Q4 2011 Report - 19971864

2011
Year-End Report
Contents CEOs message Group Electricity generation, sales of heat and gas Wholesale price trend The Groups operating segments Consolidated income statement Consolidated statement of comprehensive income Segment reporting Consolidated balance sheet Consolidated statement of cash flows Consolidated statement of changes in equity Key ratios Quarterly information Exchange rates Parent Company income statement and balance sheet Accounting policies, risks and uncertainties, and the Parent Companys interim report Vattenfalls organisational structure 2011 Definitions and calculations of key ratios
Page 1 5 10 11 13 20 21 22 24 26 28 29 30 31 32
Financial calendar Annual Report 2011 29 March 2012 Interim report JanuaryMarch 3 May 2012 Interim report JanuaryJune 31 July 2012 Interim report JanuarySeptember 30 October 2012 Annual General Meeting 25 April 2012, in Stockholm For enquiries, please contact ystein Lseth, President and CEO tel. +46-8-739 50 05 Klaus Aurich, Head of Investor Relations tel. +46-8-739 65 14, or +46-705-39 65 14
33 35 36
Production: Vattenfall AB in co-operation with Intellecta Corporate. Printing: Intellecta Infolog. Copyright 2012, Vattenfall AB, Stockholm.
All comparison figures in this report pertain to the full year 2010, unless indicated otherwise.
This is a translation of the Swedish original. In the event of any discrepancy, the Swedish version shall govern.
Delivering according to strategy during a demanding year

etsalesin2011decreasedby15.2%,toSEK181,040million(213,572). N Thecost-cuttingprogrammeisproceedingbetterthanplanned. SalesofassetstotalledSEK23billion,ofwhichSEK16billionwasreceivedin2011. peratingprofitdecreasedby22.3%toSEK23,209million(29,853).ProfitwaschargedwithSEK O 10.5 billion as a result of the German decision to phase out the countrys nuclear power. nderlyingoperatingprofit1for2011decreasedby16.4%,toSEK30,793million(36,838),mainlyas U a result of lower production volumes and average lower electricity prices received. peratingprofitforthefourthquarterincreased105.4%toSEK10,159million(4,946).Underlying O operatingprofitforthefourthquarterdecreasedby19.4%toSEK7,343million(9,109). Profitfortheyear(aftertax)decreasedby21.0%toSEK10,416million(13,185).
1) peratingprofitexcludingitemsaffectingcomparabilityandunrealisedchangesinthefairvalueofenergyderivatives,whichaccordingtoIAS39 O may not be reported using hedge accounting, and changes in the fair value of inventories.
Although 2011 was a tough year in many respects for the entire energy sector, Vattenfall successfully carried out a number of measures to boost profitability and improve its financial position. I am satisfied with the result we achieved in 2011, especially against the background of the large earnings charge of SEK 10.5 billion caused by the unexpected decision in Germany to phase out the countrys nuclear power. We have delivered in accordance with our strategy. Vattenfalls cost-cutting programme, aimed at reducing SEK 6 billion in costs by year-end 2013, is proceeding better than planned, and we have lowered our annual costs by SEK 4 billion. At the same time, future-oriented operations have given rise to new costs of SEK 1.4 billion. We have completed or signed agreements to carry out sales of non-core assets at a fast pace corresponding to a value of SEK 37 billion. This includes the sale of operations in Finland, which was completed in January 2012. In addition, the investment programme for the coming five years has been adjusted to a level that is compatible with our cash flow at the same time that we are increasing our focus on investments in renewable energy generation. The economic slowdown in our markets dampened demand for electricity, and warm weather during the second half of the year led to lower sales of gas and
YE AR- End REPoRt 2011
heat. We also had problems at some of our production plants mainly an extended outage of one of the reactors at the Ringhals nuclear power plant. Vattenfalls challenges remain great, and we must therefore continue at an undiminished pace our work on improving cash flow and further strengthening the companys financial position so that we can be one of the leaders in developing environmentally sustainable energy production. With our strategy and the active measures we have taken, I am confident about our opportunities to achieve the goals set by our owner and ourselves.
ystein Lseth President and CEO

1
Vattenfall delivering in accordance to strategy

In September 2010 Vattenfall adopted a new strategic direction for the Group, entailing that the company regards the years 20112013 as a consolidation phase with focus on the following measures: Cost-cutting programme, SEK 6 billion Divestment of non-core assets Revised investment programme New,business-ledorganisationalstructure During the year, Vattenfall successfully carried out a number of measures in pursuit of its strategy. Annual costs have been reduced by SEK 4 billion compared with the cost base in 2010. At the same time, future-oriented operations gave rise to new costs of SEK 1.4 billion. Sales of non-core assets were carried out for a value of SEK 23 billion, of which SEK 16 billion was received in 2011. Added to this, Vattenfalls electricity distribution and district heat operations in Finland have been sold to SEK 14 billion, which will be booked during the first quarter of 2012. The investment programme for the coming five-year period 20122016 has been adjusted downwardtoSEK147billion(fromSEK165billionforthe period20112015),atthesametimethatthefocuson renewable electricity generation is increasing. A functionbased organisational structure has been implemented in place of the former geographic organisation. This has enabled the achievement of substantial synergies, which have made a significant contribution to the cost reduction.
Full year 2011 net sales, profit, cash flow and debt
Consolidatednetsalesdecreasedby15.2%,toSEK181,040 million(213,572),whichismainlyattributabletothesaleof theGermantransmissionbusinessinMay2010(SEK20billion),averagelowerelectricitypricesreceivedandlower productionvolumes(SEK6billion),andcurrencyeffects associatedwiththestrongerSwedishkrona(SEK8billion). Operatingprofitdecreasedby22.3%toSEK23,209million (29,853).Underlyingoperatingprofit,decreasedby16.4%to SEK30,793million(36,838).Thedropismainlyattributable tolowerproductionvolumes(SEK3.2billion),averagelower electricitypricesreceived(SEK4billion)andlowergassales (SEK1.1billion).Lowercostsforoperations,maintenance,
sales, administration, and research and development had a positiveimpactonunderlyingoperatingprofit(SEK2.6billion,net).CurrencyeffectsofthestrongerSwedishkrona had a negative impact on operating profit by approximately SEK 1 billion. Profitfortheyear(aftertax)decreasedby21.0%toSEK 10,416million(13,185).Returnonequitywas8.6%,andthe returnonnetassetswas7.1%.Vattenfallslong-termtarget ofreturnonequityis15%overabusinesscycle(57years). Thetargetreturnonnetassetsis11%.Thecashflowinterest coverage ratio after maintenance investments was 3.0 (4.6),comparedwiththetargetintervalof3.54.5. Fundsfromoperations(FFO)decreasedby4.6%toSEK 38,256million(40,108),mainlyasaresultoflowerproduction volumes, average lower electricity prices received, and lowermarginsongassales.Netdebtdecreasedby2.1%to SEK 141,089 million. FFO in relation to adjusted net debt accordingtoVattenfallsdefinitionwas21.7%.Takinginto account payments received on 10 and 11 January 2012 for divested operations in Belgium and Poland, FFO/adjusted net debt is approximately 1 percentage point higher. For detailed information on net debt, see page 25. The Groups total investments amounted to SEK 35,750 million(41,794).Inaddition,anadditional15%oftheshares inN.V.NuonEnergywereacquiredtotheamountofSEK 13,538million.Vattenfallthereafterowns64%oftheshares inN .V.NuonEnergy,althoughithashadcontrolofthecompany since 1 July 2009, at which date the company was consolidated. For further information about investment activities, see page 9. Since the first quarter of 2011 Vattenfall has been reporting its operations broken down into three operating segments: Generation, Distribution and Sales, and Renewables. Performance of the operating segments in 2011 is as follows: UnderlyingoperatingprofitforGenerationdecreasedby SEK8,970milliontoSEK22,118million(31,088). UnderlyingoperatingprofitforDistributionandSales increasedbySEK2,070milliontoSEK10,496million(8,426). UnderlyingoperatingprofitforRenewablesincreasedby SEK1,061milliontoSEK460million(601). For further information about the Groups operating segments, see pages 1319.
Electricity generation, sales of heat and gas in 2011

Vattenfallstotalelectricitygenerationdecreasedby3.3%in 2011,to166.7TWh(172.4).Nuclearpowergeneration decreasedby2.5%,hydropowerdecreasedby2.5%and fossil-basedpowerdecreasedby5.2%.Windpowergenerationincreasedby55%to3.4TWh(2.2),andelectricitygenerationbasedonbiomassdecreasedby13%to1.3TWh (1.5).Salesofheatdecreasedby11.7%to41.6TWh(47.1). Salesofgasdecreasedby14.9%to53.8TWh(63.2).For further information, see page 10.
Wholesale price trend for electricity and Co2-emission allowances

Comparedwith2010,theaveragespotpriceonNordPool was11.3%lower(EUR47.15/MWhcomparedwithEUR 53.14/MWh).ThehydrologicalbalanceintheNordiccountries improved during the year from a deficit of -41.6 TWh to a surplus of 18.8 TWh at year-end 2011. InGermany,theaveragespotprice(EPEXSpot)was15% higherthanin2010(EUR51.14/MWh,comparedwithEUR 44.46/MWh).IntheNetherlands,theaveragespotpricewas 15.3%higher(EUR52.31/MWh,comparedwithEUR45.35/ MWh). FuturespricesroseintheNordiccountriesaswellasin GermanyandtheNetherlands.TheNordicfuturescontracts fordeliveriesin2012and2013wereanaverageof9%and 6%higher,respectively,thanin2010,whilethecorrespondingcontractsinGermanyandtheNetherlandswere6%and 2%higherand8%and2%higher,respectively.Alargeshare of Vattenfalls production is hedged through contracts previously entered into in the futures market. Prices of CO2 emission allowances were traded at a level thatwas8%lowerthanin2010.Atyear-end2011,theywere quotedatEUR7/tonne.Forfurtherinformationandprice charts, see pages 1112.
Fourth quarter 2011 net sales, profit, cash flow and debt
Netsalesdecreasedby9.2%,toSEK50,453million(55,537), comparedwiththecorrespondingquarterin2010.Underlyingoperatingprofitdecreasedby19.4%toSEK7,343million (9,109).Thedropismainlyduetolowerproductionvolumes (SEK1.2billion)andaveragelowerelectricitypricesreceived
(SEK0.5billion).Profitfortheperiodbeforetaxrose56.6% toSEK7,531million(4,808).Excludingitemsaffectingcomparability,profitfortheperiodaftertaxdecreasedby32.0% toSEK4,903million(7,208).Fundsfromoperations decreasedby13.3%toSEK10,120million(11,670). Fourth quarter 2011 Electricity generation, sales of heat and gas Vattenfallstotalelectricitygenerationdecreasedby5.6% duringthefourthquarter,to43.7TWh(46.3).Nuclearpower generationdecreasedby20.7%,hydropowergeneration increasedby11.7%,andfossil-basedpowerdecreasedby 6.5%.Windpowergenerationincreasedby22.2%to3.4 TWh(2.2),whileelectricitygenerationbasedonbiomass was unchanged at 0.4 TWh. Sales of heat decreased by 22.9%to13.1TWh(17.0).Salesofgasdecreasedby24.0% to16.8TWh(22.1).
Important events in 2011

Changes in the Board of directors and Executive Group Management On 18 March Lars Westerberg left his position as Chairman of Vattenfall AB. Bjrn Savn was appointed as interim Chairman and as Deputy Chairman of Vattenfall AB until the Annual General Meeting on 27 April 2011. At the Annual General Meeting on 27 April, Bjrn Savn was elected as Chairman of the Board of Vattenfall AB until an Extraordinary General Meeting to be held on 14 June. At an Extraordinary General Meeting of Vattenfall on 14 June,LarsG.NordstrmwaselectedasnewChairmanof the Board of Vattenfall AB. Christer Bdholm was elected as Deputy Chairman. Peter Smink was appointed as acting CFO, effective 28 October 2011. On 19 December, Ingrid Bonde was appointed as Deputy CEO and new CFO. She will take office not later than 1 July 2012.
divestments in 2011
On1FebruaryVattenfallsoldits25%interestintheRostock hard coalfired plant in Germany to RheinEnergie AG. The power plant has installed capacity of 553 MW. The purchase price has not been publicly disclosed by the parties.
On23JuneVattenfallsoldits21.3%shareholdinginthe German energy company Energieversorgung Sachsen Ost AG(ENSO)toEnergieVerbundDresdenGmbH(EVD).The purchasepricewasEUR147million(approximatelySEK 1.3billion). On 15 July Vattenfall sold parts of its Swedish engineering consultancy to Pyry PLC. The divested units include approximately 245 employees at 20 offices in Sweden, NorwayandtheUK,withthelargestpresenceintheSwedish market. The purchase price has not been publicly disclosed by the parties. On 24 May Vattenfall sold its gas production operations in theDutchcompanyNuonExploration&ProductionB.V. (E&P)toTullowOilplc.ThepurchasepricewasEUR281 million(approximatelySEK2.5billion). On30JunetheHelsingrcombinedheatandpower(CHP) plant was sold to Forsyning Helsingr. The sale also covered the heat transmission line from the plant. The purchase price has not been publicly disclosed by the parties. On 27 July Vattenfall signed an agreement with the Italian energy company Eni on the sale of Vattenfalls operations inBelgium,basedonanenterprisevalueofEUR157million (approximatelySEK1.4billion).ThesalecoversNuonBelgiumNV,whichservicesapproximately550,000electricity andgasconnections,andthecompaniesNuonWindBelgiumNVandNuonPowerGenerationWalloonNV.Thesale was completed on 10 January 2012. On 23 August Vattenfall signed an agreement with Polish energy supplier Tauron S.A. on the sale of Vattenfalls subsidiaryGornoslaskiZakladElectroenergetyczny(GZE),in UpperSilesia.AnagreementwasalsosignedwiththePolishcompanyPGNiGS.A.onthesaleofVattenfallHeat PolandS.A.(VHP).TheenterprisevalueofGZEisapproximatelyPLN3.5billion,orSEK7.4billion,whiletheenterprisevalueofVHPisapproximatelyPLN3.7billion,orSEK 7.8 billion. The transactions were completed on 13 December 2011 and 11 January 2012, respectively. On29NovemberVattenfallannouncedthatithadsigned an agreement with the City of Hamburg under which the CityofHamburgwillacquire25.1%ofVattenfallselectricity distribution and district heating networks in Hamburg foracombinedtotalofEUR463.1million(approximately
SEK4.2billion).Vattenfallwillretainoperationalmanagement of the networks. The transaction is contingent upon approval by Hamburgs parliament.
divestments after the balance sheet date, 31 december 2011

On 16 December 2011 Vattenfall announced that it had signedanagreementwithLNIAcquisitionOyaconsortium comprising 3i Infrastructure plc, 3i Group plc, GS Infrastructure Partners and Ilmarinen Mutual Pension Insurance Company on the sale of Vattenfalls electricity distribution and heat businesses in Finland. Vattenfall will retain ownership of its electricity sales organisation and its hydro power operations in Finland. The sales price is based on an enterprisevalueofEUR1.54billion(approximatelySEK14billion). The transaction was completed on 10 January 2012.
new wind power projects

In early October Vattenfall acquired full ownership of the Zuidlobland-basedwindfarmintheNetherlands,which upon completion will be one of the countrys largest wind farms. The Zuidlob wind farm will have installed capacity of 122 MW, and starting in 2013, 36 wind turbines will provide power for 88,000 households. On25NovemberVattenfallannouncedthatithadpurchased the licences to build the Sandbank offshore wind farmofftheGermanislandofSyltintheNorthSea.The projectisinitiallyforupto575MW(96turbines),butcan be further expanded. Start of construction is planned for 2014. IntheUK,the30thandlast5MWturbinewasinstalledin August at the Ormonde offshore wind farm. The wind farm has installed capacity of 150 MW and is expected to supply electricityto100,000UKhouseholds.
other important events

Application for nuclear fuel repository
On16MarchSKB(theSwedishNuclearFuelandWaste ManagementCompany),whichis56%-ownedbyVattenfall, submitted a formal licence application to build a repository for spent nuclear fuel as well as an encapsulation facility for storage of spent nuclear fuel before it is transferred to the
repository. SKBs application is being considered by the Swedish Radiation Safety Authority and the Environmental Court. The application will thereafter be taken up for political decisions in the affected municipalities and by the Swedish government.
decision to phase out nuclear power in Germany
Vattenfall has announced that the company expects to receive fair compensation for its financial losses.
Analysis work surrounding new nuclear power in Sweden
On 30 June Germanys parliament decided that all 17 of the countrys nuclear power plants shall be closed by 2022 at the latest. Germanys new revision of the Atomic Energy Act took effect on 6 August 2011. The consequence of the decision for Vattenfall is that the Brunsbttel and Krmmel nuclear power plants, for which Vattenfall has operating responsibilityandowns66.7%and50%,respectively,may not be restarted. Vattenfall thereby lost 1,187 MW of installed capacity and was forced by the decision to recognise an impairment loss for the book value of these two plants and increase provisions for dismantling the plants and handling nuclear fuel, for a total cost of SEK 10.5 billion.
The issue of construction of new nuclear power in Sweden was the subject of heated debate in Sweden during the autumn. In October Vattenfall announced that the company has intensified its analysis work to illuminate the conditions for new nuclear power reactors in Sweden. The analysis will show which criteria must be met in order for an investment in new reactors to be profitable and in line with Vattenfalls required rate of return. The analysis work also addresses how the company would proceed to meet the high safety and environment requirements.
Study of routines for remuneration of senior executives and managers
tors, Vattenfall conducted a study of contracts for 16 senior executives and 228 senior managers. A number of measures, including renegotiation of employment contracts, have been taken to ensure that the governments guidelines are being followed.
Changed credit rating from Standard & Poors
On9DecemberthecreditratingagencyStandard&Poors changed its long-term credit rating for Vattenfall from A to Aand at the same time changed its oulook from negative to stable.
Proposed dividend
The Board of Directors proposes a dividend of SEK 4,433 million,correspondingto40%ofprofitfortheyearattributable to owners of the Parent Company.
Against the background of the highly publicised remuneration paid out in spring 2011, by order of the Board of Direc-
Netsales
SEK million 250,000
Operating profit, excl. items affecting comparability

SEK million 45,000
Return on equity incl. items affecting comparability/ Profit for the period
SEKmillion 8,000 6,000 4,000 % 20 15 10 5 0
200,000
36,000
150,000
27,000 2,000
100,000
18,000
50,000
9,000
-2,000 -4,000 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2008 2009 2010 2011 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2008 2009 2010 2011 Return on equity, last 12-month values Profit for the period attributable to owners of Parent Company, quarterly values
0 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2008 2009 2010 2011
Last 12-month values Quarterly values
Summary of Vattenfalls consolidated financial performance, cash flow and balance sheet
Amounts in SEK million unless, indicated otherwise Q4 2011 Q4 2010 Change% Full year 2011 Full year 2010 Change%
Netsales Operatingprofitbeforedepreciationandamortisation(EBITDA) operating profit (EBIt) operating profit excl. items affecting comparability Underlying operating profit Financial items, net Profit before tax Profit for the period - of which, attributable to owners of the Parent Company -ofwhich,attributabletonon-controllinginterests(minorityinterests) Returnonequity,% Returnonnetassets,% Fundsfromoperations(FFO) Cash flow before financing activities Free cash flow Cash and cash equivalents plus short-term investments Balance sheet total Equity incl. non-controlling interests (minority interests) Capital Securities Other interest-bearing liabilities net debt Netdebt/Operatingprofitbeforedepreciationandamortisation(EBITDA),times
1)Last12-monthvalues.
50,453 15,447 10,159 8,084 7,343 -2,628 7,531 5,103 5,602 -499 8.61 7.11 10,120 -894 -2,270 28,685 524,558 138,931 8,883 161,467 141,089 2.61
55,537 15,355 4,946 9,732 9,109 -138 4,808 2,464 2,577 -113 10.01 9.11 11,670 -1,637 3,355 43,873 541,432 133,621 8,929 179,348 144,109 2.41
-9.2 0.6 105.4 -16.9 -19.4 56.6 107.1 117.4 341.6 -13.3 -45.4 -34.6 -3.1 4.0 -0.5 -10.0 -2.1
181,040 54,538 23,209 28,562 30,793 -8,911 14,298 10,416 11,083 -667 8.6 7.1 38,256 12,666 17,637 28,685 524,558 138,931 8,883 161,467 141,089 2.6
213,572 60,706 29,853 39,952 36,838 -8,430 21,423 13,185 12,997 188 10.0 9.1 40,108 6,448 23,846 43,873 541,432 133,621 8,929 179,348 144,109 2.4
-15.2 -10.2 -22.3 -28.5 -16.4 -5.7 -33.3 -21.0 -14.7 -4.6 96.4 -26.0 -34.6 -3.1 4.0 -0.5 -10.0 -2.1
See pages 36-37 for definitions and calculations of key ratios.
Sales, profit and cash flow

Amounts in SEK million Q4 2011 Q4 2010 Change% Full year 2011 Full year 2010 Change%
Items affecting comparability

Amounts in SEK million Q4 2011 Q4 2010 Full year 2011 Full year 2010
net sales
50,453
55,537
-9.2
181,040
213,572
-15.2
Comment: Consolidated net sales in 2011 decreased by SEK 32.5 billion compared with 2010. The sale of the German transmission business, 50Hertz Transmission GmbH, in May 2010, resulted in a decrease in consolidated net sales of SEK 20 billion. Average lower electricity prices received and lower production volumes decreased net sales by SEK 6.0 billion. Currency effects of the stronger Swedish krona had a negative impact on net sales by approximately SEK 8.0 billion.
Items affecting comparability that have affected operatingprofit(EBIT) Capital gains Capital losses Impairment losses Reversed impairment losses Other items affecting comparability total
2,461 22 -507 379 -280 2,075
51 -127 -6,006 1,296 -4,786
4,780 -58 -11,301 386 840 -5,353
195 -444 -11,152 1,302 -10,099
operating profit (EBIt) Items affecting comparability Fair valuation1 Underlying operating profit
10,159 2,075 741 7,343
4,946 -4,786 623 9,109
105.4 18.9 -19.4
23,209 -5,353 -2,231 30,793
29,853 -10,099 3,114 36,838
-22.3 -47.0 -16.4
1) eferstounrealisedchangesinthefairvalueofenergyderivatives,whichaccordingtoIAS39maynotbereported R using hedge accounting, and changes in the fair value of inventories.
Comment: Items affecting comparability in 2011 amounted to SEK -5,353 million and consist mainly of impairment of book value and increased provisions for dismantling and handling of nuclear fuel as a result ofthedecisiontoclosetheKrmmelandBrnsbttelnuclearpowerplantsinGermany(SEK-10.5billion), andcapitalgainsonsalesofoperationsin2011(SEK4.8billion).Itemsaffectingcomparabilityfor2010 consisted primarily of impairment of goodwill pertaining to the former Benelux operating segment (SEK-4.3billion)andimpairmentof50HertzTransmissionGmbH(SEK-5.1billion).
Comment:Underlyingoperatingprofitfor2011decreasedbySEK6.0billion.Thisismainlyattributable to: Lowerelectricityvolumes(SEK-3.2billion) Averagelowerelectricitypricesreceived(SEK-4billion) Lowergassales(SEK-1.1billion) owercostsforoperations,maintenance,sales,administration,andresearchanddevelopment L (SEK2.6billion,net) Otheritems,net(SEK-0.3billion) Itemsaffectingcomparabilityin2011amountedtoSEK-5.3billion,net(SEK-10.1billion).Seetableat right.
Fair valuation
Fair valuation of energy derivatives Fair valuation of inventories total
7 734 741
546 77 623
-1,690 -541 -2,231
2,860 254 3,114
Amounts in SEK million
Q4 2011
Q4 2010
Change% Full year 2011
Full year 2010
Change%
Q4 2011
Q4 2010
Change% Full year 2011
Full year 2010
Change%
Funds from operations (FFo) Cash flow from changes in operating assets and operating liabilities (working capital) Cash flow from operating activities
10,120
11,670
-13.3
38,256
40,108
-4.6
-6,841 3,279
-1,776 9,894
285.2 -66.9
-4,788 33,468
1,123 41,231
-18.8
net financial items of which, interest income from financial investments of which, interest expenses for loans Interest received Interest paid Average monthly net interest expense
-2,628 619 -1,535 80 -252
-138 298 -1,600 245 -854
107.7 4.1 -67.3 -70.5
-8,911 1,454 -6,176 635 -4 871
-8,430 1,131 -6,447 912 -4,866
-5.7 28.6 4.2 -30.4 -0.1
Comment:Comparedwith2010,fundsfromoperations(FFO)decreasedbySEK1.9billionin2011.The decrease is mainly attributable to lower production volumes, average lower electricity prices received and lower sales of gas. Lower costs for operations, maintenance, sales, administration, and research and development, together with lower paid tax and lower interest expenses, had a positive impact. Cash flow from changes in working capital decreased by SEK 4.8 billion, which was mainly attributable to an increaseininventories(SEK3.3billion)ofprimarilyoilandgas.MargincallsdecreasedbySEK4.2billion, ofwhichSEK3.3billionpertainstothenetchangeinCreditSupportAnnex(CSA)agreements1 in the trading operation. Changes in operating receivables and operating liabilities along with realised equity hedge items had a positive impact on operating profit of SEK 2.7 billion.
1) CreditSupportAnnex(CSA)isalegaldocumentthatsetsforththerulesgoverningthepostingofmargincallsfor A derivative transactions. It defines the terms and conditions that apply for the posting of collateral or transfer of funds between two parties to reduce credit risk.
-305
-434
-393
-443
Comment: The deterioration of financial items during the fourth quarter is mainly attributable to impairmentofthevalueofVattenfallsshareholdingintheenergycompanyEneaS.A.(SEK1.6billion)anda negativechangeinthevalueofderivatives(SEK1.5billion).Forthefullyear2011,animprovedreturn fromtheSwedishNuclearWasteFund(SEK0.9billion)andimprovementinnetinterestincome(SEK0.6 billionmainlyrefundedinterestontax)hadapositiveimpactonfinancialitemscomparedwith2010.
Employees
Numberofemployees,full-timeequivalents 31 Dec. 2011 31 Dec. 2010 Change%
Generation Distribution and Sales Renewables Other total
17,078 12,166 350 5,091 34,685
17,359 14,982 318 5,521 38,180
-1.6 -18.8 10.1 -7.8 -9.2
Comment: The decrease is mainly attributable to divested operations in Poland and Belgium, and natural attrition.
Financial position
Amounts in SEK million 31 Dec. 2011 31 Dec. 2010 Change% Amounts in SEK million 31 Dec. 2011 31 Dec. 2010 Change%
Cash and cash equivalents, and short-term investments Committedcreditfacilities(unutilised) Othercreditfacilities(unutilised)
28,685 42,297 2,901
43,873 9,102 6,860
-34.6 364.7 -57.7
Comment: The decrease in cash and cash equivalents, and short-term investments, is mainly attributable topaymentforanadditional15%ofthesharesinN .V.N uonEnergy,asplanned.CommittedcreditfacilitiesconsistofaEUR2.55billionRevolvingCreditFacilitythatexpireson20January2016,aEUR1billion RevolvingCreditFacilitythatexpireson23February2013,anda12-monthEUR1.3billionrevolvingMulti OptionFacility(unutilisedamountEUR1.2billion),contractedinAugust2011.Vattenfallstargetisto havenolessthan10%oftheGroupsnetsales,butatleasttheequivalentofthenext90daysmaturities, in the form of liquid assets or committed credit facilities. As per 31 December 2011, available liquid assetsand/orcommittedcreditfacilitiesamountedto36%ofnetsales.
net debt Interest-bearing liabilities Adjusted net debt (see page 25) Averageinterestrate,%1 Duration, years1 Average time to maturity, years1
141,089 170,350 176,031 3,9 4,3 5,5
144,109 188,277 173,409 3,5 3,9 6,1
-2.1 -9.5 1.5 10.2 10.8 -10.8
1)ncludingCapitalSecuritiesandloansfromownerswithnon-controllinginterests(minorityowners)andassociated I companies.
Comment: Compared with 31 December 2010, net debt decreased by SEK 3.0 billion, and total interestbearing liabilities decreased by SEK 17.9 billion. Repayment of loans accounted for SEK 29 billion of the decrease in total interest-bearing liabilities, of which repayment of loans pertaining to acquisitions of subsidiariesaccountedforSEK13.5billion.Newloansincreasedinterest-bearingliabilitiesbySEK10.5 billion. Compared with 31 December 2010, adjusted net debt increased by SEK 2.6 billion, which is attributable to higher provisions for nuclear power as a result of the decision to close the Krmmel and Brnsbttel nuclear power plants in Germany.
Amounts in SEK million 31 Dec. 2011 31 Dec. 2010 Change%
N etdebt
SEK million 350,000
Netassets
SEK million 350,000
Equity attributable to Owners of the Parent Company Non-controllinginterests(minorityinterests) total
131,988 6,943 138,931
126,704 6,917 133,621
4.2 0.4 4.0
Comment: For a specification of changes in equity, see page 28.

280,000 280,000
Credit ratings
ThecurrentratingsforVattenfallslong-termborrowingareA-(Standard&Poors)andA2(Moodys). VattenfallsratingoutlookisstablefrombothStandard&PoorsandMoodys.On9December2011the ratingagencyStandard&Poorslowereditslong-termratingforVattenfallfromAtoA-andatthesame time changed its outlook from negative to stable.
210,000
210,000
140,000
140,000
70,000
70,000
0 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2008 2009 2010 2011
0 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2008 2009 2010 2011
Capital Securities Quarterly values
Investments
Divestments
Maintenance investments Growth investments of which, shares total investments
5,549 7,026 236 12,575
6,539 6,066 21 12,605
-15.1 15.8 -0.2
15,831 19,919 396 35,750
17,385 24,409 1,085 41,794
-8.9 -18.4 -63.5 -14.5
Divestments of which, shares
9,708 9,454
974 544
16,280 13,553
7,197 5,200
126.2 160.6
Specification of investments
Amounts in SEK million Full year 2011 Full year 2010 Change%
Comment: Divestments in 2011 pertained to the following: Vattenfalls25%interestintheRostockcoal-firedpowerplantinGermany attenfalls21.3%shareholdingintheGermanenergycompanyEnergiversorgungSachsenOstAG V (ENSO) VattenfallssaleofpartsofitsSwedishengineeringconsultancy NuonExplorationandProductionB.V.(E&P) HelsingrCHP attenfallsoperationsinBelgium,comprisingNuonBelgiumNV,NuonWindBelgiumNVandNuon V PowerGenerationWalloonNV.PaymentwasreceivedinJanuary2012 attenfallsoperationsinPoland,comprisingthesubsidiaryGornoslaskiZakladElectroenergetyczny V (GZE)andVattenfallHeatPoland(VHP).PaymentforVHPwasreceivedinJanuary2012 For further information on divestments, see page 3.
Electricity generation Hydro power Nuclearpower Fossil-based power Wind power Biomass, waste Other total Electricity generation thermal power, heat Fossil-based power Biomass, waste Other total thermal power, heat Electricity networks Electricity networks total Electricity networks Acquisitions of shares Other, excl. shares total
1,157 4,800 12,153 2,972 163 1,928 23,173 3,949 225 1,309 5,483 5,024 5,024 396 1,674 35,750
813 4,688 12,471 7,303 203 1,915 27,393 1,631 538 865 3,033 5,405 5,405 1,085 4,878 41,794
42.3 2.4 -2.5 -59.3 -19.6 0.7 -15.4 142.2 -58.2 51.6 80.8 -7.0 -7.0 -63.5 -65.7 14.5
total investments 20122016

147 33
114 Electricity networks Heat grid Gas storage IT Biomass 2 Hydro 7 Nuclear16 Lignite (incl.mining)17 Coal 12 Gas 22 Total investments Investments not based on fuel Investments by type of fuel
Wind 38
Comment: Investments are proceeding in the coal-fired Boxberg and Moorburg power plants in Germany andinthreegas-firedpowerplantsintheNetherlands.TheinvestmentintheOrmondeoffshorewind farmintheUKisinprogress;commissioninghasbeendelayedduetopoorweatherconditions.Thelower investment level in wind power in 2011 is due to the fact that no major purchases were made during the period. However, several new wind power projects were started up during the year, entailing that the investmentamountswillbebookedincomingyears.Inaddition,anadditional15%ofthesharesin N.V.NuonEnergywereacquiredinJuly.Vattenfallthereafterowns64%ofthesharesinN.V.NuonEnergy, although it has had full control of the company since 1 July 2009.
Investment programme 20122016 Vattenfalls total investment programme has decreasedby11%,fromSEK165billionforthe period 20112015 to SEK 147 billion for the fiveyear period 20122016. Of the total investment amount, SEK 114 billion is earmarked for production of electricity and heat. The remaining amount is being allocated to investments in electricity and heating networks, IT and gas storage. A large share of investments consist of the completion of investment projects that were decided on in previous years. As shown in the adjacent chart, investments are distributed across several forms of energy. Compared with 20112015, the share of low CO2-emitting electricity generation has increasedfrom36%to43%.
Electricity generation, sales of heat and gas

Q4 2011 Q4 2010 Change% Full year 2011 Full year 2010 Change%
Electricity generation, full year 2011

Vattenfallstotalelectricitygenerationdecreasedby3.3%to 166.7TWh(172.4).Hydropowergenerationdecreasedby2.5% to34.5TWh(35.4).Increasedwatersupplyduringthefourth quarter contributed to greater hydro power generation and higher reservoir levels. At year-end 2011, the reservoirs were 81%full.ThehydrologicalbalanceintheN ordiccountriescontinued to strengthen during the fourth quarter, to +18.8 TWh at the end of December, from +10.9 TWh at the end of September. Nuclearpowergenerationdecreasedby2.5%to42.5TWh (43.6).GenerationbytheForsmarknuclearpowerplant increasedby20.4%,whilegenerationbyRinghalsdecreasedby 21.3%,mainlyduetoextensiveaudits,continuedsafetydevelopment during the year and an unplanned outage at Ringhals 2. Fossil-basedpowergenerationdecreasedby5.2%,to85.0TWh (89.7),mainlyattributabletooperationaldisruptionsatafew power stations in Denmark. Wind power generation increased bynearly55%to3.4TWh(2.2),whileelectricitygeneration basedonbiomassandwastedecreasedto1.3TWh(1.5).
Electricity generation, tWh Hydro power Nuclearpower Fossil-based power Wind power Biomass, waste total External sales of electricity, tWh Sales of heat, tWh Sales of gas, tWh
10.5 8.8 22.9 1.1 0.4 43.7 59.7 13.1 16.8
9.4 11.1 24.5 0.9 0.4 46.3 53.5 17.0 22.1
11.7 -20.7 -6.5 22.2 -5.6 11.6 -22.9 -24.0
34.5 42.5 85.0 3.4 1.3 166.7 209.41) 41.6 53.8
35.4 43.6 89.7 2.2 1.5 172.4 194.21) 47.1 63.2
-2.5 -2.5 -5.2 54.5 -13.3 -3.3 7.8 -11.7 -14.9
1)Ofwhich,bilateralsalesthroughthetradingoperationsamountedto52.9TWh(40.0)in2011.
Sales of heat, full year 2011

ElectricitygenerationQ42011,%
Hydro power 24 Fossil-based power 53 N uclearpower20 Other 1 3
1)Windpower,biomassandwaste
ElectricitygenerationQ42010,%
Salesofheatdecreasedby11.7%to41.6TWh(47.1),mainlyasa result of warmer weather.
Sales of gas, full year 2011

Salesofgasdecreasedby14.9%to53.8TWh(63.2),mainlydue to warmer weather.
Electricitygenerationfullyear2011,%
Hydro power 21 Fossil-based power 51 N uclearpower25 Other 3
1
Electricitygenerationfullyear2010,%
10
Wholesale price trend

ElectricityspotpricesintheNordiccountries,Germany, PolandandtheNetherlands,2009-2011,monthlyaverages
EUR/MWh 85 75 65 55 45 35 25 15 NordPool EPEX
The hydrological balance continued to strengthen during the fourth quarter, which led to slightly lower average spot prices compared with the third quarter of 2011. However, compared with the fourth quarter of 2010,spotpriceswere45%lower.Overall,Nordicspotpriceswere11% lower in 2011 than in 2010. Average electricity spot prices in Germany andtheNetherlandswereanaverageof1.5%higherduringthefourth quarter compared with the third quarter. Compared with the fourth quarterof2010,spotpriceswere3%lower,owingtomilderweatheranda greater mix of renewable energy in the system. Overall, German and Dutchspotpriceswere15%higherin2011thanin2010.
Timeperiod/EUR/ MWhh NordPool(Nordic countries)
EPEX(Germany)
APX(Netherlands)
2009 APX olPX P
2010
2011
Q4 2010 Q4 2011 Full year 2010 Full year 2011
62.03 34.29 53.14 47.15
51.46 49.97 44.46 51.14
52.61 51.10 45.35 52.31
ElectricityfuturespricesintheNordiccountries,Germany andtheNetherlands
EUR/MWh 80
AveragespotpricesinPolandonthePolishelectricityexchange,PPX, decreasedby15%toEUR46.08/MWhduringthefourthquarter,which was also due to the warmer weather in December. However, part of the change is attributable to the weakening of the Polish zloty against the euro. Electricity futures prices for 2012 and 2013 fell during the fourth quarterof2011.ThedecreaseinNordicelectricityfuturespriceswas mainly caused by the improved hydrological balance, while the decrease in futures prices in the Continental European market was attributable to a poorer macroeconomic outlook, the European debt crisis and lower electricity spot prices. However, despite the decrease, average futures prices for the full year 2011 were higher than the correspondingpricesin2010.NordPoolcontractsfordeliveriesin2012 and2013roseby10%and6%,respectively,whiletheGermanand Dutchcontractsfordeliveryinthesametimeperiodsroseby6%-8% fordeliveriesin2012andby2%fordeliveriesin2013.
Time period / EUR/MWhhv NordPool 2012 NordPool 2013 EEX2012
70
60
50
40 EEX2013 APX2012 APX2013
30 2009
2010
2011
Nordiccountries2011 Nordiccountries2012 Germany 2011 Germany 2012 Netherlands2011 Netherlands2012 Source:N ordPool,EuropeanEnergyExchange(EEX)andAPX.
Q4 2010 Q4 2011 Full year 2010 Full year 2011
44.39 41.88 42.55 46.71
44.12 43.49 43.41 46.07
50.94 53.86 52.53 56.01
53.03 54.15 55.21 56.38
50.99 53.66 51.67 55.97
53.11 52.87 54.69 55.66
11
Wholesale price trend
Price trend for oil, coal, gas and CO2 emission allowances
USD 160 140 120 100 80 60 40 20 0
EUR 80 70 60 50 40 30 20 10 2009 2010
2011
Prices of fuel and CO2 emission allowances fell during the fourth quarter, where prices of CO2 emission allowances showed the greatest change, withquotationsofEUR7/tonneattheendofthefourthquarter(average forfourthquarterof2010:EUR15/tonne).Generationofelectricityfrom renewable energy sources, such as wind power, increased, and the large supply of CO2 emission allowances pushed the price down. Demand for gas fell as a result of economic uncertainty and mild weather. Gas prices fell by anaverageof10%duringthefourthquarter,butwerestill36%higherin 2011 than in 2010. Oil prices fell back during the year from high levels as a result of recurring downward adjustments of global growth figures and lowerdemand.However,theweakeningoftheeuroagainsttheUSdollar translated to more expensive oil for European buyers. The price decline was dampened by geopolitical anxiety at the end of the year. Compared with2010,thepriceofoilwas37%higherin2011.Coalpricesalsofell slightlyduringthefourthquarter,althoughtheywerestill24%higheronan annual basis compared with 2010.
Oil(USD/bbl),Brent, Front month Coal(USD/t),API2, Front Year
G as(EUR/MWh),NBP, Front Year CO2emissionallowances(EUR/t)
Vattenfalls degree of price hedging in various markets per 31 December 2011

% 100 98
Vattenfalls degree of price hedging

The chart shows Vattenfalls price hedging of planned electricity generationintheNordiccountriesandContinentalEurope.Vattenfallcontinuously hedges its electricity generation through sales in the futures and forward markets.
52 53
75
76
50
Average price hedges as per 31 december 2011

25 13
25
0 2012 2013 2014
EUR/MWh Nordiccountries Continetal Europe
2012 45 55
2013 46 58
2014 43 60
Nordiccountries Continental Europe
12
Vattenfalls operating segments

Effective 1 January 2011 Vattenfall moved from a geographical to a business-led organisational structure that is based on the value chain and which comprises the following three operating segments: Generation DistributionandSales Renewables The operating segments are organised into five Business Divisions, where the Generation segment comprises three Business Divisions: Asset Development, Production, and Asset Optimisation and Trading. The Distribution and Sales segment is made up of Business Division Distribution and Sales, and the Renewables segment is made up of Business Division Renewables. See the illustration below. responsiblefortheGroupsR&DactivitiesandEngineering consulting business. Business Division Production operates Vattenfalls lignite miningandpowergenerationassets(includinghydro powerbutexcludingotherrenewablegenerationassets) as cost-effectively as possible to ensure optimal levels of generation capacity and availability. The Division also operatesVattenfallscombinedheatandpower(CHP) plantsinGermany,DenmarkandtheNetherlands. Business Division Asset Optimisation and Trading is responsible for optimising the dispatch of all of Vattenfalls generationassets(i.e.,itmanageswhenandhowtheplantsgenerateelectricity)andhedgestheproductionoutputof those assets for maximum profitability within a given risk mandate. This Business Division also conducts proprietary trading under defined risk mandates. The Distribution and Sales segment is Vattenfalls interface towards the end-customer market and includes the unbundled and regulated electricity distribution business. Business Division Distribution and Sales is responsible for Vattenfalls electricity sales and heat businesses, the regulated electricity distribution business and other downstream businesses. This division is responsible for relationships with all of Vattenfalls end customers. The Renewables segment is responsible for asset development, and operation and maintenance of Vattenfalls renewable energy operations, except for hydro power, which is managed within the Generation segment. Business Division Renewables is responsible for asset development, and operation and maintenance of Vattenfalls renewable energy operations, primarily wind power and upstream biomass. Depending on the type of business, a number of key performanceindicators(KPIs)havebeendeveloped.ForBusiness Division Production in the Generation segment, for Business UnitHeatwithinDistributionandSales,andforBusiness Division Renewables, the main KPIs are operating expenses and plant availability. For Business Division Asset Optimisation and Trading, the main KPIs pertain to the value added from asset optimisation as well as to hedging performance above a certain benchmark. Apart from its Engineering consulting business, Business Division Asset Development is managed as a cost centre and focuses on delivery of projects within budget and on time.
Staff Functions and Shared Service Centres

A number of Group-wide Staff Functions support Vattenfalls business as well as the decision-making process of the ExecutiveGroupManagement(EGM)andCEO.TheStaff Functions also govern relevant business processes in Vattenfall as a whole. The Staff Functions are managed and coordinated centrally with employees located at both the corporate level and closer to the business. Staff Functions are financially managed as cost centres. Shared Service Centres(SSCs)areanimportantandintegralelementofVattenfalls business operations and focus on transaction-related processes. Shared Services are led with a focus on process efficiency and utilisation of economies of scale. Shared Services provide such services and specialist functions which, from a cost perspective, are advantageous to handle and perform on a shared basis. Staff Functions and Shared Service Centres are reported under the heading Other.
Responsibilities of the operating segments:

The Generation segment is Vattenfalls interface towards the wholesale market and includes development and building of production assets, generation of electricity and heat, and sales of electricity on the wholesale energy market. Business Division Asset Development is responsible for project development and execution of new build generation projects in electricity and large modification projects in thermal power, heat, infrastructure, nuclear power and hydro power. Business Division Asset Development is also
three operating segments:

Generation distribution and Sales Renewables
Five Business divisions:

Bd Asset development Bd distribution and Sales Bd Renewables
Bd Production
Bd Asset optimisation and trading
13
Generation
Netsales External net sales1 Operatingprofit(EBIT) Items affecting comparability Fair valuation2 Underlyingoperatingprofit Sales of heat, TWh Electricity generation3, TWh of which, hydro power of which nuclear power of which, fossil-based power of which, biomass, waste External electricity sales, TWh
1)Excludingintra-Grouptransactions.
34,588 15,004 5,152 -469 741 4,880 2.8 37.9 10.5 8.8 18.5 0.1 4.1
38,083 21,812 4,338 -3,825 623 7,540 4.2 40.2 9.4 11.1 19.7 5.2
-9.2 -31.2 18.8 -87.7 18.9 -35.3 -33.3 -5.7 11.7 -20.7 -6.1 -21.2
123,111 59,347 10,545 -9,342 -2,231 22,118 9.9 148.2 34.5 42.5 70.8 0.4 18.3
129,882 71,567 30,388 -3,814 3,114 31,088 11.9 153.9 35.4 43.6 74.7 0.2 18.6
-5.2 -17.1 -65.3 144.9 -28.9 -16.8 -3.7 -2.5 -2.5 -5.2 100.0 -1.6
2) ertainstounrealisedchangesinthefairvalueofenergyderivatives,whichaccordingtoIAS39maynotbereportedusinghedgeaccounting,and P changes in the fair value of inventories. 3) felectricitygeneration2011,Vattenfalldisposedover132.6TWh(130.0TWh),whiletherestwenttotheminoritypart-ownersorwasdeductedas O replacement power.
The Generation operating segment is Vattenfalls interface towards the wholesale market and includes development and building of production assets, generation of electricity and heat, and sales of electricity on the wholesale energy market. The Generation segment comprises three Business Divisions: AssetDevelopment Production AssetOptimisationandTrading
Operations in 2011 were conducted in Sweden, Denmark, Germany,theNetherlandsandPoland. The Generation segment includes a total of 17,078 employees (full-timeequivalents).
14
Generation
Underlying operating profit, full year 2011 UnderlyingoperatingprofitfellbySEK9.0million,whichwas mainly attributable to average lower electricity prices received, lower production volumes and increased depreciation. Items affecting comparability in 2011 amounted to SEK -9.3 billion. These consist mainly of impairment of book value and increased provisions for the dismantling and handling of nuclear fuel as a result of the decision to close the Krmmel and BrnsbttelnuclearpowerplantsinGermany(foracombinedtotalof SEK-10.5billion),andcapitalgains(SEK0.7billion).Itemsaffecting comparability in 2010 consisted primarily of impairment of goodwillintheformerBeneluxoperatingsegment(SEK4.3billion). Underlying operating profit Q4 UnderlyingoperatingprofitdecreasedbySEK2.7billionandis mainly attributable to average lower electricity prices received and lower production volumes. Lower costs for operations, maintenance, and research and development had a positive effect on underlying operating profit. Electricity generation and sales of heat, full year 2011 Electricitygenerationdecreasedby3.7%to148.2TWh(153.9). Hydropowergenerationdecreasedby2.5%to34.5TWh(35.4). Nuclearpowergenerationdecreasedby2.5%to42.5TWh (43.6),mainlyattributabletotheRinghalsnuclearpowerplant (seebelow).AvailabilityoftheForsmarknuclearpowerplantwas 86%(72%)in2011,whileavailabilityofRinghalswas60%(76%) due to unplanned outages, extensive audits, and modernisation andmaintenancework.NuclearpowergenerationatForsmark increasedby20.4%to23.6TWh(19.6),whilenuclearpowergenerationinRinghalsdecreasedby21.3%to18.9TWh(24.0). Fossil-basedgenerationdecreasedby5.2%to70.8TWh (74.7).ElectricitygenerationbasedoncoalinGermany decreasedby1.5%to12.8TWh(13.0).Thedecreaseismainly owing to the sale of Vattenfalls interest in the Rostock power plant.Fossil-basedgenerationintheNetherlandsdecreasedby 3.1%to12.4TWh(12.8)duetooperationaldisruptionsatthe Hemweg 8, Velsen and Purmerend power stations. Fossil-based generationinDenmarkdecreasedby36.5%to4.7TWh(7.4). The decrease is mainly attributable to the divestment of the Hillerd and Helsingr power stations, extended audits at the Fyn7andNordjylland3powerstations,andashortageofstraw at the Fyn 8 power station. Salesofheatdecreasedby16.8%to9.9TWh(11.9)asa result of warmer weather. Moorburgs unit B is expected to be ready for commercial operation in early 2014, and unit A is expected to be ready by the middle of the same year. Audits of nuclear power plants During the year, Forsmark attained its highest generation result since2005,reachinganenergyavailabilityof86.2%.Ringhals hadavailabilityof60%in2011.Ringhals2wasofflineforthe greater part of the year due to, among other things, extensive clean-up work following a small fire in a reactor containment unit during the spring. Ringhals 1 noted its best year since 2006, and Ringhals 3 posted annual generation in excess of 7 TWh. Ringhals4resumedgenerationon15November2011following its most extensive audit ever. The upgrade included, among other things, replacement of the steam generators and installation of a new pressuriser. The replacement of the pressuriser was the first to be carried out at a European nuclear power plant. Expanded gas storage capacity in the netherlands In an auction process Vattenfall has secured storage capacity forgasinBergermeer,theNetherlands,whichwillbeavailablein 2015. Since demand for gas is highly seasonal, by having storage capacity Vattenfall can store gas during the summer, when demand is low, for sale during the winter, when demand is higher. Publication of power plant data in the netherlands In December Vattenfall began to publish information on the availability of its Dutch power plants and the Epe gas storage facility.VattenfallistherebysupportingtheEUsgoalofincreasing transparency in the European electricity and gas markets. Vattenfall has previously reported production data for Germany ontheEEXexchangeswebsiteandfortheNordicfacilitieson NordPoolswebsite.
Important events Q4
Political impasse stops Vattenfalls CCS investment in Germany In September 2011, the upper house of Germanys parliament (Bundesrat)rejectedtheproposedCCSlaw.Thegovernment has now initiated a parliamentary process to amend the law, but it remains unclear what the outcome will be. Since Germany lacks consistent legislation in this area, Vattenfall has decided to discontinue its CCS demonstration project in Jnschwalde in easternGermany.TheEU-supportedprojectwouldhavebeen operational by 2015/16 and would have been the first European project to demonstrate how CCS works on a significant power plantscale.Nevertheless,VattenfalliscontinuingfurtherdevelopmentofCCStechnology,particularlyR&Dsurroundingstorage.Forexample,VattenfallisapartnerintheUKslargestCCS pilot plant at Ferrybridge Power Station in West Yorkshire, which wasinauguratedon30November.Vattenfallwillalsocontinue the test operation of the CCS pilot plant at Schwarze Pumpe, Germany, and work for the development of a European CO2 storage infrastructure. new timetable for Moorburg power plant project Qualitydefectsinacertaintypeofsteel(T24)haveledtodelays in the Moorburg power plant project in Hamburg, Germany.
15
Distribution and Sales

Netsales External net sales1 of which, Distribution of which, Heat Operatingprofit(EBIT) of which, Distribution of which, Heat Items affecting comparability of which, Distribution of which, Heat Underlyingoperatingprofit Sales of gas, tWh Sales of heat, tWh Electricity generation2, tWh of which, fossil-based power of which, biomass, waste External sales of electricity, TWh of which, private customers of which, resellers of which, business customers Transited volume, excl. production transiting
42,703 39,575 4,565 5,111 3,163 877 1,956 76 -23 378 3,087 16.8 10.3 4.7 4.4 0.3 36.5 9.2 7.7 19.3 31.2
47,589 42,932 5,031 5,892 2,329 1,778 926 -134 183 -318 2,463 21.0 12.8 5.3 4.9 0.4 36.5 9.8 7.3 18.5 33.3
-10.3 -7.8 -9.3 -13.3 35.8 -50.7 111.2 25.3 -20.0 -19.5 -11.3 -10.2 -25.0 -6.1 5.5 4.3 -6.3
155,299 144,575 17,965 17,481 11,123 5,035 4,895 627 -32 386 10,496 51.6 31.7 15.1 14.2 0.9 137.9 34.0 28.7 74.8 118.8
165,529 151,850 17,968 19,626 8,340 5,906 4,388 -86 202 -307 8,426 58.3 35.2 16.3 15.0 1.3 135.3 34.3 27.4 70.2 121
-6.2 -4.8 -10.9 33.4 -14.7 11.6 24.6 -11.5 -9.9 -7.4 -5.3 -30.8 1.9 -0.9 4.7 6.6 -1.8
2)Ofelectricitygenerationin2011.Vattenfalldisposedover15.1TWh(16.3TWh).whiletherestwenttotheminoritypart-ownersorwasdeductedasreplacementpower.
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. Distribution and Sales comprises sixBusinessUnits(BUs): BUCustomerService BUSalesB2C(BusinesstoConsumers) BUSalesB2B(BusinesstoBusiness) BUHeat BUDistribution BUEnergyRelatedServices Operations in 2011 were conducted in Sweden, Denmark, Finland,Norway,Germany,France,andtheNetherlands.TheDistribution and Sales segment includes a total of 12,166 employees(full-timeequivalents).
16
distribution and Sales

Underlying operating profit, full year 2011 UnderlyingoperatingprofitimprovedbySEK2.0billion.The improvement is mainly attributable to higher profitability for the SalesB2C(BusinesstoConsumers)unit,primarilyinGermany andtheNetherlands.Lowercostsforsalesandadministration had a positive earnings impact. Items affecting comparability in 2011 amounted to SEK 0.6 billion and consisted of capital gains on the sale of a property on SpitalerstraeinHamburg(SEK0.4billion)andofVattenfalls interestintheGermanenergycompanyENSO(SEK0.2billion), reversedimpairmentofheatingassetsintheNetherlands(SEK 0.4billion),andaprovisionpertainingtothedistributionoperationsinGermany(SEK-0.3billion). Underlying operating profit Q4 UnderlyingoperatingprofitimprovedbySEK0.6billion.The improvement is mainly attributable to higher profitability for the SalesB2C(BusinesstoConsumers)unit,primarilyinGermany andtheNetherlands.Lowermarginsinthedistributionoperations had a negative impact on underlying operating profit. Severe storms in Sweden and Finland in December gave rise to costs for repairs and outage compensation, together totalling approximately SEK 250 million. Sales of gas and heat, and electricity generation, full year 2011 ity and provide better information to customers. The Regulator did not accept the requested revenue framework, and instead granted a considerably lower framework for the first four-year period. Like more than 80 other Swedish network companies that also had their revenue frameworks reduced, Vattenfall has appealed the Regulators decision. Sale of Finnish operations On 16 December 2011 Vattenfall announced that it had signed anagreementwithLakesideNetworkInvestmentsaconsortium comprising 3i Infrastructure plc, 3i Group plc, GS Infrastructure Partners and Ilmarinen Mutual Pension Insurance Company on the sale of Vattenfalls electricity distribution and heat businesses in Finland. The sale is based on an enterprise valueofapproximatelyEUR1.54billion(approximatelySEK14 billion).Thetransactionwascompletedon11January2012and will be booked in the first quarter of 2012. Vattenfall will retain ownership of its electricity sales organisation and hydro power operations in Finland. Completion of sales of Polish operations ThesaleofGornoslaskiZakladEnergetyczny(GZE),Vattenfalls Polish electricity trading and distribution company, was completed on 13 December. The buyer was the Polish energy company Tauron Polska Energia S.A. The sales price is based on an enterprisevalueofapproximatelyPLN3.5billion(approximately SEK7.4billion).On11January2012,thesaleofVattenfallHeat PolandS.A.(VHP)tothePolishgascompanyPGNiGS.A.was completedforanenterprisevalueofPLN3.7billion(approximatelySEK7.8billion).ThesaletoPGNiGS.A.coversallofVHPs operations including the era, Siekierki and Pruszkow combined heat and power plants, and the Kawczyn and Wola heat generation plants, which feed heat into the local Warsaw and Pruszkow grids, respectively. Both transactions are booked in 2011. Several major customer contracts signed: nSweden,GERealEstateAB,withitssubsidiaryRoxanne I Properties AB, extended its contract with Vattenfall, for a total of 66 GWh/year. nSweden,MetsTissueABsignedanewcontractforthreeof I its plants. Vattenfall will deliver 200 GWh/year during a threeyear period. ntheNetherlands,2,000membersofNIFE,theNetherlands I largest real estate consultancy for greenhouse operations, signed a new contract for 220 GWh. nGermany,BASFsignedanewcontractfor35GWhfor16of I its plants.
Salesofgastoendcustomersdecreasedby11.5%to51.6 TWh(58.3)asaresultofwarmerweather.Salesofheat decreasedby9.9%to31.7TWh(35.2),mainlyinGermany and Sweden, also as a result of warmer weather. Electricity generationdecreasedby7.4%,to15.1TWh(16.3),mainly attributable to Germany.
Important events Q4
Application for revenue framework for Swedish network operations The new, so-called ex ante regulation of Swedish electricity network fees, which took effect in 2012, entails that a predetermined revenue framework is set for four years by the Swedish Energy Markets Regulator. The application for a revenue framework for the four-year period 20122015 that Vattenfall Eldistribution AB filed with the Regulator in spring 2011 entailed a higher level of investments, among other things to improve the electricity networks resilience to storms. In addition, the application sought the ability to increase connections of small as well as large scale wind power plants to the grid, raise delivery qual-
17
Renewables
Q4 2011
Q4 2010
Change%
Full year 2011
Full year 2010
Change%
Netsales External net sales1 Operatingprofit(EBIT) Items affecting comparability Underlyingoperatingprofit Electricity generation2, tWh of which, wind power External sales of electricity, TWh
1,043 673 308 308 1.1 1.1 0.1
1,008 531 -864 -839 -25 0,9 0,9 0,1
3.5 26.7 22.2 22.2
3,131 1,820 496 36 460 3.4 3.4 0.3
2,078 1,040 -1,620 -1,019 -601 2.2 2.2 0.3
50.7 75.0 54.5 54.5
2) felectricitygenerationin2011,Vattenfalldisposedover3.4TWh(2.2TWh),whiletherestwenttotheminoritypart-ownersorwasdeductedas O replacement power.
The Renewables operating segment and Business Division is responsible for capacity development, and operation and maintenance of Vattenfalls renewable energy operations primarily in wind power and upstream biomass. Renewables comprisesfourBusinessUnits(BUs): BUOnshoreWindProjects BUOffshoreWindProjects BUGenerationWind BUBiomass Operations are conducted in Sweden, Denmark, Germany, the Netherlands,Belgium,Poland,theUKandLiberia.TheRenewablessegmentincludesatotalof350employees(full-time equivalents).
Underlying operating profit 2011 UnderlyingoperatingprofitimprovedbySEK1.1billion.The improvement is mainly attributable to greater wind power generation. Items affecting comparability in 2010 consisted mainly of goodwillimpairmentattributabletoNuon(SEK-0.8billion). Underlying operating profit Q4 UnderlyingoperatingprofitimprovedbySEK0.3billion.The improvement is mainly attributable to greater wind power generation. Electricity generation, full year 2011 Windpowergenerationincreasedby55%to3.4TWh(2.2).The increase is mainly attributable to high availability at all wind farms and favourable wind conditions. However, winds primarily in DenmarkandtheUKwereoccasionallytoostrong,resultinginlower availability and difficulties in maintaining offshore wind farms. Sales of biomass from Liberia amounted to 232 ktonnes.
Important events Q4
Vattenfall purchases licence to build Sandbank wind farm Vattenfall purchased the licence to build the new Sandbank offshore wind farm from the German company Sandbank Power GmbH&Co.Permitsarecurrentlyinplacefor96windturbines which will deliver a combined output of 576 MW. The purchase includes the opportunity to expand the project with 40 turbines. Sandbank is located 90 kilometres west of the German island of Sylt in the vicinity of Vattenfalls already ongoing project, DanTysk. Construction of the new Sandbank wind farm will commence when DanTysk is completed in early 2014.
18
other
Netsales External net sales1 Operatingprofit(EBIT) Items affecting comparability Underlyingoperatingprofit

1,670 148 1,536 2,468 -932
2,179 159 -857 12 -869
-23.4 -6.9 7.2
7,303 983 1,045 3,326 -2,281
31,482 21,464 -7,255 -5,180 -2,075
-76.8 -95.4 -114.4 9.9
Other comprises all Staff Functions including Treasury activitiesandSharedServiceCentres.TheDutchcompanyNuon Exploration&ProductionB.V.(E&P),whichwasdivestedduring the second quarter of 2011, and the German transmission business, which was divested in May 2010, are reported under Other.Otherincludesatotalof5,091employees(full-time equivalents).
Underlying operating profit 2011 UnderlyingoperatingprofitfellbySEK0.2billion,whichismainly explained by the 2010 operating profit from 50Hertz Transmission GmbH, which was divested in mid-May 2010. Lower costs for Staff Functions had a positive impact. Items affecting comparability in 2011 amounted to SEK 3.3 billion and consist of capital gains on part of the sales of VattenfallsoperationsinPolandandBelgium,andthesaleofNuon Exploration&ProductionB.V.(E&P)duringthesecondquarter of 2011. Items affecting comparability in 2010 consisted of impairmentof50HertzTransmissionGmbH(SEK-5.1billion).
Underlying operating profit Q4 UnderlyingoperatingprofitfellbySEK63million.Itemsaffecting comparability(SEK2.5billion)consistedofcapitalgainsforpart of the sale of Vattenfalls operations in Poland.
19
Consolidated income statement

Netsales Cost of products sold1 Gross profit Selling expenses, administrative expenses and research and development costs2 Other operating income and expenses, net Participations in the results of associated companies operating profit (EBIt)3 Financial income4 Financial expenses5 Profit before tax6 Income tax expense Profit for the period7 Profit for the period attributable to: Owners of the Parent Company Non-controllinginterests(minorityinterests) total Earnings per share N umberofsharesinVattenfallAB,thousands Earningspershare,basicanddiluted(SEK) Supplementary information Operatingprofitbeforedepreciationandamortisation(EBITDA) Financialitems,netexcl.discountingeffectsattributabletoprovisionsandreturnfromtheSwedishNuclearWasteFund
1) Ofwhich,depreciation,amortisationandimpairmentlossesrelatedtoimmaterintangibleassets(non-current)andproperty,plantandequipment 2) Ofwhich,depreciation,amortisationandimpairmentlossesrelatedtoimmaterintangibleassets(non-current)andproperty,plantandequipment 3) Includingitemsaffectingcomparabilityattributableto: Capital gains/losses, net Impairment losses and close-down costs pertaining to German nuclear power plants Other impairment losses and impairment losses reversed, net Other items affecting comparability total of items affecting comparability in operating profit 4) IncludingreturnfromtheSwedishNuclearWasteFund 5) Includinginterestcomponentsrelatedtopensioncosts 5) Includingdiscountingeffectsattributabletoprovisions 6) Includingitemsaffectingcomparabilityattributableto: Capital gains/losses, net Impairment losses and close-down costs pertaining to German nuclear power plants Other impairment losses and impairment losses reversed, net Other items affecting comparability total of items affecting comparability in Profit before tax 7) ncludingitemsaffectingcomparabilitystatedaboveadjustedfortax I
50,453 -37,449 13,004 -5,700 2,855 10,159 1,319 -3,947 7,531 -2,428 5,103
55,537 -44,612 10,925 -6,386 94 313 4,946 783 -921 4,808 -2,344 2,464
181,040 -144,492 36,548 -18,849 5,478 32 23,209 3,843 -12,754 14,298 -3,882 10,416
213,572 -159,098 54,474 -20,094 -5,151 624 29,853 2,514 -10,944 21,423 -8,238 13,185
5,602 -499 5,103
2,577 -113 2,464
11,083 -667 10,416
12,997 188 13,185
131,700 42.54 15,447 -2,319

-5,119 -169 2,483 -193 65 -280 2,075 538 -266 -847 2,536 -193 -1,646 -280 417 200
131,700 19.57 15,355 308

-10,509 100 -77 -4,709 -4,786 434 -273 -880 -74 -4,709 -4,783 -4,744
131,700 84.15 54,538 -7,893

-30,737 -592 4,722 -10,513 -402 840 -5,353 1,948 -1,043 -2,966 4,826 -10,414 -2,113 840 -6,861 -4,726
131,700 98.69 60,706 -6,179

-30,342 -511 -250 -9,849 -10,099 1,011 -1,138 -3,262 -247 -9,849 -10,096 -10,009
20
Consolidated statement of comprehensive income

Profit for the period other comprehensive income: 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 Revaluation of available-for-sale financial assets Transferred to the income statement, available-for-sale financial assets total other comprehensive income, net after tax total comprehensive income for the period Total comprehensive income for the period attributable to: Owners of the Parent Company Non-controllinginterests(minorityinterests) total
5,103
2,464
10,416
13,185
-1,409 3,055 162 -554 1,254 4,287 -1,117 3,170 -6,386 621 186 1 591 436 5,539
-4,132 -56 6 1,173 -3,009 2,205 -580 1,625 -3,556 -4,940 -2,476
-4,675 6,668 224 -638 1,579 960 -242 718 -2,014 621 -1 591 1 591 904 11,320
-1,189 -684 246 494 -1,133 19,831 -5,215 14,616 -30,727 -17,244 -4,059
6,180 -641 5,539
-2,290 -186 -2,476
12,008 -688 11,320
-3,717 -342 -4,059
21
Operating segments, Vattenfall Group

External net sales Amounts in SEK million Q4 2011 Q4 2010 Full year 2011 Full year 2010 Q4 2011 Internal net sales Q4 2010 Full year 2011 Full year 2010 Q4 2011 Total net sales Q4 2010 Full year 2011 Full year 2010
Generation Distribution and Sales Renewables Other1 Eliminations2 total
15,004 39,575 673 148 -4,947 50,453
21,812 42,932 531 159 -9,897 55,537
59,347 144,575 1,820 983 -25,685 181,040
71,567 151,850 1,040 21,464 -32,349 213,572
19,584 3,128 370 1,522 -24,604
16,271 4,657 477 2,020 -23,425
63,764 10,724 1,311 6,320 -82,119
58,315 13,679 1,038 10,018 -83,050
34,588 42,703 1,043 1,670 -29,551 50,453
38,083 47,589 1,008 2,179 -33,322 55,537
123,111 155,299 3,131 7,303 -107,804 181,040
129,882 165,529 2,078 31,482 -115,399 213,572
Profit Amounts in SEK million Q4 2011 Q4 2010 Full year 2011 Full year2010
Profit excl. items affecting comparability Q4 2011 Q4 2010 Full year 2011 Full year 2010 Q4 2011
Underlyingprofit3 Q4 2010 Full year 2011 Full year 2010
Generation Distribution and Sales Renewables Other1 operating profit (EBIt) Financial income and expenses Profit before tax
5,152 3,163 308 1,536 10,159 -2,628 7,531
4,338 2,329 -864 -857 4,946 -138 4,808
10,545 11,123 496 1,045 23,209 -8,911 14,298
30,388 8,340 -1,620 -7,255 29,853 -8,430 21,423
5,621 3 087 308 -932 8,084
8,163 2,463 -25 -869 9,732
19,887 10,496 460 -2,281 28,562
34,202 8,426 -601 -2,075 39,952
4,880 3,087 308 -932 7,343
7,540 2,463 -25 -869 9,109
22,118 10,496 460 -2,281 30,793
31,088 8,426 -601 -2,075 36,838
1)ChieflyincludesTreasuryActivitiesandOtherStafffunctions. 2)Forexternalnetsales,theeliminationpertainstosalestotheNordicelectricityexchange,NordPool. 3) peratingprofitexcludingitemsaffectingcomparabilityandunrealisedchangesinthefairvalueofenergyderivatives, O which according to IAS 39 may not be reported using hedge accounting and changes in the fair value of inventories.
22
Vattenfall Group, information about geographical areas

External net sales Amounts in SEK million Q4 2011 Q4 2010 Full year 2011 Full year 2010 Q4 2011 Internal net sales Q4 2010 Full year 2011 Full year 2010 Q4 2011 Total net sales Q4 2010 Full year 2011 Full year 2010
Nordiccountries Germany and Poland NetherlandsandBelgium Other1 Eliminations total
13,645 19,673 11,549 5,586 50,453
17,614 20,328 12,819 4,776 55,537
53,505 73,433 38,361 15,741 181,040
59,829 95,974 41,990 15,779 213,572
1,236 9,970 1,941 29,047 -42,194
-1,437 10,261 2,277 23,314 -34,415
-1,327 36,290 8,243 75,819 -119,025
-4,368 40,402 7,338 70,999 -114,371
14,881 29,643 13,490 34,633 -42,194 50,453
16,177 30,589 15,096 28,090 -34,415 55,537
52,178 109,723 46,604 91,560 -119,025 181,040
55,461 136,376 49,328 86,778 -114,371 213,572
Operatingprofit(EBIT) Amounts in SEK million Q4 2011 Q4 2010 Full year 2011 Full year 2010 Q4 2011
Operatingprofit(EBIT)excl.items affecting comparability Q4 2010 Full year 2011 Full year 2010
Nordiccountries Germany and Poland NetherlandsandBelgium Other1 Total Summa
3,872 420 1,502 4,329 36 10,159
5,238 3,226 -5,035 1,517 4,946
17,330 1,138 1,883 2,822 36 23,209
21,196 9,908 -5,570 4,319 29,853
3,846 3,304 -17 949 2 8,084
5,447 2,044 190 2,051 9,732
16,046 13,168 -96 -558 2 28,562
21,344 13,897 -417 5,128 39,952
1)ChieflyconcernsTrading,TreasuryactivitiesandOtherStafffunctions.AlsoincludesoperationsintheUK.
23
Consolidated balance sheet

Amounts in SEK million 31 Dec. 2011 31 Dec. 2010 Amounts in SEK million 31 Dec. 2011 31 Dec. 2010
Assets
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 ShareintheSwedishN uclearWasteFund 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 to suppliers Derivatives with positive fair value Prepaid expenses and accrued income Current tax assets Short-term investments Cash and cash equivalents Assets held for sale total current assets total assets 46,229 279,445 539 8 12,344 3,235 28,430 990 188 1,303 5,732 378,443 49,787 285,631 626 4 12,949 4,954 26,791 1,184 171 1,397 4,769 388,263
Equity and liabilities

Equity Attributable to owners of the Parent Company Attributabletonon-controllinginterests(minorityinterests) total equity non-current liabilities Capital Securities Other interest-bearing liabilities Pension provisions Other interest-bearing provisions Deferred tax liabilities Other noninterest-bearing liabilities total non-current liabilities Current liabilities Trade payables and other liabilities Advance payments from customers Derivatives with negative fair value 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 Pledged assets Contingent liabilities 131,988 6,943 138,931 126,704 6,917 133,621
8,883 149,602 17,995 66,487 35,406 8,238 286,611
8,929 144,599 18,137 62,494 36,125 8,409 278,693
18,564 1 5,627 41,880 6,368 30,099 6,450 1,853 17,417 11,268 6,588 146,115 524,558
16,825 8,330 36,380 3,904 29,338 10,597 2,311 31,278 12,595 1,611 153,169 541,432
35,108 1,142 22,454 18,507 844 11,865 7,237 1,859 99,016 524,558 3,584
33,184 1,912 25,216 24,804 2,062 34,749 7,191 129,118 541,432 634 4,542
24
Consolidated balance sheet, cont.
31 Dec. 2011
31 Dec. 2010
31 Dec. 2011
31 Dec. 2010
Supplementary information
net assets Netassets,weightedaveragevalue net debt Capital Securities Bond issues, commercial papers and liabilities to credit institutions Present value of liabilities pertaining to acquisitions of subsidiaries Liabilities to associated companies Liabilities to owners of non-controlling interests (minorityowners) Other liabilities total interest-bearing liabilities Cash and cash equivalents Short-term investments Loans to owners of non-controlling interests (minorityowners)inforeignsubsidiaries net debt 284,250 283,957 285,153 293,298
-8,883 -102,234 -30,472 -10,521 -10,240 -8,000 -170,350 11,268 17,417 576 -141,089
-8,929 -110,038 -43,438 -10,493 -9,327 -6,052 -188,277 12,595 31,278 295 -144,109
Adjusted gross debt and net debt Total interest-bearing liabilities 50%ofCapitalSecurities Present value of pension obligations Provisions for mining, gas and wind operations and other environment-related provisions Provisionsfornuclearpower(net) Currency derivatives for hedging of debt in foreign currency Margin calls received Liabilities to owners of non-controlling interests (minorityowners)duetoconsortiumagreements Adjusted gross debt Reported cash and cash equivalents and short-term investments Unavailableliquidity Adjusted cash and cash equivalents and short-term investments Adjusted net debt
-170,350 4,442 -22,461 -12,542 -18,470 3,282 7,369 9,771 -198,959 28,685 -5,757 22,928 -176,031
-188,277 4,464 -19,992 -12,760 -12,794 2,668 5,149 8,923 -212,619 43,873 -4,663 39,210 -173,409
25
Consolidated statement of cash flows

operating activities Profit before tax Reversal of depreciation, amortisation and impairment losses1 Tax paid Capital gains/losses, net Other, incl. non-cash flow 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 activities Investing activities Acquisitions in Group companies Investments in associated companies and other shares and participations Other investments in non-current assets total investments Divestments Cash and cash equivalents in acquired companies Cash and cash equivalents in divested companies Cash flow from investing activities Cash flow before financing activities Financing activities Changes in short-term investments Changesinloanstoownersofnon-controllinginterests(minorityowners)inforeignsubsidiaries Loans raised2 Amortisation of debts pertaining to acquisitions of subsidiaries Amortisation of other debts Dividends paid to owners Contributionfromownersofnon-controllinginterests(minorityinterests) Cash flow from financing activities Cash flow for the period
7,531 6,948 -479 -2,537 -1,343 10,120 152 -14,727 11,351 -3,617 -6,841 3,279
4,808 10,409 -127 74 -3,494 11,670 -1,000 -17,869 16,024 1,069 -1,776 9,894
14,298 33,040 -5,250 -4,827 995 38,256 -3,350 944 668 -3,050 -4,788 33,468
21,423 30,853 -8,901 247 3,514 40,108 -2,407 -12,612 5,681 10,461 1,123 41,231
-254 17 -12,338 -12,575 9,708 -1,306 -4,173 -894
4 -26 -12,583 -12,605 974 97 3 -11,531 -1,637
-257 -140 -35,353 -35,750 16,280 -1,332 -20 802 12,666
-577 -508 -40,709 -41,794 7,197 111 -297 -34,783 6,448
-956 2 7,512 -7,266 -3 49 -662 -1,556
-4,997 22 4,491 -1,219 -4 -85 -1,792 -3,429
11,292 -287 10,511 -13,538 -15,688 -6,701 569 -13,842 -1,176
-1,919 1,135 13,325 -12,389 -5,311 12 -5,147 1,301
26
Consolidated statement of cash flows, cont.
Q4 2011
Q4 2010
Full year 2011
Full year 2010
Cash and cash equivalents at the beginning of the period Cash and cash equivalents included in assets held for sale Cash flow for the period Translation differences Cash and cash equivalents at the end of the period
1)nthiscontext,impairmentlossesalsoincludeotherdiscontinuationcoststhanimpairmentin2011pertainingto I nuclear power plants in Germany. The total of these impairment losses and other discontinuation costs amounts to SEK 10,513 million. 2)Short-termborrowingsinwhichthedurationisthreemonthsorshorterarereportednet.
11,848 880 -1,556 96 11,268
16,014 -3,429 10 12,595
12,595 -1,176 -151 11,268
10,555 653 1,301 86 12,595
Supplementary information
Cash flow before financing activities Financing activities Dividends paid to owners Contributionfromownersofnon-controllinginterests(minorityinterests) Cash flow after dividend Analysis of change in net debt N etdebtatbeginningoftheperiod Changed calculation of net debt 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 acqusitions of subsidiaries, discounting effects Cash and cash equivalents included in assets held for sale Intetrest-bearing liabilities associated with assets held for sale Translation differences on net debt N etdebtattheendoftheperiod net debt at the end of the period Free cash flow -894 -1,637 12,666 6,448
-3 49 -848
-4 -85 -1,726
-6,701 569 6,534
-5,311 12 1,149
-143,808 -848 -704 32 -478 -74 880 344 3,567 -141,089 -2, 270
-145,155 -1,726 1,528 34 332 -600 -159 1,637 -144,109 3,355
-144,109 6 534 -2,210 114 -459 -549 344 -754 -141,089 17,637
-154,987 -11,252 1,149 -1,743 111 4,002 -122 -627 653 18,707 -144,109 23,846
27
Consolidated statement of changes in equity

31 Dec. 2011 Attributable to non-controlling interests (minority interests) Attributable to non-controlling interests (minority interests) 31 Dec. 2010
Attributable to owners of the Parent Company
total equity
Attributable to owners of the Parent Company
total equity
Balance brought forward Dividends paid to owners Groupcontributionsfrom(+)/to(-)ownersofnon-controllinginterests(minorityinterests),netaftertax Changes in ownership 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 companies Revaluation of available-for-sale financial assets Transferred to the income statement, available-for-sale financial assets total other comprehensive income for the period Profit for the period total comprehensive income for the period Balance carried forward
1)Ofwhich,Reserveforcashflowhedges
126,704 -6,500 -224
6,917 -201 358 557
133,621 -6,701 358 333
135,620 -5,240 41
6,784 -71 402 144
142,404 -5,311 402 185
-4,689 6,667 213 -631 1,560 960 -242 718 -1,974 621 -1,591 1,591 925 11,083 12,008 131,988 1
245
14 1 11 -7 19 -40 -21 -667 -688 6,943
-4,675 6,668 224 -638 1,579 960 -242 718 -2,014 621 -1,591 1,591 904 10,416 11,320 138,931
-1,086 -684 247 467 -1,056 19,831 -5,215 14,616 -30,274 -16,714 12,997 -3,717 126,7041
-1,315
-103 -1 27 -77 -453 -530 188 -342 6,917
-1,189 -684 246 494 -1,133 19,831 -5,215 14,616 -30,727 -17,244 13,185 -4,059 133,621
28
Key ratios, Vattenfall Group (definitions and calculations of key ratios on pages 36-37)
In%unlessotherwisestated.(x)meanstimes Q4 2011 Q4 2010 Full year 2011 Full year 2010
Operating margin Operating margin1 Pre-tax profit margin Pre-tax profit margin1 Return on equity Return on equity1 Return on net assets Return on net assets1 EBITinterestcover,(x) EBITinterestcover,(x)1 FFOinterestcover,(x) FFOinterestcover,net,(x) Cashflowinterestcoveraftermaintenanceinvestments,(x) FFO/gross debt FFO/net debt EBITDA/netfinancialitems,(x) EBITDA/netfinancialitems,(x)1 Equity/total assets Gross debt/equity Netdebt/equity Gross debt/gross debt plus equity N etdebt/netdebtplusequity N etdebt/EBITDA,(x)
1)Excl.itemsaffectingcomparability. 2)Last12-monthvalues.
20.1 16.0 14.9 14.1 8.62 12.22 7.12 9.02 2.52 3.12 4.82 5.82 3.02 22.52 27.12 6.7 5.8 26.5 122.6 101.6 55.1 50.4 2.62
8.9 17.5 8.7 17.3 10.02 17.72 9.12 12.52 4.12 5.42 6.22 7.52 4.62 21.32 27.82 24.7 140.9 107.8 58.5 51.9 2.42
12.8 15.8 7.9 11.7 8.6 12.2 7.1 9.0 2.5 3.1 4.8 5.8 3.0 22.5 27.1 6.9 7.6 26.5 122.6 101.6 55.1 50.4 2.6
14.0 18.7 10.0 14.8 10.0 17.7 9.1 12.5 4.1 5.4 6.2 7.5 4.6 21.3 27.8 9.8 11.5 24.7 140.9 107.8 58.5 51.9 2.4
29
Quarterly information, Vattenfall Group

Amounts in SEK million Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010
Income statement Netsales Cost of products sold Other operating income and expenses, net Participations in the results of associated companies Operatingprofitbeforedepreciationandamortisation(EBITDA) Operatingprofit(EBIT) Financial items, net Financial items, net1 Profit before tax Profit for the period - of which, attributable to owners of the Parent Company -ofwhich,attributabletonon-controllinginterests(minorityinterests) Balance sheet Non-currentassets Short-term investments Cash and cash equivalents Other current assets total assets Equity - of which, attributable to owners of the Parent Company -ofwhich,attributabletonon-controllinginterests(minorityinterests) Capital Securities Other interest-bearing liabilities Pension provisions Other interest-bearing provisions Deferred tax liabilities Other noninterest-bearing liabilities total equity and liabilities Netassets N etdebt
1) xcl.discountingeffectsattributabletoprovisionsandreturnfromthe E SwedishN uclearWasteFund.
50,453 -37,449 -2,845 15,447 10,159 -2,628 -2,319 7,531 5,103 5,602 -499
38,276 -29,238 -4,666 75 9,593 4,447 -2,800 -2,933 1,647 1,345 1,106 239
40,443 -40,997 -2,397 -288 12,566 -3,239 -1,590 -1,211 -4,829 -3,235 -2,742 -493
51,868 -36,808 -3,463 245 16,932 11,842 -1,893 -1,430 9,949 7,203 7,117 86
55,537 -44,612 -6,292 313 15,355 4,946 -138 308 4,808 2,464 2,577 -113
37,665 -27,271 -4,748 183 10,685 5,829 -3,261 -2,858 2,568 1,749 1,597 152
49,713 -36,343 -4,433 26 13,867 8,963 -2,132 -1,302 6,831 5,185 5,077 108
70,657 -50,872 -9,772 102 20,799 10,115 -2,899 -2,327 7,216 3,787 3,746 41
378,443 17,417 11,268 117,430 524,558 138,931 131,988 6,943 8,883 161,467 17,995 73,724 35,406 88,152 524,558 284,250 -141,089
385,438 19,498 11,848 107,704 524,488 133,223 126,032 7,191 9,207 166,548 18,792 75,081 33,877 87,760 524,488 284,187 -143,808
389,453 18,959 20,238 94,540 523,190 132,493 125,715 6,778 9,084 172,809 18,517 74,840 34,395 81,052 523,190 281,771 -142,153
387,991 28,647 10,909 110,201 537,748 140,948 133,754 7,194 8,869 169,461 18,053 69,746 36,526 94,145 537,748 285,169 -138,282
388,263 31,278 12,595 109,296 541,432 133,621 126,704 6,917 8,929 179,348 18,137 69,685 36,125 95,587 541,432 285,153 -144,109
386,867 26,841 16,014 99,012 528,734 135,605 128,953 6,652 9,081 179,263 18,393 67,584 31,974 86,834 528,734 282,413 -145,155
391,153 24,365 21,279 107,110 543,907 140,215 133,572 6,643 9,414 189,123 18,994 66,963 34,266 84,932 543,907 289,874 -151,071
392,920 22,952 7,238 145,985 569,095 139,461 132,889 6,572 9,646 187,942 19,390 67,788 32,721 112,147 569,095 307,966 -165,581
30
Quarterly information, Vattenfall Group (cont.)

Amounts in SEK million Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010
Cash flow Fundsfromoperations(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 period Free cash flow
10,120 -6,841 3,279 -4,173 -894 -956 297 -3 -662 -1,556 -2,270
9,855 932 10,787 -7,145 -3,642 -289 -11,047 -11 336 -7,694 6,434
6,125 5,670 11,795 -4,533 7,262 9,726 -560 -6,682 2,484 9,746 8,410
12,156 -4,549 7,607 -4,951 2,656 2,811 -7,123 -16 -4,328 -1,672 5,063
11,670 -1,776 9,894 -11,531 -1,637 -4,997 3,209 -4 -1,792 -3,429 3,355
6,939 4,832 11,771 -11,017 754 -3,390 -3,238 -13 -6,641 -5,887 7,260
11,679 5,628 17,307 -3,479 13,828 -2,010 6,940 -5,277 -347 13,481 14,288
9,820 -7,561 2,259 -8,756 -6,497 8,478 -4,828 -17 3,633 -2,864 -1,057
Key ratios (definitions and calculations of key ratios on pages 36-37)

In%unlessotherwisestated.(x)meanstimes
Return on equity1 Return on equity 1, 2 Return on net assets1 Return on net assets1,2 EBITinterestcover,(x)1 EBITinterestcover,(x)1,2 FFO/gross debt1 FFO/net debt1 Equity/assets ratio Gross debt/equity Netdebt/equity N etdebt/netdebtplusequity N etdebt/EBITDA,(x)1
1)Last12-monthvalues. 2)Excl.itemsaffectingcomparability.
8.6 12.2 7.1 9.0 2.5 3.1 22.5 27.1 26.5 122.6 101.6 50.4 2.6
6.3 13.8 5.3 9.6 2.9 4.7 22.6 27.7 25.4 131.9 107.9 51.9 2.6
6.6 14.3 5.7 10.1 3.0 4.7 20.3 26.0 25.3 137.3 107.3 51.8 2.6
12.6 15.9 9.9 11.3 4.7 5.3 23.8 30.7 26.2 126.5 98.1 49.5 2.4
10.0 17.7 9.1 12.5 4.1 5.4 21.3 27.8 24.7 140.9 107.8 51.9 2.4
9.3 15.4 9.2 12.1 3.1 3.9 21.1 27.4 25.6 138.9 107.0 51.7 2.4
8.7 14.6 8.6 11.6 3.0 3.9 18.6 24.4 25.8 141.6 107.7 51.9 2.6
6.6 12.5 8.1 11.4 2.6 3.4 14.0 16.8 24.5 141.7 118.7 54.3 3.0
Exchange rates
Q4 2011
Key exchange rates applied in the accounts of the Vattenfall Group:

Q4 2010 Full year 2011 Full year 2010 31 Dec. 2011 31 Dec. 2010
Average rate EUR DKK GBP NOK PLN USD

9.1050 1.2244 10.6075 1.1703 2.0550 6.7875
9.1860 1.2325 10.7275 1.1449 2.2950 6.8306
9.0215 1.2110 10.3810 1.1579 2.1900 6.4922
9.5694 1.2850 11.1573 1.1920 2.3831 7.2152
Balance sheet date rate EUR DKK GBP NOK PLN USD
8.9400 1.2033 10.6800 1.1505 2.0300 6.9200
9.0020 1.2075 10.5475 1.1520 2.2700 6.8025

31
Parent Company income statement

Amounts in SEK million Full year 2011 Full year 20101
Parent Company balance sheet

Amounts in SEK million 31 Dec. 2011 31 Dec. 20101
Netsales 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 Group companies Result from participations in associated companies Result from other shares and participations Group contributions received Group contributions paid Other financial income Other financial expenses Profit before appropriations and tax Appropriations Profit before tax Income tax expense Profit for the year
31,655 -19 037 12,618
36,538 -19,190 17,348
Assets
non-current assets Intangible assets: non-current Property, plant and equipment Shares and participations Deferred tax assets Other non-current assets total non-current assets Current assets Inventories Intangible assets: current Current receivables Current tax assets Short-term investments Cash and cash equivalents total current assets total assets 206 4,086 178,670 72,495 255,457 166 22,138 194,064 417 55,899 272,684
-3,538 -3,136 5,944 13,935 1 -1,523 1,921 -2,862 6,037 -7,005 16,448 3,253 19,701 -2,847 16,854
-3,111 303 14,540 15,456 2 73 1,379 -3,918 10,765 -7,061 31,236 -3,602 27,634 -3,577 24,057
360 334 47,431 565 12,839 6,265 67,794 323,251
268 660 33,888 26,874 7,348 69,038 341,722
Equity and liabilities

Equity Restricted equity Share capital Statutory reserve Non-restrictedequity Retained earnings Profit for the year total equity Untaxed reserves Provisions non-current liabilities Capital Securities Other interest-bearing liabilities Deferred tax liabilities Other noninterest-bearing liabilities total non-current liabilities Current liabilities Interest-bearing liabilities Current tax liabilities Other noninterest-bearing liabilities total current liabilities total equity and liabilities 6,585 1,286 62,790 16,854 87,515 10,355 191 8,883 134,972 932 5,864 150,651 6,585 1,286 45,232 24,057 77,160 13,819 195 8,929 131,234 4,341 144,504
Parent Company statement of comprehensive income

Amounts in SEK million Full year 2011 Full year 20101
Profit for the year Total other comprehensive income total comprehensive income for the year
16,854 16,854
24,057 24,057
1) heParentCompanysincomestatement,statementofcomprehensiveincomeandbalancesheethave T been recalculated compared with previously published information. See accounting policies, etc. on page 34.
32
50,202 24,337 74,539 323,251
79,641 1,394 25,009 106,044 341,722
Accounting policies, risks and uncertainties, and the Parent Companys year-end report
Group
Accounting policies The consolidated accounts for 2011 have been prepared in accordance with International Financial Reporting Standards(IFRS)asendorsedbytheEuropeanCommissionfor applicationwithintheEU,andtheSwedishAnnualAccounts 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 applied in this year-end report are the same as those described in Vattenfalls 2010 Annual Report(Note3totheconsolidatedaccounts),exceptforthe new and amended IFRSs standards and IFRIC interpretationsendorsedbytheEUanddescribedbelow,whichare effective as of the 2011 financial year. new and amended IFRSs and IFRIC interpretations The new standards and amendments to standards and interpretationsdescribedbelow,andendorsedbytheEU,are effective as of the 2011 financial year. Amendments to IFRS 1 First-time Adoption of IFRS have been omitted as these are not relevant for Vattenfall. Revised IAS 24 Related Party Disclosures. The revised standard includes certain clarifications and simplifications of the definition of a related party and provides relief for government-related entities to disclose details of transactions with other government-related entities. However, Vattenfalls transactions with government-related entities do not represent a significant part of the Vattenfall Groups net sales, purchasing or earnings. The amendments in IAS 24 have not had any impact on Vattenfalls financial statements. Amendments in IAS 32 Classification of Right Issues. Share subscription rights denominated in a currency other than the companys functional currency are classified as equity instruments under certain conditions. The amendments are not relevant for Vattenfall. Amendment in IFRIC 14 Prepayments of a Minimum Funding Requirement, corrects an unintended consequence of IFRIC 14 and provides guidance on determining the recoverable value of a net pension asset. The amendment has not had any impact on Vattenfalls financial statements. IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments. The interpretation deals with the accounting of creditors that settle liabilities by issuing equity instruments, but is not relevant for Vattenfall. Improvements to IFRSs(issuedinMay2010)aimtostreamline and clarify the accounting standards concerning presentation, recognition and measurement including changes in terminology or amendments of an editorial nature. Certain relief from the disclosure requirements has been introduced. For example, an amendment to IFRS 7 Financial Instruments: Disclosures entails that Vattenfall no longer discloses its maximum credit risk exposure for financial instruments. In other respects, these amendments have had no or negligible impact on Vattenfalls financial statements. Reporting of operating segments To enable Vattenfall to carry out its new strategic direction (seeVattenfalls2010AnnualReport,pages515),anew business-led organisational structure was implemented on 1 January 2011. The previous, region-based structure has been replaced by five new Business Divisions: Asset Development, Production, Asset Optimisation and Trading, Distribution and Sales, and Renewables. The first three mentioned Business Divisions together form the Generation operating segment, while the Distribution and Sales and Renewables Business Divisions, respectively, are reported as separate operating segments. In the segment reporting, in addition to the above, treasury activities, other staff functions and shared services are reported under the heading Other. Comparison figures for 2010 have been restated to reflect the new segment structure. Estimations and assessments in the preparation of the financial statements Important estimations and assessments in the preparation of the financial statements are described in Vattenfalls 2010AnnualReport,Note4totheconsolidatedaccounts. These include, among other things, a description of impairment testing of non-current assets and valuation of embedded derivatives. The decisions in 2011 by the German government and Germanys parliament that all German nuclear power plants are to be closed by 2022 at the latest entail that the Brunsbttel and Krmmel nuclear power plants, for which Vattenfallhasoperatingresponsibilityandowns66.7%and 50%,respectively,maynotberestarted.Becauseofthis, Vattenfall is forced to recognise an impairment loss for the entire book value of these two plants and increase its provisions for dismantling and handling of nuclear fuel. A charge ofEUR1,145million(SEK10,240million)wasbooked againstoperatingprofit(EBIT)forthesecondquarterof 2011 for these measures. Calculated at the exchange rate applicable after four quarters in 2011, the corresponding effect on income is SEK 10,330 million. In addition, during the fourth quarter of 2011, provisions for dismantling and handling of nuclear fuel were increased by an additional SEK 183 million. In a review conducted during the second quarter of 2011 of the valuation of long-term electricity contracts, Vattenfall has determined that, 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, the use of modelled prices provides a reliable value. The effect of this review on the value of these embedded derivatives amounted to SEK +1,120 million as per 30 June 2011 andaffectedoperatingprofit(EBIT)initsentiretywhile increasing net sales. The value of these derivatives at 31 December 2011 was SEK +785 million. Vattenfallownsapproximately19%ofthesharesinthe energy company Enea S.A., which is listed on the stock exchange in Warsaw, Poland. Eneas share price has a history of relatively high volatility, which is coupled to very limited trading. The holding in Enea is classified as a financial instrument in the subcategory Available-for-sale financial assets. Such assets are to be carried at fair value with changes in fair value recognised in Other comprehensive income, alternatively, impaired in the income statement. As per 31 December 2010, the cumulative changes in the fair value of the holding were negligible. During the first three quarters of 2011, Vattenfall recognised the changes in fair value in Other comprehensive income, which were thereby charged against consolidated equity. However, since the changes in fair value as per 31 December 2011 are considered to be
33
both significant and permanent over time, a decision has been made to make an impairment of the shareholding in Enea to fair value, taking also into account the decline in valueofthePolishzloty(PLN).Theimpairmentamountsto SEK 1,591 million and has been recognised as a Financial expense in the income statement. Risks and uncertainties For a description of risks, uncertainties and risk management, please refer to Vattenfalls 2010 Annual Report, pages 7783.Noothermaterialchanges,otherthanwhatisstated in this year-end report, have taken place since publication of the 2010 Annual Report. The turbulence in the capital markets caused by the debt crisis in the euro zone has not had any neagtive impact on Vattenfalls funding situation. other Significant related-party transactions are described in Vattenfalls2010AnnualReport,Note54totheconsolidated accounts.Nomaterialchangeshavetakenplaceinrelations or transactions with related parties compared with the description in the 2010 Annual Report.
Parent Company Vattenfall AB

Accounting policies The Parent Company Vattenfall ABs accounts and this yearend report 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 asthosedescribedinVattenfalls2010AnnualReport(Note 2totheParentCompanyaccounts)withtheexceptionthat the Parent Company, as of the 2011 financial year, recognises Group contributions received as financial income and Group contributions paid as financial expenses. Comparison figures for 2010 have been restated to reflect this new accounting policy. Full year 2011 A condensed income statement and balance sheet for the
Parent Company are presented on page 32 of this report. SalesamountedtoSEK31,655million(36,538). Profit before appropriations and tax was SEK 16,448 million(31,236). In 2011, Vattenfalls electricity distribution, network services and electricity sales activities in Poland, conducted via GornoslaskiZaklandElectroenergetycznyS.A.(GZE),and Vattenfalls electricity and heat production activities in Warsaw, Poland, conducted via Vattenfall Heat Poland S.A., were divested. Capital gains from these divestments amounted to SEK 2.3 billion and SEK 1.1 billion, respectively. In addition, Vattenfall AB has recognised a capital loss of approximately SEK 3 billion in connection with the divestment of all hydro power operations on 1 January 2011 to wholly owned, newly formed subsidiaries. The divestments were made at residual tax values. In connection to these divestments, VattenfallABhasdissolveduntaxedreserves(accelerateddepreciation)intheamountofapproximatelySEK4.3billion. In2011VattenfallABrepaidpartofitsliabilitytoNuons shareholders, for which the Parent Company has recognised a realised foreign exchange gain in the income statement of slightly more than SEK 2 billion. During the year, the shareholding in the Polish company Enea S.A. was impaired by SEK 1.6 billion. In other respects, the decrease in earnings compared with the preceding year is attributable to lower dividends from subsidiaries. The balance sheet total amounted to SEK 323,251 million (341,722). Investments for the period amounted to SEK 700 million (2,286). Cash and cash equivalents and short-term investments amountedtoSEK19,104million(34,222). Risks and uncertainties For a description of risks, uncertainties and risk management, please refer to Vattenfalls 2010 Annual Report, pages 7783.Nomaterialchanges,otherthanwhatisstatedinthis year-end report, have taken place since publication of the 2010 Annual Report.The turbulence in the capital markets caused by the debt crisis in the euro zone has not had any neagative impact on Vattenfalls funding situation.
other Significantrelated-partytransactionsaredescribedinNote 41 to the Parent Company accounts in Vattenfalls 2010 AnnualReport.Nomaterialchangeshavetakenplacein relations or transactions with related parties compared with the description in the 2010 Annual Report. dividend Consolidated profit attributable to shareholders of the ParentCompanyamountedtoSEK11,083million(12,997)or SEK84.15(98.69)pershare.TheBoardofDirectorsproposes a dividend of SEK 4,433 million, corresponding to SEK 33.66 per share. Annual General Meeting The Annual General Meeting will be held on 25 April 2012, in Stockholm. The Annual General Meeting is open to the generalpublic.TheAnnualReport(inbothSwedishandEnglish) is expected to be published on www.vattenfall.se and www. vattenfall.com, respectively, on 29 March 2012. Printed versions of the Annual Report in Swedish and English will be distributed in early April. Copies of the printed Annual Report can be ordered from Vattenfall AB, e-mail: info@vattenfall.se or directly via Vattenfalls websites: www.vattenfall.se (Swedish)andwww.vattenfall.com(English).
Stockholm, 9 February 2012 VattenfallAB(publ) The Board of Directors
This year-end report has not been reviewed by the companys auditors. The information provided in this year-end report is such that Vattenfall is required to disclose pursuant to the Swedish Securities Market Act.
34
Vattenfalls organisational structure 2011

Board of directors
Chief Executive officer
Staff Functions
Chief Financial officer
operating segment Generation Business division Asset development Business division Production Business division Asset optimisation and trading Asset optimisation nordic Asset optimisation Continental trading operations
operating segment distribution and Sales Business division distribution and Sales
operating segment Renewables Business division Renewables onshore Wind Projects offshore Wind Projects Generation Wind Biomass
R&d Projects Engineering thermal Power Projects nuclear & Hydro Power Projects Project Governance & Improvement
Lignite nuclear power Hydro power thermal power
Customer Service Sales B2C Sales B2B Heat distribution Energy Related Services
Shared Services
35
Definitions and calculations of key ratios

Figures for the Group in 2011. Amounts in SEK million unless otherwise stated. EBIt = EBItdA = Underlying profit = FFo = Items affecting comparability = Free cash flow = Capital Securities = net assets = net debt = Earnings Before Interest and Tax. Earnings Before Interest, Tax, Depreciation and Amortisation. Also other close-down costs than impairment losses pertaining to the close-down of German nuclear power plants during 2011 are here treated as Amortisation. Operating profit excluding items affecting comparability and unrealised changes in the fair value of energy derivatives, which according to IAS 39 may not be reported using hedge accounting, and changes in the fair value of inventories. Funds From Operations. Capital gains and capital losses from shares and other non-current assets, impairment losses and impairment losses reversed pertaining to non-current assets, and other non-recurring items. Cash flow from operating activities less maintenance investments. Perpetual subordinated securities, junior to all Vattenfalls unsubordinated debt instruments. Reported as interest-bearing non-current liabilities. Balancesheettotallessnoninterest-bearingliabilities,provisions,interest-bearingreceivables,fundsintheSwedishNuclearWasteFund,cashandcashequivalents, short-term investments. Interest-bearingliabilitieslessloanstoownersofnon-controllinginterests(minorityowners)inforeignsubsidiaries,cashandcashequivalents,short-terminvestments. Thekeyratiosarepresentedasprecentages(%)ortimes(x).
Key ratios based on full year amounts 2011:

operating margin, % = 100 x Operatingprofit(EBIT) Netsales 23,209 = 181,040 28,562 = 181,040 14,298 = 181,040 21,159 = 181,040 11,083 = 129,479 15,809 = 129,479 20,243 = 283,957 12.8 15.8 7.9 11.7 8.6 12.2 7.1
Operatingprofit(EBIT)excl.itemsaffectingcomparability operating margin excl. items = 100 x affecting comparability, % Netsales Pre-tax profit margin, % = 100 x Profit before tax Netsales
Profit before tax excl. items affecting comparability Pre-tax profit margin excl. items = 100 x affecting comparability, % Netsales Return on equity, % = 100 x Profit for the period attributable to owners of the Parent Company Average equity for the period attributable to owners of the Parent Company excl. the Reserve for cash flow hedges
Profit for the period attributable to owners of the Parent Company excl. items affecting comparability Return on equity excl. items = 100 x affecting comparability, % Average equity for the period attributable to owners of the Parent Company excl. the Reserve for cash flow hedges Return on net assets, % = 100 x Operatingprofit(EBIT)+discountingeffectsattributabletoprovisions Weighted average of net assets for the period
36
Operatingprofit(EBIT)excl.itemsaffectingcomparability+discountingeffectsattributabletoprovisions Return on net assets excl. items = 100 x affecting comparability, % Weighted average of net assets for the period EBIt interest cover, (x) = EBIt interest cover excl. items = affecting comparability, (x) FFo interest cover, (x) = Operatingprofit(EBIT)+financialincomeexcl.discountingeffectsattributabletoprovisionsandreturnfromtheSwedishN uclearWasteFund Financial expenses excl. discounting effects attributable to provisions Operatingprofit(EBIT)excl.itemsaffectingcomparability+financialincomeexcl.discountingeffectsattributabletoprovisionsandreturn fromtheSwedishN uclearWasteFund Financial expenses excl. discounting effects attributable to provisions Fundsfromoperations(FFO)+financialexpensesexcl.discountingeffectsattributabletoprovisions Financial expenses excl. discounting effects attributable to provisions Fundsfromoperations(FFO)+financialitemsexcl.discountingeffectsattributabletoprovisionsandreturnfrom theSwedishN uclearWasteFund Financialitemsexcl.discountingeffectsattributabletoprovisionsandreturnfromtheSwedishN uclearWasteFund Cash flow from operating activities less maintenance investments + financial expenses excl. discounting effects attributable to provisions and interest components related to pension costs Financial expenses excl. discounting effects attributable to provisions and interest components related to pension costs Fundsfromoperations(FFO) Interest-bearing liabilities Fundsfromoperations(FFO) N etdebt Operatingprofitbeforedepreciationandamortisation(EBITDA) Financialitemsexcl.discountingeffectsattributabletoprovisionsandreturnfromtheSwedishN uclearWasteFund Operatingprofitbeforedepreciationandamortisation(EBITDA)excl.itemsaffectingcomparability Financialitemsexcl.discountingeffectsattributabletoprovisionsandreturnfromtheSwedishN uclearWasteFund
25,596 = 283,957 25,359 = 10,043 30,712 = 10,043 48,299 = 10,043 46,149 = 7,893 26,637 = 9,000 38,256 = 170,350 38,256 = 141,089 54,538 = 7,893 59,891 = 7,893
9.0 2.5
3.1 4.8
FFo interest cover, net, (x) =
5.8
Cash flow interest cover after main= tenance investments, (x) FFo/gross debt, % FFo/net debt, % EBItdA/net financial items, (x) = 100 x = 100 x =
3.0 22.5 27.1 6.9 7.6
EBItdA excl. items affecting compa= rability/net financial items, (x)
Key ratios based on the balance sheet per 31 december, 2011:

Equity/total assets, % = 100 x Gross debt/equity, % = 100 x net debt/equity, % = 100 x Gross debt/gross debt plus equity, % = 100 x Equity Balance sheet total Interest-bearing liabilities Equity N etdebt Equity Interest-bearing liabilities Interest-bearing liabilities + equity 138,931 = 524,558 170,350 = 138,931 141,089 = 138,931 170,350 = 309,281 141,089 = 280,020 141,089 = 54,538 26.5 122.6 101.6 55.1 50.4 2.6
N etdebt net debt/net debt = 100 x plus equity, % N etdebt+equity net debt/EBItdA, (x) = N etdebt Operatingprofitbeforedepreciationandamortisation(EBITDA)
37
Vattenfall AB (publ) SE-162 87 Stockholm Corporate Identity number 556036-2138 Tel. +46 8 739 50 00 www.vattenfall.com www.vattenfall.se
38

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2011

Delivering according to strategy during a demanding year

ystein Lseth President and CEO

Vattenfall delivering in accordance to strategy

Electricity generation, sales of heat and gas in 2011

Wholesale price trend for electricity and Co2-emission allowances

YE AR- End REPoRt 2011

Important events in 2011

divestments after the balance sheet date, 31 december 2011

new wind power projects

other important events

YE AR- End REPoRt 2011

Operating profit, excl. items affecting comparability

0 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2008 2009 2010 2011

Last 12-month values Quarterly values

YE AR- End REPoRt 2011

See pages 36-37 for definitions and calculations of key ratios.

YE AR- End REPoRt 2011

Sales, profit and cash flow

Items affecting comparability

2,461 22 -507 379 -280 2,075

51 -127 -6,006 1,296 -4,786

4,780 -58 -11,301 386 840 -5,353

195 -444 -11,152 1,302 -10,099

10,159 2,075 741 7,343

4,946 -4,786 623 9,109

105.4 18.9 -19.4

23,209 -5,353 -2,231 30,793

29,853 -10,099 3,114 36,838

-22.3 -47.0 -16.4

Fair valuation of energy derivatives Fair valuation of inventories total

-1,690 -541 -2,231

2,860 254 3,114

YE AR- End REPoRt 2011

Amounts in SEK million

Change% Full year 2011

Full year 2010

Amounts in SEK million

Change% Full year 2011

Full year 2010

-2,628 619 -1,535 80 -252

-138 298 -1,600 245 -854

107.7 4.1 -67.3 -70.5

-8,911 1,454 -6,176 635 -4 871

-8,430 1,131 -6,447 912 -4,866

-5.7 28.6 4.2 -30.4 -0.1

Generation Distribution and Sales Renewables Other total

17,078 12,166 350 5,091 34,685

17,359 14,982 318 5,521 38,180

-1.6 -18.8 10.1 -7.8 -9.2

YE AR- End REPoRt 2011

Cash and cash equivalents, and short-term investments Committedcreditfacilities(unutilised) Othercreditfacilities(unutilised)

28,685 42,297 2,901

43,873 9,102 6,860

-34.6 364.7 -57.7

141,089 170,350 176,031 3,9 4,3 5,5

144,109 188,277 173,409 3,5 3,9 6,1

-2.1 -9.5 1.5 10.2 10.8 -10.8

Equity attributable to Owners of the Parent Company Non-controllinginterests(minorityinterests) total

131,988 6,943 138,931

126,704 6,917 133,621

4.2 0.4 4.0