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Vattenfall Q3 Results 2007. Presentations by Lars G. Josefsson, CEO and Jan Erik Back, CFO 31 October 2007. Highlights – 9M results 2007. Net sales rose 9.3% to SEK 105,310 million (96,374) EBIT decreased 2.8% to SEK 21,225 million (21,827) Profit after tax increased

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Vattenfall q3 results 2007

VattenfallQ3 Results 2007

Presentations by

Lars G. Josefsson, CEO and

Jan Erik Back, CFO

31 October 2007


Highlights 9m results 2007
Highlights – 9M results 2007

Net sales rose

9.3% to SEK 105,310 million (96,374)

EBIT decreased

2.8% to SEK 21,225 million (21,827)

Profit after tax increased

28.4% to SEK 17,010 million (13,249) due to reduction of German corporate income tax

Net debt decreased

by SEK 4,883 million to SEK 44,524 million compared with

31 December 2006

31 Oct 2007


Highlights q3 results 2007
Highlights – Q3 results 2007

Net sales rose

12.9% to SEK 31,589 million (27,990)

EBIT increased

37.9% to SEK 4,557 million (3,304)

Profit after tax increased

88.3% to SEK 3,523 million (1,871) due to reduction of German corporate income tax

31 Oct 2007


Highlights q3 results 20071
Highlights – Q3 results 2007

Net debt decreased

by SEK 2,241 million to SEK 44,524 million vs 30 June 2007

Return on Net Assets

was15.7% LTM (FY 2006: 16.6%)

Return on Equity

was 20.5% LTM (FY 2006: 19.1%)

Net Gearing

was 37% as of 30 Sept 2007 vs 46% as of 31 December 2006

LTM = Last twelve months

31 Oct 2007


Ebit development

Quarterly figures in SEK million, excluding items affecting comparability

Last 12 months figures in SEK million, excluding items affecting comparability

EBIT development

Quarterly figures, SEK million

Bewag consolidated

Danish assets consolidated

GZE consolidated

HEW consolidated

31 Oct 2007


Increased fossil and hydro power generation
Increased fossil and hydro power generation comparability

Electricity:Q3 2006 total: 34.5 TWh

Electricity:Q3 2007 total: 37.3 TWh

Other=wind, biofuel, waste

Heat Q3 2006 total: 3.0 TWh

Heat: Q3 2007 total: 3.8 TWh

41 %

31 Oct 2007


Electricity spot price development
Electricity spot price development comparability

As of 26 Oct

31 Oct 2007


Nordic hydrological balance
Nordic hydrological balance comparability

Source: Markedskraft and Nord Pool

31 Oct 2007


Increasing electricity forward prices
Increasing electricity forward prices comparability

31 Oct 2007


Oil coal gas and co 2 allowances
Oil, coal, gas and CO comparability2 allowances

31 Oct 2007


Vattenfall q3 results 2007

CO comparability2 allowances

EUR/tonne

31 Oct 2007


Nuclear update post outages on 28 june
Nuclear update – post outages on 28 June comparability

  • Damage at German nuclear plant Krümmel has been repaired, some work is still under way (e.g. installation of new transformer).

  • However, following the events, deviant installations of some anchors were detected at Brunsbüttel and Krümmel. The evaluation of the findings is still in progress.

  • Both plants will remain disconnected from the grid until all replacement work is finished, all questions are clarified and all relevant measures are taken.

  • Q3 financial impact totals approximately EUR 60 million (SEK 555 million)

Krümmel (1,346 MW)

Brunsbüttel (771 MW)

31 Oct 2007


Increased retail customer churn in germany
Increased retail customer churn in Germany comparability

  • Some 200,000 customers lost in Germany primarily due to:

    • mounting competition in the retail market and customers being increasingly inclined to switch electricity suppliers

    • Vattenfall’s notice of price increases as of 1 July, which resulted in very negative customer reactions

    • Inadequate information to the general public following the nuclear outages

  • Losses should be viewed against the background of very high market shares (>80%, corresponding to nearly 2.9 million customers) in Berlin and Hamburg

    Measures taken:

  • Improved product offers

    • launched a very competitively priced internet product

    • expanded marketing activities throughout Germany, i.e. to areas outside our core German markets in Berlin and Hamburg

  • Launched a large-scale dialogue, inviting all customers as well as the general public to put questions to Vattenfall

  • Establishment of a customer advisory council

31 Oct 2007


We are growing our market shares in sweden
We are growing our market shares in Sweden comparability

  • We have now exceeded one (1) million customers in the Nordic countries

  • Our Swedish retail customer market share has grown from 13% to 15%.

  • Customer satisfaction index has improved

  • Vattenfall’s products are considered best in the market

31 Oct 2007


Major ongoing investment projects
Major ongoing investment projects comparability

  • Lillgrund – the world’s 3rd largest offshore wind power farm soon to be fully operationable (48 windmills, 110 MW)

  • Schwarze Pumpe – the world’s first CCS oxyfuel pilot plant, to be commissioned in August 2008. Agreement on CO2 storage is now in place.

  • Boxberg – 675 MW lignite power plant under construction

  • Moorburg – 1,640 MW CHP plant still pending final approval from the City of Hamburg

  • Reopening of the Reichwalde lignite mine in Germany

  • Extensive transmission grid investments in Germany

  • Several renewable energy projects in Germany and Sweden

31 Oct 2007


Eu s 3 rd energy package launched 19 september
EU’s 3 comparabilityrd Energy package launched 19 September

Vattenfall’s response:

  • This offers a unique opportunity to further improve the market’s function and to speed up market development through integration of national markets into regional markets and finally the Internal Market for Energy

  • We believe that an integrated energy market is a prerequisite for the competitiveness of Europe

  • We believe having Regional System Operators (RIO) is the best way to achieve integration

  • We are positive to creating an Agency for Cooperation of National Energy Regulators

  • We support the proposed new Network for Transmission System Operators (ENTSO)

  • We believe, however, that additional measures are needed to reach the target

31 Oct 2007


Vision and growth strategy remains firm
Vision and growth strategy remains firm comparability

  • Vattenfall’s vision is to be a leading European energy company

  • Within our “growth ambition” we will

    • Continue to be an integrated company and focus on generation of electricity and heat

    • Expand in core and geographically close markets where value can be created

    • Use both M&A and greenfield investments as tools for growth

  • More focus on renewables, CCS, nuclear and CHP

  • Increased focus on our “benchmark ambition” and operational performance

31 Oct 2007


Financials

Financials comparability

Jan Erik Back, CFO


Consolidated income statement
Consolidated income statement comparability

Amounts in MSEKQ3 2007 Q3 2006 Change FY2006 LTM

IFRS IFRS %

Net sales 31,589 27,990 12.9 135,802 144,738

Cost of products sold 24,335 21,956 10.8 96,844 105,575

Gross profit 7,254 6,034 20.2 38,958 39,163

Operating profit (EBIT) 4,557 3,304 37.9 27,049 26,447

Operating profit, excl. IAC*4,5423.28638.2 26,676 26,373

Financial income 472 841 -43.9 3,839 3,623

Financial expenses -1,515 -1,18428.0 -5,363 -5,758

Financial net -1.043 -343 -204.1 -1,524 -2,135

Profit before taxes 3,514 2,961 18.7 25,525 24,312

Taxes 9 -1,090 -5,667 -693

Profit for the period 3,523 1,871 88.3 19,858 23,619

* IAC = items affecting comparability

31 Oct 2007


Vattenfall q3 results 2007

Cash flow development comparability

MSEK

31 Oct 2007


Return on equity
Return on equity comparability

30%

Rolling 4-quarter

IFRS excl IAC

25%

20%

Rolling 4-quarter Sw

GAAP excl IAC

15%

Average 4-years (16

10%

quarter) Sw. GAAP.

IFRS from Q4

5%

2004. Excl. IAC

Requirement 15%

0%

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

31 Oct 2007


Financial targets and outcome
Financial targets and outcome comparability

Key Ratio

Targets

Q3 2007

Return on Equity (RoE)

20.5%1

15 % on average equity

Return on Net Assets(RoNA, excl. IAC)

11 % before tax (= 15 % RoE recalculated into the Groups RoNA requirement)

15.7%*

Cash flow interest coverage after maintenance investments

3.5 – 4.5 times

7.0*

Credit Rating

A2/A-

Stable outlook

Single A category rating

Dividend pay-out

40-60 %

40 %2

1) Q3 2007 figure = LTM

2) Paid in May 2007

31 Oct 2007


Ebit q3 2007 vs q3 2006
EBIT Q3 2007 vs Q3 2006 comparability

Millions of SEK

6 000

648

619

5 000

4 557

60

942

540

356

4 000

3 304

3 000

2 000

1 000

0

Q3 2006

Price

Volume

O&M

Sales and

Write-downs

Other

Q3 2007

admin

31 Oct 2007


Ebit 9m 2007 vs 9m 2006
EBIT 9M 2007 vs 9M 2006 comparability

31 Oct 2007


Ebit q3 2007 vs q3 2006 secondary segments
EBIT Q3 2007 vs Q3 2006 – secondary segments comparability

VTS= Vattenfall Trading Services

31 Oct 2007


Ebit 9m 2007 vs 9m 2006 secondary segments
EBIT 9M 2007 vs 9M 2006 – secondary segments comparability

Millions of SEK

VTS= Vattenfall Trading Services

26 000

2 651

-1 214

Sales

24 000

VTS

21 827

756

21 225

22 000

1 383

1 279

20 000

457

134

18 000

16 000

14 000

12 000

10 000

8 000

6 000

4 000

2 000

0

Q1-Q3 2006

Generation

Heat

Networks

Markets

Other

Q1-Q3 2007

31 Oct 2007


Hedging position as of 30 september 2007
Hedging position as of 30 September 2007 comparability

% hedged of planned electricity generation (percentage values are rounded)

31 Oct 2007


Highlights q3 2007 nordic
Highlights Q3 2007 - Nordic comparability

  • EBIT almost flat compared with Q3 2006

  • Sharp decline in Nordic spot prices mitigated by hedging.

  • Higher electricity generation due to increased hydro and nuclear power.

  • Lower results in Distribution due to a provision of approx. SEK 100 million for restructuring measures.

  • Lower results in Heat due to an impairment loss of SEK 195 million of a CHP plant in Finland.

  • The Lillgrund windpower farm has started to generate electricity. When fully operational it will be the largest windpower farm in Sweden and the third largest offshore farm in the world.

31 Oct 2007


Key data bg nordic
Key data – BG Nordic comparability

31 Oct 2007


Highlights q3 2007 germany
Highlights Q3 2007 - Germany comparability

  • Significantly higher EBIT, + SEK1,279 million to SEK 3,173 million (+67,5%). (+ 71.2% excl. IAC).

  • Main part of EBIT improvement pertains to an impairment loss of SEK 931 million in Q3 2006 in business unit Distribution.

  • Mining & Generation increased its result despite unplanned nuclear outages thanks to higher fossil power and successful hedging.

  • NAP2 - Total national emissions cut to 453 million tonnes per year (NAP1 was 499 million tonnes). Vattenfall estimates a yearly deficit of approx. 28-33 million tonnes. Estimated cost (after tax) totals EUR 400-500 million

  • Continued pressure from the Regulator (BNetzA) on transmission tariffs

  • Lowered German corporate income tax by approx. 10 percentage points. The impact on profit after tax is 950 MSEK for Q3 and 2,850 for 9M 2007

31 Oct 2007


Key data bg germany
Key data – BG Germany comparability

31 Oct 2007


Highlights q3 2007 poland
Highlights Q3 2007 - Poland comparability

  • EBIT decreased by 37% from SEK 125 million to SEK 79 million (-50.4% excl IAC).

  • EBIT reduction pertains mainly to Distribution due lower volumes and squeezed margins.

  • Business unit Heat reports a marginally lower operating profit.

  • Business unit Sales reports a slightly better result.

31 Oct 2007


Key data bg poland
Key data – BG Poland comparability

31 Oct 2007


Consolidated balance sheet
Consolidated balance sheet comparability

Amounts in MSEK30/9/07 30/9/06 Change 31/12/06

IFRS IFRS %

Non-current assets 257,489 266,242 -3.3 251,893

Current assets 67,127 61,543 9.1 71,273

Total assets 324,616 327,785 -1.0 323,166

Equity 119,679 94,118 27.2 107,674

Interest-bearing liabilitites66,34172,222-8.1 71,575

Interest-bearing provisions 52,280 48,412 8.0 49,217

Pension provisions 17,424 17,3450.5 16,877

Deferred tax liabilities 25,403 40,104 -36.7 29,875

Other non-interest-bearing liabilitites 43,489 55,584 -21.8 47,948

Total equity and liabilities 324,616 327,785 -1.0 323,166

31 Oct 2007


Net debt development
Net debt development comparability

Acquisition of Bewag and GZE shares

Acquisition of Elsam shares

SEK million

Dividend paid

Capital Securities SEK 9.1 billion

31 Oct 2007


Vattenfall q3 results 2007

Questions & Answers comparability

31 Oct 2007


Backup slides

Backup slides comparability


Consolidated income statement1
Consolidated income statement comparability

Amounts in MSEK9M 2007 9M 2006 Change

IFRS IFRS %

Net sales 105,310 96,374 9.3

Cost of products sold 75,911 67,180 13.0

Gross profit 29,399 29,194 0.7

Operating profit (EBIT) 21,225 21,827 -2.8

Operating profit, excl. IAC*21,11521,418 -1.4

Financial income 2,103 2,319 -9.3

Financial expenses -4,095 -3,70010.7

Financial net -1,992 -1,381 -44.2

Profit before taxes 19,233 20,446 -5.9

Taxes -2,223 -7,197 -69.1

Profit for the period 17,010 13,249 28.4

* IAC = items affecting comparability

31 Oct 2007


Consolidated cash flow statement
Consolidated cash flow statement comparability

Amounts in MSEKQ3 2007 Q3 2006 Change FY 2006 LTM

IFRS IFRS %

Funds from operations (FFO)6,002 5,625 6.7 35,673 32,667

Change in working capital 261 1,769 -85.2 -466 1,290

Cash Flow from operating activities 6,263 7,394 -15.3 35,207 33,957

Investments -4,310 -4,749 -9.2 -16,534 -18,327

Divestments239289 -17.3 1,720 935

Cash and cash equivalents in aquired/divested companies2 39 -94.9 -686 10

Cash Flow from investing activities -4,069 -5,107 -20.3 -15,647 -17,382

Cash Flow before

financing activities 2,194 2,287 -4.1 19,560 16,575

Cash Flow from financing activities -8,259 -634 -10,742 -18,870

Cash Flow for the period -6,065 1,653 8,818 -2,295

Net debt at the end of the period -44,524 -55,380 -19.6 -49,407 -44,524

31 Oct 2007


Key ratios
Key ratios comparability

Key Ratios(% unless otherwise stated) Q3 2007 Q3 2006 LTM

RoNA (1) 15.7 15.7

RoE (1) 20.5 20.5

Operating margin 14.4 11.8 18.3

Pre-tax profit margin 11.1 10.6 16.8

Cash Flow interest coverage aftermaintenance investments, times 4.7 6.9 7.0

FFO/net debt (1) 69.0 69.0

Equity/assets ratio 36.9 28.7 36.9

Net Gearing - Net debt/equity, times 0.37 0.59 0.37

Capitalisation - Net debt/net debt + equity 27.1 37.0 27.1

1) Q3 2007 value = LTM

31 Oct 2007


Net asset development
Net asset development comparability

Consolidation of Danish assets

Acquisition of Elsam shares

MSEK

Acquisition of Bewag and GZE shares

31 Oct 2007


Break d own of group liquidity
Break d comparabilityown of group liquidity

Amounts in SEK million

As of Sep 30, 2007 Treasury Germany Poland NordicTotal %

Cash and bank 968 1,034 467 594 3,063 14

Interest-bearing investments 4,683 5,419 63 316 10,481 48

Special Funds 2,578 2,578 12

Brunsbüttel 5,335 5,673 26

Shares 22 22

Total 5,651 14,389 531 909 21,480 100

Undrawn committed credit facilities amount to 9,577 SEK million and other undrawn credit- and overdraft facilities amount to 10,859 SEK million.

31 Oct 2007


Break down of group debt
Break down of group debt comparability

Amounts in SEK million

As of Sep 30, 2007 Treasury Germany Poland Nordic Total %

Subordinated perpetual

Capital Securities 9,082 9,082 14

MTN 839 839 1

EMTN 30,526 30,526 46

Liabilities to assoc. companies 6,909 4,261 11,170 17

Liabilities to minority shareholders 49 5,132 5,181 8

Bank loans and others 559 6,433 142 2,410 9,544 14

Total 47,915 10,743 142 7,542 66,341 100

31 Oct 2007


Vattenfall debt maturity profile

Sep 30, 2007 comparabilitySep 30, 2006

Duration (years) 3,71) 3,7

Average time to maturity (years) 6,51) 6,1

Net debt (SEK bn) 44,5 55,4

Vattenfall debt maturity profile

SEKmillion

Excluding loans from associated companies and minority owners

1) Based on external debt. Excluding Capital Securities the duration is 3,1 years and average time to maturity 6,3 years.

31 Oct 2007


Adjusted gross net debt
Adjusted Gross & Net debt comparability

31 Oct 2007


Development of adjusted net debt
Development of adjusted net debt comparability

31 Oct 2007


Group provisions down by 10 2
Group provisions down by 10.2% comparability

30 Sept 2007

SEK 95,107 million

30 Sept 2006

SEK 105,861 million

31 Oct 2007