Vattenfall Annual Report 2005

Vattenfall Annual Report 2005

FIVE AMBITIONS FOR BECOMING NUMBER ONE ANNUAL REPORT 2005 contents Financial calendar 2006 Chief Executive Officer’s message 2—4 8 February Year-end Report VAT TEN Mid-March Annual Report 2005 Important events 5 27 April Three-month Interim Report The year in brief 6—7 27 April Annual General Meeting F Vattenfall’s strategies 8—9 27 July Six-month Interim Report ALL Vattenfall’s world 31 October Nine-month Interim Report ANNUAL REPORT 2005 The European energy market 12—15 The competition 16—19 Investor Relations Pricing 22—25 Klaus Aurich, [email protected] Monica Edblad, [email protected] Renewable energy and energy efficiency measures 26—29 Susanna Hjertonsson, [email protected] Telephone +46 8 739 50 00 Sustainability work 30—31 Vattenfall’s markets The Nordic Countries 34—36 Other publications September Corporate Social Responsibility Report Germany 37—39 November Electricity Market Report Poland 42—43 All reports can be ordered from Facts about Vattenfall’s markets 44—45 Vattenfall AB, SE-162 87 Stockholm, Sweden Telephone +46 8 739 50 00, e-mail info vattenfall.com Employees and competence 48—49 @ Five ambitions For Corporate Governance Report 50—56 Further information about Vattenfall The Board’s report on internal control 57 can be found on Vattenfall’s homepages: becoming number one www.vattenfall.com (English) The Board and www.vattenfall.se (Swedish) Executive Group Management 58—59 Risks and risk management 60—63 Financial information Administration Report 64—67 Consolidated accounts 68—74 Notes to the consolidated accounts 76—103 Parent company’s Vattenfall AB (publ) accounts including notes 104—111 SE-162 87 Stockholm, Sweden Tel +46 8 739 50 00 Proposed distribution Swedish corporate identity number 556036–2138 of profits,Audit Report 112 www.vattenfall.com www.vattenfall.se Key ratios, definitions 113 Eight-year review 114 Quarterly review 115 Glossary 116 Energy terms 117 about energy Energy terms Units of power Power is energy per unit of time this is vattenFall Power is expressed in Watts (W) 1 kW (kilowatt) = 1,000 W 1 MW (megawatt) = 1,000 kW 1 GW (gigawatt) = 1,000,000 kW Vattenfall is Europe’s fourth largest generator of electricity and the largest generator of heat. External net sales and EBIT per market, 2005 Vattenfall’s markets Units of energy The Group’s sales amounted to SEK 129,158 million in 2005. Vattenfall’s vision is to be a Nordic Countries Energy is power multiplied by time Vattenfall generates roughly 20 per cent of the electricity consumed 1 kWh (kilowatt hour) = 1 kW expended over an hour leading European power company. The company currently has operations in Sweden, Finland, in the Nordic countries. Electricity generation is almost exclusively 1 MWh (megawatt-hour) = 1,000 kWh comprised of nuclear power and hydro power. Electricity is sold to 1 GWh (gigawatt-hour) = 1,000,000 kWh approximately 0,9 million customers throughout the Nordic countries. Denmark, Germany and Poland. Vattenfall is active at all stages of the electricity value chain Vattenfall also has considerable heat generation operations, largely 1 TWh (terawatt-hour) = 1,000,000,000 kWh based on biofuel, and sells district heating and so-called thermal heat. — generation, transmission, distribution and sales. Vattenfall is also active in electricity trading Distribution owns and operates electricity networks and distributes Voltage electricity to 1.3 million network customers in Sweden and Finland. 1 kV (kilovolt) = 1,000 volt (V) and generates, distributes and sells heat. The group has more than 32,000 employees and Vattenfall also conducts consulting, contracting and R&D activities, primarily within the energy sector. the parent company, Vattenfall AB, is wholly owned by the Swedish State. 41 Germany Energy units in practice Vattenfall generates almost 14 per cent of the electricity consumed in 1 kWh is enough to run a standard Swedish car heater for about an Germany, making it the country’s third largest generator of electricity. 1 Sales and operating profit Profitability Total electricity generation 14 About 87 per cent of the generation comes from fossil fuels, primarily hour or an 11 W low energy light bulb for almost four days. Sales, Operating profit, based on the company’s own lignite mining. Vattenfall’s coal-fired SEK millions SEK millions % TWh power plants are among the most modern in the world. Vattenfall also 1 MWh is enough to heat a small house for a couple of weeks and 70 150,000 30,000 30 75 Nordic generates heat and has considerable district heating sales, primarily is generated in 20 minutes by Vattenfall’s largest wind turbine in Countries in Berlin and Hamburg. In the electricity network sector, Vattenfall windy conditions. owns and operates high-voltage as well as regional and local 43% 120,000 24,000 24 60 42% networks. There are a total of about 3.4 million network customers and about 2.9 million electricity customers. 1 GWh is enough to meet the energy needs of an average Swedish 37% town with a population of 100,000 for 8 hours and can be generated 35% 90,000 18,000 18 45 9 Poland in one hour by the Harsprånget hydro plant or in 20 minutes by the 0,8 Heat generation and sales comprise the majority of operations and Forsmark nuclear power plant. 10 Poland Vattenfall has a market share of about 27 per cent. Electricity is also 60,000 12,000 12 30 23% generated, but to a lesser degree. Distribution owns and operates electricity networks and distributes electricity to 1.1 million network 1 TWh is enough to run two large news print machines for a year. It is 20% Germany customers, primarily in the south-western part of the country. There also enough to power all of Sweden’s railways, underground railways 30,000 6,000 6 15 are a total of approximately 1.1 million electricity customers. and trams for five months. Ringhals nuclear power plant can gener- ate this power in 12 days. Joint Group operations 0 0 0 0 External net sales per market, SEK billions Vattenfall Trading Services, Vattenfall Treasury and Vattenfall 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 2004 2005 Insurance are central support functions for managing the Group’s EBIT excl. items affecting comparability per market, SEK billions risks and providing market access. ■ Sales (IFRS) ■ Return on equity1 (Sw. GAAP) ■ Fossil-based power ■ Operating profit1 (Sw. GAAP) ■ Return on equity1 (IFRS) ■ Nuclear power ■ Operating profit1 (IFRS) ■ Return on net assets1 (Sw. GAAP) ■ Hydro power Key facts about Vattenfall’s markets 1) Excl items affecting comparability. ■ Return on net assets1 (IFRS) 1) Wind power, biofuel and waste are 1) Excl items affecting comparability. included in these volumes at a total of 0.6 TWh for 2004 and 0.5 TWh Nordic Countries Germany Poland Total for 2005. 2005 2004 2005 2004 2005 2004 2005 2004 External net sales, SEK millions 40,712 38,843 70,304 63,514 8,790 7,421 129,1581 113,3662 Key figures (IFRS) Operating profit, SEK millions 16,845 12,215 10,221 4,591 842 711 27,7303 17,1124 2005 2004 2005 (EUR)1 Net sales, SEK millions 129,158 113,366 13,697 EBIT excl. items affecting Operating profit, SEK millions 27,730 17,112 2,941 comparability, SEK millions 13,755 12,246 10,359 7,208 808 691 24,7445 19,3276 Operating profit (EBIT) excl. items affecting comparability, SEK millions 24,744 19,327 2,624 Profit before tax, SEK millions 26,319 14,614 2,791 Net assets, SEK millions 77,190 57,377 68,717 68,040 9,295 7,321 155,237 131,622 Profit for the year, SEK millions 20,518 9,604 2,176 Earnings per share, SEK 146.05 67.91 15.49 VAT TEN Return on equity excl. items affecting comparability, % 22.0 15.6 Electricity generation, TWh 89.8 88.4 75.9 75.5 3.4 3.2 169.1 167.1 Return on net assets excl. items affecting comparability, % 15.9 13.3 F Total assets, SEK millions 330,421 285,205 35,039 Heat, TWh 7.3 7.6 15.4 15.5 11.4 11.4 34.1 34.5 ALL ANNUAL REPORT 2005 Equity/assets ratio, % 26.8 29.1 Funds from operations (FFO), SEK millions 31,386 24,302 3,328 Investments, SEK millions 24,497 12,731 2,598 Number of customers 1,291,000 1,278,000 3,399,000 3,393,000 1,104,000 1,101,000 5,794,000 5,772,000 Production: Vattenfall AB and Intellecta Communication AB. Photos: Bruno Ehrs, Electricity generation, TWh 169.1 167.1 Johnér and Vattenfall AB. Illustration: Mikael Jacobsson, Amigos. Printed by: Edita. Heat generation, TWh 34.1 34.5 Number of employees 8,788 8,735 20,096 20,864 3,029 3,309 32,2317 33,0178 Copyright 2006, Vattenfall AB, Stockholm. Average number of employees in the Group 32,231 33,017 1) Total sales includes sales in “Other segment” of SEK 9,352 million. 2) Total sales includes sales in “Other segment” of SEK 3,588 million. 3) Total profit includes 1) Exchange rate 9.43 SEK/EUR. a loss in “Other segment” of SEK —178 million. 4) Total profit includes a loss in “Other segment” of SEK —392 million. 5) Total includes a loss in “Other segment of SEK —178 million. 6) Total includes a loss in “Other segment” of SEK —805 million. 7) Other countries are included, totalling 318 persons. 8) Other countries are included, totalling 109 persons.

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