Administration report
The Board of Directors and President of Vattenfall AB (publ), Swedish corporate identity number 556036-2138, herewith submit the annual accounts and consolidated accounts for 2008, encompassing Administration report incl Risk management - Parent company accounts incl notes, which have been translated from the Swedish original.
Group operations and structure
Vattenfall’s vision is to be a leading European energy company, and its main products are electricity and heat. Vattenfall works in all parts of electricity value chain - generation, transmission, distribution and sales - and produces, distributes and sells heat. Vattenfall also conducts energy trading and lignite mining. Operations in 2008 were conducted in Sweden, Denmark, Finland, Germany, Poland and the UK. At year-end Vattenfall had 4.8 million electricity customers and 5.6 million network customers. In 2008 the Group had approximately 33,000 employees. Vattenfall AB is 100%-owned by the Swedish state. The company is domiciled in Stockholm.
Reporting structure
The Group’s operations in 2008 were conducted primarily in two operating segments (Business Groups) with different geographical areas of responsibility. These primary segments (operating segments) are Business Group Nordic and Business Group Central Europe. In addition to these is the Other segment, which includes Energy Trading, Treasury activities and other Group functions. In 2008, Business Group Nordic comprised operations in Sweden, Finland and Denmark, and Vattenfall’s wind power investments in the UK. Business Group Central Europe included operations in Germany and Poland. Operating profit for the primary segment Other includes changes in market value for electricity trading. These are reported by Energy Trading until the amounts are realised. When the amounts are realised, they affect other segments.
In terms of business segments (secondary segments), the Group’s operations are broken down into Electricity Generation, Electricity Markets (sales and energy trading), Electricity Networks (electricity transmission and distribution), and Heat (production, distribution and sales of heat). The Other segment includes Vattenfall’s Treasury activities and Other Group functions. Operating profit of the secondary segment Electricity Markets includes changes in market values for electricity trading. These are reported by Energy Trading until the amounts are realised. When the amounts are realised, they affect mainly the Electricity Generation segment.
A new Group organisation is being introduced as from 1 January 2009. A third Business Group, Pan-European, is being established, comprising three new Group-wide business units: Wind Power, Nuclear Power and Engineering (read more on "Corporate Governance Report"). Provided that Vattenfall’s offer on 23 February 2009 pertaining to the acquisition of the Dutch company Nuon is approved and completed, a new Business Group, Benelux will be established (read more on "Events after the balance sheet date").
| External net sales, SEKm | Net sales, SEKm | Operating profit, SEKm | operating profit, % | Operating margin, % | |
| Primary segments | |||||
| Business Group Nordic | 54,732 | 48,851 | 16,760 | 56.1 | 34.3 |
| Business Group Central Europe | 99,182 | 142,260 | 15,140 | 50.6 | 10.6 |
| Other | 10,635 | 44,849 | -2,005 | -6.7 | -4.5 |
| Eliminations | - | -71,411 | - | - | - |
| Total | 164,549 | 164,549 | 29,895 | 100 | 18.2 |
| Secondary segments | |||||
| Electricity Generation | 48,389 | 78,952 | 24,318 | 81.3 | 30.8 |
| Electricity Markets | 80,130 | 89,090 | -1,363 | -4.6 | -1.5 |
| Electricity Networks | 45,644 | 61,208 | 4,654 | 15.6 | 7.6 |
| Heat | 13,593 | 22,514 | 3,689 | 12.3 | 16.4 |
| Other | 3,367 | 12,653 | -1,403 | -4.7 | -11.1 |
| Eliminations | -26,574 | -99,868 | - | - | - |
| Total | 164,549 | 164,549 | 29,895 | 100 | 18.2 |
