Targets and target achievements

Vattenfall’s assignment from its owner is to generate a market rate of return by operating an energy business in such a way that the company is among the leaders in developing sustainable energy production.

Stable financial performance, that provides scope for long-term investments enables environmentally sustainable energy production as well as new product solutions for sustainable consumption of electricity, gas and heat.

Vattenfall’s owner and Board of Directors have set four financial targets for the Group, and the Board has set six strategic targets that apply from 2016.

Effective January 2016, the three former sustainability targets were replaced by the six new strategic targets to better reflect the strategy and the Group’s four strategic objectives. The four financial targets, set by the owner, will remain as long-term targets for Vattenfall. The strategic targets have been set for 2020 and will be followed up on a quarterly and annual basis.

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Strategic objectives Strategic targets for 2020

Leading towards sustainable consumption

1. Customer loyalty, NPS (Net Promoter Score): +2 NPS1 relative

Leading towards sustainable production

2. Commissioned renewables capacity: ≥2,300 MW
3. Absolute CO2 emissions pro rata: ≤21 Mtonnes2

High performing operations

4. ROCE: ≥9%

Empowered and engaged people

5. LTIF3 (Lost Time Injury Frequency): ≤1.25
6. Employee Engagement Index: ≥70%4

1) NPS is a tool for understanding customers’ perception of Vattenfall’s products and services and for measuring customer loyalty. The target is a positive absolute NPS value +2 compared to peers. 

2) Require significant structural changes.

3) Lost Time Injury Frequency (LTIF) is expressed in terms of the number of lost time work injuries (per 1 million hours worked), i.e., work-related accidents resulting in absence longer than one day, and accidents resulting in fatality. Pertains to Vattenfall's employees. 

4) The basis for the target consists of the results from the employee survey My Opinion.

Financial targets

The financial targets relate to profitability, capital structure and the dividend policy, and were set by the owner in November 2012.

These targets are intended to ensure that Vattenfall creates value and generates a market rate of return that the capital structure is efficient, and that financial risk is kept at a reasonable level.

The targets are to be evaluated over a business cycle.

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Profitability Outcome 2016 Comments

Return on capital employed: 9% 

-8.5%1 The outcome for Total Vattenfall was negatively affected by the recognition of impaired asset values. Excluding impairment losses and other items affecting comparability, return on capital employed was 8.7% for Total Vattenfall.
Capital structure Outcome 2016 Comments

FFO/adjusted net debt: 22%-30%

22.6%2 FFO/adjusted net debt increased compared to 2015 (21.1%) for Total Vattenfall. Adjusted net debt decreased, mainly due to the lower net debt, at the same time as the FFO decreased slightly.

Net debt/equity ratio: 50%-90%

60.5%  The net debt/equity ratio is still within the target interval but increased slightly compared to 2015 (55.4%), mainly due to the negative result of the year.
Dividend policy Outcome 2016 Comments

The dividend should amount to 40-60% of the year's profit after tax.

- Due to the negative profit for the year, the Board of Directors has proposed – in accordance with Vattenfall's dividend policy – that no dividend be paid for 2016.

1) The key ratio is based on average capital employed. The lignite operations were classified as assets held for sale on the balance sheet as per 30 June 2016, which entails that the calculation of average capital employed excludes the lignite operations as from 30 June 2016.

2) The lignite operations were classified as assets held for sale on the balance sheet as per 30 June 2016. As a result, the lignite operations are excluded from balance sheet items included in the calculations of key ratios as from 30 June 2016.

Last updated: 2017-03-28 10:05