanged at SEK 47,762 million (47,937).The underlying
operating profit1 rose 1.3% to SEK 27,900 million (27,530).The
underlying operating profit1 rose 4.4% to SEK 6,951 million
(6,655).Operating profit amounted to SEK -6,453 million (25,958).
As a result of poorer market conditions and higher business risks,
Vattenfall recognised SEK 30.1 billion in impairment losses in
2013, which were charged against operating profit.Operating profit
decreased by 24.7% to SEK 3,839 million (5,097), mainly owing to
higher provisions in the German operations.Profit for the year
(after tax) amounted to SEK -13,543 million (17,047). The
impairment losses during the second quarter of 2013 resulted in a
charge against profit for the period of SEK 24.8 billion after tax
effects and exchange rate effects.Profit for the period (after tax)
amounted to SEK 1,983 million (6,342). The fourth quarter of 2012
included a large, positive tax effect as a result of the lowered
corporate tax rate in Sweden. Electricity generation decreased by
4.4%, to 47.7 TWh (49.9)Return on capital employed was -2.1%.
Excluding items affecting comparability, the return on capital
employed was 9.2%. Electricity generation increased by 1.6%, to
181.7 TWh (178.9). For the nuclear power operations, with
generation of 51.9 TWh, 2013 was the second-best year since the
start of generation nearly 40 years ago. Due to the negative result
after tax, the Board of Directors proposes in accordance with
Vattenfalls dividend policy that no dividend be paid for 2013. The
dividend for 2012 was SEK 6,774 million. 1)he underlying operating
profit is defined as operating profit excluding items affecting T
comparability (for specification of items affecting comparability,
see page 7).1Vattenfall Year-End Report 2013Vattenfall discloses
the information provided in this year-end report pursuant to the
Swedish Securities Market Act.
2. CEOs comments I am pleased to report a higher underlying
operating profit for 2013, despite the challenging market
conditions. The positive outcome from previous years forward hedges
and successful cost-cutting measures have compensated for the
negative effect of lower wholesale electricity prices in Germany
and higher costs for purchases of CO2 emission allowances. During
the year we cut our annual operating expenses by a further SEK 3.2
billion, mainly through lower costs for operations and maintenance,
and lower costs for sales and administration. In total, during the
last three years we have reduced our annual operating expenses by
more than SEK 9 billion, which corresponds to 18% of our cost base
in 2010. Vattenfall is also showing strong cash flow after
investments. In terms of production, 2013 was a very good year,
with high availability at our plants, especially in nuclear power,
where generation of nearly 52 TWh was the second-highest level of
electricity generation since our nuclear power generation was
started 40 years ago. This can be credited in large part to recent
years modernisation work at the nuclear power plants. In Germany,
Vattenfalls lignite-fired generation showed very good availability,
and the Groups wind power generation increased. Hydro power
generation decreased, however, due to lower water supply. In 2013
it became increasingly clear that the entire European energy
industry is undergoing a fundamental structural change. Apart from
the fact that we have seen continued falling prices due to a
surplus of generation capacity and weak demand for electricity, the
entire, traditional business model, based on large-scale
electricity generation in conventional power plants, is now also
being challenged. Large volumes of subsidised renewable energy
(wind and solar power) have emerged and are putting pressure on
conventional gas- and hard coal-based electricity production. Due
to the elevated business risks for the industry, the estimated
value of some of our assets in hard coal and gas-fired plants
has2Vattenfall Year-End Report 2013been impaired. As a result, in
the 2013 half-year report we recognised SEK 29.7 billion in losses
for impaired assets. Due to these impairment losses, we fell short
of our profitability and dividend goals. However, we did achieve
our target for the debt-equity ratio. To adapt Vattenfall to the
new market conditions, which we call the new normal, we are taking
a number of measures. We are cutting costs, strengthening our cash
flow, and we are developing new, sustainable, and smart products
and services that society and our customers are demanding. Starting
on 1 January 2014 we have also as previously communicated
reorganised the company in two regions: Nordic and Continental/UK.
Our current production portfolio, with large shares of hydro power,
nuclear power and lignite-based power, is very profitable, and
through our efficiency improvement measures we have created a solid
foundation for the successful continuation of our shift to
environmentally sustainable energy production. This does not mean,
however, that we can now sit back, but rather that we must take
advantage of the growing strength and flexibility that this hard
work at adapting the company has generated, so that we can forge an
even better position for the future.ystein Lseth President and CEO
3. Key data Amounts in SEK million unless indicated otherwiseQ4
2013Q4 2012 1Change, %Full year 2013Net sales Operating profit
before depreciation and amortisation (EBITDA) Operating profit
(EBIT) Underlying operating profit Profit for the period Funds from
operations (FFO) Net debt Adjusted net debt47,762 9,368 3,839 6,951
1,983 6,548 106,912 162,597Full year 2012 1Change,
%47,937-0.4171,684167,3132.610,286 5,097 6,655 6,342 11,583 111,907
153,943-8.9 -24.7 4.4 -68.7 -43.5 -4.5 5.642,842 -6,453 27,900
-13,543 31,888 106,912 162,59754,271 25,958 27,530 17,047 34,419
111,907 153,943-21.1 1.3 -7.4 -4.5 5.6Return on capital employed, %
Net debt/equity, % Funds from operations (FFO)/adjusted net debt, %
Adjusted net debt/operating profit before depreciation and
amortisation (EBITDA), times Electricity generation, TWh Hydro
power Nuclear power Fossil-based power3 Wind power Biomass,
waste3-2.1 81.8 19.6 28.3 74.9 22.4 2 -2.1 81.8 19.68.3 74.9 22.4
3.8 2 47.7 8.6 14.1 23.1 1.3 0.72.8 2 49.9 10.6 14.0 23.5 1.1 0.7
-4.4 -18.9 0.7 -1.7 18.2 3.8 181.7 35.6 51.9 87.9 3.9 2.42.8 178.9
42.2 48.9 81.7 3.6 2.5 1.6 -15.6 6.1 7.6 8.3 -4.0Sales of
electricity, TWh Sales of heat, TWh Sales of gas, TWh54.8 8.8
16.057.3 10.2 17.1-4.4 -13.7 -6.4203.3 30.2 55.8205.5 29.8 52.4-1.1
1.3 6.531,81932,794-3.031,81932,794-3.0Number of employees,
full-time equivalents222) Last 12-month values. 3) The figures for
electricity generation in 2013 are preliminary.See pages 35-36 for
definitions and calculations of key ratios.Vattenfall Year-End
Report 2013Hydro power 20 Fossil-based power 48 Nuclear power 29
Wind power, biomass and waste 3Electricity generation 2012, % Hydro
power 24 Fossil-based power 46 Nuclear power 271)ertain values for
2012 have been recalculated compared with previously published
information in C Vattenfalls 2012 Annual Report. See Note 5, page
32.3Electricity generation 2013, %Wind power, biomass and waste 3
4. Important events 2013 GroupHigher output at ForsmarkCapacity of
reactor 2 at the Forsmark nuclear power plant was raised by 114 MW
(12%), to 1,120 MW, thereby enabling Forsmark to generate roughly 1
TWh more electricity per year than previously. This corresponds to
the annual electricity consumption of nearly 100,000 households.
Limited operation of the Magnum gas-fired power plantIn late
February the first deliveries of electricity were made from the
Magnum gas-fired power plant (total installed capacity of 1,311 MW)
in Eemshaven, the Netherlands. As a result of deteriorated market
conditions, Vattenfall decided, starting in 2014, to put only one
of the three units into full commercial operation. Staff
reductionsOn 6 March Vattenfall announced that the number of
employees would be reduced by approximately 2,500 persons by
year-end 2014, including approximately 1,500 in Germany,
approximately 500 in the Netherlands, and 400 in Sweden. At
year-end 2013 the number of employees had been reduced by
approximately 850 persons. Vattenfall builds new wind farmsDuring
the first quarter, construction was started on two new wind farms:
Bajlum (15 MW) in Denmark and Hjuleberg (33 MW) in Sweden.
Hjuleberg will be the largest landbased wind farm in southern
Sweden. Both wind farms are expected to be commissioned in
mid-2014. In July Vattenfall announced its decision to build two
new wind farms in the UK. Pen y Cymoedd (228 MW), in southern
Wales, comprises 76 wind turbines and is expected to come on stream
at the end of 2016. Clashindarroch Windfarm 4Vattenfall Year-End
Report 2013(36.9 MW), in Scotland, comprises 18 turbines and is
expected to be completed in early 2015. The combined investment
amounts to approximately SEK 4.7 billion. During the second
quarter, the land-based Princess Alexia Wind Farm (150 MW, formerly
Zuidlob) in the Netherlands was commissioned. The wind farm
comprises 36 wind turbines. During the fourth quarter Vattenfall
decided to expand the Kentish Flats wind farm offshore Englands
south-east coast by 15 new wind turbines, from 30 at present.
Construction start is planned for mid-2015. Extensive modernisation
of nuclear power plantsIn May Vattenfall announced that as a result
of the extensive upgrade of the nuclear reactors at Forsmark and
Ringhals, Vattenfall can now plan for an operating time of up to 60
years for five reactors (Ringhals 3 and 4, and all three reactors
at Forsmark). The previously planned operating time for Vattenfalls
reactors was 50 years. Lifting of special oversight of RinghalsIn
June the Swedish Radiation Safety Authority (SSM) lifted its
special oversight of the Ringhals nuclear power plant, citing the
significant impact on operations that the change work performed by
the company has had. Ringhals had been under special oversight
since July 2009. Further cost-cutting and scaled-back investment
programmeVattenfall decided in summer 2013 to increase its cost
reductions for 2014 from SEK 1.5 billion to SEK 2.5 billion, and
set a new savings target of SEK 2 billion for 2015. The investment
programme for the five-year period 20142018was scaled back to SEK
105 billion, compared with SEK 123 billion for the period 20132017.
Impairment lossesAs a result of deteriorated market conditions and
higher business risks in the industry, in the half-year
book-closing for 2013 Vattenfall recognised impairment losses of
SEK 29.7 billion, which were charged against operating profit. Of
the total impairment losses, SEK 14.5 billion pertained to hard
coal and gas power plants in the Netherlands, SEK 4.1 billion to
hard coal power plants in Germany, SEK 2.5 billion to combined heat
and power plants in the Nordic countries, SEK 6.8 billion to
goodwill primarily in the Trading operations, and SEK 1.8 billion
to other assets. Payment for shares in N.V. Nuon EnergyOn 1 July
Vattenfall made payment, pursuant to previous agreement, of EUR
1,180 million (corresponding to SEK 10.3 billion) for 15% of the
shares in N.V. Nuon Energy. Vattenfall thereafter owns 79% of the
shares. The remaining 21% is payable on 1 July 2015. Sale of Amager
CHP station in DenmarkIn July Vattenfall announced the sale of the
Amager combined heat and power station in Denmark to the municipal
utility HOFOR for an enterprise value of approximately DKK 2
billion. The deal was completed in early January 2014. Referendum
on grid buybackOn 22 September a referendum was held in Hamburg on
the issue of whether the city should take all measures necessary to
repurchase all electricity, gas and district heating grids in the
city. Vattenfall acquired the citys electricity and 5. heating
grids in 2001 in connection with its purchase of the City of
Hamburgs shares in the energy company HEW. In 2011 Vattenfall sold
25.1% of the electricity grid and district heating network to the
city. The gas grid is owned by E.ON. A narrow majority, 50.9%,
voted in favour of repurchasing the grids. The concession to
conduct electricity grid operations expires at the end of 2014. The
company that wins the concession will be able to acquire the grids.
After the referendum, the City of Hamburg and Vattenfall initiated
negotiations on the sale of the remaining 74.9% of the electricity
and heating grids (see further under Important events after the
balance sheet date). Changes in Vattenfalls board of directorsAt
Vattenfalls Annual General Meeting on 24 April 2013, Lars G.
Nordstrm was re-elected as Chairman of the Board. Eli Arnstad,
Gunilla Berg, Hkan Buskhe, Hkan Erixon, Jan-ke Jonsson and Patrik
Jnsson were reelected as directors on the Board, while Cecilia
Vieweg declined re-election. Jan-ke Jonsson resigned from the Board
on 29 May 2013. At an extraordinary general meeting on 18 December,
Jenny Lahrin and sa Sderstrm Jerring were elected as new directors
on the Board. Patrick Jnsson resigned from the Board. New
organisation and changes in the Group Executive ManagementA change
was carried out of Vattenfalls organisation with5Vattenfall
Year-End Report 2013effect from 1 January 2014. Vattenfalls
operations have been split up into two regions Nordic and
Continental/UK. The Executive Group Management was reduced to seven
persons and now includes the following persons: ystein Lseth,
President and CEO Ingrid Bonde, CFO Stefan Dohler, Head of Asset
OptimisationTrading Olof Gertz, Head of Human Resources Anne
Gynnerstedt, General Counsel Tuomo Hatakka, Head of Continental/UK
region Torbjrn Wahlborg, Head of Nordic regionImportant events
after the balance sheet date Vattenfall sells its stake in Polish
company EneaOn 14 January, as part of the decision to divest
non-core assets, Vattenfall sold its minority interest,
corresponding to 18.67% of the shares, in the Polish energy company
Enea for approximately SEK 2.2 billion. The price per share was PLN
12.50. Vattenfall acquired the shares in Enea in November 2008 for
a sum equivalent to approximately SEK 4.6 billion. The sale will be
recognised in the book-closing for the first quarter of 2014. The
sale will not have any material earnings effect, since Vattenfall
has continuously restated the shares to fair value and recognised
impairment of the shares value in previous book-closings.
Vattenfall sells electricity grid in HamburgOn 15 January
Vattenfall reached an agreement to sell its majority shares of
74.9% in the electricity grid company Stromnetz Hamburg GmbH to the
City of Hamburg. Theequity value of 100% of the electricity grid
company has been preliminarily set at EUR 550 million (approx. SEK
4.8 billion). The definitive value will be determined by an
independent auditing firm. However, the parties have agreed that
the value cannot be below EUR 495 million (approx. SEK 3.6
billion). In addition to the purchase price, the City of Hamburg
will repay loans to Vattenfall of EUR 243 million (approx. SEK 2.1
billion). The deal will be completed by 14 February 2014 at the
latest. Through the sale of the electricity grid, Vattenfall
estimates that it will recognise a capital gain of at least EUR 300
million (approx. SEK 2.6 billion) in the book-closing for the first
quarter of 2014. The City of Hamburg has also been granted an
option to buy Vattenfalls majority shareholding of 74.9% in the
district heating company Vattenfall Wrme Hamburg GmbH in 2019. The
equity value of 100% of the district heating company will be
determined by an independent auditing firm in 2018. However, the
parties have agreed that the value cannot be below EUR 1,150
million (approx. SEK 10.1 billion), or EUR 950 million (approx. SEK
8.4 billion) if Vattenfall decides to not build a new combined heat
and power plant in Hamburg/Wedel. 6. Sales, profit and cash flow
Amounts in SEK millionQ4 2013Q4 2012Change, %Full year 2013Full
year 2012Change, %Net
sales47,76247,937-0.4171,684167,3132.6Comment, full year:
Consolidated net sales increased to SEK 4.4 billion, mainly owning
to higher electricity generation and higher average electricity
prices achieved. Comment, Q4: Consolidated net sales for the fourth
quarter of 2013 decreased by SEK 0.2 billion compared with the
corresponding period in 2012.Net sales SEK million
250,000200,000150,000100,000Amounts in SEK millionQ4 2013Q4
2012Change, %Full year 2013Full year 2012Change, %50,000Operating
profit (EBIT) Items affecting comparability Underlying operating
profit3,839 -3,112 6,9515,097 -1,558 6,655-24.7 99.7 4.4-6,453
-34,353 27,90025,958 -1,572 27,530 1.30Comment, full year: The
underlying operating profit improved by SEK 0.4 billion, which is
mainly explained by the following:1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
2010 2011 2012 2013 ast 12-month values Luarterly values QHigher
average electricity prices achieved (SEK 1.3 billion) Higher
generation volumes (SEK 1.5 billion) Higher heat prices achieved
and higher heat production (SEK 0.6 billion) Higher costs for
purchases of CO2 emission allowances and fuel (SEK -5.4 billion)
Lower operating expenses (SEK 1.1 billion, net). Excluding growth
projects, the cost savings amounted to SEK 3.2 billion, mainly
owing to lower costs for operations and maintenance, and lower
costs for sales and administration Other items (SEK 1.3 billion,
net), mainly as a result of improved earnings from associated
companies, improved earnings from the Trading operations, higher
taxes on hydro power assets and higher earnings from sales of
electricity to end customers Comment, Q4: The underlying operating
profit decreased by SEK 0.3 billion, which is mainly explained by
the following:Underlying operating profit SEK million
45,00036,00027,00018,000Higher average electricity prices achieved
(SEK 0.3 billion) Volume effects, mainly owing to lower hydro power
generation (SEK -0.5 billion)9,000Improved earnings from the
heating operations (SEK 0.3 billion) Higher costs for CO2 emission
allowances and fuel (SEK -0.3 billion) Higher operating expenses
(SEK -0.3 billion, net) Improved earnings from associated companies
(SEK 0.4 billion) Other items (SEK 0.4 billion)6Vattenfall Year-End
Report 20130 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2010 2011 2012 2013
ast 12-month values Luarterly values Q 7. Sales, profit and cash
flow, cont.Amounts in SEK millionQ4 2013Items affecting
comparability affecting operating profit (EBIT): Capital gains
Capital losses Impairment losses Unrealised changes in the fair
value of energy derivatives Unrealised changes in the fair value of
inventories Restructuring costs Other items affecting comparability
Total151 -51 -295Q4 201270 -315 -6Full year 2013189 -133
-30,147Full year 20128,399 -389 -8,648-978-271-995729431 -792
-1,578 -3,112-377 -696 37 -1,558281 -1,568 -1,980 -34,353-395 -824
-444 -1,572Comment, full year: Items affecting comparability for
the full year 2013 amounted to SEK -34.4 billion. Impairment losses
(SEK 30.1 billion) pertain to the impairment losses of SEK 29.7
billion that were recognised in the half-year book-closing in 2013
and exchange rate effects. Restructuring costs (SEK -1.6 billion)
are mainly attributable to staff reductions. Other items affecting
comparability consist mainly of a provision related to the German
Renewable Energy Act (EEG) (SEK -0.9 billion) and higher provisions
in the German nuclear power operations (SEK -0.9 billion). Items
affecting comparability for 2012 amounted to SEK -1.6 billion.
Capital gains (SEK 8.4 billion) pertain mainly to the sale of the
companys Finnish electricity network and heat assets. Impairment
losses (SEK 8.6 billion) pertain to impairment of goodwill and
production assets in Thermal Power. Comment, Q4: Items affecting
comparability in the fourth quarter of 2013 amounted to SEK -3.1
billion. The impairment losses of SEK 0.3 billion pertain mainly to
exchange rate effects on the impairment losses that were recognised
in the half-year book-closing in 2013. Restructuring costs (SEK
-0.8 billion) are mainly attributable to ongoing staff reductions.
Other items affecting comparability consist mainly of a provision
related to the German Renewable Energy Act (EEG) (SEK -1.0 billion)
and higher provisions in the German nuclear power operations (SEK
-0.6 billion).Amounts in SEK millionProfit for the periodQ4 2013Q4
2012Change, %Full year 20131,9836,342-68.7-13,543Full year
201217,047Change, %Comment, full year: Profit for the period (after
tax) decreased by SEK 30.6 billion, mainly owing to the impairment
losses recognised in the second quarter of 2013 (SEK 24.8 billion),
higher restructuring costs and higher provisions. Comment, Q4:
Profit for the period (after tax) decreased by SEK 4.4 billion,
mainly attributable to higher provisions and a large, positive tax
effect during the fourth quarter of 2012.7Vattenfall Year-End
Report 2013Amounts in SEK millionQ4 2013Q4 2012Net financial items
of which, interest income f which, interest expenses o f which,
impairment and o provisions-2,080 395 -1,520-1,373 119 -1,263-51.5
-20.315-956 158 -875-243 23 -312 of which, other Interest received1
Interest paid1Change, % Full year 2013Full year 2012Change, %-8,758
696 -4,719-7,840 812 -5,244-11.7 -14.3 10.0-492-1,09054.9 -4,243
725 -4,086-2,317 426 -3,798-83.1 70.2 -7.61) Pertains to cash
flows.Comment, full year: The worsening of financial items for the
full year 2013 compared with the full year 2012 is mainly
attributable to changes in the fair value of financial derivatives
and a lower return from the Swedish Nuclear Waste Fund. Comment,
Q4: The worsening of financial items for the fourth quarter of 2013
is mainly attributable to a lower return from the Swedish Nuclear
Waste Fund.Amounts in SEK millionFunds from operations (FFO) Cash
flow from changes in operating assets and operating liabilities
(working capital) Cash flow from operating activitiesQ4 2013Q4
20126,54811,583Change, % Full year 2013-43.531,888Full year
201234,419Change,
%-7.41,359-6,3205,948-5,9347,9075,26350.237,83628,48532.8Comment,
full year: Funds from operations (FFO) decreased by SEK 2.5
billion. The decrease is mainly attributable to higher costs for
CO2 emission allowances and fuel, and higher paid tax. Cash flow
from changes in working capital increased by SEK 5.9 billion during
the year. Working capital was positively affected by higher
operating liabilities (SEK 5.1 billion), changes in margin calls
(SEK 3.4 billion) and a change in inventories (SEK 1.4 billion).
Higher operating receivables (SEK -3.9 billion) had a negative
impact on working capital. In 2012, cash flow from changes in
working capital decreased by SEK 5.9 billion, mainly due to a net
increase in operating receivables and operating liabilities, and an
increase in inventories. Comment, Q4: Funds from operations (FFO)
decreased by SEK -5.0 billion compared with the fourth quarter of
2012. The decrease is mainly attributable to higher costs for CO2
emission allowances and fuel, higher interest payments and higher
paid tax. The latter is mainly attributable to the repayment of
preliminary tax during the fourth quarter of 2012. Cash flow from
changes in working capital increased by SEK 1.4 billion during the
quarter. This is mainly attributable to a change in margin calls
(SEK 1.7 billion), a change in inventories (SEK 0.4 billion), and a
net change in operating receivables and liabilities (SEK -0.8
billion). 8. Financial position Amounts in SEK millionCash and cash
equivalents, and short-term investments Receivable attributable to
Vattenfalls Swedish pension foundation Committed credit facilities
(unutilised)31 Dec. 201331 Dec. 2012Change, %27,25446,495-41.4
22,5911,807 32,172 -29.8Comment: The decrease in cash and cash
equivalents, and short-term investments, is mainly attributable to
amortisation of external loans, payment of the shareholder
dividend, and payment for an additional 15% of the shares in N.V.
Nuon Energy. Committed credit facilities consist of a EUR 2.55
billion Revolving Credit Facility that expires on 20 January 2016.
Vattenfalls 12-month revolving Multi Option Credit Facility was
renegotiated in October 2013 and is no longer classified as a
committed credit facility. As per 31 December 2013, available
liquid assets and/or committed credit facilities amounted to 24% of
net sales. Vattenfalls target is to maintain this level at no less
than 10% of the Groups net sales, but at least the equivalent of
the next 90 days maturities.Amounts in SEK millionInterest-bearing
liabilities Net debt Adjusted net debt (see page 20) Average
interest rate, %1 Duration, years1 Average time to maturity,
years131 Dec. 201331 Dec. 2012134,295 106,912 162,597 3.5 2.9
5.7160,261 111,907 153,943 3.4 3.3 5.3Change, %-16.2 -4.5 5.6 1)
Including Hybrid Capital and loans from owners with non-controlling
interests (minority owners) and associated companies.Comment: Total
interest-bearing liabilities decreased by SEK 26 billion compared
with the level at 31 December 2012, mainly as a result of
amortisation of external loans and amortisation of debt to the
minority owners of N.V. Nuon Energy. Net debt compared with the
level at 31 December 2012 decreased by SEK 5.0 billion. Net debt
was unchanged during the fourth quarter. Adjusted net debt
increased by SEK 8.7 billion compared with the level at 31 December
2012, mainly due to a higher pension liability, higher provisions
for nuclear power and lower margin calls received. During the
fourth quarter, adjusted net debt increased by SEK 4.6 billion.
Credit ratings The current credit ratings for Vattenfalls long-term
borrowing are A (StandardPoors) and A3 (Moodys). Vattenfalls rating
outlook is stable from both StandardPoors and Moodys. On 27
September 2013 Moodys announced that it had downgraded Vattenfalls
long-term rating from A2 to A3 and changed its outlook to stable
(previously negative).8Vattenfall Year-End Report 2013 9.
Investments and divestments Amounts in SEK
millionMaintenance/replacement investments Growth investments1 of
which, shares Total investments Divestments of which, sharesQ4
2013Q4 2012Change, % Full year 2013Full year 2012Change, %5,663
3,746 -76 9,4097,156 2,842 107 9,998-20.9 31.8 -5.914,265 13,496
-26 27,76115,866 13,715 345 29,581-10.1 -1.6 -6.2411 21887 23372.4
847.8651 27122,836 20,969-97.1 -98.71) Investments in new
capacity.Comment: Investments are specified in the table below.
Divestments in 2012 pertain to the proceeds received during the
first quarter of 2012 from the sales of Vattenfalls electricity
distribution and heat business in Finland (SEK 13.2 billion),
Vattenfalls heat operation in Poland (SEK 5.8 billion), and
Vattenfalls operations in Belgium (SEK 1.9 billion).Electricity
generation Hydro power Nuclear power Coal power Gas Wind power
Biomass, waste Other Total electricity generation CHP/heat
Fossil-based power Biomass, waste Other Total CHP/heat Electricity
networks Electricity networks Total electricity networks Purchases
of shares Other, excl. purchases of shares Total917% pertains to
growth investmentsInvestment plan 20142018, SEK 105
billionSpecification of investments Amounts in SEK
millionVattenfalls investment plan for the period 20142018
Vattenfalls investment plan for the coming five-years (20142018)
amounts to SEK 105 billion. The lower level compared with the plan
for 20132017 (SEK 123 billion) is mainly explained by a decrease in
growth investments, by approximately SEK 17 billion. Maintenance
and replacement investments, and investments in
non-production-related assets, such as electricity and heating
networks and IT, are essentially unchanged. Investments in
non-production-related activities, such as electricity and heating
networks, and IT, amount to SEK 30 billion. Of these, SEK 3 billion
are growth investments that pertain mainly to the construction of
new connections to existing district heating networks. Most of the
investments in nuclear power, hydro power, gas and biomass are
investments that are needed to meet laws and regulations, or
maintenance investments to enable continued operation of safe
plants with a high level of availability. Approximately SEK 1
billion is being invested in new gas-fired heating plants in
Hamburg and Berlin (replacement investments). Most of the
investments in lignite- and hard coal-fired plants are maintenance
investments. Approximately SEK 3 billion of a total SEK 22 billion
are growth investments in the hard coal-fired Moorburg plant, which
is currently being built outside of Hamburg, Germany. Construction
of the Moorburg plant will be completed in 2014.Q4 2013Q4
2012Change %527 879 1,210 46 876 10 453 4,001489 905 1,487 829
1,343 5 186 5,2447.9 -2.9 -18.6 -94.4 -34.8 97.9 -23.71,300 2,993
4,367 1,622 4,095 14 1,280 15,6711,245 3,011 4,977 4,511 2,716 16
1,170 17,6464.4 -0.6 -12.3 -64.0 50.8 -15.6 9.4 -11.2633 133 420
1,186925 204 409 1,538-31.6 -34.8 2.7 -22.91,699 377 1,022
3,0982,264 334 1,003 3,601-25.0 12.8 1.9 -14.01,871 1,871 2,270
2,270 107-17.6 -17.6 4,571 4,571 504,658 4,658 345-1.9 -1.9
-85.52,351 9,409839 9,998 -5.94,371 27,7613,331 29,58131.2
-6.2Vattenfall Year-End Report 2013Full year 2013 Full
year2012Growth investments 17%Change %Replacement investments 15%
Maintenance investments 68% 1053075 Electricity networksWind
11Heating networksHydro 8 Biomass 4Gas inventory IT Nuclear 14Gas
15 Lignite and hard coal 22Total Non-production- Investments
investments related by type investments of fuelWind power still
accounts for the largest share of growth investments Wind 58% Other
(e.g., heating networks) 15% Lignite and hard coal 19% Gas 5%
Biomass 1% Hydro 1% Nuclear 1% 10. Wholesale price trend
Electricity spot prices in the Nordic countries, Germany and the
Netherlands, monthly averages EUR/MWh 806040200 2011 Nord
PoolEPEX2012The hydrological balance in the Nordic market
strengthened during the fourth quarter, which led to slightly
higher average Nordic spot prices compared with the fourth quarter
of 2012. For the year as a whole, Nordic spot prices were 22%
higher in 2013 compared with 2012 as a result of a lower
hydrological balance during the year. Average spot prices in
Vattenfalls markets in Continental Europe (Germany and the
Netherlands) moved in different directions. In Germany, spot prices
fell by 9% compared with the fourth quarter of 2012, owing to lower
prices for coal and CO2 emission allowances. Overall, spot prices
in Germany were 11% lower in 2013 than in 2012. In the Netherlands,
spot prices were virtually unchanged compared with the fourth
quarter of 2012 and 8% higher compared with the full year 2012.2013
Time period EUR/MWhAPXElectricity futures prices in the Nordic
countries, Germany and the Netherlands EUR/MWh 55 50Nord Pool Spot
(Nordic countries)EPEX (Germany)APX (Netherlands)35.8 37.3 -4.1
38.1 31.3 21.937.6 41.4 -9.3 37.8 42.7 -11.452.0 51.9 0.3 52.0 48.0
8.4Q4 2013 Q4 2012 Change (%) Full year 2013 Full year 2012 Change
(%)Electricity futures prices fell during the year in all of
Vattenfalls markets compared with 2012. In the Nordic countries,
futures prices fell by 8%12% (for deliveries in 2014 and 2015)
compared with the full year 2012. Futures prices were 21%23% lower
in Germany and 5%13% lower in the Netherlands.45 40 35 30 2012
Nordic countries 2014 Germany 2014 Netherlands 2014 2013 Nordic
countries 2015 Germany 2015 Netherlands 2015Sources: NASDAQ OMX
Commodities, European Energy Exchange (EEX) and APX.10Vattenfall
Year-End Report 2013Time period EUR/MWhFull year 2013 Full year
2012 Change (%)Nordic countries 2014 201536.2 39.6 -8.534.7 39.6
-12.4Germany 2014 201539.1 49.6 -21.238.7 50.0 -22.6Netherlands
2014 201547.5 50.1 -6.743.9 50.7 -13.5 11. Wholesale price trend,
cont. Price trend for oil, coal, gas and CO2 emission allowances
USDEUR14070120601005080406030402020Oil prices (Brent crude) were
volatile during the fourth quarter, but on average they were at the
same level as in the preceding quarter. Coal prices continued to
fall during the year and were 2% lower compared with the preceding
quarter, but a full 21% lower compared with the fourth quarter of
2012. Gas prices were on average at the same level as during the
third quarter of 2013. The price of CO2 emission allowances was
essentially unchanged compared with the preceding quarter and
hovered around EUR 5/tonne at the end of the fourth
quarter.100020112012oal (USD/t), API2, C Front Year il (USD/bbl),
Brent O Front Month2013as (EUR/MWh), NBP, G Front Year Emission
allowances CO2 (EUR/t)Vattenfalls hedge ratios (%) as per 31
December 2013 % 1001009575 6867 505356Vattenfalls price
hedgingSince Vattenfall continuously hedges its future electricity
generation through sales in the forward and futures markets, spot
prices have only a limited impact on Vattenfalls earnings in the
near term. The chart shows the share of planned electricity
generation that Vattenfall has hedged in the Nordic countries and
Continental Europe (Germany and the Netherlands). Average price
hedges as per 31 December 201325EUR/MWhNordic countries Continental
Europe0 20142015ordic countries N ontinental Europe C11Vattenfall
Year-End Report 2013201620142015201640 5039 4437 40Compared with
the level at 30 September 2013, Vattenfalls price hedge ratios
increased for both markets for 2014 and 2015. Price hedges in EUR
were slightly lower. 12. Vattenfalls operating segments Generation
Amounts in SEK millionQ4 2013Q4 2012Change, %Full year 2013Full
year 2012Change, %Net sales External net sales1 Underlying
operating profit Sales of heat, TWh Electricity generation2, TWh of
which, hydro power of which, nuclear power of which, fossil-based
power of which, wind power of which, biomass, waste Sales of
electricity, TWh Number of employees, full-time equivalents34,072
19,154 5,403 2.5 44.8 8.6 14.1 20.6 1.3 0.2 22.6 16,94834,623
18,138 4,406 3.3 46.7 10.6 14.0 20.7 1.1 0.3 23.4 16,928-1.6 5.6
22.6 -24.2 -4.1 -18.9 0.7 -0.5 18.2 -33.3 -3.4 0.1121,236 67,798
22,048 9.4 170.8 35.6 51.9 78.8 3.9 0.6 81.0 16,948118,956 61,159
20,484 9.4 167.9 42.2 48.9 72.5 3.6 0.7 79.5 16,9281.9 10.9 7.6 1.7
-15.6 6.1 8.7 8.3 -14.3 1.9 0.1The Generation operating segment is
Vattenfalls interface towards the wholesale market and includes BD
Sustainable Energy Projects, BD Production, BD Asset Optimisation
and Trading, and BD Nuclear Power. Operations during the fourth
quarter of 2013 were conducted in Sweden, Denmark, Finland,
Germany, the Netherlands and the UK.1) Excluding intra-Group
transactions. 2)f electricity generation during Q14 2013,
Vattenfall disposed over 152.8 TWh (150.1), while the rest went to
the minority part-owners or was deducted as replacement power.
OUnderlying operating profit 2013: The underlying operating profit
improved by SEK 1.6 billion, mainly owing to higher production and
lower operating expenses. Underlying operating profit Q4: The
underlying operating profit improved by SEK 1.0
billion.12Vattenfall Year-End Report 2013Electricity production and
sales of heat, 2013 Hydro power generation decreased by 15.6%, to
35.6 TWh (42.2), mainly owing to exceptionally high hydro power
generation in 2012 as a result of high water supply. Nordic
reservoirs were filled to 67.6% capacity (69.6%) at the year-end,
which is slightly higher than normal. Nuclear power generation
increased by 3.0 TWh to 51.9 TWh (48.9). Combined availability of
Vattenfalls nuclear power plants was 86% (82%). Forsmark had
availability of 89.5% (89.3%) and generated 25.2 TWh (24.6).
Availability at Ringhals was 83.4% (75.4%), and generation amounted
to 26.7 TWh (24.4).Fossil-based generation increased by 8.7% to
78.8 TWh (72.5). Electricity generation in Germany increased by
3.2%, to 57.3 TWh (55.5), mainly owing to the fact that unit R at
the Boxberg power plant was in full operation. Electricity
generation in the Netherlands increased to 14.1 TWh (12.8), mainly
owing to the commissioning of the Magnum, Diemen 34 and Hemweg 9
gas power plants for commercial operation. As a result of low
margins for gas-fired power generation, as previously communicated,
Vattenfall has decided for the time being to not put the Magnum
plant into full commercial operation. Due to lower water supply in
the Nordic reservoirs, fossil-based generation in Denmark increased
by 1.3 TWh, to 5.8 TWh. Wind power generation increased by 8.3% to
3.9 TWh, mainly in the UK and the Netherlands. Sales of heat were
unchanged at 9.4 TWh. 13. Vattenfalls operating segments
Distribution and Sales Amounts in SEK millionQ4 2013Q4 2012Change,
%Full year 2013Full year 2012Change, %Net sales External net sales1
of which, Distribution of which, Heat Underlying operating profit
of which, Distribution of which, Heat Sales of gas, TWh Sales of
heat, TWh Electricity generation2, TWh of which, fossil-based power
of which , biomass, waste Sales of electricity, TWh of which,
private customers of which , resellers of which, business customers
Transited volume, excl. production transiting Number of employees,
full-time equivalents34,969 33,315 4,120 4,293 2,216 1,304 674 16.0
6.3 3.0 2.5 0.5 32.2 7.8 7.3 17.1 25.7 10,69437,007 34,970 3,755
4,481 2,526 1,649 866 17.1 6.9 3.3 2.8 0.5 33.9 8.4 7.0 18.5 26.9
11,235-5.5 -4.7 9.7 -4.2 -12.3 -20.9 -22.2 -6.4 -8.7 -9.1 -10.7
-5.0 -7.1 4.3 -7.6 -4.5 -4.8128,720 122,776 15,389 15,030 8,667
5,059 2,283 55.8 20.8 10.9 9.1 1.7 122.3 28.1 27.1 67.1 98.4
10,694130,671 123,495 14,216 14,785 7,855 5,428 2,727 52.4 20.4
11.0 9.2 1.8 126.0 29.5 25.3 71.3 99.9 11,235-1.5 -0.6 8.3 1.7 10.3
-6.8 -16.3 6.5 2.0 -0.9 -1.1 -5.6 -2.9 -4.7 7.1 -5.9 -1.5 -4.81)
Excluding intra-Group transactions. 2) Of electricity generation
during Q14 2013, Vattenfall disposed over 10.9 TWh (11.0
TWh).Underlying operating profit 2013: The underlying operating
profit improved by SEK 0.8 billion, mainly as a result of lower
operating expenses. Underlying operating profit Q4: The underlying
operating profit decreased by SEK 0.3 billion, mainly as a result
of higher operating expenses.13Vattenfall Year-End Report 2013Sales
of electricity, gas and heat, 2013 Total sales of electricity
decreased by 3.7 TWh to 122.3 TWh (126). Sales to private customers
decreased by 1.4 TWh to 28.1 TWh (29.5). Sales to resellers
increased by 1.8 TWh to 27.1 TWh (25.3). Sales to business
customers decreased by 4.2 TWh to 67.1 TWh (71.3). Sales of gas
increased by 3.4 TWh to 55.8 TWh (52.4), mainly owing to a larger
number of customers in Germany (both private and business
customers). Sales of heat increased to 20.8 TWh (20.4).The
Distribution and Sales operating segment and Business Division is
responsible for Vattenfalls electricity sales and heat businesses,
electricity distribution and other downstream businesses. The
Division is responsible for all relationships with Vattenfalls end
customers. Operations during the fourth quarter of 2013 were
conducted in Sweden, Denmark, Finland, Norway, Germany, France and
the Netherlands. 14. Other Amounts in SEK millionQ4 2013Q4
2012Change, %Full year 2013Full year 2012Change, %1,555 81 -665
4,1771,437 88 -277 4,6318.2 -8.0 140.1 -9.85,477 302 -2,812
4,1775,445 245 -809 4,6310.6 23.3 247.6 -9.8Net sales External net
sales1 Underlying operating profit Number of employees, full-time
equivalents 1) Excluding intra-Group transactions.Underlying
operating profit, 2013: The underlying operating profit decreased
by SEK 2.0 billion. Underlying operating profit, Q4: The underlying
operating profit decreased by SEK 0.4 billion.14Vattenfall Year-End
Report 2013Other comprises all Staff Functions including Treasury
activities and Shared Service Centres. 15. Consolidated income
statement Amounts in SEKNet sales Cost of products sold2 Gross
profitQ4 2013Q4 20121Full year 2013Full year 2012147,762 -37,401
10,36147,937 -37,519 10,418171,684 -158,693 12,991167,313 -131,698
35,615Selling expenses, administrative expenses and research and
development costs3 Other operating income and expenses, net
Participations in the results of associated companies Operating
profit (EBIT)4-7,357 482 353 3,839-5,314 11 -18 5,097-21,511 1,283
784 -6,453-18,501 8,708 136 25,958Financial income5,7 Financial
expenses6,7 Profit before tax556 -2,636 1,759754 -2,127 3,7241,196
-9,954 -15,2112,636 -10,476 18,118Income tax expense Profit for the
period224 1,9832,618 6,3421,668 -13,543-1,071 17,047Profit for the
period attributable to: Owners of the Parent Company
Non-controlling interests Total2,228 -245 1,9836,405 -63
6,342-13,668 125 -13,54316,759 288 17,047131,700 16,92131,700
48,63131,700 -103,78131,700 127,259,368 -1,527 6,95110,286 -1,517
6,65542,842 -6,239 27,90054,271 -6,190 27,530-5,134 -395-5,024
-165-48,342 -953-27,712 -601100 -295 -978 431 -792 -1,578-245 -6
-271 -377 -696 3756 -30,147 -995 281 -1,568 -1,9808,010 -8,648 729
-395 -824 -444-3,112 182 -313 -735 -1,558 762 -249 -618 15-34 353
363 -1,170 -2,882 -469-1,572 1,430 -1,021 -3,080 -1,090Earnings per
share Number of shares in Vattenfall AB, thousands Earnings per
share, basic and diluted (SEK) Supplementary information Operating
profit before depreciation and amortisation (EBITDA) Financial
items, net excl. discounting effects attributable to provisions and
return from the Swedish Nuclear Waste Fund Underlying operating
profit (Operating profit (EBIT) excluding items affecting
comparability) 1)ertain amounts for 2012 have been recalculated
compared with previously published information in Vattenfalls 2012
Annual Report. C See Note 5, page 32. 2) Of which, depreciation,
amortisation and impairment losses related to intangible assets
(non-current) and property, plant and equipment 3) Of which,
depreciation, amortisation and impairment losses related to
intangible assets (non-current) and property, plant and equipment
4) Including items affecting comparability attributable to: Capital
gains/losses, net Impairment losses and impairment losses reversed,
net, pertaining intangible assets (non-current) and property, plant
and equipment Unrealised changes in the fair value of energy
derivatives Unrealised changes in the fair value of inventories
Restructuring costs Other items affecting comparability Total of
items affecting comparability in Operating profit which also
constitute the difference between Operating profit and Underlying
operating profit 5) Including return from the Swedish Nuclear Waste
Fund 6) Including interest components related to pension costs 6)
Including discounting effects attributable to provisions 7) Items
affecting comparability recognised as financial income and
expenses, net15Vattenfall Year-End Report 2013 16. Consolidated
statement of comprehensive income Amounts in SEKQ4 2013Q4 2012
1Full year 2013Full year 2012 1Profit for the
period1,9836,342-13,54317,047Other comprehensive income: Items that
will be reclassified to profit or loss when specific conditions are
met: Cash flow hedges: Changes in fair value Dissolved against the
income statement Transferred to cost of hedged item Tax
attributable to cash flow hedges Total cash flow hedges Hedging of
net investments in foreign operations Tax attributable to hedging
of net investments in foreign operations Total hedging of net
investments in foreign operations Translation differences
Translation differences and exchange rate effects net, divested
companies Remeasurement of available-for-sale financial assets
Impairment of available-for-sale financial assets Total6,820 -2,704
13 -1,012 3,117 -2,129 469 -1,660 3,546 3 5,006-338 2,192 -27 -580
1,247 -1,353 336 -1,017 2,466 -44 2,65212,510 -9,920 -7 -736 1,847
-2,717 598 -2,119 4,165 182 -30 4,0457,025 -2,476 70 -1,381 3,238
4,035 -1,049 2,986 -7,242 79 30 -909-165 93 -72-3,848 1,218
-2,630-1,200 469 -731-3,759 1,230 -2,529Total other comprehensive
income, net after tax4,934223,314-3,438Total comprehensive income
for the period6,9176,364-10,22913,609Total comprehensive income for
the period attributable to: Owner of the Parent Company
Non-controlling interests Total7,027 -110 6,9176,437 -73
6,364-10,722 493 -10,22913,591 18 13,609Items that will not be
reclassified to profit or loss: Remeasurement pertaining to defined
benefit obligations Tax attributable to remeasurement pertaining to
defined benefit obligations Total1) Certain amounts for 2012 have
been recalculated compared with previously published information in
Vattenfalls 2012 Annual Report. See Note 5, page 32.16Vattenfall
Year-End Report 2013 17. Operating segments, Vattenfall Group
External net salesInternal net salesTotal net salesAmounts in SEK
millionQ4 2013Q4 2012Full year 2013Full year 2012Q4 2013Q4 2012Full
year 2013Full year 2012Q4 2013Q4 2012Full year 2013Full year
2012Generation Distribution and Sales Other1 Eliminations2
Total19,154 33,315 81 -4,788 47,76218,138 34,970 88 -5,259
47,93767,798 122,776 302 -19,192 171,68461,159 123,495 245 -17,586
167,31314,918 1,654 1,474 -18,046 16,485 2,037 1,349 -19,871 53,438
5,944 5,175 -64,557 57,797 7,176 5,200 -70,173 34,072 34,969 1,555
-22,834 47,76234,623 37,007 1,437 -25,130 47,937121,236 128,720
5,477 -83,749 171,684118,956 130,671 5,445 -87,759
167,313ProfitUnderlying operating profitAmounts in SEK millionQ4
2013Q4 2012 3Full year 2013Full year 2012 3Generation Distribution
and Sales Other1 Operating profit (EBIT) Financial income and
expenses Profit before tax2,806 2,098 -1,065 3,8393,024 2,531 -458
5,097-9,757 6,996 -3,692 -6,45311,011 7,926 7,021 25,958-2,080
1,759-1,373 3,724-8,758 -15,211-7,840 18,118Q4 20135,403 2,216 -668
6,951Q4 2012 3Full year 2013Full year 2012 34,406 2,526 -277
6,65522,048 8,667 -2,815 27,90020,484 7,855 -809 27,5301) Mainly
includes all Staff Functions including Treasury activities and
Shared Service Centres. 2) For external net sales, the elimination
pertains to sales to the Nordic electricity exchange. 3) Certain
amounts for 2012 have been recalculated compared with previously
published information in Vattenfalls 2012 Annual Report. See Note
5, page 32.17Vattenfall Year-End Report 2013 18. Vattenfall Group,
information about geographical areas1 External net salesInternal
net salesTotal net salesAmounts in SEK millionQ4 2013Q4 2012Full
year 2013Full year 2012Q4 2013Q4 2012Full year 2013Full year 2012Q4
2013Q4 2012Full year 2013Full year 2012Sweden Germany Netherlands
Other countries Eliminations Total13,522 23,622 8,779 2,861 -1,022
47,76215,090 20,871 9,696 3,354 -1,074 47,93748,551 84,805 31,585
10,614 -3,871 171,68449,483 77,205 33,537 10,678 -3,590
167,3131,341 17,070 18,924 1,202 -38,537 1,493 17,754 17,411 762
-37,420 3,971 50,239 49,585 3,713 -107,508 6,940 38,061 35,323
2,171 -82,495 14,863 40,692 27,703 4,063 -39,559 47,76216,583
38,625 27,107 4,116 -38,494 47,93752,522 135,044 81,170 14,327
-111,379 171,68456,423 115,266 68,860 12,849 -86,085
167,313Operating profit (EBIT)Amounts in SEK millionSweden Germany
Netherlands Other countries TotalQ4 20133,143 18 384 294 3,839Q4
2012 2Full year 20134,631 1,243 -1,399 622 5,09713,618 3,583
-21,326 -2,328 -6,453Underlying operating profit Full year 2012
223,461 11,569 -9,999 927 25,958Q4 20133,481 2,390 674 406 6,951Q4
2012 2Full year 2013Full year 2012 24,408 1,195 394 658 6,65513,584
13,429 121 766 27,90015,779 10,970 -2 783 27,5301) Pertains to
consolidated financial information allocated to geographical areas.
2) Certain amounts for 2012 have been recalculated compared with
previously published information in Vattenfalls 2012 Annual Report.
See Note 5, page 32.18Vattenfall Year-End Report 2013 19.
Consolidated balance sheet Amounts in SEK million31 Dec. 201331
Dec. 2012 11 Jan. 2012 1Assets Non-current assets Intangible
assets: non-current Property, plant and equipment Investment
property Biological assets Participations in associated companies
and joint ventures Other shares and participations Share in the
Swedish Nuclear Waste Fund Derivative assets Current tax asstes,
non-current Prepaid expenses Deferred tax assets Other non-current
receivables Total non-current assets Current assets Inventories
Biological assets Intangible assets: current Trade receivables and
other receivables Advance payments paid Derivative assets Prepaid
expenses and accrued income Current tax assets Short-term
investments Cash and cash equivalents Assets held for sale Total
current assets Total assets31,285 269,160 479 2039,045 279,284 489
1146,229 279,445 539 812,076 2,699 30,600 16,239 627 117 5,977
6,587 375,86611,620 2,980 29,954 23,756 807 168 1,018 5,249
394,38112,344 3,235 28,430 20,691 990 188 1,303 5,732 399,13418,448
5 7,531 32,042 2,710 10,967 6,264 525 11,460 15,794 4,814 110,560
486,42619,463 3 6,083 34,409 5,396 12,498 7,806 1,830 28,450 18,045
133,983 528,36418,564 1 5,627 41,880 6,368 9,408 6,450 1,853 17,417
11,268 6,588 125,424 524,5581) Certain amounts for 2012 have been
recalculated compared with previously published information
inVattenfalls 2012 Annual Report. See Note 5, page 32.19Vattenfall
Year-End Report 2013Amounts in SEK million31 Dec. 201331 Dec. 2012
11 Jan. 2012 1Equity and liabilities Equity Attributable to owner
of the Parent Company Attributable to non-controlling interests
Total equity120,370 10,348 130,718140,764 8,608 149,372128,964
6,827 135,791Non-current liabilities Hybrid Capital Other
interest-bearing liabilities Pension provisions Other
interest-bearing provisions Derivative liabilities Deferred tax
liabilities Other noninterest-bearing liabilities Total non-current
liabilities8,835 98,004 35,477 69,282 9,734 31,285 6,000
258,6178,543 112,524 30,584 67,640 15,193 32,537 7,534 274,5558,883
149,602 22,904 65,632 12,590 34,510 8,238 302,35931,908 3,289 4,280
20,382 1,43535,219 2,138 5,612 15,812 85435,108 1,142 9,864 18,489
84427,456 5,42939,194 5,60811,865 7,2372,912 97,091 486,426 104,437
528,3641,859 86,408 524,5588,712 2,7996,672 1,905Current
liabilities Trade payables and other liabilities Advance payments
received Derivative liabilities Accrued expenses and deferred
income Current tax liabilities Interest-bearing liabilities
Interest-bearing provisions Liabilities associated with assets held
for sale Total current liabilities Total equity and liabilities
Collateral Contingent liabilities 20. Consolidated balance sheet,
cont.Amounts in SEK million31 Dec. 201331 Dec. 2012Supplementary
information Capital employed Capital employed, average Net debt
Hybrid Capital Bond issues, commercial paper and liabilities to
credit institutions Present value of liabilities pertaining to
acquisitions of Group companies Liabilities to associated companies
Liabilities to owners of non-controlling interests Other
liabilities Total interest-bearing liabilities Cash and cash
equivalents Short-term investments Receivable from Vattenfall's
pension foundation Loans to owners of non-controlling interests in
foreign Group companies Net debt20Vattenfall Year-End Report
2013297,178 304,479311,780 314,602-8,835-8,543-78,109-94,254-17,892
-9,513 -12,425 -7,521 -134,295 15,794 11,460 -27,080 -9,308 -11,876
-9,200 -160,261 18,045 28,450 1,807129 -106,91252 -111,907Amounts
in SEK millionAdjusted gross debt and net debt Total
interest-bearing liabilities 50% of Hybrid Capital Present value of
pension obligations Provisions for mining, gas and wind operations
and other environment-related provisions Provisions for nuclear
power (net) Currency derivatives for hedging of debt in foreign
currency Margin calls received Liabilities to owners of
non-controlling interests due to consortium agreements Adjusted
gross debt Reported cash and cash equivalents and short-term
investments Receivable from Vattenfall's pension foundation
Unavailable liquidity Adjusted cash and cash equivalents and
short-term investments Adjusted net debt31 Dec. 201331 Dec.
2012-134,295 4,418 -35,477-160,261 4,272 -30,192-11,760 -20,247
1,212 2,176-12,229 -18,463 3,027 7,17010,866 -183,107 27,254 -6,744
20,510 -162,59710,495 -196,181 46,495 1,807 -6,064 42,238 -153,943
21. Consolidated statement of cash flows Amounts in SEK
millionOperating activities Profit before tax Reversal of
depreciation, amortisation and impairment losses Tax paid Capital
gains/losses, net Other, incl. non-cash items Funds from operations
(FFO) Changes in inventories Changes in operating receivables
Changes in operating liabilities Other changes Cash flow from
changes in operating assets and operating liabilities Cash flow
from operating activitiesQ4 2013Q4 20121,759 5,529 -1,225 -100 585
6,5483,7241 5,189 536 241 1,8931 11,583Full year 2013Full year
2012-15,211 49,787 -4,090 -79 1,481 31,88818,1181 28,624 -3,545
-8,031 -7471 34,419391 -10,712 9,938 1,742 1,359 7,907-1,019
-14,398 12,163 -3,066 -6,320 5,2631,361 -3,966 5,145 3,408 5,948
37,836-1,657 -6,348 2,505 -434 -5,934 28,485Investing activities
Acquisitions in Group companies Investments in associated companies
and other shares and participations Other investments in
non-current assets Total investments-41 -30 -9,338 -9,409 -107
-9,891 -9,998-41 15 -27,735 -27,761 -345 -29,236 -29,581Divestments
Cash and cash equivalents in divested companies Cash flow from
investing activities411 -8,99887 -2 -9,913651 -16 -27,12622,836
-145 -6,890Cash flow before financing
activities-1,091-4,65010,71021,595Financing activities Changes in
short-term investments Changes in loans to owners of
non-controlling interests in foreign Group companies Loans raised2
Amortisation of debt pertaining to acquisitions of Group companies
Amortisation of other debt Divestment of shares in Group companies
to owners of non-controlling interests (minority owners) Payment
from Vattenfall's pension foundation Settlement of receivable from
Vattenfall's pension foundation Dividends paid to owners
Contribution from owners of non-controlling interests Cash flow
from financing activities3,773 147 4,592 -9,044 1,921 499
1,8884,055 140 492 -2,928 2,917 2,800 261 7,73717,948 -75 7,449
-10,257 -27,362 2,911 1,807 -6,840 1,275 -13,144-11,830 510 1,427
-2,738 -5,265 4,113 2,800 -4,500 737 -14,7467973,087-2 4346,849Cash
flow for the period 1) The amount for 2012 has been recalculated
compared with previously published information. See Note 5, page
32. 2) Short-term borrowings in which the duration is three months
or shorter are reported net.21Vattenfall Year-End Report 2013 22.
Consolidated statement of cash flows, cont.Amounts in SEK millionQ4
2013Q4 2012Full year 2013Full year 2012Cash and cash equivalents
Cash and cash equivalents at start of period Cash and cash
equivalents included in assets held for sale Cash flow for the
period Translation differences Cash and cash equivalents at end of
period14,849 1 797 147 15,79414 863 3,087 95 18,04518,045 -1 -2,434
184 15,79411,268 6,849 -72 18,045Cash flow before financing
activities-1,091-4,65010,71021,595Financing activities Dividends
paid to owners Payment from Vattenfalls pension foundation
Divestment of shares in Group companies to owners of
non-controlling interests Contribution from owners of
non-controlling interests Cash flow after dividend 1,921 499 -1,329
2,800 2,917 261 1,328-6,840 2,911 1,275 8,056-4,500 2,800 4,113 737
24,745-106,923 -1,329 690 14 -104 1 -23 -1,896 -106,912-114,143
1,328 309 96 -144 1,807 -665 -495 -111,907-111,907 8,056 2,126 36
-408 -1 -3,387 -1,427 -106,912-141,089 24,745 316 -621 344 -520
1,807 -984 -344 4,439 -111,9072,244-1,89323,57112,619Supplementary
informationAnalysis of change in net debt Net debt at start of
period Cash flow after dividend Changes as a result of valuation at
fair value Changes in interest-bearing liabilities for leasing
Interest-bearing liabilities/short-term investments
acquired/divested Changes in liabilities pertaining to acquisitions
of Group companies, discounting effects Cash and cash equivalents
included in assets held for sale Receivable from Vattenfalls
pension foundation Interest-bearing liabilitiy for future dividend
Interest-bearing liabilities associated with assets held for sale
Transfer to liabilities due to changed shareholders rights
Translation differences on net debt Net debt at end of period Free
cash flow22Vattenfall Year-End Report 2013 23. Consolidated
statement of changes in equity 31 Dec. 2013Amounts in SEK
millionBalance brought forward Transitional effect of adoption of
new accounting rules (IAS 19)Attributable to owner of the Parent
CompanyAttributable to non-controlling interests (minority
interests)31 Dec. 20121Total equityAttributable to owner of the
Parent CompanyAttributable to non-controlling interests (minority
interests)Total
equity6,943138,931140,7648,608149,372131,988-3,024-116-3,140Dividends
paid to owners Group contributions from(+)/to(-) owners of
non-controlling interests, net after tax Changes in ownership in
Group companies on divestment of shares to owners of
non-controlling interests Other changes in ownership Transfer to
liabilities due to changed shareholders rights-6,774 -66 505-6,840
505-4,433 -67 532-4,500 532 4 -2,902 1,294 -486 1,298 -3,3882,642
572 726 3,214 726 Cash flow hedges: Changes in fair value Dissolved
against income statement Transferred to cost of hedged item Tax
attributable to cash flow hedges Total cash flow hedges Hedging of
net investments in foreign operations Tax attributable to hedging
of net investments in foreign operations Total hedging of net
investments in foreign operations Translation differences
Translation differences and exchange rate effects net, divested
companies12,503 -9,922 -11 -733 1,837 -2,717 598 -2,119 3,820 7 2 4
-3 10 345 12,510 -9,920 -7 -736 1,847 -2,717 598 -2,119 4,165 7,031
-2,478 58 -1,378 3,233 4,035 -1,049 2,986 -7,033 79-6 2 12 -3 5
-209 7,025 -2,476 70 -1,381 3,238 4,035 -1,049 2,986 -7 242 79182
-30 3,690 355182 -30 4,04530 -705 -20430 -909Remeasurement
pertaining to defined benefit obligations Tax attributable to
remeasurement pertaining to defined benefit obligations Total-1,213
469 -74413 13-1,200 469 -731-3,693 1,230 -2,463-66 -66-3,759 1,230
-2,529Total other comprehensive income for the
period2,9463683,314-3,168-270-3,438Profit for the period Total
comprehensive income for the period-13,668 -10,722125 493-13,543
-10,22916,759 13,591288 1817,047 13,609Balance carried
forward120,3702130,7182140,76428,6082149,3722Remeasurement of
available-for-sale financial assets Impairment of
available-for-sale financial assets Total10,34821) Certain amounts
for 2012 have been recalculated compared with previously
publishedinformation in Vattenfalls 2012 Annual Report. See Note 5,
page 32. 2) Of which, Reserve for cash flow hedges23Vattenfall
Year-End Report 20135,315-395,2763,478-483,430 24. Key ratios,
Vattenfall Group (definitions and calculations of key ratios on
pages 35-36) In % unless otherwise stated. (x) means timesOperating
margin Operating margin2 Pre-tax profit margin Pre-tax profit
margin2 Return on equity Return on capital employed Return on
capital employed2 EBIT interest cover, (x) EBIT interest cover,
(x)2 FFO interest cover, (x) FFO interest cover, net, (x) Cash flow
interest cover after maintenance investments, (x) FFO/gross debt
FFO/net debt FFO/adjusted net debt EBITDA/net financial items, (x)
EBITDA/net financial items, (x)2 Equity/total assets Gross
debt/equity Net debt/equity Gross debt/gross debt plus equity Net
debt/net debt plus equity Net debt/EBITDA, (x) Adusted net
debt/EBITDA, (x)Q4 20138.0 14.6 3.7 10.2 -11.4 3 -2.1 3 9.2 3 -0.8
3 4.1 3 5.5 3 6.1 3 5.0 3 23.7 3 29.8 3 19.6 3 6.1 8.2 26.9 102.7
81.8 50.7 45.0 2.5 3 3.8 3Q4 2012 110.6 13.9 7.8 11.0 12.3 3 8.3 3
8.8 3 3.7 3 3.9 3 5.7 3 6.6 3 3.0 3 21.5 3 30.8 3 22.4 3 6.8 7.8
28.3 107.3 74.9 51.8 42.8 2.1 3 2.8 3Full year 2013-3.8 16.3 -8.9
11.4 -11.4 3 -2.1 3 9.2 3 -0.8 3 4.1 3 5.5 3 6.1 3 5.0 3 23.7 3
29.8 3 19.6 3 6.9 12.4 26.9 102.7 81.8 50.7 45.0 2.5 3 3.8 31)
Certain amounts for 2012 have been recalculated compared with
previously published information in Vattenfalls 2012 Annual Report.
See Note 5, page 32. 2) Based on Underlying operating profit. 3)
Last 12-month values.24Vattenfall Year-End Report 2013Full year
2012 115.5 16.5 10.8 12.4 12.3 8.3 8.8 3.7 3.9 5.7 6.6 3.0 21.5
30.8 22.4 8.8 9.0 28.3 107.3 74.9 51.8 42.8 2.1 2.8 25. Quarterly
information, Vattenfall Group Amounts in SEK millionIncome
statement Net sales Cost of products sold Other operating income
and expenses, net Participations in the results of associated
companies Operating profit before depreciation and amortisation
(EBITDA) Operating profit (EBIT) Underlying operating profit
Financial items, net Profit before tax Profit for the period of
which, attributable to owner of the Parent Company f which,
attributable to non-controlling interests o Balance sheet
Non-current assets Short-term investments Cash and cash equivalents
Other current assets Total assetsQ4 2013Q3 2013Q2 2013Q1 2013Q4
2012 1Q3 2012 1Q2 2012 1Q1 2012 147,762 -37,401 -6,875 353 9,368
3,839 6,951 -2,080 1,759 1,983 2,228 -24536,997 -27,820 -4,152 -207
9,532 4,818 3,999 -1,688 3,130 1,538 1,570 -3237,266 -58,229 -5,295
342 8,190 -25,916 5,325 -2,584 -28,500 -23,259 -23,707 44849,659
-35,243 -3,906 296 15,752 10,806 11,625 -2,406 8,400 6,195 6,241
-4647,937 -37,519 -5,303 -18 10,286 5,097 6,655 -1,373 3,724 6,342
6,405 -6333,679 -32,946 -3,555 44 10,521 -2,778 4,474 -827 -3,605
-3,975 -4,216 24136,703 -27,477 -4,619 122 9,684 4,729 4,772 -3,195
1,534 852 874 -2248,994 -33,756 3,684 -12 23,780 18,910 11,629
-2,445 16,465 13,828 13,696 132375,866 11,460 15,794 83,306
486,426363,325 14,741 14,849 76 089 469,004366,624 11,973 23,103
86,685 488,385387,459 21,820 17,156 87,751 514,186394,381 28,450
18,045 87,488 528,364386,637 32,103 14,863 65,933 499,536398,651
25,767 16,547 72,668 513,633396,640 28,254 17,456 84,153
526,503Equity of which, attributable to owner of the Parent Company
of which, attributable to non-controlling interests (minority
interests) Hybrid Capital Other interest-bearing liabilities
Pension provisions Other interest-bearing provisions Deferred tax
liabilities Other noninterest-bearing liabilities Total equity and
liabilities130,718 120,370122 796 114,152127,691 117,858152,527
143,625149,372 140,764139,840 132,039147,752 140,394150,711
143,71910,348 8,835 125,460 35,477 74,711 31,285 79,940
486,4268,644 8,630 128,159 33,093 73,723 28,216 74,387 469,0049,833
8,746 139,001 33,329 73,630 28 642 77 346 488,3858,902 8,321
139,238 31,027 72,522 32,622 77,929 514,1868,608 8,543 151,718
30,584 73,248 32,537 82,362 528,3647,801 8,408 152,889 22,099
70,401 34,047 71,852 499,5367,358 8,725 157,014 22,676 71,870
34,842 70,754 513,6336,992 8,793 157,752 22,764 73,368 34,825
78,290 526,503Capital employed Net debt297,178 -106,912286,182
-106,923292,268 -112,369310,913 -107,379311,780 -111,907294,939
-114,143315,448 317,430 -123,207 -120,5971) Certain amounts for
2012 have been recalculated compared with previously published
information in Vattenfalls 2012 Annual Report. See Note 5, page
32.25Vattenfall Year-End Report 2013 26. Quarterly information,
Vattenfall Group, cont.Amounts in SEK millionQ4 2013Q3 2013Cash
flow Funds from operations (FFO) Cash flow from changes in
operating assets and operating liabilities Cash flow from operating
activities Cash flow from investing activities Cash flow before
financing activities Changes in short-term investments Loans
raised/Amortisation of debt, net, etc. Dividends paid to owners
Cash flow from financing activities Cash flow for the period6,548
1,359 7,907 -8,998 -1,091 3,773 -1,885 1,888 7976,743 6,958 13,701
-6,444 7,257 -2,940 -12,498 -3 -15,441 -8,1842,244-11.4 -2.1 9.2
-0.8 4.1 23.7 29.8 19.6 26.9 102.7 81.8 45.0 2.5 3.8Free cash
flowQ2 2013Q1 2013Q4 2012 1Q3 2012 1Q2 2012 1Q1 2012 15,999 5,474
11,473 -6,421 5,052 10,979 -3,509 -6,837 633 5,68512,598 -7,843
4,755 -5,263 -508 6,136 -6,360 -224 -73211,583 -6,320 5,263 -9,913
-4,650 4,055 3,681 1 7,737 3,0876,172 4,471 10,643 -6,372 4,271
-7,196 1,033 -1 -6,164 -1,8933,947 4,441 8,388 -5,700 2,688 2,300
-996 -4,489 -3,185 -49712,717 -8,526 4,191 15,095 19,286 -10,989
-2,134 -11 -13,134 6,15210,2208,3622,745-1,8937,9284,5432,041-7.6
-1.8 9.5 -0.7 4.2 27.0 34.5 23.4 26.2 111.4 87.1 46.5 2.4 3.6-11.7
-4.2 9.3 -2.0 4.7 24.6 32.4 22.4 26.1 115.7 88.0 46.8 2.5 3.66.8
5.7 8.8 2.8 4.2 23.2 31.9 22.6 29.7 96.7 70.4 41.3 2.3 3.312.3 8.3
8.8 3.7 3.9 21.5 30.8 22.4 28.3 107.3 74.9 42.8 2.1 2.811.8 10.2
9.3 3.7 3.4 20.4 28.9 22.8 28.0 115.3 81.6 44.9 1.9 2.415.8 12.0
9.2 3.6 2.8 22.1 29.7 23.4 28.8 112.2 83.4 45.5 2.1 2.713.4 9.5 9.4
3.2 3.1 23.3 32.2 25.0 28.6 110.5 80.0 44.5 2.0 2.5Key ratios
(definitions and calculations of key ratios on pages 35-36) In %
unless otherwise stated. (x) means timesReturn on equity2 Return on
capital employed2 Return on capital employed2,3 EBIT interest
cover, (x))2 EBIT interest cover, (x)2,3 FFO/gross debt2 FFO/net
debt2 FFO/adjusted net debt2 Equity/assets ratio Gross debt/equity
Net debt/equity Net debt/net debt plus equity Net debt/EBITDA, (x)2
Adjusted net debt/EBITDA, (x)21) Certain amounts for 2012 have been
recalculated compared with previously published information in
Vattenfalls 2012 Annual Report. See Note 5, page 32. 2) Last
12-month values. 3) Based on Underlying operating
profit.26Vattenfall Year-End Report 2013 27. Note 1 Accounting
policies, risks and uncertainties Accounting policies The
consolidated accounts for 2013 have been prepared, as for the 2012
year-end accounts, in accordance with International Financial
Reporting Standards (IFRS) as endorsed by the European Commission
for application within the EU, and the Swedish Annual Accounts Act.
This year-end report for the Group has been prepared in accordance
with IAS 34 Interim Financial Reporting, and the Swedish Annual
Accounts Act. The accounting policies and calculation methods
applied in this year-end report are the same as those described in
Vattenfalls 2012 Annual Report (Note 3 to the consolidated
accounts), except for the amended IFRSs endorsed by the EU and
described below, which are effective as of the 2013 financial year.
Amendments in IFRS 7 Financial Instruments: Disclosures. The
amendment entails that further disclosures are to be provided about
financial instruments that are recognised net in accordance with
the rules of IAS 32 as well as about financial assets and
liabilities covered by master netting agreements and similar,
regardless of whether these have been offset or not. Vattenfall has
identified which financial instruments are to be covered by the new
disclosure requirements, which are reported in Note 3, Offsetting
financial assets and financial liabilities, in this year-end
report. IFRS 13 Fair Value Measurement. The standard includes
uniform rules for measuring fair value where another IFRS requires
fair value measurements or disclosures about fair value
measurements. New types of disclosures are to be made in order to
clarify which valuation techniques are used and which inputs are
used. The new standard is not expected to affect Vattenfalls
financial statements to any significant degree, but leads to more
detailed disclosures. The disclosures required by IFRS 13 are
provided in this year-end report in Note 4, Financial instruments
by category and related effects on income. Amendments in IAS 1
Presentation of Financial Statements. The amendment entails a
change in the presentation of transactions that are reported in
other comprehensive income. Items that are to be reclassified (or
recycled) to profit or loss are to be reported separately. The
amendment in IAS 1 does not affect the actual content of other
comprehensive income, but only the presentation format. As shown in
the consolidated statement of comprehensive income, two new
sub-headings have been added: Items that will be reclassified to
profit or loss when specific conditions are met, and Items that
will not be reclassified to profit or loss, respectively.
Amendments in IAS 19 Employee Benefits. Significant changes mainly
pertaining to the reporting of defined benefit pension plans, where
the opportunity to defer actuarial gains and lossesNote 2over time
as part of the so-called corridor rule may no longer be applied;
instead, these are to be reported immediately in other
comprehensive income. The current years service cost of defined
benefit pensions, gains and losses that arise from settlement of a
pension liability, and financial items pertaining to the defined
benefit plan, are reported through profit or loss. Amendments in
IAS 19 entail that the Groups financial statements for 2012 have
been recalculated, and the recalculation effects are reported in
Note 5 of this year-end report, Adjustments of 2012 financial
statements as an effect of amendments in IAS 19. Amendment of IAS
36 Impairment removes the requirement introduced in connection with
IFRS 13 Fair Value Measurement to disclose the recoverable amount
for all cash-generating units to which goodwill has been allocated.
Instead, additional disclosure requirements regarding fair value
are introduced when the recoverable amount of an impaired asset is
based on fair value less costs of disposal. The amendments are to
be applied as from 1 January 2014, however, Vattenfall has chosen
to apply them retrospectively in 2013. Improvements to IFRSs
(issued in May 2012) aim to streamline and clarify the accounting
standards concerning presentation, recognition and measurement,
including changes in terminology or amendments of an editorial
nature. The changes are to be applied for the 2013 financial year,
but have not had any significant impact on Vattenfalls financial
statements. IFRIC 20 Stripping Costs in the Production Phase of a
Surface Mine. The interpretation addresses how costs for stripping
the surface layer of an open cast (surface) mine are to be
determined and reported, initially and on a continuous basis,
during the production phase. Vattenfall already applies the
valuation and reporting stipulated in IFRIC 20. Risks and
uncertainties For a description of risks, uncertainties and risk
management, please refer to Vattenfalls 2012 Annual Report, pages
4550. No other material changes have taken place since publication
of the 2012 Annual Report. Other Significant related-party
transactions are described in Note 55 to the consolidated accounts
in Vattenfalls 2012 Annual Report. No material changes have taken
place in relations or transactions with related parties compared
with the description in the 2012 Annual Report.Exchange ratesKey
exchange rates applied in the accounts of the Vattenfall Group: Q4
2013Average rate EUR DKK NOK PLN GBP USD278.8073 1.1808 1.0709
2.1012 10.5087 6.4584Vattenfall Year-End Report 2013Q4 20128.5736
1.1494 1.1633 2.0884 10.613 6.5823Full year 20138.6625 1.1615
1.1081 2.0615 10.2250 6.5144Full year 20128.7036 1.1692 1.1627
2.0797 10.6954 6.734331 Dec. 2013Balance sheet date rate EUR DKK
NOK PLN GBP USD31 Dec. 20128.8591 1.1877 1.0593 2.1325 10.6262
6.42388.5820 1.1503 1.1679 2.1065 10.5159 6.5045 28. Note 3
Offsetting financial assets and financial liabilities Financial
assets and liabilities that are subject to enforceable master
netting arrangements and similar agreements. Related amounts not
set off on the balance sheetAssets 31 December 2013 Amounts in SEK
millionGross amounts of Gross recognised amounts of financial
recognised liabilities set financial off on the assets balance
sheetNet amounts of financial assets presented on the balance
sheetFinancial liabilities, not intended to be settled net 1Related
amounts not set off on the balance sheetCash collateral receivedNet
amount2,17634Derivatives, financial operations Derivatives,
commodity
contracts44,01027,54716,4633,108Total52,98327,54725,4366,7635,2841,7701,770
27,2068,973Derivatives, not subject to offsetting Total derivative
assets8,9736,763Liabilities 31 December 2013 Amounts in SEK
millionGross amounts of recognised financial liabilitiesGross
amounts of recognised financial assets set off on the balance
sheet8,669Net amounts Financial of financial assets liabilities
pre- not intended sented on the to be balance sheet settled net
1Cash collateral pledgedNet amount6,7631,68522113,355Derivatives,
financial operations Derivatives, commodity
contracts32,60827,5475,0611,6003,46113,389Total41,27727,54713,7306,7633,2853,6821,770
15,159Derivatives, not subject to offsetting Total derivative
liabilities284284 14,014284 3,96612,81312,81311,1271 34434239,019
51,83231,788 31,7887,231 20,044 11,1271,354 2,6985,877 6,219761761
20,805761 6,980Assets 31 December 2012Liabilities 31 December
2012Amounts in SEK million8,669Amounts in SEK millionDerivatives,
financial operations Derivatives, commodity contracts
Total19,29519,29511,1277,21595344,965 64,26031,788 31,78813,177
32,472 11,1271,740 8,95511,437 12,390Derivatives, financial
operations Derivatives, commodity contracts Total3,7823,782
36,2543,782 16,172Derivatives, not subject to offsetting Total
derivative liabilitiesDerivatives, not subject to offsetting Total
derivative assetsFor derivatives in the financial operations and
commodity contracts, CSAs (Credit Support Annex) may be entered
into as an annex to the respective master agreements, and are
recognised as cash collateral received or cash collateral pledged.
Under the CSA, the parties agree to provide each other with
eligible credit support, which is calculated based on a daily
exposure under the specific agreement. 1)hese items cannot be
settled net as each transaction has a unique due date and they were
not entered into with T the purpose to be settled net. Settlement
can be entailed only in case of default.28Vattenfall Year-End
Report 2013 29. Note 4 Financial instruments by category and
related effects on income Financial instruments by category:
Carrying amount and fair value 31 Dec. 201331 Dec. 2012Amounts in
SEK millionCarrying amountFair valueCarrying amountFair
valueFinancial assets at fair value through profit or loss
Derivative assets Short-term investments Cash equivalents
Total13,011 9,774 52 22,83713,011 9,774 52 22,83723,179 27,192 181
50,55223,179 27,192 181 50,552Derivative assets for hedging
purposes for: Fair value hedges Cash flow hedges Total1,954 12,241
14,1951,954 12,241 14,1955,463 7,612 13,0755,463 7,612 13,075Loans
and receivables Share in the Swedish Nuclear Waste Fund Other
non-current receivables Trade receivables and other receivables
Advance payments paid Short-term investments Cash and bank balances
Total30,600 6,587 32,042 2,368 1,685 15,742 89,02430,836 6,601
32,042 2,368 1,685 15,742 89,27329,954 5,249 34,409 5,172 1,258
17,864 93,90630,736 5,249 34,409 5,172 1,201 17,864
94,631Available-for-sale financial assets Other shares and
participations carried at fair value Other shares and
participations carried at cost Total2,389 310 2,6992,389 310
2,6992,730 250 2,9802,730 250 2,980Financial liabilities at fair
value through profit loss Derivative liabilities Total9,815
9,8159,815 9,81518,866 18,86618,866 18,866Derivative liabilities
for hedging purposes for: Fair value hedges Cash flow hedges
Total459 3,740 4,199459 3,740 4,19971 1,868 1,93971 1,868
1,9398,835 98,004 6,000 27,456 30,113 3,288 173,6969,238 108,885
6,000 27,155 30,113 3,288 184,6798,543 112,524 7,534 39,194 32,581
1,929 202,3059,606 118,509 7,534 39,421 32,581 1,929 209,580Other
financial liabilities Hybrid Capital Other non-current
interest-bearing liabilities Other non-current noninterest-bearing
liabilities Current interest-bearing liabilities Trade payables and
other liabilities Advance payments received Total 29Vattenfall
Year-End Report 2013For assets and liabilities with a remaining
maturity of less than three months (e.g., cash and bank balances,
trade receivables and other receivables, and trade payables and
other payables), fair value is considered to be equal to the
carrying amount. For other shares and participations carried at
cost, in the absence of fair value, this is considered to be equal
to the carrying amount. Financial instruments that are measured at
fair value on the balance sheet are described below according to
the fair value hierarchy (levels), which in IFRS 13 is defined as:
Level 1: Quoted prices (unadjusted) in active markets for identi
cal assets or liabilities Level 2: nputs other than quoted prices
included in Level 1 that I are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that
is, derived from prices). In Level 2 Vattenfall reports mainly
commodity derivatives and interest rate swaps Level 3: nputs for
the asset or liability that are not based on I observable market
data (that is, unobservable inputs) 30. Note 4, cont. Financial
assets and liabilities that are measured at fair value on the
balance sheet at 31 December 2013 Level 1Liabilities Derivative
liabilities Total liabilitiesLevel 3Total26,058 1,782 27,8401,149
1,14927,207 9,827 2,390 39,424 Assets Derivative assets Short-term
investments and cash equivalents Other shares and participations
Total assetsLevel 2 8,045 2,390 10,435Amounts in SEK million13,639
13,639375 37514,014 14,014Financial assets and liabilities that are
measured at fair value on the balance sheet at 31 December 2012
Level 1Liabilities Derivative liabilities Total liabilitiesLevel
3Total34,125 14,393 48,5182,129 2,12936,254 27,373 2,730 66,357
Assets Derivative assets Short-term investments and cash
equivalents Other shares and participations Total assetsLevel 2
12,980 2,730 15,710Amounts in SEK million18,539 18,5392,266
2,26620,805 20,805Changes in level 3 financial instruments
Financial instruments at fair value through profit or loss
Derivative assets Amounts in SEK millionBalance brought forward
Transfers from level 3 to level 2 Revaluations recognised in
operating profit (EBIT) Translation differences Balance carried
forward Total revaluations for the period included in operating
profit (EBIT) for assets and liabilities held on the balance sheet
date30Vattenfall Year-End Report 2013Derivative liabilities31 Dec.
201331 Dec. 20122,129 -1842,832 2,266 -1,0852,925 -834 38 1,149-626
-77 2,129-836 30 375-549 -110 2,2666551,965-87-1,88431 Dec2013 31
Dec. 2012Sensitivity analysis for Level 3 contracts TGSA: TGSA
(Troll1 Gas Sales Agreement) is a large gas supply agreement (coal
priceindexed) that extends further ahead in time than liquid
trading in the gas market. Valuation of the agreement is against
the market price, as long as a market price can be observed.
Modelled prices are used for commodity deliveries beyond the market
horizon or deliveries with uncommon terms and options. TGSA is
hedged with OTC forward trades of underlying products. These trades
are also marked against the same market and modelled prices. The
modelled prices are benchmarked against reliable financial
information obtained from the company Markit; this information is
well-known and is used by many energy companies, offering a fair
valuation of the portion of the large gas supply contract that
cannot be valued against market prices (Level 3). TGSA is also
hedged with OTC forward trades of underlying products, which were
also marked against modelled prices until 2012. In 2013, all OTC
forward contracts have been transferred from level 3 to level 2
since, starting in 2013, the market price input can be observed and
derived from the market. The net value as per 31 December 2013 has
been calculated at SEK 634 million (31 December 2012: -153). The
price of the coal price index used in the model (API#2) has a large
impact on the modelled price. A change in this index of +/- 5%
would affect the total value by approximately SEK -/+ 25 million
(31 December 2012: -/+ 16). CDM: Clean Development Mechanism (CDM)
is a Kyoto Protocol initiative under which projects set up in
developing countries to reduce atmospheric carbon generate tradable
carbon credits called CERs (Certified Emission Reductions). CERs
can be used by industrialised nations to offset carbon emissions at
home to meet their Kyoto Protocol reduction targets. The
non-observable input factor is an estimation about the volume of
CERs that are expected to be delivered. This estimation is derived
from six Risk Adjustment Factors (RAFs) that have the same
weighting. These factors are calculated using the Carbon Valuation
Tool developed by Point Carbon to quantify the risk and calculate
the fair value of CDM projects or contracts. The tool is based on
Point Carbons valuation methodology, which was developed by several
experienced market players. The valuation methodology is strictly
empirical, and allrisk parameters are extracted from Point Carbons
proprietary databases of CDM project data, which entails a correct
valuation of the contracts even where market prices are not listed.
The results are validated based on monitoring reports for the
respective CDM projects, which are publicly available. The net
value as per 31 December 2013 has been calculated at SEK -1 million
(31 December 2012: -414). The fair value is mainly determined and
correlated with the observable price for CER, meaning a higher
price for CER leads to a higher value of the CDM contract and vice
versa. A change in the modelled price of CERs of +/- 5% would
affect the total value by approximately SEK +/- 3 million (31
December 2012: +/- 5). Long-term electricity contracts: Vattenfall
has longterm electricity contracts with a customer extending until
2019 that include embedded derivatives in which the electricity
price for the customer is coupled to the price development of
aluminium and exchange rate movements of the Norwegian krone (NOK)
in relation to the US dollar (USD). Reliable market quotations for
aluminium are available for a period of 27 months forward in time.
Vattenfall has estimated that the use of modelled prices provides
reliable values for valuation of the period beyond 27 months, that
is, the time horizon during which market quotations are not
available until the contracts expiration date. For modelling the
prices, a Monte-Carlo simulation is used. Valuation is done on a
monthly basis. The value of the embedded derivative is defined as
the difference between the total contract value and the fair value
of a fixed price agreement concluded at the same time and for same
time horizon as the actual contract was concluded. Furthermore,
changes in fair value are analyzed every month by comparing changes
in market price for aluminium and the USD/NOK exchange rate. The
value as per 31 December 2013 has been calculated at SEK 142
million (31 December 2012: +430). The price of aluminium is the
factor that has the greatest bearing on the modelled price. An
increase of the price for aluminum leads to a higher fair value and
vice versa. A change in the price of aluminium of +/- 5% would
affect the total value by approximately SEK +/- 90 million (31
December 2012: +/- 148). 1) Troll is a gas field in the North Sea
west of Norway. 31. Note 4, cont. Financial instruments: Effects on
income by category Net gains(+)/losses(-) and interest income and
expenses for financial instruments recognised in the income
statement: 31 Dec. 2013 Amounts in SEK millionDerivative assets and
derivative liabilities Available-for-sale financial assets Loans
and receivables Financial liabilities measured at amortised cost
Total 1) Exchange rate gains and losses are included in net
gains/losses.31Vattenfall Year-End Report 2013Net gains/
losses1-3,121 -382 753 1,541 -1,209Interest incomeInterest
expenses196 494 690-257 -4,238 -4,49531 Dec. 2012 Net gains/
losses15,120 -208 675 109 5,696Interest incomeInterest expenses489
1,379 1,868-124 -5,571 -5,695 32. Note 5 Adjustments of 2012
financial statements as an effect of amendments in IAS 19 As
described in Note 1, Accounting policies, risks and uncertainties,
new accounting rules apply as of 2013 according to IAS 19 Employee
Benefits, with respect to provisions for pensions and other
personnel-related provisions. The reported effect due to the
elimination of the corridor rule and other effects of the amended
IAS 19 have affected Vattenfalls financial statements as follows:
31 Dec. 2011/1 Jan. 2012Amounts in SEK millionBalance sheet:
Pension provisions Personnel-related provisions for non-pension
purposes Deferred tax liabilities Accrued expenses1 Equity
attributable to owner of the Parent Company Equity excl. Profit for
the year Profit for the year Equity attributable to non-controlling
interests Equity Balance sheet totalAs reported previously1 Jan.-31
Dec. 2012AdjustmentsAfter adjustmentsAs reported
previouslyAdjustmentsAfter
adjustments17,9954,90922,90421,8908,69430,5843,975 35,406
18,507-855 -896 -183,120 34,510 18,4893,141 34,681 15,830-687
-2,144 -182,454 32,537 15,812121,572 10,416-3,024 118,548
10,416129,204 17,224-5,487 -177123,717 17,0476,943 138,931
524,558-116 -3,140 6,827 135,791 524,5588,790 155,218 528,364-182
-5,846 8,608 149,372 528,36426,175 -10,510 -1,077 17,224-217 34 6
-17725,958 -10,476 -1,071 17,047Income statement: Operating profit
(EBIT) Financial expenses2 Income tax expense Profit for the year
Comprehensive income Remeasurement pertaining to defined benefit
obligations Tax attributable to remeasurement pertaining to defined
benefit obligations Profit for the year Total comprehensive
income-3,759-3,759 17,224 16,3151,230 -177 -2,7061,230 17,047
13,609Statement of cash flows: Profit before tax Other, incl.
non-cash items Funds from operations (FFO)18,301 -930 34,419-183
183 18,118 -747 34,4191) Change pertaining to recognition of
special employers payroll tax. 2) Including changed interest rate
used to calculate the return on plan assets.32Vattenfall Year-End
Report 2013 33. The Parent Company Vattenfall AB Accounting
policiesThe Parent Company Vattenfall ABs accounts are prepared in
accordance with the Swedish Annual Accounts Act and recommendation
RFR 2 Accounting for Legal Entities, issued by the Swedish
Financial Reporting Board. The accounting policies used in this
report are the same as those described in Vattenfalls 2012 Annual
Report (Note 2 to the Parent Company accounts), with the following
additions: During the year the Parent Company changed the
accounting policy pertaining to realised exchange rate fluctuations
on loans in foreign currency that hedge investments in foreign
operations. Previously, these realised exchange rate fluctuations
were reported in the income statement. After the change, such
fluctuations are reported as an increase or decrease in the
reported acquisition cost of the assets. The policies for
unrealised exchange rate fluctuations on similar loans have not
been changed, i.e., they are not reported because the loan debt
hedges the investment. The income statement and balance sheet
included in the 2012 Annual Report, i.e., the income statement for
2012 and balance sheet as per 31 December 2012, have been
recalculated in accordance with the new policy. The recalculation
entails that other financial income decreased by SEK 590 million,
and the result from participations in subsidiaries improved by the
same amount; thus there is no impact on net financial
income/expense, while a shift within one line on the balance sheet
has been made by the same amount.33Vattenfall Year-End Report
2013Full year 2013A condensed income statement and balance sheet
for the Parent Company are presented below. Sales amounted to SEK
37,197 million (38,250). Profit before appropriations and tax was
SEK -5,213 million (6,762). Profit includes a dividend of SEK
10,908 million from the subsidiary Vattenfall GmbH. Profit includes
an impairment loss for shares in N.V. Nuon Energy , totalling SEK
23,631 million, an impairment loss for shares in Vattenfall A/S,
totalling SEK 834 million, and an impairment loss of SEK 621
million for the value of shares in Enea S.A. The balance sheet
total was SEK 269,944 million (314,473). Investments during the
period amounted to SEK 465 million (4,966). Cash and cash
equivalents and short-term investments amounted to SEK 16,840
million (37,193). In May a share dividend of SEK 6,774 million
(4,433) was paid to the owner, the Swedish state.Risks and
uncertaintiesFor a description of risks, uncertainties and risk
management, please refer to Vattenfalls 2012 Annual Report, pages
4550. No material changes have taken place since publication of the
2012 Annual Report.OtherSignificant related-party transactions are
described in Note 39 to the Parent Company accounts in Vattenfalls
2012 Annual Report. No material changes have taken place in
relations or transactions with related parties compared with the
description in the 2012 Annual Report. 34. Parent Company income
statement Amounts in SEK millionNet sales Cost of products sold
Gross profit Selling expenses, administrative expenses and research
and development costs Other operating income and expenses, net
Operating profit (EBIT) Result from participations in subsidiaries
Result from participations in associated companies Result from
other shares and participations Other financial income Other
financial expenses Profit before appropriations and tax
Appropriations Profit before tax Income tax expense Profit for the
periodFull year 2013Full year 2012 137,197 -25,464 11,73338,250
-24,126 14,124-2,645 -226 8,862-3,395 253 10,982-13,424 6 -569
4,603 -4,691 -5213-3,451 1 66 4,906 -5,742 6,762-4,068 -9,281-7,680
-918-1,687 -10,968-1,122 -2,0401) T he Parent Companys income
statement and balance sheet for 2012 have been recalculated
compared withpreviously published information. See the Parent
Companys accounting policies above. This recalculation has resulted
in shifts between lines in the income statement and within o